Good day, and welcome to JSW Steel Limited Q1 FY 2024 Earnings Conference Call. 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 this conference call, please signal an operator by pressing star zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashwin Bajaj, Group Head Investor Relations, JSW Steel. Thank you, and over to you, sir. Yeah. Thank you, Nirav, and apologies for the delay in starting the call. It's a pleasure to welcome you to our earnings call for Q1 FY2024. We had a board meeting for this quarter in Japan, hence we have with us today the management team joining us from there. We have Mr. Jayant Acharya, Joint Managing Director & CEO, Mr. G.S. Rathore, Chief Operating Officer, and Mr. Rajiv Pai, CFO. We'll start with opening remarks by Mr. Acharya. Then we'll open the floor to Q&A. With that, over to you, Mr. Acharya. Yes, good evening, everyone. We welcome you all to JSW Steel's Quarter 1 FY24 results call. Apologies for the delay. We had some difficulties connecting. The macro environment globally has improved, as we can see from the pessimism, which we saw at the beginning of the calendar year. The economy has been more resilient than what was expected, especially in the developed world. We have seen the World Bank has upgraded the economic forecast by over 40 basis points. Declining inflation, lower commodity prices, and lower energy prices have supported the growth. There was an expectation that the growth would improve post-China reopening at the start of the year, that did not play out as was anticipated. However, there is some policy initiatives which is expected from the Chinese government, which should support domestic demand. Coming to India, the India story remains very robust. The strong momentum continues, driven by business and consumer sentiment. Both services and manufacturing are doing well, and we see inflation moderating. The manufacturing growth in India is benefiting not only from the manufacturing activities in India, but also from a supply chain realignment, which we see globally, which is favoring India. We see India becoming a preferred destination for investments and global capability centers. Growth is also very strongly supported by infrastructure and CapEx spend by the government of India, and that is providing the foundation for an overall economic activity improvement. Increasing FDI and FII flows is coming into India due to a very strong, positive India outlook going forward. If you look at the global steel and the Indian steel production and consumption, global steel production fell by about 10 million tons, approximately 1.2%, during the calendar year, January to May 2023. While China added production of 1.6%, which is about 7 million tons, the rest of the world decreased by 2.6%, which is basically about 17 million tons. The elevated production from China was unfortunately not supported by a domestic demand, which was initially expected at the beginning of the calendar year. The exports went up, and that remains one area of concern and monitorable for the global steel industry. Having said that, the Chinese side has given their intent, and they would like to cap the steel production to calendar year 2022 level, which would effectively mean that in second half of this year, the production will get moderated, and that would be a positive for the global steel industry at large. Indian steel production grew by 13% in FY 2023, which was a very strong number. In FY 2024, we have seen a growth of 10.2% in the demand to 30.3 million tons and 8.4% in crude steel production to 33.6 million tons. For the year FY24, we expect the steel demand to be in the range of 8%-9%, incrementally contributing to about 10-11 million tons to the demand, which should take the India demand to 130 million tons. India's rising CapEx and infra spend, as I just outlined, by the government of India, the acceleration in manufacturing, the trust on renewables and the general activity in terms of services and private consumption, augurs well for the growth of the steel demand in India. On the raw material side, we have seen that the coking coal prices, which had reached a high again in February and March, have moderated and are now moderating into our costs in Q2. However, the higher coking coal prices of February and March flowed into our quarter one cost. Going forward, the softer coking coal prices will moderate our costs in quarter two. Iron ore prices in India and internationally have not yet corrected in line with expectations of fall in the steel prices. We see some price corrections in India in the last quarter, but we feel that more correction would be coming in the coming months, and thereafter, the iron ore prices may remain range-bound. Steel prices have corrected and bottomed out, both internationally as well as in India, with the channel destocking more or less completed. If you were to look at the JSW Steel strategy, when we have created significant shareholder value in the past, with total shareholder return of 23% CAGR over the last five years and 32% over the past 10 years. Our strategic priorities, which you can refer on page six of the investor presentation, is to continue to create for our shareholders and all stakeholders, continued value. These include mainstreaming sustainability across the business, strategic growth with efficient capital allocation, cost leadership through resource optimization, and improved raw material security, enhanced value-added product portfolio with innovation and R&D, and being future-ready through technology and digitalization, and the last lever of a strong financial profile and credit ratings. JSW Steel is very well poised to be able to benefit from the India growth story. We have outlined our expansion plans in page seven of the investor presentation. Our ongoing expansion plans in India will take our capacity to 37 million tons by FY25, via brownfield capacity expansion at Vijayanagar, BPSL, and our expansions at JSW Steel Coated. Our next phase of expansion and vision to grow to 50 million tons remains intact. In the medium term, we expect to do our greenfield expansions at three sites at Vijayanagar, Dolvi, and Jharsuguda, which would be at low specific investment cost, and therefore would be very capital efficient. With our project execution capability, we continue to be able to generate superior shareholder returns. If you were to look at our results, at the backdrop of a higher cost flowing into this quarter, a globally challenging environment, supported by a good demand in India, JSW Steel has delivered a very good performance in quarter one. Our crude steel production, at 6.43 million, grew by 11%. Capacity utilization at our Indian operations was 92% during quarter one, despite planned maintenance shutdowns at few sites. JSW Steel's consolidated steel sales grew 27% YOY to 5.71 million tons. On quarter-on-quarter basis, our sales volume were down 13% on a very strong Q4 performance, where we liquidated a strong inventory. Our share of export during the quarter was 15%. We had the benefit of higher price export orders, which flowed into the Q1. We also got a good product mix and a geographical mix in Q1. Our value-added and special product component was 61%, which helped us to cushion the drop in steel prices. Additionally, we were able to mitigate some part of the coking coal cost increase, which went into Q1, into Q1. Our coking coal cost went up by $11 to $285, but we were able to mitigate this coal cost through a better blend and almost neutralize this. The value-added component of sales mix, better geographical mix, and better export realization, helped us to post better sales realization in the quarter, and mitigate some of the costs which took place primarily because of iron ore and some part because of the coal. Our sales to renewable solar and wind was up 34% YOY. Our painted sales grew by 42% YOY. Our branded sales grew by 47% YOY, and our coated product sales grew by 33% YOY. During Q1, our inventories went up by 330,000 tons. One, was due to general destocking and weather disruptions in Western India because of the cyclone towards the end of the quarter, which impacted our shipments and some part of the sales in the western part of India. We expect our inventories to reduce in the coming quarters, and we expect the steel prices to be stable as we have seen in the past few weeks on completion of the general destocking, which has already taken place. We therefore expect that the quarter two, we'll see a better demand going ahead. On financial performance, during quarter one, you would have seen the results. Our revenue from operations at INR 42,213 crore. Our operating EBITDA at INR 7,046 crore went up by 64%. EBITDA per ton at INR 12,345 was slightly better than INR 12,151 in quarter four. Our net profit at INR 2,428 crores was up 189% YOY. Net debt to EBITDA was better at 3.14 versus 3.2 in quarter twenty March 2023. Overseas operations have been better primarily on improved volumes. We have seen Baytown volumes go up. Baytown delivered a good EBITDA of close to $45 million. Ohio from a negative in quarter four of -$12 million, we are up to $2.6 million positive. Piombino, Italy, driven by good rail orders, has delivered strong volumes and an EBITDA of EUR 18.6 million. With this, the overseas operations have contributed to INR 570 crores to the overall EBITDA. We have got the necessary approvals for merging JISPL into the company, effect of which will come in Q2. The company has also completed the acquisition of National Steel and Agro Industries, and the merger of Vardhman and JVTPL into JSW Coated. Our expansion projects at Vijayanagar and BPSL are progressing well and are likely to be completed in this financial year. We have incurred a CapEx of INR 4,094 crores in the quarter. JSW Steel Coated has also commenced its production and commissioned the color-coated line in Rajpura of 0.25 million tons. This will further add to our value added portfolio. As a part of our strategy on decarbonization, we continue to make efforts to decarbonize through various levers. One of them being renewable energy, better energy efficiency, better process efficiencies, circularity in using scrap and any other kinds of waste, and the best available technologies. We would adopt the new upcoming technologies in hydrogen and carbon capture as the technology can be evolved and become commercially viable. However, as a part of this strategy, we will commence use of green hydrogen in our DRI unit in Vijayanagar on a small scale to see the efficacy and usability, so that it can be scaled up in future as it becomes commercially and financially viable. We have contracted with JSW Energy the supply of this green hydrogen to our Vijayanagar steel plant, and JSW Energy will be setting up a 3,800 tons per annum capacity green hydrogen using 25 megawatts of renewable energy. The project will be commissioned in the next 18-24 months. As we see, the Q2, I would like to mention that Q2 in India will see stronger volumes, aided also in the coming quarters by capacity ramp up at BPSL and liquidation of the inventories which we have added in Q1. Benefits of the lower coking coal will flow through in the coming quarter, in quarter two, and will offset the some of the price fall impact in the last quarter, which will flow into quarter two as well. We see some of the impacts of the global headwinds as a possible impact on our US operations, especially in Ohio. But in Baytown, we continue to expect to do well on improved volumes and demand led by the renewable sector. In Italy, we expect to do well in our operations in terms of volume, which is supported by good rail orders, both from the Italian government as well as from the export market. Therefore, going into the FY 2024 as a whole, we are confident that we'll be able to meet the guidance, both in terms of production and in terms of sales, which we have laid out for ourselves. We are happy to answer any questions. Just one small more update on the merger and acquisition. We have completed the acquisition of National Steel and Agro Industries in the quarter, and on receiving the approval, the resolution plan under IBC. This will further enhance our downstream capacities by 350,000 tons, and also will enhance our market presence in central India. We have merged the entities of Vardhman and Vallabh Tinplate with JSW Steel Coating. Our efforts to put all our coated business under JSW Coated is taking shape, giving further thrust to a focused value-added portfolio to JSW Steel. We look forward to any questions which you may have, and we'd be happy to answer the same. Thank you. Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question, may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A request to all the participants, please restrict to two questions per participant. If time permit, please come back in the question queue for a follow-up question. The first question is from the line of Amit Murarka from Axis Capital Limited. Please go ahead. Yeah, hi, good morning. Thanks for the opportunity. Just on realization, like, generally what we've seen is that the spot pricing have been falling, and in the context of realization for Q1 seems to have done well. How are we looking placed from Q2 on that front, and also some color on the auto contracts for Q2? The realizations, as we mentioned, have been supported by, you know, a better product mix and a geographical mix both in quarter one. Our value-added component sales grew by 32%, and as a percentage of total sales in quarter one were 61%, and that was supported. We also had export orders for February, March, which came into quarter one in terms of execution, which were at better prices, and that has also been supported. In spite of the price correction in the market, we were able to balance our overall product and geographical mix in a way that we had a marginally better NSR sales realization. The cost impact, to that extent, we could mitigate. Going forward into quarter two, as we said, the coking coal costs in quarter one went up by $11 to $285. We expect that the coking coal benefit of the lower coking coal prices will now flow into quarter two, which would give us a benefit of $45-$50 per ton, which would offset some of the price drops which have happened in quarter one, which will flow into quarter two. The volumes additionally in quarter two is expected to be better on one is on better demand as we see today. Although there is a monsoon impact, we look forward to better demand, we will also be able to liquidate some of the inventories which have been held up at the ports. Volume-wise, better. Cost benefit flowing in will offset the price corrections, which will flow into July, September quarter from quarter one. Could you give some NSR guidance, like, while you gave for coking coal, similarly, NSR, if you can? It's difficult to give an NSR guidance because markets will not be in our hands. I think it would be fair to say that the cost benefit of the lower coking coal prices and some impact of the recent iron ore price reductions would flow into our costs, and therefore reduce our costs in this quarter, and that would potentially help the margins. The margins should be range-bound. On an absolute number, things will improve since the volume is expected to be better. Sure. In terms of the power and fuel cost, generally, again, energy prices have fallen. Is there an expectation of, let's say, INR 500,000 drop in, on that front as well? Yes. Power and fuel cost is lower because of lower thermal coal prices and also natural gas prices. That's a basic driver of lower power and fuel cost during the current quarter. Okay. Okay, I'll come back in the future. Thank you. Next question is from the line of Alok Deora from Motilal Oswal. Please go ahead. Good afternoon. Just a couple of questions. First is on coking coal. I missed the numbers. This quarter, we are looking at around $45, $50 less than coking coal cost? Yeah. We expect that quarter two, the coking coal prices will be $45-$50 lower than quarter one. Sure. How much would be the impact of this, you know, the lower steel prices, which you mentioned with flow through in quarter two? That how much some quantification if you can provide there? I couldn't understand your question clearly. Can you repeat that a bit, please? Yeah, yeah. You mentioned that some of the the correction in the steel price will flow to quarter two, which had happened in quarter one, that will flow to quarter two. Just how much would that be? No, as we said, the $45-$50. Our quarter one coking coal was $285, which increased by $11. We expect on this $285, a drop of $45-$50 in quarter two, in coking coal. Sure. yeah, please. Sorry? Yeah, please go ahead. Yeah. That would positively impact our cost. Sure. Sir, this export of, you know, it's around 15% of the volume and, so this momentum in export will continue or, because the global demand scenario is slightly volatile, how do you see the exports proportion moving going ahead? We would say that exports at this level, by and large, would continue. I would say 15% plus minus a bit will be the exports. Maybe 12% to what we had, 12%-13%, which we had last year as a whole, has now slightly been at 15% because last year was primarily impacted by the export duty. As you are aware, JSW Steel has a wide range in terms of customers as well as geographies to which we export. Almost 100 country, 100 touch points, various product lines, which we do. We would like to continue to do our exports and maintain our presence. In the range of 15%, exports is something which we expect will be there. Sure, sir. I'll come back in the queue if I have more questions. Thank you, sir. Thank you. Next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Good afternoon. Thank you for the opportunity. The first question is on our long-term capacity potential, which we put on slide number seven. Sumangal, sorry to interrupt you. May I request you to speak a little louder, please? Yeah. Is it better? Yes. Okay. My first question is with respect to long-term capacity potential, which we've discussed on slide number seven. There, I mean, if you look at next six years, we are just talking about a potential of 13 million tons, which is just a 5% CAGR, and we've grown in the last decade much faster than that. Just want to understand that, why? On the right, on the same slide, we are talking about brownfield potential at each of our sites, so 5 million ton each, and also greenfield at Odisha. Why are we not including these capacity potential in our FY 2031 target of 50 million tons? Just want to understand what, how, if there's something I'm missing here. Our current capacity, as you are aware, is about 28 million tons in India. At Ohio, we have about 1.5 million tons of capacity in terms of crude steel production. We are adding 9 million tons of capacity in this remaining two years at FY25, which would take our capacity in India to 37 million tons by and large. We have a potential now to add in the medium term, by 2030-2031, capacities in our brownfield sites, which is at Vijayanagar, Dolvi, and Jharsuguda, which is at a low specific investment cost, and that's why we would like to focus on these first. We complete some of these, but we would start the greenfield growth maybe in some part in Odisha. The slurry pipeline is part of that. The slurry pipeline, work has already started, as we mentioned last time. There would be, as we get clearances for, the site, maybe the next step would be a pellet plant, and we will grow the Odisha site in a modular fashion. We continue to look for new opportunities like what we have taken up at an electric arc furnace at Kalinganagar in Andhra Pradesh, which will be a greener, lower emitting, carbon steel. We have divided this into phases in a way to make it more capital efficient. The first medium phase, as we call it, is 50 million tons. The greenfield site in Odisha will play out in a modular fashion, and we will continue to, you know, look at opportunities of completing these capacities and then taking up the next phase for the full greenfield expansion. Okay. So the part 150, the 50 figure is just through brownfield, right? That Odisha greenfield is not included in that. No, it's not included in that. Got that. Got that. One bookkeeping question, is it possible to share what is the acceptance number, both revenue and capital? What is the acceptance? The acceptances number. Acceptances? Yeah. Let me just see that. Acceptances, revenue acceptances, we have INR 2,610 million, INR 2.6 billion. CapEx acceptances are INR 207 million. Okay. Just to understand, as the coking coal prices are normalizing and correcting, should we expect this revenue acceptances to go down and consequently our debt levels to increase just because of this lower acceptances going into the future? Some part of the acceptances will go down because of the lower coking coal prices, but it will also result into an improved EBITDA. Net of that, we will have some reduction in acceptances, which might have an initial impact on the debt. Gotcha. Understood. Thank you, and all the best, sir. Thank you. Next question is from the line of Vivek from DSP Mutual Fund. Please go ahead. Sir, good afternoon. My question is on the inventories. You were talking about inventory destocking in India, and, you know, excess production in China, where the demand, local demand has not picked up. Do you see any? You are confident about the inventories picking up, sales picking up in this quarter. Do you see any signs of, you know, slowdown from Chinese production, which might help your exports? You know, what is the situation in the domestic market? That will also probably affect iron ore prices, if that logic flows right through. Is that, would, if you could give some color on that'll be useful. We are very positive about the India demand story. If you were to look at the infrastructure and construction growth, which is driven by CapEx, we are seeing growth in double digits in infrastructure, and construction growth is expected to be 5%-7%. Automotive growth is very healthy. We are seeing the engineering and packaging sector growth also in the range of 7%-8%. The energy transmission, as we discussed, renewables getting traction. We already have 176 gigawatts capacity, and 45 gigawatt of more capacity is likely to get added. The manufacturing intensity is going up. Our government initiatives announced on housing in urban and rural both are taking traction. The road projects, which are now getting completed, is very positive. Coastal roads as well as the road projects across the country. In the month of May, we have seen 50 kilometers a day, which is extremely positive. Not only will this add to the steel consumption, but it creates the, you know, much better infrastructure for general improvement in economic activity. The freight corridors are, you know, likely to add steel consumption. Metros, almost about 600 kilometers approved to start construction, 1,000 kilometers already under construction in various cities. We see good all around demand in India, and we are quite confident that the India story will still hold up. The risk side, as you also mentioned, is that a weaker China demand, which resulted in a higher export in quarter in the last half, in up to June, is something which we need to watch. We are expecting that the Chinese declaration of capping the steel production to calendar year 2022, will be a positive and therefore will reduce the production in H2, and that, in general, should be a positive for the global steel industry at large. Having said that also, we also see that the Chinese steel industry today, from a margin perspective, are quite thin, and therefore the price seems to have bottomed out in the global prices as well. Going forward, you know, we see that a lower raw material price would play in, and therefore it would generally support, you know, the steel margins going ahead. Excellent, sir. Sir, my last question is in terms of the balance CapEx for the year, how much would that be in terms of rupees crores? We have communicated, Indian assets plus overseas, about INR 20,000 crores spent for the year. For the first quarter, we incurred about INR 4,094. We are on track to spend the CapEx which we have committed at the beginning of the year. Okay, excellent, sir. Thank you very much, and good luck. Thank you. Next question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah, hi. Good afternoon again. Thanks for the opportunity. Congratulations for a good set of numbers. I have a couple of questions. I'm sorry to interrupt you. Can you please speak little louder? I have a couple of questions. The first one is on the production side. We mentioned that we had, in this quarter, in the quarter gone by, we had 92% capacity utilization mainly due to maintenance shutdown. I understand that there will be some restocking of inventory that will happen at our end. Are we planning to take any maintenance shutdown in Q2, and what could be the capacity utilization for India operations? Yeah, Mr. Rathore will answer. Yeah, see, in quarter one, we had 92% utilization because a lot of shutdowns were planned. The target for the year guidance is INR 26.34 million. We are very much on the target. The Q1, we have achieved 100% production target. The shutdowns were planned. you know, usually in the first quarter of the year, you have annual maintenance shutdowns. That was something which is a part of the process. We don't expect any undue shutdowns, which is other than planned, to impact our annual production. Therefore, we are quite confident that production numbers, which we have given in our guidance, will be achieved. Okay. The second question is more of a bookkeeping question: Is it possible to let us do the cash flow from operations in the quarter? Yeah. Can you repeat the question, please? Yeah, cash flow from operations for the quarter. Long-term surplus of INR 264 crores from the cash flow. What is the EBITDA? What we have got is an increment of INR 264 crores. Yes, sir, I couldn't hear you possibly, I mean, for the better part of your answer. Can you please repeat the answer? Our cash flow from the operations net of the long-term payments, like interest and taxes, et cetera, was INR 264 crores. INR 264 crore. After that, there was a CapEx of INR 4,040. No. Cash flow, net of interest, taxes, and CapEx. Oh, okay. Okay. This is free cash flow, more or less? Free cash flow. Okay. Thank you so much, sir, and all the best. Thank you. Next question is from the line of Pinakin Parekh from JP Morgan. Please go ahead. Yeah, thank you very much, sir. maybe you addressed this point at the beginning of the call, and I missed it. There has been news flow about JSW being an interested party in coking coal assets of Teck. Now, can you give us your longer-term view of how you see coking coal security, and whether your CapEx plan includes spending on coking coal acquisitions going forward? Our strategy for raw material security remains one of our strategic pillars. We will continue to look at iron ore security within, mostly within India. We are, we have just one, six iron ore mines in the different options, two in Karnataka, two in Goa, and two in Maharashtra. The mines in Karnataka and Goa, we expect to operationalize soon. The ones in Maharashtra will be prospective and exploration involved as well. That will take a little longer. We will continue to look at the options which come up for iron ore mines in areas which make strategic sense for us, and we'll continue to look for raw material security. As far as coking coal is concerned, we have one, two coking coal mines, which would give us 1 million ton of clean coking coal, which would be about 5%, 6% of our total requirement now. We will continue to look for some more assets which may come up in India. Additionally, we are looking at good quality assets internationally, which may be available at a valuation which will be commercially and financially viable. We continue to look for those strategic assets in Australia, Canada, and elsewhere. That, as soon as we have any information which we think we can share, we'll certainly come back to you. Sure, sir, that's very helpful. My second question is on realizations going forward. Now, as we look at it, JSW's realizations have effectively three components. One is the spot HRC steel price in India, the second is the contracts, and the third is the export prices and export volumes. Now, of these three components, we have a pretty good handle on domestic spot steel prices, which are broadly down around INR 4,000-5,000 from the peak. How much of this could be offset by any contractual price increases, especially in autos? How are the export prices and volumes trending? What we are trying to understand is that would the realizations decline mirror the large spot steel price decline, or should it be lower than the spot steel price decline? Sorry, could you repeat that last part? Spot steel price. The realization decline should be lower than the spot steel price decline that we have seen. Let me put it this way, that the steel prices have bottomed out. Whatever price corrections we see which had to happen, have happened between the April-June quarter and a little bit in the month beginning of July. This, which will flow into quarter two, will get offset by I think two factors. One is coking coal prices, which would flow in and benefit the cost. Some impact of better iron ore prices, which we expect in this quarter. Some of that has just recently been announced, which would, to some extent, come in in quarter two. The raw material cost benefit analysis, both for coal and iron ore, will come. On the NSR or on the price side, the automotive price contracts are under negotiation. Some of that will will be completed in this quarter. It would to some extent support the overall average price for the quarter. Understood. What we primarily see, therefore, the cost will probably offset whatever negative impact of prices, which will flow into quarter two. Understood. Thank you very much, sir. Thank you. Next question is from the line of Abraham Iyer from Deutsche Bank. Please go ahead. Hi. Just a quick question on the cash outflows that you mentioned. Now, given that your interest payments are around INR 1,900 crores, could you please let us know what the working capital outflow was? Was it significantly high, and is this expected to reverse course during the rest of the year? Because debt has remained flat, while there's a significant about INR 7,000 crores of cash flow that's gone out. Yeah. Investment in working capital was about INR 7,800 crores during the quarter. Got it. Is this level expected to reverse because of destocking, as you mentioned, activity going ahead during the second half of the year? Yeah. This consists of two parts. One thing is the postponement of sales because of channel destocking, plus exports impact because of cyclone and some general increase in the inventory. We expect this 330,000 tons increase in inventory and the sales deferral to get liquidated partly in Q2 and Q3. To that extent, we expect this working capital investment will come back. However, there would be some higher cost coking coal acceptances which will get paid off during the quarter. To some extent, it will get neutralized by increase in the debt by repayment of buyer's credits acceptances. Understood. Understood. Thanks for the update. I'll get back to you. Thank you. Next question is from the line of Indrajit from CLSA India. Please go ahead. Hi. Thank you for the opportunity. I have two questions. First, on coking coal, after the benefit in second quarter of $45-$50, would it reflect spot prices or could we see further benefit in third quarter as well, based on where prices are currently? The coking coal prices, as we see today, has been in the range of $230-$235 for the Australia for PLV. I think we are seeing this range going to maybe $220s and coming back to this range. We would say that coking coal may be range-bound in this situation. If that were to happen, I think by and large, you might see more or less the entire benefit play out in Q2. Very marginal impact, if it doesn't change further down, would go into Q3. Sure. This is helpful. Second, can you give us some idea about what is happening in the import market? Are you seeing somewhat of cheaper imports from China, some shipments being booked in India, or do you see some cheaper imports arriving on Indian shores over the next couple of months? Imports in this quarter, YOY have gone up, while it has gone down quarter-on-quarter, I think we would keep an eye on this. What we see today, however, is that the domestic price of steel and the international price of steel is not very far off. Therefore, the incentive to import for better prices, the propensity is less. People would not like to take a risk to import something when the price gap is low. Therefore, while we keep a watch, especially on the zero-duty imports, I think that imports also will moderate a bit given the price environment where the domestic market currently is. Sure. Thank you. That's all from my side. Thank you very much. Next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead. Hi, thank you. Two questions. One, on the longer-term capacity target of 50 million tons, on that, is there a thought behind what could be the long and flat mix? Could we see more long expansion in beyond the current stage expansion? Typically, historically, we've seen greenfield projects take 10 years, entail $1,000 plus per ton of capital cost. Has something changed in the past three years, or can we expect something similar for any greenfield CapEx? If I were to understand the question, are you asking the ratio between flat and long capacities? Some years actually. One is on that, the flat and long mix. Beyond the current state of expansion, which is largely flat, would you look at more long versus flat beyond this current phase of expansion? Eventually, when you look at greenfield, typically it involves a long gestation period, 10 years. Would you need to start putting capital to work now for that plant to commission, let's say, in 10 years from now and have $1,000 per ton capital cost? Has something changed in terms of gestation period for greenfield projects? From a flat to long percentage ratio, currently we are at about roughly 25% longs. As we go into our expansion up to 50 million, I think we will be in the range of 25% maybe to 30% longs within the 50 million ton, which we propose to have. Regarding the specific investment cost, you know, up to 50 million tons, as I said, our expansions of brownfield are at very specific, a low specific investment cost because some of the infrastructure and some of the facilities are already available in Vijayanagar and Dolvi, which we will be able to use. Therefore, the efficiency of capital allocation there is better. Our effort will be to complete those first. We will parallelly look at starting some part of our Jharsuguda expansion, which is also a brownfield expansion. The greenfield expansion is in some form already started with some investments which we are doing in mining and the slurry pipeline. The slurry pipeline, which is a 300 km slurry pipeline, is already on track. Basically, the expansions are going on. Investments have already been put on the ground, and pipes are being laid as we speak. That will be the first step. The second step in the greenfield steel plant will be to get the environmental clearances, which had come under some approval issue, which now have been cleared. From our side, the hearings have been completed, we expect that resolution to happen soon. Once that starts, we would be able to start the greenfield steel plant in a modular manner. Maybe we'll start with the pellet plant, and then we will look at one unit of 5 million tons to start with. That is, and scale it up to capacity over time. That is our plan. Our specific cost of investment for a greenfield steel plant, which you are talking about $1,000 per ton, which is some kind of a thumb rule. I think it'd be difficult to comment on that as of now, because costs two, three years down the line, we will not know. Only one thing we can say is that we have been more cost efficient in terms of our specific investment cost. We continue to hope to be more cost efficient even in our greenfield steel plant at Odisha. Okay. Second, question on the debt levels. We're sitting at INR 67,000 crore of net debt, and there are sizable acceptances right now. Including acceptances, we're looking at INR 90,000 crore odd leverage. I know, understand some of that may come off with lower prices and all. When you look at some acquisitions, whether it is inorganic in steel or coking coal assets, is there a leverage target you would have to not exceed, or maybe you would exceed the target, or maybe acquire the entity in a promoter entity, like you've done with some of the other assets, and then bring them on? What's the thought process behind maintaining that leverage and how you look at acquisitions? We have been communicating about our leverage policy, which is net debt to equity 1.75, and net debt to EBITDA 3.75. You would have observed that though the debt has gone up from March to June, our net debt EBITDA ratio has improved from 3.2 to 3.14. As a policy here, that we still have, is not following de-leveraging policy, who wants to participate into India growth story. As we add, the way we are currently adding 9 million tons capacity in this year, there will be some increase in the debt. That would be when we look at then ratio of net debt to EBITDA, that would be within our policy leverage ratios. We feel these ratios are reasonable. They have stood us good over the years in, including in terms of addressing any downturn which we have, which has happened in the past. We don't feel our absolute amount of net debt is the relevant number. What we would continuously get guided by the leverage ratios which we have communicated. Okay. Thank you. Just one more quick question, if I can squeeze. On carbon trading, there's a proposal in India for a proposal of carbon trading. Have you explored the possibility of maybe voluntarily buying carbon in India, and exporting under using that to export to Europe under CBAM? Is that possible, given we may have lower CO2 prices in India to start with? I think, from a CBAM perspective, I think we are still, the discussions, between various, you know, global partners are on. We feel that, the decarbonization is, a initiative which is common for the developed world and the developing world, but there are common but differentiated responsibilities. The developed world has, to shoulder more, since most of the emissions were, done by the, developed world over time. The developing world has just started, building their, economic, trajectory, and therefore, we feel that the, identified, path, the nationally determined contribution for each country, which is agreed in the Paris Agreement, should be honored. That, effort of discussion is on, and engagement with the European Union is going on. Having said that, I think, the energy trading, carbon trading system in Europe, to some extent, which is, which is there. In India also, we are looking at, carbon trading, systems which would come, and once that comes in, we will certainly look at, opportunities or ways to manage that, to offset, the impact of, the differential carbon. Additionally, I think our effort in the medium term, as I said, is to very, actively reduce, our carbon emissions, going forward. In the medium term, through five levers, as we said, one, through renewable energy. Already 1,000 megawatts is under construction to 25 is on in Vijayanagar. We will continue to look at additional renewable energies for all our locations to see that by 2030, our intent is to bring the thermal coal to as close to zero as possible. The second lever will be to improve our energy efficiencies within the system. Any waste heat, any better use of gases which we are able to do, we are putting in place various initiatives to make that happen. The third lever is the process efficiencies. We are using the resources better. Beneficiation technologies to use lesser resources for a better output of steel is being looked at. The fourth initiative is basically circularity in terms of internal scrap generation and any wastes which are getting generated, including recovery from tailings, are being looked at. The fifth is the best available technologies which would be available to, you know, for the decarbonization. These, in five steps in the medium term, are economically and commercially viable and feasible, and they would reduce the overall carbon emissions per ton of crude steel. We are focused on seeing that that happens. Finally, we are doing the trial with the first hydrogen plant, which we said we are taking up at Vijayanagar. We will see how the trial goes, and use that study to see how the hydrogen can be scaled up once the technology becomes more evolved and commercially viable. Okay, thank you so much. Wish you all the best. Thank you. Next question is from the line of Tarang Agrawal from Old Bridge Capital. Please, go ahead. Hi, good evening, thank you for your time. Just a couple of questions from my side. One, you know, if you look at the estimates of WSA for China, between the October 2022 estimate and April 2023 estimate, they're actually looking at about 25 million tons of additional demand kicking in from China. From whatever we've seen in the first half, things don't seem to be so rosy. Just wanted to get your perspective, because in your opening remarks, you spoke about certain policy initiatives. Standing now, how do you see that playing out? That's number one. The second is quite a few capacities coming in from the steel players starting from 2024, 2025. How do you see that impacting the price, especially for the flat segment? Third, you know, in the last interaction that India had with the US, there has been some amount of duty reduction that we've seen for steel and aluminum. Given the price differential between Indian prices and prices there, if one were to adjust for freight and if there are carbon taxes, it would still be lucrative to probably supply from here. Just wanted to get your view. First on the China side and the World Steel direction which they have given. World Steel expected that the China demand would go up by 18 million tons or so, and the rest of the world would go up by 23 million tons in this calendar year. While we feel that the rest of the world, you know, demand may still play out to be in that range, the China demand growth of 18 million tons will probably be lower. That is something which we need to factor in on the overall number. Our estimates are that the growth, instead of 40 million ton additional, which was given at about 2.3% growth, would be slightly lower because of the China demand situation. Having said that, it is good to see that in spite of an export from China, almost in the range of 44 million tons, which has happened in H1, the demand in the rest of the world has held up, and that grows to substantiate the fact that the rest of the world demand is able to, you know, grow well. The 23 million tons demand incrementally this year from the rest of the world will play out, and if the export from China reduces, with the reduction in production, then that would be a positive as we go into the second half. As far as your second question was concerned, I was not too clear, but I gathered that you said US, and India are discussing on certain duty relaxations for US, from India to US. Yes. That would open up some market. Is that what you asked? Yes, yes. Yeah. from what. Yes, please, yeah. If you could repeat, yeah. From what I understand is, I think there was an imposition of about 25% duty on aluminum and steel getting imported from India in 2018. Correct. There seems to be. Right. amount of relaxation coming in from there. The safeguard of 25%, which was imposed, is prevalent today as well. There was a discussion that certain lines and certain products they are looking at exempting. We would, you know, look forward to some direction and clarity on this once this is decided between both the countries. That would certainly be a positive and open up further avenues for trade with US, and it's certainly a positive to the market. Yes. Yes. Just to add on to this, I mean, typically, how much would be the logistics and carbon cost shipping from India to the US? If you were to have a full vessel, I think that the costs of logistics would be in the vicinity of $40-$45, I would guess. Okay. The cost of shipping is also going down. My guess would be around that much. I'll have to check latest number, but that should be the approximate cost. Sure, that's helpful. My last question was on, you know, the capacities coming in from various players. How do you see that impacting the prices for flats, especially? I would say that if you were to look at the medium-term capacities of flats which are coming up, they would be not as much. As a matter of fact, in the next year, FY 2025, I expect probably even if the capacity comes up from some of the competition, and our own capacity in JVML, we may have at the most anywhere between 10-12 million tons of capacity addition, which would come. However, the ramp-up takes time, therefore, if you were to look at a spread over two years, this capacity will get consumed in two years' time. I see the demand very much there. As we said, incremental demand every year is now at 10-11 million tons and maybe a little better. Therefore, if you were to take typically even half of that as flats, so your demand of 5-6 million tons of flat demand would be there, and that is what will get met. As a matter of fact, that capacity which is coming up will probably just be sufficient to meet the local domestic demand. Thank you, sir. With this capacity addition, I don't see a concern, as of now. Thank you very much. I now hand the conference over to the management for closing comments. Yeah, thank you, operator. Thank you, ladies and gentlemen, for joining us today, and please reach out if you have any further questions. Thank you. Thank you very much. Thank you very much. Just to sum up, I think, as we said, JSW in the quarter one has done quite well under the circumstances, being able to manage the margin almost equivalent to quarter one, quarter four. Going forward, we expect that we will be able to meet the guidance which we have given for production and sales both. We continue to be very optimistic about the India demand across sectors, and that will be very positive for our capacity expansions, which are in process, which will play out between the next one to 1.5 years of about 9 million tons. That, you know, would incrementally benefit the overall operations and performance of the company. We are very well placed to take advantage of the growing Indian market, and we continue to focus on our capacity growth, not only in terms of volume, but in terms of the overall product mix, and see that we have relevant product mix in our system, which is required, where there's a demand in the country. Thank you very much for your time, and any questions you might have our investor relations will be happy to clarify. Thank you very much again. Thank you. On behalf of JSW Steel Limited, that concludes this conference. Thank you for joining us. You may now disconnect.