Ladies and gentlemen, good day, and welcome to the Q1 FY23 earnings conference call of JSW Steel Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is now being recorded. I now hand the conference over to Mr. Ashwin Bajaj, Group Head of Investor Relations at JSW Steel Limited. Please go ahead, sir. Yes, thank you, Peter. Good evening, ladies and gentlemen. It's a pleasure to welcome you to JSW Steel's earnings call for Q1 FY23. We have with us today, the management team represented by Mr. Seshagiri Rao, Joint Managing Director and Group CFO, Mr. Jayant Acharya, Deputy Managing Director, Mr. Rajeev Pai, Chief Financial Officer, and Mr. G.S. Rathore, Chief Operating Officer. We will start with opening remarks by Mr. Rao and then open the floor to Q&A. With that, over to you, Mr. Rao. Good evening. Good evening, everybody. This quarter, which has gone by, was one of the successful and challenging quarters, particularly on the back of the Russian-Ukrainian war, which has brought in extreme uncertainty and extreme volatility in the market, especially commodity market. This has given a major shock in the steel market. Totally a pattern of global trade has changed with the largest ever increase in energy prices. All got further aggravated with the sanctions on Russia and trade restrictions, labor shortages, logistic bottlenecks. Moreover, to contain inflation, the contractionary fiscal and monetary policies that are being followed by countries and central banks. This has caused a lot of uncertainty and volatility in the market. To contain inflation as the major objective of several countries and the government, they have changed the policies, they have changed the priorities. The Indian government, in line with that, have imposed export duty also in the month of May of 15% on export of steel. All this together was challenging quarter. What is interesting here if I really see the whole steel industry. The overall steel production in my view has increased quarter-over-quarter. Generally, the impression is year-over-year, the steel production for the first six months of the year have fallen. This is not really true. The largest producer and consumer of steel, that is China, quarter-over-quarter, their steel production went up by 16.5%. They produced 284 million tons as against 243 million tons, which is 40 million ton more steel China has produced. What did they do? Their exports went up by 54% in the Q2 over Q1. They exported 20 million tons of steel, 20 million tons in the Q2 21. All this if you see country by country overall trade flows, there is more production, more exports, falling demand and ready to import. This has caused a fall in the steel prices. There is a fall of over 20% in the global steel prices. Maybe in Europe and U.S. it is much more. This is the context in which we have delivered the results from JSW. One more point if we observe as far as Indian steel industry is concerned, completely in contrast to what I just explained in the global market. While Chinese steel production sequentially went up, Indian steel production sequentially came down, but year-on-year it increased. This is majorly in my view attributable to the imposition of export duty, which has brought in a big psychological factor in the Indian industry. Regardless, I see as far as JSW is concerned, we have produced five million tons of crude steel on standalone basis. We have taken steps. We have pre-closed certain shutdowns. Otherwise, we could have produced at least 0.5-0.7 million tons more production in the last quarter. Our Indian operations, including Bhushan Power and Steel, we produced 5.62 million tons. Our capacity utilization in Bhushan Power and Steel was 89% as against 103% in the Q4. Our capacity utilization in the existing operations other than Dolvi expansion if you look at, it also came down to 93% from 98% in the Q4. Therefore, we have moderated production. Otherwise, production could have been higher. As far as sales are concerned because of export duty imposition, then the steel exports from India came down by 26%. Even our exports in the last quarter came down to 34%. We could do 8.83 million tons of exports versus 1.35 million tons in the Q4 of last year. Exports have fallen 20% of the total volume of sales. Consolidated sales including Bhushan Power are 4.63 million tons. The blended sales realization because of price hikes that have happened in the month of April. Overall, blended basis, it went up by 9% in the quarter. Whereas cost pressures were very high. As we guided in the last call that the coal, coking coal impact would be there in this quarter to the extent of $125 per ton. We have seen $113 increase in the coking coal price. The iron ore fall in prices are not fully reflected in the last quarter. All together, the cost went up by 21%. Like from standalone basis, the EBITDA per ton was INR 8,311 per ton, that is 10.8%. The coated business also has not done well because of a huge amount of inventory losses in the segment. Like their exports could not take place. Those together volumes also did not do well. Those together there was a negative EBITDA as per our coated business segment. Bhushan Power and Steel made an EBITDA of INR 698 crores, INR 13,541 per ton. The domestic subsidiaries net contributed including Bhushan Power and Steel, INR 743 crores. Our US operations, $34.2 million, both Ohio and Baytown together. Italy was positive, EUR 4 million. Overseas contributed INR 276 crores. The EBITDA on a consolidated basis, INR 4,309 crores. EBITDA per ton on a consolidated basis is INR 9,601 rupees. But there are four one-off items which are very, very important for us to understand. These one-off items are, one is, the foreign exchange rate fluctuations. We have been explaining our hedging policy that we will hedge 100% on the revenue account. On the capital account, whatever installments that are falling due for the next 12 months we hedge. Balance is unhedged. Which we depreciated in the last quarter by over 4%. We have to translate our outstanding foreign currency loans at the exchange rate prevailing as on 30 June 2022. The impact on that of this foreign exchange fluctuation on profit and loss account was INR 747 crores on a consolidated basis. The second item of one-off item is, MTM provision. When the input prices started falling, the inventories have to be revalued. Net, on net realizable value basis. Those, that impact has come close to INR 813 crores to be earned in the last quarter. Imposition of export duty has put additional burden of INR 242 crore on exports which were made. In the U.S. during COVID time, U.S. government has given to medium enterprises grants. Our subsidiary got a grant of $10 million. Subsequently, on review they said it is not a corporation located in the U.S., it is a foreign corporation because 100% is owned by parent outside the U.S. They canceled the grant. That $10 million, approximately INR 83 crore were made a provision. All this together is INR 1,882 crore, which will translate to INR 4,342 per ton. If I take 9,601 rupees reported EBITDA, and this 4,342 rupees to make adjustment, then the total EBITDA on a consolidated basis is INR 13,943 per ton. Similar adjustments we may have to do in standalone basis. Standalone basis once you make adjustment, the EBITDA per ton is INR 12,086 as against INR 8,300 that we reported. Considering this, the profit after tax on a consolidated basis was INR 839 crore. Our net debt has increased by INR 10,574 crore. This was at 67,224 crores. This 10,500 crores increase in the debt is majorly on account of inventory accretion. The investment in the working capital was INR 7,874 crore. As I mentioned, one million tons of accretion to inventory in the last quarter. We produced more despite moderation. The exports we could not do and domestic there was a weakness in the apparent consumption. Both together, we had to invest in the inventories, here. That amount was INR 7,874 crores. For the quarter the translation increased the debt by INR 1,400 crores. Balance sheet capital expenditure related increase. This INR 10,500 crores, a significant portion, we'll be able to bring back the cash flow on unwinding of inventory in the balance three quarters. With that our debt to equity was 0.98. Our debt to EBITDA was 2.03. Our capital expenditure cash flow spend was INR 3,702 crores in the last quarter. Our revenue acceptances were INR 2.7 billion. Our capital expenditure acceptances were $13 billion. As per our projects are concerned, we have reviewed the projects. We have given the guidance of INR 20,000 crore CapEx initially. We have not slashed any of the CapEx on the expansion projects of 7.5 million ton at Vijayanagar, and also the expansion at Bhushan Power and Steel to five million ton. Those are on track. Any other capital expenditure, special projects or any discretionary CapEx, that we have reviewed. We thought we should bring down the discretionary and special project CapEx until situation improves. We have moderated our CapEx by INR 5,000 crore in this year from INR 20,000 crore to INR 15,000 crore. With that, we will take questions if anything is there. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. Participants are requested to use handsets while asking a question. Ladies and gentlemen, in the interest of time and fairness to all participants, we request to limit questions to two questions per participant. We will now wait for a moment while the question queue assembles. Our first question comes from the line of Amit Dixit with Edelweiss. Please go ahead. Yeah. Hi, good evening, everyone. Thanks for the opportunity, sir. I have got two questions. The first one is essentially on your BPSL realization. If I compare BPSL realization with the standalone realization, there is a lot of difference between the two. In fact, the blended realization for BPSL is up like INR 20,000 per ton in this quarter. Just wanted to understand the key drivers of the same. The BPSL, there is a pig iron sale. The profit on pig iron, which is adjusted in the INR 698 crore, and then calculate the EBITDA pertaining to steel operation, it comes down to INR 11,000 per ton. This 11,000 versus 8,300 standalone basis of Bhushan Steel, if you compare, the iron ore is cheaper in the case of BPSL compared to Bhushan Steel. There are the two main reasons why you find apparently the EBITDA of BPSL is higher. Okay. The second question is essentially on the cost guidance for this quarter Q2. What kind of coking coal reduction and iron ore reduction per ton of steel do you see? Coking coal, we are likely to see a reduction in the range of $50-$60 per ton, going from quarter one to quarter two. Iron ore, the reductions which have happened in the market have not been reflected fully. Part of that reflection will come in quarter two. Given the fact that international prices are moderating further on iron ore, we do expect some moderation going ahead in this quarter. Is it possible to quantify the iron ore reduction as you have done for coking coals? Iron ore, different areas, different locations, we will have a different number because, you know, based on the Fe. It's difficult to quantify a number. Okay. Thanks, and all the best. Thank you. Thank you. Our next question comes from the line of Pinakin Parekh with JP Morgan. Please go ahead. Yeah. Thank you very much, sir. My first question is trying to understand exports. At this point of time, given where the export duty is and given where the export realizations are, would the company be exporting any steel at this point of time? Yes, we are exporting steel, you know, basically to certain locations and certain products. The export volumes are far lower than our normal volumes. Naturally, given the fact that the export duty makes it totally unviable. Secondly, you know, the general moderation in the global demand as well. My second question is given, if the export duty is not removed, in the course of the year, would it be fair to say that the volume guidance on sales given for FY 2023 would be downside risk? We do not expect the export duty to continue for long. This was a temporary measure to contain inflation. We have seen in inflation numbers while it is not fully translated yet, the component of steel price in inflation has vastly gone down. We do expect you know, moderation going forward or removal going forward. We see this as purely temporary and maybe in H2 the opportunity to export will come back. Understood. Thank you very much. Thank you. Our next question comes from the line of Vishal Chandak with Motilal Oswal Financial Services. Please go ahead. Yeah. Thank you very much for the opportunity. Just following up on the iron ore. Iron ore generally the lag in purchase and consumption is about 15 days compared to about two months for coking coal. I would presume that there would be a fair amount of visibility on the iron ore pricing, given the fact that almost everything is localized. Could you please just give us a sense of how much lower was it in Q1 versus Q4? And what kind of ballpark number it would be probably in the next quarter? Vishal, as far as iron ore is concerned, we have captive supply and also we buy in the market. We buy in the market every month. In the case of our captive supply, 52% of the total consumption of iron ore is now from captive in the quarter one. In this case, what is happening is the premium which we have to pay on the auction mine to the government is based on last declared IBM price. IBM, there is a lag of two months in declaring the price. Number two is if you compare the IBM prices vis-à-vis the market prices, IBM prices are not getting adjusted in line with the market prices. There is an anomaly. That is why we are hesitant to give a view on what would be the iron ore price, because as on date IBM declared for April. May, June price not yet declared. This is already two and a half months lag as on date. Whatever we consume, whatever we dispatch in this month, we have to pay premium based on April. Whether and when IBM declares the price, whether premium will get adjusted like royalty, there is ambiguity in law. That's a real issue which is going on even on that. That is why on the iron ore price, we are hesitant to give commentary for the impact. That is absolutely clear. Thank you very much for this elaborate answer. My second question was with respect to the overseas operations. Do we foresee in the near term to close down European operations at least given the fact that there have been quite a number of challenges since we have acquired them? No. In the last quarter, if you have seen the European operations in the positive EBITDA. The rail orders from RFI, which the pricing also got clarified. Therefore we were able to get a positive EBITDA there. Going forward, we are expecting that the rail orders from the Italian rail will be forthcoming. With that, we expect to maintain you know, a positive kind of an EBITDA going forward. While we are looking you know, we may continue to look for opportunities maybe to partly divest the assets in case there is a possibility or economic sensible possibility to do so. We may continue to hold the rail mill in the asset. Thank you very much, sir. I have questions. I'll join the queue. Thank you. Thank you. Our next question comes from the line of Indrajit with CLSA. Please go ahead. Hi. Thank you for the opportunity. I just have one question. You also highlighted downward pressure on global iron ore prices. We have seen global steel prices now hovering around $600 per tonne. Chinese coking coal prices are now much lower than maybe Australian. Our coking coal prices have softened as well. In light of that, how do you see global prices as we head into seasonal weakness in China? Do you see as a result we could start seeing some bit of imports coming back into the Indian market? Yes, we have seen some import into India from Russian sources. Not as much from the Chinese yet, although their exports have been elevated. The Russian Ruble being now far stronger, we see a reluctance from the Russians to offer that kind of a competitive pricing going forward. On the Chinese side, while the export volume because of COVID restrictions in China, the exports have also increased. Their costs, you know, are elevated. The $600 which you're talking about are spot deals which are being done by traders, which are offloading stocks, you know, to de-risk their working capital. It is not something which is being offered by primary mills, since the cost doesn't support this price. My sense is that given the current cost structure, there is not much room for prices to fall further. The prices are likely to be range bound. There is a feeling that by and large, situation has bottomed out and therefore we do see some buying coming back. On top of that, in certain global markets, as you may have read the print as well, there are shutdown of blast furnaces and moderation in production, particularly Europe. That also is leading to a slightly better sentiment with respect to global buying. Sure. Thank you. With that note, how are the current NSR in India versus first quarter average and any outlook you can provide for the following two quarters in our India operations? I would say that prices are by and large exit of June. I would say the price of July would be range bound. We don't see much variation going forward because the cost structure remains on a higher plane because of the raw material holding which most steel producers have. Price is range bound, but cost going forward will reduce. Therefore, by October, all the inventory of high cost raw material will get consumed. We see margin improvement from quarter three onwards. Sure. Thank you so much. Thank you. Our next question comes from the line of Abhijeet Mitra with ICICI Securities. Please go ahead. Yeah, thanks for taking my question. I have two questions. First of all, on the realization, the QoQ delta that we are seeing, how much of it is timing of sales? How much of it is auto contract triggered increases? If you can sort of help us understand. Second is on the power cost. I think in the call yesterday of JSW Energy, they were saying that because of Russian coal imports, their costs have been pretty much controlled. Just want to understand that you know that same structure would have flowed into our power cost as well, right? You know just to sort of clarify on these two. Thanks. The second question first. No, I think we have clarified this last time probably as well, that we have been buying coal from Russian sources, particularly certain metallurgical coals, which qualitatively have been required and continue to be required in our operations. We continue to source you know similar kind of coals because it's not possible to overnight replace those. That having said, I think the general price of coal, if you have noticed, except for thermal, are generally on a softer trajectory. It's correcting downwards. That will reflect going forward in our books as well. The questions on NSR which you asked, I can only say that, yes, auto contracts partly are closed. Some of the long product contracts have just been closed. That gives an increase in quarter one. It is getting divided into two parts. There is an increase in quarter one and there is a decrease in quarter two. Just to give an example for long products, not that it holds for all producers as yet, but some of the major producers have given an increase of INR 9,000 in quarter one and a drop of INR 4,000 in quarter two, which is in July-September. Quarter one pertains to the April-June. We are still in discussion with some of the auto majors to close these numbers. Some are already closed, some are in the process of getting closed. Okay. My question on the coal side was more on power cost. I think on the thermal coal side. The increase in power cost that we have seen will it sort of stabilize here or come up? How do you see it? It will moderate, because we are using a mix of different coals as well, so the power cost will also moderate. Okay. Thanks. That's all from my side. Thank you. Thank you. Our next question comes from the line of Satyadeep Jain with Ambit Capital. Please go ahead. Hi. Good evening. Thank you for the opportunity. First question is on CapEx. I think recently you indicated increase in CapEx in Vijayanagar. With the recent moderation in commodity inflation and stuff, is there possibility of that being revised down or have you already placed an equipment order? How does the next budget for the next three years, how would you look at the CapEx for the next three years after INR 15,000 crore of CapEx this year? That's the first question. We have to look at maybe medium term when we are committing capital expenditure, as per our strategic plan. India, we are very optimistic with regard to the overall building infrastructure and also other sectors of the economy. Either you take auto or you take packaging industry or the renewable industry, appliances. They all have lot of big potential. Whereas there are very few players in India who are capable of creating new capacity. That is why we are not changing our plans on the CapEx for expanding our capacity by 7.5 million tons at Vijayanagar, and expanding capacity at Bhushan Power and Steel to FIVE million tons. They are on track. We already placed orders. Project work is in full swing in the pipeline. Only what we have reviewed, the capital expenditure is relating to special projects, other discretionary projects. Our view on the outlook for growth is still demand in India. It remains intact. Excellent. What would be the CapEx, so you're looking at INR 15,000 crore this year? Are you still maintaining that INR 48,000 crore of CapEx guidance as we sit here today for the next three years? Only this INR 5,000 we have put it on hold. INR 48,000 remains for the next three years. As and when situation improves, this INR 5,000 crores will take effect. Okay. Secondly, on the entire decarbonization CapEx you indicated, I think INR 10,000 crore of CapEx, including 1 GW of renewable energy. What is the remaining CapEx that you would expect to be incurred in the INR 10,000 crores? Is there opportunity to add more WHRS in the existing units? I think in the upcoming plant you're looking at WHRS. Is there potential to capture more of waste heat from CDQ and stuff in the existing plants that you have? No, we already have two plants using the coke oven gas and the other heat at Jharsuguda. That is 175 MW one unit, just commissioned a few days back. There's another 75, 70? 60. 60 MW is one more plant, which will get commissioned by September. This 170 plus 60 is 230 MW at Jharsuguda, is majorly to use the heat and the gas that would come in the process. The way we are working as a part of decarbonization is for reducing carbon emission is to replace our entire coal-based power plants with renewable. We are in the direction with 958 MW we have signed with JSW Energy, 225 already started. Balance will start in this financial year. Over and above that, we are also looking at seriously to commit for more renewable power in future and replace the existing fossil fuel-based power. In addition to capturing the fuel, the heat and the gases that are there in the process to generate power. Okay. Thank you. Thank you. Our next question comes from the line of Prashant Kumar with Dolat Capital. Please go ahead. Sir. Thanks for the opportunity and, congrats for good results in a very, very challenging quarter. Adjusted for one-off with, the results are clearly, not that bad. Sir, my question is, Jayant sir has just touched upon the topic of export duty, and it may be removed, et cetera. There are some unanswered questions, sir. Now, that have been, you know, lingering in our minds. It's been two months that the export duty was imposed on and the restrictions were imposed on our sector, sir. If we just look at the rationale and the logic, there are four or five areas which are really contrasting, to the actual, logic. They're not logic, it's not logical actually. The first one is the steel industry as a whole is very, very challenging industry. That's why the market as a whole also thinks it's very low valuation. For example, if you take the Grasim versus the market cap, we get 1x. Versus various other sectors it's 10, 15, 20x. That is a very challenging space. Market is right. The second one is, sir, there are many, many sectors and many of hundreds of smaller and larger companies also, which sell branded products and where when raw material prices increase, they increase the price of the end product. When raw material prices decrease, they don't commensurately decrease the price, of course. The prices remain for a significant amount of time and it pinch the retail, sir. Third one, sir. There are some impression management influences like your management that probably other sectors are able to do well and we are not able to manage probably. Because we see recently when on the oil and gas sector there was this cess, et cetera, imposed, many market participants, veterans came out and said this is a bad move. It will spoil the impression of the country, et cetera. When it came to steel, when the duties were imposed, everyone said, "Yes, it's a good move. It's a good move. Prices will decrease." Even we are a private sector driven enterprise, private capital. Why this entire anomaly? In just 15 days when crude prices fell from this 5.5 times percent, the cess was over. Yes, agreed export duty and this cess are not similar in nature. One is based on production, one is based on just the restriction. Prashant, sorry to disturb. Can you please come to your question, please? Sure. Yes, yes. Finishing that. Hence, what we can say is, my view is that the prism lens used to evaluate the steel sector is not uniform and is not comparable to what is being used for other sectors, sir. With huge respect and regard for the honorable FM, et cetera, ministry and government, why this stepmotherly treatment with steel, sir? No, it's Prashant, thank you very much for pointing out this. As an industry, what we can do is to bring the facts to the attention of the government and seek their intervention to ensure that fairness is there. We as an industry, through Indian Steel Association, represented to the government. We appreciate the step of the government to impose export duty not only on steel and several similar items for certain restrictions with the noble objective of reining in inflation. Last time, 2008 also they have done, and they removed the duty within a short period of time. Our view is that it's a very short-term measure. Government of India is watching, and they will take a positive call on this very shortly. That is what we feel. We have made enough representations to the government. Okay, sir. Understood, sir. Thank you. My second question is to Mr. Jayant Acharya. Sir, assuming the steel prices hold where they are, the domestic HRC rebar and the export HRC, et cetera, and for the rest of the couple of months in the quarter, the realization dip QoQ, what is best to expect, sir? Does it come to about INR 12-INR 13 thousand or more or less, sir? The realization? Sorry, come again. The realization dip between Q2 and Q1. Assuming the steel prices hold at this level now, what they are now, for example, INR 58,000-INR 59,000 HRC rebar and $660 export. The realization decline QoQ is 13,000, 12,000, 13,000 a decent number to work with, sir? No, it'll be difficult for us to quantify that. I think directionally the quarter one to quarter two, the prices will be lower because the price drops have happened between April to May to June. As I said, June to July, it's only marginal change. Therefore, yes, quarter two average will be certainly lower than quarter one. I will not be able to give you a number as to how much that will be, because it will also depend on a mix of things. Thank you. Our next question comes from the line of Sumangal Nevatia with Kotak Securities. Please go ahead. Hi. Thanks. Sir, just one clarification. You said July NSR is very similar to June. Is it possible to share how July NSR with respect to 1Q as an average? You know, we don't usually give NSR numbers. Difficult to give you a number right now because today there are various moving parts. What we are trying to do, I can tell you, is that we are trying to increase our domestic in the interim. What you will see is more of domestic volume and less of export in the short term. Our focus is to see that our value-added steel focus continues. Our value-added sales continue to be promoted. We continue to look at our branded portfolio and you know, concentrate on sales of that. That to some extent will reflect. We also see good movement in the automotive. As we said, the automotive demand is quite positive. We see a good traction in underlying demand in most of the products and most of the sectors. Demand perspective, I think we are cautiously optimistic for this quarter. Therefore, the domestic part, since the channel inventory is very low, the domestic component of the sale will be able to make up some part of the loss in exports. Since the export prices are also internationally, as we discussed, have gone down, therefore, to some extent it will offset, you know, on a mixed basis, some of the drop which has been there between quarter one and quarter two. I would be more cautious to say that yes, volume part we are more optimistic. Margin part, I would say that the situation improvement we will see once the cost comes down from October onwards. Understood. Sir, my second question is with respect to the coated business. Now, the margins there have been quite volatile in the last many quarters, from up to 10,000 INR to now a loss. I believe this quarter there will be some one-offs in that business as well. I mean from a value addition and from a long term, given the amount of value addition we have and the downstream units we have, I mean what sort of mid-cycle margin one should assume, in this division? The EBITDA impact on coated which you see is primarily on account of NRV provision, which is basically on higher cost of inventory which they are holding. Which basically is a mark to market which is being done. We feel that going forward, coated margins also will improve, not to the levels which we have seen last year because of, you know, a higher level international price. It would go back to maybe earlier numbers, which have been prevalent in the coated space. Understood. One just last clarification. I mean what sort of inventory days do we have for the coking coal? Seshagiri Rao explained that two-month lag on the IBM price for iron ore premium. Is it provisional payment where once the say for example, May, June IBM price is updated, the payment is reversed or adjusted for future payments? Or is it a permanent payment and there is a permanent two-month lag? On coking coal, we have around 60 days of inventory. Coming back to the IBM question. In the case of royalty payment, the procedure is the same as and when dispatches happen. Royalty is payable depending upon the last declared IBM price. When IBM declares the price for the month of dispatch, there is a provision in the mining rule that it will get adjusted, either upwards or downwards. A similar rule is not there in the case of premium. Therefore, there is a gray area where some clarifications are being sought from the government. I hope this will be put to rest. Understood. Okay. Thank you so much, and all the best. Thank you. Our next question comes from the line of Ritesh Shah with Investec Capital. Please go ahead. Hi, sir. Thanks for the opportunity. Two quick questions. Recent months we indicated Chinese exports have actually increased on a monthly basis on a quarter-over-quarter. How do we see the trends over here? That's one. Secondly, any hopes of further stimulus or policy action from China which can actually improve the sentiment? We were not able to hear the first question very clearly. The second question I'll answer first. Maybe you can repeat the first question. Second question, yeah, China is providing, the government is providing stimulus to drive the economic activity upwards, especially post the real estate challenges which they are facing and the COVID lockdowns which continue to be a challenge. So we do see that some impact of that stimulus will be seen in the short term. As far as your first question is concerned, if you could kindly repeat that. Sir, I referred to the Chinese steel export volumes which have actually bumped up. How do you see the trend over here? Also if you can give some flavor that you indicated that global steel trade patterns have actually changed. Chinese exports have moved up to close to 7.7 million tons in the last two months. That is also primarily impact of the COVID lockdowns and therefore impact consumption in the domestic market. Manufacturing as well as real estate, which, you know, consumed a lot of amount of steel. Going forward, if the COVID restrictions ease and the stimulus takes effect, we feel that the exports may moderate somewhat. We'll have to watch that space because China remains unpredictable. We'll have to watch and see how that thing moves. Just to add to the point, if I just take the Chinese apparent consumption in the Q2, it was higher by 13% over Q1. In spite of that, their exports went up. That means they produced more. 96 million tons they produced in the month of May. There is a moderation in the month of June, already came down to 90. The expectation is, one, stimulus increasing the domestic demand. Number two is adjusting the steel production in line with the local demand instead of relying on exports. These two things together, I feel exports will get moderated from China. They've also declared that they would like to maintain their production at the level of last year. Correct. If you see that and the run rate required, it seems that the production will get moderated to 2.75 million per day from the three million-plus levels which are going on today. Sure. That's very helpful. My second question is, we called out for third expansion potentially into Q3. We also indicated the coking coal cost decline which can happen in the next quarter. My question is basically how should one look at local pricing, factoring in import parity math and then secondly, would it be even fair to look at it on export parity basis? Just trying to get some sense, given we have called out for coking coal, what else, how should one understand the local pricing? Export parity pricing, no, that usually doesn't get. The norm is basically based on import. Import, the depreciation of the rupee and the volatility in the general import is also, you know, making many customers hesitate to go too much into the international market. I would say import, you will have to use your numbers based on import plus a certain premium which the domestic customers will be willing to pay. Sure. Thank you so much. Thank you. Ladies and gentlemen, we request participants to limit their questions to two questions per participant. Our next question comes from the line of Alexandra Symeonidi with William Blair. Please go ahead. Hi. Thank you for the opportunity to ask questions. I wanted to understand how you think of dividends this year, given that you're facing higher costs and a bit of margin contraction as well. Thank you. We have already communicated our dividend policy. It is 15%-20% of the consolidated net profit. As the company has done extremely well in last three years, the board has taken a decision for the approval of the shareholders, which got approved, that in upper end of the range, we declared last year 20%. This we have been consistently following. In the future we will follow a similar policy, 15%-20% of consolidated net profit. Okay. This year you plan to pay about 20% as well. Is this correct? No, I'm not saying 20. This is a range. 15% minimum, 20% is outer limit. Within that range, board and shareholders will take a call. In the last year it was 20%, but this year, based on the profitability and the cash flow requirements, board again will take a call in this range. 15 minimum, 20% is the upper. Okay, thank you. Thank you. Our next question comes from the line of Bhavin Chheda with Enam Holdings. Please go ahead. Oh, yeah. Good evening, sir. First question on these overseas operations. There's a plate mill and pipe mill is seeing very good traction of late. Is that sustainable going forward? For the U.S. operations, the plate mill in Baytown is doing quite well. The demand pattern on the plate side is positive. While on the coil side, you may have seen that the prices have corrected. There has also been, you know, destocking which has happened in the U.S. as well. Going forward, the gap between coil and plate which exists today may correct. It may not remain at this level. Currently, the plate prices are at $1,800+ per short ton, whereas coil prices are in the range of 50% of that. There will be some correction on the plate. The demand on the plate side we feel is going to be positive, especially the transition to renewables calls for a lot of plate, especially in the wind sector. The barge requirements, the infrastructure requirements also are consuming plates. Given the fact that Russia and Ukraine were plate exporters and that is out of the market, we feel from a demand perspective plate will continue to be better than the coil in the US operations. Yeah. Second on the, particularly the power and fuel cost, which has seen sharp escalation. I'm assuming a majority of this is also an impact of the gas consumption cost at Dolvi operations, because that, I think, gets accounted in power and fuel, because I believe coking coal gets covered in the raw material head. This power and fuel spurt, is it driven by gas consumption cost? Yes, that's correct. Obviously that's the formula base, so that is not coming down in the immediate term till the crude prices go down sharply. It depends upon index, like gas index. There are two, three gas indexes there. We have contracts, some are linked to JKM and the balance are linked to Henry Hub. Based on that, it goes on changing. All right. One last question, sir. Operator, if for any follow-up questions. Okay. I'll come back. Thank you. Thank you. Our next question comes from the line of Love Sharma from Lombard Odier Investment Managers. Please go ahead. Hi. Thanks. Thanks for this call. Just wanted to understand a few things. From the given that the margins are likely to remain subdued currently for this quarter and next quarter. In terms of the deleveraging, given the debt build-up has been quite significant due to the CapEx and the growth which the company has seen over the last few years, could you share any thoughts around how the cash flows could be managed to ensure there is some deleveraging which we could see going forward? If you see the total increase in debt, I tried to do the breakdown, the reasons for increasing the debt. Out of INR 10,500 crore increase in the debt, INR 6,800 crore is only on account of inventory addition. This is possible to bring back the cash flow into the business and reduce the debt during this financial year. INR 1,400 crores is only on account of exchange rate translation. Twelve hundred crores against INR 3,700 crores of CapEx we have incurred is the incremental debt which has come in as a part of this INR 10,500. If you take that into account and considering the financial year's balance nine months performance, we don't expect the debt to go up. By end of this financial year it will be lower than what you are seeing in budget quarter. Understood. Okay. Should we expect it should be stable to FY 22 number? Our effort is not to increase FY 2022, but this is an acquisition which has come in the last quarter. Our effort is to bring down the debt to FY 2022 numbers. Okay. Can you tell me the acceptances, how much of the acceptance is outstanding currently? You see, I have given the number already. We have INR 2.7 billion acceptances on revenue account and INR 13 million, 1.3, CapEx. Okay. Understood. Thank you. Mr. Sharma, for any follow-up questions, please come back in the queue afresh. Sure, sure. Thank you. Our next question comes from the line of Amit Murarka with Axis Capital. Please go ahead. Yeah. Hi, thanks for the opportunity. First question is on exports. Like, my understanding is that there's about 1.5-2 months lag in executing the export orders. Is it fair to say that on the export side, whatever you do in Q2, at least, where the hit will come of lower prices and Q1 has not seen the hit of lower prices on exports? The export orders, which have been there, carried forward from April, May, I think, have all got executed. Whatever orders are now being taken are orders taken in month of June, let's say, for execution in July. You would see whatever volumes you will see of exports now will be current order based. Yeah. Also just on the duties, you mentioned that it's unviable now to export, which is understandable, but semis are exempt from duty. Like, does it not make sense to try to do some semis exports to the extent you can? Yes, we are doing some semis export in this quarter. Some in the special grades and some of the semi exports to our facility in Italy as well. Right. What happens to the DFCCIL order under the long-term contract like? Mr. Murarka, sorry to interrupt. This is the operator. For any follow-up questions, please join the queue afresh. Okay, sure. Thank you. We move on to our next question. Yes, thank you. The next question comes from the line of Kamlesh Bagmar with Prabhudas Lilladher Pvt Ltd. Please go ahead. Yeah. Thanks for the opportunity and good performance in this quarter. One question on the part of your remarks. Like, how much was the like export duty NRV provision and FX-based fluctuations in standalone and subsidiary? NRV provision in the standalone is INR 787 crores, and in the consolidated, INR 813 crores. Forex fluctuation in the standalone account is INR 598 crores. In the consolidation, it's INR 747 crores. Export duty in the standalone is INR 136 crores. In the consolidated, it is INR 242 crores. Okay. Thanks for that. Second question on the part of steel prices, like, say, the way the coking coal prices have fallen. Does government want any assurances on the part that over a period of time as the cost has come down, so the prices or the steel prices should also be at a level significantly lower than the current what they are trading at or earning at? I think the way you have to see is that the steel prices have come down by more than 20% from the levels which it was, let's say, beginning April. Number two is that the prices currently of steel prices which you see are lower than what it was one year back. Therefore, we are saying that given the fact that the coking coal prices still are higher, even after dropping vis-a-vis the last year, we feel that by and large, steel prices will remain range bound. There is not too much scope for prices to further correct. For the steel prices are determined, and I don't think it will be controlled. What Government today has done, as I mentioned in my opening remarks, we only need to contain inflation, therefore temporarily the duty. The duty will go away. I don't think government will ask the companies how to fix the steel price. Got it. Thanks a lot. Thank you. Our next question comes from the line of Anuj Singla with Bank of America. Please go ahead. Thank you very much for the opportunity, sir. Just one question on the mix between domestic and exports. Given the export duty, what are we targeting for second quarter, and what can we look forward to in case the export duty is removed in the second half, which you are expecting? What can we see the whole mix for the full year? The export proportion, if you see it varied in our company from 12% to 30%, that is the range. Last quarter it was 20%. Depending upon the pickup in the domestic market, which we expect it will revive in this quarter, we will be in that range, 12-30. We're not able to say today, okay, we will do definitely 20. We're not ruling out zero to all. Okay. 12% is the minimum benchmark there. Yes. The second question, sir, with regards to the maintenance shutdowns which you have taken at the various facilities. Given that second quarter is typically a seasonally weak quarter, do you think a reversal of that is quite likely in this quarter, or that can extend into the second half as well? The way that we start the maintenance of company daily, we could continue as long as the cost structure is still high. In the case of Bhushan Power and Steel, in fact, the expansion to 3.5 million ton is getting completed in this quarter. At Vijayanagar and Dolvi, we'll just watch the market, and if something can be postponed, fortunately we will see if markets don't recover. Otherwise, there's no plan to postpone anything. We would like to continue the production as we have planned. Okay. Thank you very much, sir. Thank you. Our next question comes from the line of Abhiram Iyer with Deutsche Bank AG. Please go ahead. Yes, sir. Thank you for taking my questions. The first question that I had was on the revenue acceptances. So this has increased significantly into Q1. Any particular reasons for this, and is this expected to correct? Because these are treated as sort of debt-like instruments by your rating agencies, right? Your external rating agencies. The second question, just as a follow-up, is in case you're seeing Forex sort of blow up, especially considering a significant portion of your debt is in U.S. denominated bonds. Is there any plan for the company to sort of repurchase or, you know, buy back some of these bonds in the market? Sir, the acceptance increase is concerned is usually attributable for increase in coal price. Coal prices, which used to be $100, we bought at $650 per ton. The acceptance rates have gone up. Now that coal prices got corrected, it will also come down in the next six months' time. As regards to buying of bond is concerned, we continue to watch the situation and then take a call on that. As on date, we have to work within the RBI guidelines. If you want to buy back the new loan which we are raising, it should be lower than what you had earlier raised that is getting retired. The new loan should have a maturity longer than the loan getting retired. It's very difficult to comply with these two conditions. Therefore, we have to watch the situation and then take a call. Got it, sir. Sorry, just a follow-up on that revenue acceptances, and you mentioned it. This will correct down, as you mentioned, within the next six months, as coking coal goes from $650 to less than $400 that it is right now. That's correct. Today 2:30, we must cut 400. Got it, sir. Thank you very much. Thank you. Our next question comes from the line of Ashish Kejriwal with Centrum Broking. Please go ahead. Hi. Thanks for the opportunity. Two questions. One is about coking coal average price to be lower by $50-$60 in Q2. Is it possible to share how much is the spot coking coal price versus quarter one average? How much lower? Coking coal. The quarter one average, as we said, is about $421. CNF. CNF India. The spot, as Mr. Rao just told you, is today, as we speak, $230 for PSV FOB Australia. But four twenty-one and two thirty different- Not comparable. because we have to buy Comparable numbers. Is it possible to share? Sorry? The comparable numbers to 421. We've already given it by saying $50 will be reduced. 421 - 50. Yeah. Correct. You take $50 from $421. No. $50 you were talking about for second quarter average because of our low ordering at the spot ton versus first quarter. How much it can be lower? Can it be lower by, you know, more than $150 or, you know, how it is? Just to clarify what we have said, the whatever has gone into consumption in the Q1 was $421 CNF. Yeah. Whereas in the Q2, we are guiding that this cost will come down by $50. That means $421 - $50. Whatever we are buying now or in the next two months, that average cost will come as a consumption in the following quarter. The next time when we have a call, we will tell you that. It is very difficult for us. In the next two months, how the coking coal prices will move. The second question is, what we have been hearing is that lots of cheap imports from Russia is coming and, which is going to arrive at our port, in September, which is around INR 51,000-INR 52,000 per ton. Considering that our export duty is still revised and it's not profitable to export and cheap Russian imports are coming at much lower than what the current price is, what are our thought process for going forward for our domestic steel prices in September? Actually, the way you have to see the Russian cargos is that there are five cargos which were booked in India from Russia. They range from INR 61,000 down to maybe 51, what you said. But that's not the average. The duty also will be applicable on imports of Russian arrivals. On an average basis, if you were to look at INR 55,000 and on top of that duty, you will not be too far from the domestic numbers. Okay. Yeah. Thank you for the clarification. Thank you. Ladies and gentlemen, that was the last question for today. Now I hand the conference back over to the management for closing comments. What we can say at the end is that in the quarter two, we feel that the domestic demand will recover. Already we are seeing increasing inquiries from various end users. Domestic volumes will be robust relating to what we have seen in the Q1. Number two is input prices are coming down, either coking coal or the iron ore, so that benefit also will come. The third point is whatever guidance we have given of 24 million tons of total steel production and 24 million tons of total steel by consolidated basis, notwithstanding a slightly lower sale in the Q1, we will be able to achieve this guidance. With that, thank you very much. Thanks for joining us. Please feel free to reach out if you have any further questions. Thank you. Thank you. On behalf of JSW Steel Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.