Ladies and gentlemen, good day and welcome to the JSW Steel Limited Second Quarter 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 the call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashwin Bajaj, Group Head of Investor Relations, who will introduce the management and then take the call forward. Thank you, and over to you, sir. Very much. Good evening, ladies and gentlemen, this is Ashwin Bajaj, and it's a pleasure to welcome you to the JSW Steel earnings call for Q2 FY 2024. I hope you've had a chance to go through our results, posted a couple of hours back. We have with us today the management team, represented by Mr. Jayant Acharya, Joint Managing Director and CEO, Mr. G.S. Rathore, Chief Operating Officer, Mr. Rajeev Pai, CFO, and Mr. Swayam Saurabh, CFO Designate. We will start with opening remarks by Mr. Acharya and then open the floor to Q&A. With that, over to you, Mr. Acharya. Good evening, everyone. Thank you very much for joining us for the quarter two call today. In this backdrop, India continues to remain a bright spot, with strong economic momentum driven by both manufacturing and services. The government spend on infrastructure remains strong and is a primary driver, with specific focus on roads, railways, and various other sectors. Recent CRISIL report also indicate investments in infrastructure over 2024, FY 2024-2030, to be more than two times the spend over the previous seven years. In manufacturing, defense indigenization, the PLI scheme are driving CapEx. Energy transmission and investments in communication network are also large themes. With rising per capita income in India, consumption will continue to be a long-term theme. The rural economy is witnessing a gradual recovery, which is evident from the numbers which we see in the two-wheeler and FMCG sales data point. Going forward, with better connectivity in the rural with respect to road, electricity, water, and communication network, we will see a more inclusive growth, and that will propel per capita income in the rural hinterland, and we will see a strong consumption emanating out of the rural economy in this decade. The global economic slowdown and evolving geopolitics, as I said, remains a risk, especially from an energy price and inflation perspective. Global crude steel production saw a marginal growth of approximately 2.5 million tons during the period January to August. While China added 18 million tons of production, the rest of the world dropped by about 15 million during this time frame. More or less flattish is what we can say on the production side. However, if you look at the demand side, as per the latest report of Worldsteel, the global steel demand is growing by 32 million tons in 2023, in which China is growing by about 18 million tons, and the rest of the world is growing by about 12-14, 15 million tons. The rest of the world growth is incrementally, primarily coming from India, which is a good story, as we will discuss when we come to the India scenario. Despite the challenging macro environment, the steel demand globally remains resilient. In China, infrastructure and other steel-consuming sectors are offsetting the weakness of the property sector. In India, crude steel production grew by 13.1% year-over-year in H1 FY 2024 to 69.7 million tons, while apparent steel consumption grew at a robust 14.8% year-over-year to 64 million tons in H1. For FY 2024, we expect steel demand growth in double digits. This is driven again by a very strong government CapEx, pickup in manufacturing, and with a strong demand from residential, real estate, auto sector, and consumption in general. India steel imports also has grown, which is by 23% year-over-year during H1 FY 2024 to 3.4 million tons. Imports into India are rising and hence remains an area which we need to watch out for. Given the strong rate of growth of 8%-10%, which is possible on a larger base, we are looking at about India needing incrementally between 10 million-12 million tons of steel every year. To service this strong demand, we will need to add capacity in India, which JSW Steel is looking at. JSW Steel is currently adding 8.5 million tons of capacity over the next one and a half years, and we will reach a capacity of 37 million tons by 2025. We also have plans to add incremental capacity to reach 50 million tons by the end of this decade through brownfield expansions at low specific investment cost. Our current growth pipeline to reach 37 million tons, accompanied by downstream and cost reduction projects, entails a CapEx of INR 52,000 crore until FY 2026. We expect to fund this through internal accruals for the most part, while keeping our balance sheet robust. We will continue to ensure that our growth remains capital efficient at low CapEx per ton, which, combined with our efficient project execution, will continue to generate superior shareholder returns. Before I move to our performance for the quarter, I would like to mention that the merger of JSW Ispat Special Products, or JISPL, has been completed during the quarter at the end of July. As you are aware, JISPL was a joint control entity with associate accounting treatment prior to the merger. With effect from August 1st, JISPL numbers have been consolidated with JSW Steel. Hence, the Q2 numbers have August and September consolidated for JISPL, while July was associate accounting. Please note that previous periods have not been restated. JSW Steel's consolidated group steel production stood at 6.34 million tons during quarter two F.Y. 2024, and grew 12% YOY. The QoQ decline of 1% is attributed to maintenance shutdowns at India operations and lower utilization in Ohio operations due to market conditions in USA. JSW Steel's consolidated sales grew 10% YOY to 6.34 million tons, and on a QoQ basis, grew by 11%. This was driven by a strong growth of 18% in our domestic sales in India. Our share of exports during this quarter was rebalanced to 11%, given global headwinds. Most importantly, I think, you know, we are happy to note that the share of value-added and special products, which we have been focusing on, has increased to 62% during this quarter. Additionally, during quarter two FY 2024, our sales to the auto sector were up 4% YoY and 11% quarter-over-quarter. Appliance sector grew by 37% YoY and 14% quarter-over-quarter, while sales to renewable, that is solar and wind, grew 34% YoY and 125% quarter-over-quarter. Our branded sales grew by% YoY and 16% quarter-over-quarter, and the overall coated product sales grew by 29% YoY and 17% quarter-over-quarter. Overall, during the quarter two FY 2024, we have been able to deliver strong sales performance driven by volume, supported by a strong domestic demand, improvement in the sales mix and the product mix through VASP. We have also liquidated inventories of about 300,000 tons, which we had increased in the quarter one. We remain on track to achieve our production and sales guidance for FY 2024. The financial performance has been strong. On a consolidated basis in quarter two FY 2024, our revenues from operations were INR 44,584 crore, up 5.6% quarter-over-quarter. The operating EBITDA was INR 7,886 crore, up 11.9% quarter-over-quarter, with an EBITDA margin of 17.7%. Our EBITDA per ton on a consolidated basis stood at INR 12,436 per ton. The profit after tax for the quarter was 2,773, INR 2,773 crore, after incorporating the financials of subsidiaries, joint ventures, and associates. Our overseas operations in Q2 were impacted by global headwinds, falling prices, and the holiday season. For quarter three FY 2023, we expect the performance at the India operations to remain stable. However, the Ohio operations will see impact of weaker market conditions, but it is expected to be better than quarter two, 2024. Italy performance will remain range-bound in quarter three and going into H2 of FY 2024. While there was a fall in steel prices in quarter one in India, which flowed into quarter two, it was offset by improved domestic prices during August and September. The positive impact of this price movement will flow into quarter three of FY 2024. Against the guidance of a $45-$50 per ton decrease in coking coal costs for quarter two, the coking coal costs fell by $54 to $231 CFR through a better blend mix. Coking coal prices have increased in the last month or two, and this will flow partly into quarter three and partly into quarter four of this year. For quarter three, coking coal, in fact, is likely to be about $30 on an average, maybe slightly lower due to blending benefits. We feel the current elevated coking coal prices are not sustainable. They've gone up sharply and is expected to moderate. We have seen some moderation in the last few days. Iron ore prices have also seen some increase in September and October, which will flow into our costs. Global steel prices have largely bottomed out, and we are likely to see some uptick, reflecting the increase in raw material costs. Our net debt stands at INR 69,195 crore, up by INR 2,398 crore as compared to 30th June 2023. Largely driven by the consolidation of net debt of about INR 2,200 crore due to the JSW merger. This was offset by healthy cash generation and working capital management. Importantly, our leverage ratio in net debt to EBITDA fell sharply to 2.52 from 3.14 at the end of last quarter. Our net debt to equity stood at 0.92, also lower sequentially. The net gearing and leverage are well within stated caps of 1.75 and 3.75 respectively. At the end of quarter two, revenue acceptances stood at $2.15 billion, and capital acceptances stood at $227 million. On the project side, we are on track for the brownfield expansion at Vizag of 5 million tons. It's progressing well, and we expect most of the facilities to get completed by end of FY 2024. The BPSL phase two expansion from 3.5 million-5 million also remains on track for completion during this financial year, the benefit of which should start flowing in in the last quarter of this year. The company's CapEx spend during Quarter two was INR 3,700 crore and consolidated was INR 3,816 crore. During H1, the CapEx spend in India was INR 7,795 crore and consolidated CapEx was INR 7,996 crore, against the planned CapEx of INR 18,800 crore in India, and overall, CapEx spend of INR 20,000 crore including international. We will continue to focus on our CapEx to see that we deliver the projects which we have envisaged on time. We are also focused on increasing our raw material security for our steelmaking operations. We currently operate four iron ore mines in Odisha and nine mines in Karnataka. Further, we have won seven more mines across Karnataka, Goa and Maharashtra. We will continue to participate in the upcoming mine auctions in proximity to our plants, which makes sense logistically for us to optimize our overall cost. In coking coal, we have two mines in Jharkhand, which will yield about 1 million tons of clean coking coal, as we had mentioned earlier. It will meet 5% of our current coking coal requirement. We are exploring coking coal opportunities both in India and globally, or any other strategic alliance which may come up. Are looking at both the quality of the coking coal asset and the commercial viability to lock in coking coal, partly for our steel operations. In 2021, JSW One Platform was launched as a trusted one-stop digital marketplace for manufacturing and construction ecosystem. The platform has scaled significantly since the beginning and has more than 30,000 registered customers pan-India. The annualized gross GMV was INR 5,300 crore based on September exit, and continues to grow rapidly. JSW Steel holds 69.01% on the JSW One Platform. JSW One raised $25 million from Mitsui of Japan in April 2023. Going forward, we see a strong domestic demand to continue across sectors as we enter a seasonally strong steel consumption period after monsoon. We expect strong growth in all steel consuming sectors to continue. We are on track to achieve our guidance, both for production and sales. Better volumes in quarter two, or beyond quarter two, will be driven by the BPSL capacity expansion and better utilization of capacity at our other Indian operations. Thank you. This is all from me, and I look forward to questions which you may have. Thank you. Over to you, operator, please. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touch-tone 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 questions. Also, in order to ensure that the management can address questions from all participants in the conference, we request participants to limit your questions to two per participants. For follow-up questions, you may rejoin the queue. We take the first question from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah, congratulations for the set of numbers and thanks for the opportunity. I have a couple of questions. The first one is essentially on iron ore royalty, burden of steel. We see in the standalone statement that has dropped significantly QoQ. Just wanted to understand the key drivers of the same. Okay, and what's your next question? Yeah, the next question is essentially that there is a significant change in payables that I see almost INR 8,331 crore, INR 339 crore payables and other liabilities in the cash flow negative. Just wanted to understand, I mean, the key drivers behind it as well. These are the two questions. On the iron ore side, I think you would see a differential royalty because the production levels were lower, and that's the main reason. Royalty rates have not changed in any way, so that continues. Your second question, I request Ravi to answer. Yeah, the payables were down mainly because you would have observed the coking coal prices were lower in Q1 and Q2. That is one of the reasons. Secondly, as JSW was carrying an more than adequate cash, we used the cash for an optimization of interest arbitrage between the cash yields versus buyer credit interest cost, and that was used to pay down the buyer credits. Most of this coking coal thing now, you know, prices have practically bottomed out. In fact, they are increased, they have increased. This payables, we might not see the change in payables going ahead. Is that a fair assumption? Actually, with coking coal prices cycle, yes, the payables would more or less follow the current working capital cycle. The prices going up, if they sustain, you can expect the payables amounts maybe going up. Okay, fair enough. Thanks, and all the best. Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah, good evening, and thank you for the opportunity. My first question is on steel prices in India. If you could just share what are the October prices versus Q2 average? We've seen that domestic prices are quite strong despite weakness in the regional prices. If you could just explain what are the drivers behind this trend, and how do we see this domestic price premium over import parity sustaining or kind of normalizing in the coming months? The domestic, if you look at the Indian steel prices that we had mentioned in our last quarter, there was price corrections in the Quarter 1, which had flowed into Quarter two. But we saw improvement in prices in August and September after the fall, primarily driven by a good demand growth. In the first half of this year, we saw a demand which was very strong, 14.8% growth in the India steel demand, and that has been one of the primary drivers, and that has affected across sectors. There has been some price increase in the month of October as well, and this would flow into Quarter Three, October-December, which will offset to some extent the prices on or the costs of which are getting increased because of the price of coking coal and iron ore. It's very difficult to forecast going forward how the prices would play out, but I would like to put it this way, that the economic momentum in India, we feel, will continue to be strong. The growth in GDP to steel demand will structurally be high. The GDP to steel elasticity, which we have seen in other countries during their nation-building phase, as I mentioned in the past, has been 1.5. In the last year, it was 1.8 odd, and in the first half, it has been two. Going forward, I think it is very safe to say that in the medium term, an 8%-10% growth in the steel demand in India is a very likely scenario. Which means incrementally we will add between 10 million-12 million tons every year, which will call for more capacity expansions as well. This demand is the main drivers, infrastructure being a prime pillar, with manufacturing led by automotive, general engineering, and energy transition, improvement in services, and consumption through inclusive growth. I think what we have seen, when I say inclusive growth, is the rural side, where 65% of our population resides. The connectivity to the rural hinterland through electricity, water, communication network, and, you know, water, electricity, communication network, and highways are enabling the rural sides to basically participate in the economic activity in India. That is improving the per capita. Going forward, we have already seen some green shoots. I think the rural sides will improve and come out of the impact which they had faced in the pandemic. This strong demand in India will continue to keep the prices, I would say, range-bound. There may be some blips, but the demand will continue to be strong. Oh, got it. Just a follow-up. Is it possible to share some quantification as to what are October prices versus last quarter average? Number one. Number two, given the price premium, do you expect imports to increase in coming months, which could create some pressure on the domestic prices? I think difficult to give exact numbers as to what the prices are, but I think what is important to note that the international prices, according to half, have already bottomed out. The current raw material prices, which will flow into steelmakers' cost in the next two months, internationally as well, will be much higher. Therefore, it is either one has to correct, either the raw material prices will come down or the steel prices will reflect this increase in raw material cost. Therefore, we feel that the steel prices are likely in the medium term to or in the short term to improve somewhat internationally, which would be positive for the steel industry at large. Having said that, I think coking coal prices also we expect to moderate, because they have gone up by more than $100 over the last one and a half months. That has seen some moderation in the last two, three days, and we expect that to moderate to more sustainable levels. Understood. Understood. Just one, my second question is on your capacity addition map, which you have given. Now you're talking about the potential of 13 million tons addition to 50 by FY 2031, which only implies a 5% kind of a CAGR if we come from a base of 37 million tons in FY 2025. Now, this is not tying up with our bullish outlook on steel demand. Also, if you look at last five and 10 years of growth which you've done to your capacity. Just wanted to understand what are we missing here, and how should we read this next five-year roadmap? I think the way you should read it is that 37 million ton in India, we are on track. Our focus on completing our 50 million tons by 2030 is our aim. When I say by 2030, it doesn't mean the year 2030, it means it could be before. That is what is our approach, because these are brownfield expansions, they can be done faster. We have been having a good track record of execution, so we should be able to initiate, you know, some of these brownfield expansions quickly. We may be able to do this at a faster pace. 13 million tons, and when you take another three, four years, yeah, it's not bad, because you have to look even at the CapEx allocation, which we need to do in a manner which is prudent, financially prudent, and keeps our ratios stable. Our 37 million tons of earnings, which will flow, will fund the internal accruals, will fund the CapEx of 50 million tons. Our 50 million, part of it, as it starts yielding positive returns in terms of revenue and profits, we'll start funding the next phase of expansion. Got it. Thank you so much, and all the best, sir. Thank you. The next question is from the line of Rahul Gupta from Morgan Stanley. Please go ahead. Yeah, hello. Thank you for taking my questions. I have two questions. First, your second half implied numbers for production and sales show that there is no material growth, and it's broadly stable versus second half last year. Any specific reason why you are not upgrading your production and sales volume guidance? That is number one. Second, any number on what kind of steel inventory you are sitting on? The reason I'm asking is because the delta in production and sales in the second half for domestic numbers would imply excess inventory of around 0.5 million tons. With the risk of imports rising in the near term, could this mean that we end up with excess inventory in the system for the industry? These are my two questions. Thank you. Yeah. From a volume perspective, I think we will have to see that in this particular second half of this year, we are not adding incrementally to much of capacity. The BPSL Phase Two, which will give us some capacity increase, which will play out only partly this year. The balance will be from improvement in existing operations. What we are on track is what we have given as per guidance, both in terms of production and sales. In terms of inventory, I didn't gather that question too much. I think our inventory, which we had increased in quarter one, overall has, you know, been liquidated. Whatever we increased in quarter one, 900,000 tons out of that, we have already liquidated. What did you have in mind when you were talking about 500,000 tons? Yeah. If I look at the delta of implied production and the sales number for second half for the domestic business, it leaves us with around 500,000 tons of excess steel. With the risk of imports rising in the near term for the industry, I just wanted to understand your perspective on how to look at the overall inventory for the industry. If you look at, especially let me talk about our numbers. When we look at crude steel to finished steel, you also have to factor, you know, in yield as well. Only thing I can say, I'm not too sure our people can help you with the calculations, but in what you think. We are not adding inventory during the second half. As a matter of fact, our effort is to try to see if we can liquidate a little bit more inventories of what we carry on 1st October, during the second half. Got it. I'll take it off then. Thank you so much for your responses. Thank you. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Yeah. Hi, sir. A couple of questions. Thanks for the opportunity. First is on the regulatory side. Anything from an industry standpoint when it comes to the Indian equivalent version of CBAM? Secondly, on the National Mineral Index, it was spoken about earlier. Any specific updates over here? That's the first question. Second is, will we be okay to look at diversification when it comes to mining? There's a lot of noise around lithium, manganese in India. Will this be something of interest to JSW or JSW Group? That's the first question, sir. Your first question was on the CBAM regulatory and the, yeah, India. On the carbon market, let me put it this way, that the government of India, you must be aware, has formed 13 task forces in this matters to basically look at various initiatives on sustainability. We are looking at a couple of levers in India, and JSW Steel is doing similar. The first one is the energy transition, which, if you remember, the RP Obligations, which have been laid down by the government of India, have been in place since the last few years, and that has been regularly been on the increase. That will basically force companies to transit to more of renewable energy over time, and that's one thing which is positive. JSW Steel's intention is also to see that we increase our renewable energy in a manner that we are phasing out as much of our thermal energy by 2030 as possible. The second one is on energy efficiency, and the Government of India here also had, if you recall, put out a scheme called Perform, Achieve and Trade, which defines certain norms to be, you know, achieved from a benchmark perspective, and otherwise you need to buy energy certificates. That also is forcing companies all across to look at better energy efficiencies in their operations. This is something similar to what the ETS scheme, which is available in Europe, although that is for emissions. Number three is that the Government of India is looking at new market mechanisms. New market mechanisms will likely be announced next year. Those will be carbon market initiatives, which will have a certain carbon tax, which will be charged against a particular benchmark, and or you will have to buy carbon certificates in the market, similar to what you have in Europe. This will be another good initiative because some of the taxes which we are already paying in various forms in India will also get consolidated under this. The fourth lever is the Green Hydrogen Mission. The Government of India has already defined the Green Hydrogen Mission up to 2030, and efforts are on way to see that it becomes commercially more viable. The fifth lever is to look at Carbon Capture, Use and Storage. Agencies, the NITI Aayog, is already looking at creating hubs, identifying locations in the country where you can put up CCUS, create the infrastructure and the logistics support system as well. There is a lot happening in India. In JSW Steel also, we are using levers of renewable energy fully. We are in a process to improve our energy efficiencies, process efficiencies, and raw material efficiencies. We are trying to use circularity to see that we use our scrap, our gases, our waste into the system. We have also embarked on a trial plant for hydrogen. As in January, as we had declared last time, and as the trial progresses, we will have more detailed data points. As hydrogen becomes, you know, more evolved and becomes commercially more viable, we'll incorporate more hydrogen into our systems or any other disruptive technologies which may come in. We will continue to explore carbon capture and use the various alternatives till such a time, you know, other things fall in place. I think as a country and as JSW Steel, we are getting well prepared. However, every country has their own particular mix of technologies, raw material, and demand. As internationally, we'll have to work together to see that one methodology and one measurement metric is defined to measure carbon. There is a need to define the scope and boundary internationally together, so that we have one common framework which we can work upon. Thank you, sir. The second question on lithium batteries, I think on mining, let me put it this way, that our focus at JSW Steel right now will be to see that we integrate our raw material backwards with respect to iron ore, coking coal, and kind of minerals which go into our own assets. JSW Group differently could look at any other mining opportunities which may come up, but I would not be able to comment on that right now. Sure, sir. This is Jason. I have more questions. I'll join back with you. Thank you so much. Thank you very much. The next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead. Hi. Thank you. A couple of questions, Mr. Acharya. Firstly, on the acquisition, we've talked about organic growth. You know, in the media, it was, they reported that JSW is also evaluating certain cases, including NMDC. Now, there are certain reports that that may not be on the cards anymore. Have you just wanted to check, if you have checked in that process, have you heard any communication from the industry, the DIPAM, are you still looking at that asset? That's the first question. We have submitted our EOI, as we had informed earlier for NMDC, and the due diligence process will follow the steps laid out by the government and NMDC. We do not have any official notification for anything to the contrary, so we will continue to look at the due diligence process as it unfolds, and if it makes any, you know, strategic and economic sense, we will look at the asset going forward. Okay. Second, touching on the question on prices in Indian market being higher than import parity prices, and generally, despite a very tough economic environment, JSW has been reporting very good in EBITDA per ton. Is there a risk to, or is there a merit in continuation of the Basic Customs Duty? Have you heard anything from government on justification for continuation of the act or any study? Do you continue to see merit in some of these supporting mechanisms? From price perspective, I think, you know, as I said, the raw material prices internationally have gone up, and the steel prices internationally have bottomed out. With the current raw material prices, I think many of the international producers will have difficulty on the margins. Therefore, there would be a reflection of a higher steel price, very likely in the coming months, should the raw material prices continue. However, we do expect some moderation in the raw material prices, especially with the coking coal part. I think Indian prices, I would say, are not high. What you see as, at times, a concern is imports coming into the country at predatory prices. Somebody at a particular location in the world has some excess stock, which they want to offload. That is being offered at lower numbers. Doesn't mean they are selling in their country at those numbers, their entire production. That's not the fact. They are trying to offload excess production because there is a visibility that India has a good demand. That certainly is a matter of concern, and I think we are watching that space. We need to be cognizant as a country to see that we do not make ourselves vulnerable to unfair trade. Since India is adding capacities and, as per the National Steel Vision, the steel industry is trying to put in a lot of capacities in India. I think the government would also look at these numbers. In the past also they have stepped in as and when required, and I'm sure that appropriate trade limited measures will be looked at, should there be a concern which increases. Okay. Just one quick follow-up question to the first question. If just on the CBAM, you mentioned collection of taxes like ETS in India. If in CBAM also talked about a fair price for carbon, they seem to be okay as long as domestic collection of carbon costs in the exporting current countries there. Would there be a price for CO2 that the Indian carbon market evolves when there's a price of CO2? Does it have to be maybe similar to the ETS price, or can that price be lower than that price? I think the price, because it's a new market mechanism, so the price will find its own level, is what I feel. I think it's early days to comment on that, but that's the way it should work. Whatever carbon prices are established here over time will get set off when you export the products from here into Europe or any other region for that matter. I think what is important for I think all of us to understand that the strong demand growth, which we see in India over the next few years, I think will ensure that exports may not be really that high. I think what we will see is more of engineering exports from India, where merchandise exports for engineered goods will increase. That is, I think, a more probable situation than, you know, going into the detail for more of steel exports as we increase our capacities, because the domestic demand for steel will be very strong. Thank you so much. Thank you. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead. Yeah. Hi, can you hear me? Yes, we can hear you now. Please go ahead. Yeah. Hi, thanks for the opportunity. Just on the question on the import parity and the import volumes. We have been seeing that- Like a steady drop in export realization in the Chinese export prices as well as regional prices, as India is holding up and in fact growing. Just wondering, like, what holds back the importers from kind of benefiting from this arbitrage that you're seeing in the local prices and import prices? Could you help understand, like, what are the roadblocks they would be facing in this regard to not import more in that sense? If I understood your question correctly, are you saying that why the arbitrage is not being used to come into India? Is that? Yeah, yeah, correct. That's the question that since there is such a big gap now, like, but still imports have not risen as much probably they would have. I think what you need to see is what is the fair import price at which standard material for a particular requirement will come in. I don't think the gap for that will really be that much. I think the gap will probably be in the vicinity of 5% or so today. In some of the lower-priced imports which is coming into the country, there may be a differential number, but that is something which people are trying to offload excess stock. I don't think those are being done more by mills. It is most probably a little bit more of the trade flows which are holding stocks and getting out of those stocks. If somebody were to convert with the current raw material, then the prices at which some of those imports of the lower price have come in are not sustainable. Therefore, I don't see that as, you know, very continuation going forward. I think the prices will reflect the higher raw material cost going forward. With that, the gap in steel prices in India will not really look, you know, that high. I think we will be, we will be close to what the international prices are. Even today, if somebody was to import material which is as per their requirement of grade, size, and mix, I don't think we are very far off from what the international numbers are. Okay. Got it. Thanks. Thanks for the elaborate explanation. Also on coking coal, like you mentioned, your consumption cost was $231 in the second quarter, whereas the third quarter expectation is $30 higher. Like generally what I've seen, coking coal has been upwards of $300 actually for the last three or other months. Like how could the increase then is, I mean, only $30? Was there some inventory which was purchased earlier at lower prices? Just could you help understand that? Yeah. Usually we have inventories of two, two and a half months in the system, and that is something which, you know, basically will support some part of Q3. If the prices were to continue, then the impact of the higher prices will flow into Q4 as well. In the last two o three days, you would have also observed there has been some moderation in the coking coal prices. We'll watch how this coking coal goes into the next few months. Sure. Yeah, and lastly, any update on the auto contracts, the negotiations, like will there be a drop this time around, or how do you see that? No, the auto contract negotiations will proceed as per, you know, the normal discussions with them. No, I don't see a drop in this quarter at all. Okay, sure. That's all from my side. Thank you. Thank you. The next question is from the line of Brian Ayer from Deutsche Bank. Please go ahead. Yeah, hi. Thanks for taking my question. I just want to understand what's the plan for, you know, funding the rest of the CapEx requirements for the rest of the year as well as going forward into FY 2024. Is it still beneficial for you to continue relying on the domestic market here, or are you seeing, you know, I didn't hear the last but first part of your question. Could you just repeat, please? You may want to just start again, if you don't mind. Yeah, sure. First, I just wanted to congratulate the results. The other question that I had was how are you gonna, how are you looking forward to meet the CapEx requirements for the rest of the year as well as for FY 2025? Given that, you know, are you still seeing conditions favorable for debt to be taken onshore, or is the reduction in hedging costs making, you know, offshore debt more viable for you now? Yeah. We will continue to source both as a part of our risk management strategy. As you are aware, in domestic, liquidity is extremely strong. We will tap that liquidity including the domestic capital market. Also, considering the hedging cost currently is low, there is a good liquidity in ECB. Maybe dollar bond market liquidity may not be as good, but in the ECB and ECA categories, there is an adequate liquidity which will be used to finance the CapEx. As a policy, we also try to ensure that all of our CapEx projects are properly tied up in terms of financing. We don't see any challenge in the second half in terms of financing the CapEx. Perfect. Thanks. Most of our CapEx also, we focus to the internal accruals system in any case, and some of the debts which we will refinance is what Pritesh was telling you, the resources which, by which we could do that. Got it. Just another thing on your acquisition plans that you are sort of focused on on the recent reports, especially increasing your sourcing for coking coal as coking coal. Again, would the financing here be looking, as you mentioned, the ECB route and the onshore liquidity? Or can we get any more thoughts on your plans there? There are, there are good models of the structured finance which we have used earlier and we will continue to use. We normally try to do, do the acquisition financing in such a way that it is non-consolidating and it is more on the target company cash flow. We will continue to do that, but in such cases, the majority could be the foreign currency borrowing. Understood. Thanks for answering my questions. Thank you. The next question is from the line of Ashish Kejriwal from the Nuvama Wealth Management. Please go ahead. Yeah, hi. Thanks. Good evening, everyone. Just, I have three questions. One is the kind of price hikes which we have taken and the kind of outlook which we have for coking coal price and iron ore. Is it possible to state or give a sense that these prices are sufficient to offset their higher coking coal iron ore prices, especially in third quarter, when we have some high volume also? Yeah. Ashish, the price increase, which we have taken in August, September and also part in October, will flow into the October-December quarter. That will, you know, partly offset these cost increases, which is happening because of coking coal and iron ore. Yeah, that's what I was asking, sir. I mean, is it enough to offset or we need to take further price increase to offset completely? Sure. The second thing is in terms of acquisition opportunities. I think one thing we need to keep in mind, we are Q4, because some of the. Yeah. Cost of coking coal, if it continues in this manner, will flow into Q4, and that's something which we'll have to address separately in Q4. As I said, either the raw material prices will correct, which I hope the. Mm-hmm. Looking into the coking coal numbers, they look that they will moderate. Yeah. The steel prices will also reflect an upward movement. A combination of both I think will play out in quarter four, but we'll know more as we go into the quarter. Yeah, because the kind of fluctuations we are seeing, I think will go quarter-on-quarter. At least in third quarter, we are more or less safe. Okay. Second point is, sir, in terms of acquisition opportunities, we highlighted again and again that we can go look for coking coal or iron ore. My question is, have we been approached or are we looking for any iron ore mining to acquire in India? In coking coal also, what we have been reading in the newspaper about that Teck Resources, any status or any updates you can give on that? Iron ore, we continue to focus on first to integrate, and we have currently, as I mentioned, 13 operating mines. We have seven more mines across Karnataka, Maharashtra, Goa. This will be developed as quickly as possible. I think Karnataka will come sooner, some part of Goa and then Maharashtra. I think our effort will be to participate in other mine auctions, which are going to come in various states, which make logistic sense for us, where we can optimize our cost. Coking coal, as I mentioned, we are developing those two mines which we won. That would flow in some clean coking coal into our operations. We will again look at coking coal, more mines which may come up for auction. Also, we will look at coking coal linkages, let's say, full linkages, where we set up washeries and where soft coking coal is available. We will wash and be able to blend that with our existing coking coal which we are importing. That is the second step. We will continue to look for some strategic assets internationally, wherever the coking coal qualities are something good in terms of what we need in the blend, and as long as it makes both strategic and commercial sense to take a stake or a strategic alliance. That effort will be something which we will look out for as we go into the remaining one or two years. Sir, my question was more on iron ore domestically. Are we seeing any inorganic opportunities domestically in iron ore? Well, yes, there could be one, but I think that's something which you are aware about, that one of the assets right now is in the market, and that's a combination of steel and mines both. I think that is something which is premature right now to comment. If there is an asset which is coming in, which is interesting, we'll certainly look at it, especially on the mining side. Till that time, we will continue to focus on whichever mines which we have won and developing as well as possible. Sure. Sir, secondly, in terms of Karnataka mining cap, I think there was a mining cap by Supreme Court. Have you heard anything that, you know, they are in the process of increasing it? Because from next year onwards, we will require more iron ore. Any update on that front? The current Karnataka cap, if I recall, is 50 million tons. If you look at the way the numbers pan out, I think we will be able to manage our next phase of growth quite comfortably. Our current mines, which we have in Karnataka, are going to give us 7 million tons of iron ore. There are some environmental clearances which have already been applied for, which are likely to fructify in this remaining few months. That will give us an additional 4 million tons. With that, we will have 11 million tons of iron ore captive in Karnataka from our existing mines. We have three more mines in Karnataka, which will give us another 5 million tons, which will also come in, taking our total captive in Karnataka to 16 million tons. Between NMDC and others, if you were to mainly look at NMDC and one more major player, they account for almost 21 million tons of the production. The balance 28 million tons is spread between various miners. We will be able to look at... I would say that from NMDC, the other major miners anywhere about two-third of their mining quantum, and the balance quantity will be able to source from the 20 million ton, which is available in the mine, along with others, which is within the cap. From a next phase of expansion, we don't see any concern. We would require in the vicinity of 33 million-34 million tons, 16 million from captive. I think from NMDC and Sandur and the other mines which we have will be well able to meet our requirement which we have for Karnataka. Should there be any shortfall, as we do, we take care anywhere from other states, including our mines in Odisha. Okay. That means till 19 million ton, we don't build that, you know, at 50 million ton mining limit, we can satisfy our requirements from Karnataka most of the time? Yes. Okay. Sir, last, lastly, have you seen or have you heard anything about government somewhat restricting imports by not renewing BIS certification for most of the traders, and which may reduce imports going forward, or that could be just fear in the market and because of which we are able to sustain higher prices compared to the imported landed cost? I'm not too sure whether the Government of India is controlling anything, but from, you know, perspective of BIS, I understand also from the market that there are one or two players where the BIS are expiring. I'm not too sure how they are taking it forward to extend their BIS. It is important for us to note as a country that most countries have very strong quality code mechanisms which have to be adhered to. I'm sure that, you know, India will also, you know, India is taking measures to see that BIS is a norm which has to be adhered to by everybody. We will see how that plays out. As of now, I've not heard anything about any steps being taken to contain BIS by the government. Sure, sir. Thank you. Thanks a lot for your answers, and all the best. Thank you. Before we take the next question, a reminder to participants to please limit your questions to two per participant. The next question is from the line of Rajesh Majumdar from B&K Securities. Please go ahead. Yes, sir. Thank you for the opportunity. I had just a couple of questions. One was that going by a narrative on the Indian steel growth, as well as the fact that we don't need to export more, as well as what you said on the CBAM, is it fair to assume that our next phase of growth to 50 million will also be led primarily by the blast furnace route? Or are you also considering electric arc or any other technology to lead to that kind of a volume number? That was the first question. The BF-BOF route in India, I think for some time may continue. I think what you will see in terms of technologies is various technologies coming in to use the gases into the blast furnace, which will reduce the overall coal consumption, the solid fuel charge, by as much as 30%. Improving, you know, kind of further steps to, you know, reduce the solid fuel for heating can be done through, you know, electricity. Heating can be done through electricity. That will further reduce some of the carbon input into the blast furnaces. We will be able to reduce B.F. BOF through various technologies which are coming up. The carbon emissions would come down, so that is one step. The second one is that in our locations, one is that we are looking at a combination of DRI, electric arc furnace, combination of natural gas and hydrogen, which, you know, which will play out as we go into this next few years. The hydrogen trials will first be taken at Vizag level. We are looking at other locations where DRI and electric arc furnace, so natural gas can also be taken up. That will also have carbon emissions below one, and we will be able to increase the capacities in those as well. With hydrogen becoming more viable, natural gas will get replaced with hydrogen, and that would be zero. I won't say zero, but it will be a low carbon emitting product from JSW Steel. As we grow our capacity, we're conscious that we reduce our carbon emissions, and as I said, various steps we are taking, and we'll continue to monitor that. Right, sir. My second question was, so what is your total requirement of renewable power to phase out the thermal capacity by FY 2030, and what is the total CapEx required for this, just for the renewable power? In terms of renewable energy, as we had mentioned earlier, we already have 1,000 MW in the pipeline. Out of that, part of that is already operational at Vijayanagar. The balance will come in by December to quarter four, will all be working and in place. We are increasing our renewable energy, I think, sorry, the next- Okay. That will fall in place by next year, within the next year. The additional requirement of renewable energy, we are already in discussion with various suppliers, including JSW Energy, which has renewable energy assets and which are willing to put in renewable energy facilities in case those are required. We are studying those, and at different locations we will be collaborating with suppliers to see that more renewable energy is added. If you were to look at, I think overall renewable energy requirement, if we have to replace 100% at a 50 million ton level, we would require close to 7 GW, which is about 7,000 MW of renewable. Out of that, 1,000 will already be there, and the balance, 6 GW is something which we'll have to put in place over time as we transit into a full renewable energy space. Sir, that is still under INR 30,000 crore of CapEx approximately on the renewable space, if you talk about additional 6 GW, approximately? True. Yeah. That's something which the suppliers of the renewable energy will put in. Basically, the CapEx will get done by them, and we will have contracting to basically buy renewable energy at a particular price. If there is any need for equity inclusion or any captive status, we will do that suitably, but those will not be very much. Okay. Thank you. Thank you, sir. Thank you for this. Thank you. Thank you very much. We'll have to take that as the last question. I would now like to hand the conference back to the management team for closing comments. I think, as we said, the quarter two has been driven by very strong volume growth, driven by the domestic demand, improvement in the product and sales mix. Our value-added sales increased by 15% quarter-on-quarter, 62% share, driven by automotive, appliances, renewable, coated. We have liquidated inventories of 300,000 tons in this last quarter in a traditionally weak quarter. I would like to also say that while the overseas numbers have been under pressure in the quarter two, in quarter three, we see that Baytown will remain more or less stable. However, Ohio will still see some impact due to weaker market conditions, but it is likely to be better than Q2. Italy operations will remain range-bound going into H2, supported by very orders from the Italian government and exports from Italy. The raw material increase we discussed already. Some part of that we have seen moderating. We see that some part of the cost of coking coal will play into quarter three and part into quarter four. However, the prices which have increased in August, September and October, will mostly offset the cost in quarter three. We will look and watch how the coking coal and iron ore progress as we go into quarter four. Internationally, we feel that the steel prices have bottomed out, and with these raw material prices, it is likely to see and increase and reflect that in the steel prices going forward. We are on track to achieve our guidance on production and sales for this year. Better volumes in H2 will primarily be driven by the capacity addition at BPSL and better capacity utilization at our existing Indian operations. I would also like to end with saying that JSW Steel, as you know, has continued to deliver strong growth in terms of volume, revenue, and total shareholder return. In the last 20 years, our capacity growth of 15% has yielded revenue growth of 24% and EBITDA growth of 22%, and a total shareholder return of 26%. In the last three quarters, we have reported good EBITDA per ton, and as the India demand continues to be strong and we will confirm that it continues to go into the medium term, we are adding capacities to see that we are able to participate in this growth. While doing so, we will ensure that the growth remains capital efficient, which, combined with our efficient project execution, will continue to generate superior shareholder return. Thank you very much. Thank you, ladies and gentlemen. If you have any other questions, please feel free to reach out to us. Thank you. Thank you very much. On behalf of JSW Steel Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.