Ladies and gentlemen, good day, and welcome to the 4Q FY 2022 earnings conference call of SAIL, Steel Authority of India Limited, hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Chandak from Motilal Oswal Financial Services Limited. Thank you, and over to you, sir. Thank you, Rutuja. Good afternoon, everyone, and welcome to the fourth quarter earnings call for Steel Authority of India. On behalf of SAIL, I would like to apologize for the delay because of some unavoidable circumstances. I would also like to thank the management of SAIL for giving us this opportunity to host them again for this call. From the management side, we have Mr. Tulsiani, who is the ED, Finance. I welcome you, sir, and over to you for your opening remarks. Thank you, Vishal. Good afternoon, everyone, and welcome to the investor conference on the financial results for Q4 and financial year 2022 of SAIL. First of all, I would like to thank Vishal Chandak from Motilal Oswal for arranging this conference. The company has published the results yesterday, which I'm sure everyone must have seen, and I'm happy to see the reactions from the different corners. I will briefly apprise the audience on the highlights. Starting with the economic scenario that we have been operating in, the economies around the world have since been fighting the impact of COVID-19. While the recovery stories around the globe have been heartening, the economies have now been thrust into inflation concerns as well as the uncertainties and supply chain disruptions emerging from Russia-Ukraine war. The Indian economy has also charted a V-shaped recovery path. Though the yearly GDP ended in red at 6.6% for financial year 2021, but the estimates of financial year 2022 has impact at 8.9% growth in the second revised estimate published recently. The scenario, however, is now being strained by inflationary measures and Russia-Ukraine war. The projections for the coming years have been getting moderated accordingly. The steel industry has enjoyed one of the best periods during the first half of financial year 2022, which was later eaten into by the rising prices of imported coal, CDI, ferroalloys, et cetera. The steel demand and prices have also been volatile during the end of financial year 2022, given the consistent decline in production and demand in China and global trends. Now we come to the performance of SAIL. Company has clocked its best ever production and sales during the year. The crude steel production for financial year 2022 is at 70.36 million tons as compared to 15.21 million tons in financial year 2021. That is a growth of 15%. The sales for the year have been the highest ever at 16.15 million tons as compared to 14.94 million tons in the previous year. As mentioned earlier, the increase in prices of imported coking coal and other raw materials had a major impact on our cost of production. The impact of coking coal alone had an adverse impact of more than INR 12,000 crore on the cost of SAIL. The company had been taking measures for improvement in operational efficiencies, which partially offset the impact of the same with reduction in coke rate by 1%, replacing coke with CDI by around 12%, reducing specific energy consumption by around 2%. The changes in MMDR Act has impacted the company substantially during the year with royalty payments increasing. In line with the physical performance, it has posted its best ever annual financial results. For the first time in history of SAIL, we have crossed the revenues from operation has crossed 1 lakh crore. For the year it was INR 1,03,473 crore as compared to INR 69,110 crore. Quarter four also was very good for us, and we clocked a revenue from operations of INR 30,758 crore. The EBITDA for the financial year 2022 is at INR 22,364 crores. The PBT is INR 16,039 crores, and PAT is INR 12,015 crores. SAIL focused on proactive stakeholder engagement, which includes the company has recommended INR 2.25 as final dividend for financial year 2022. SAIL has declared highest ever dividend in financial year 2022, that is INR 8.75, which includes two interim dividends declared per year. SAIL also emerged as the topmost buyer on GeM amongst all the CPSEs in financial year 2022. SAIL has supplied steel for various projects of national importance, like the Central Vista, Delhi, Mumbai-Ahmedabad High-Speed Rail, Delhi-Meerut RRTS, Kaleshwaram Lift Irrigation Project, etc. We have also supplied liquid medical oxygen in excess of 1.3 lakh tons, majorly during the second wave of COVID-19. We also set up separate jumbo COVID care facilities which increased the COVID-19 dedicated beds. For our employees also, we have implemented the wage revision, which has helped in improving their motivation to a very large extent. We are regularly holding customers' meets to understand the requirement of our customers. The borrowings also have reduced significantly during the year. We have reduced our borrowings from nearly INR 22,000 crore to the level of INR 13,400 crore. With these words, I hand it back to Mr. Chandak for opening the question- and- answer session. Thank you. Thank you, sir. Rutuja, please open those for the Q&A. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets and limit your questions to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Dixit from Edelweiss. Please go ahead. Yeah. Good morning, sir, and thanks for the opportunity, and congratulations for a good performance. I have a couple of questions. The first one is on coking coal. While you have indicated that the coking coal cost increased by around INR 12,000 per ton in the quarter, can you quantify the coking coal cost in Q4 FY 2022 in dollar terms, and how it is expected to change in Q1 FY 2023? That is the first question. You have another question? Sorry? Yeah. Yeah. That's the first question on coking coal. In the financial year 2021/2022, the total imported coal cost was around INR 20,000. No, sir. I'm asking in Q4 FY 2022, what was the coking coal cost and how it is expected to change in Q1 FY 2023? It is likely to grow substantially. In Q4 only, it was around about INR 28,000-INR 29,000, in that range. It is expected to be slightly more in the first quarter of 2022/2023. When you say slightly more, how much is that slight? You can say around about a 10%-12% increase. 10%-12% increase. Yeah. Thanks. That's helpful. The second question is essentially that, the Government of India has imposed export duty, and we expect that, you know, realization in domestic market would be lower as a result. Now, we have a substantial brownfield CapEx plan. So, does this move by the government change in any way your CapEx ambitions, or you are planning to delay the CapEx, or what kind of CapEx we can look for, I mean, in the coming two, three years? See, we have some long-term plans for expansion. In the immediate future, we are basically going in for some rehabilitation and debottlenecking schemes. For the time being, means it's too early to decide on, you know, doing something, thinking about it in another angle. We'll continue with our investments in our current plants and assets. Regarding the future or future expansion plans, we'll just take a call after some time. Means we cannot take a call immediately that we'll defer something or, we'll continue. We are neutral on that for the time being. Okay. What would be the CapEx for this year and the next one? We have planned a CapEx of INR 8,000 crore for 2022-2023. Okay. Thanks, sir. That's very helpful. Congratulations and all the best. Thank you very much. Thank you. Participants are requested to please limit your questions to two per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Rajeev Bajaj from Systematix. Please go ahead. Good morning, sir. Good morning. Good morning, sir. I'm Rajeev Bajaj from Systematix. Hi. Sir, what's your total borrowing as on 30 June 2022? It is 13,386. The total borrowings are INR 13,386 crore. Sir, in your presentation you are showing 17,284. That is the ATS impact. The debt equity also you have shown according to that. Yeah, according to that. What that 17,284 crore consist, sir? It consists of financial leases. Okay. Financial leases. These current liabilities are also taken in that? Financial lease, INR 3,800. T he financial leases are INR 3,898 crores. If you add those to that, then probably it will add up. Basically the borrowings are INR 13,364 crore. Sir, it has got the borrowing, so I have seen that because it doesn't include that lease liability which is appearing balance sheet. That INR 17,000 figure I'm not able to reconcile. At the current- That is in your presentation, not on your accounts. Mr. Rajeev, the borrowings are basically in the presentation shown inclusive of the financial lease liabilities which we have to account for in terms of the Ind AS requirements. That is a part considered as a part of the borrowing. The presentation reflects that figure of INR 17,000 crores. If we talk about the pure debt, what we are holding, as on 31st of March, like sir said, the borrowings stood at INR 13,386 crores. Okay. Got it. Thank you. Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go ahead. Yeah. Namaskar, sir, and thank you for this, opportunity. Namaskar. Sir, fi- Yes, sir. Sir, firstly, as the earlier participant has spoken about this export tax, sir, how is the steel sector and SAIL in particular impacted by this, if I may use the word, ad hoc introduction of export tax, how is this going to impact the industry and SAIL in particular, sir, your understanding on the same? Yeah. Actually, from the sources what we have got, there are almost contracts worth nearly 2 million tons of steel exports, which will have to be catered to in this coming future. Trade doesn't have that much quantity of exports. SAIL also has got one advantage that it is basically into exporting of semis also. It has exports of semis also. Semis are basically not impacted by this export tax. But yes, we have got certain orders and we are evaluating what is to be done about that. For the general steel industry, sir, how is the demand supply scenario for the country going to very likely change because of the introduction of this tax? See, early to comment on this at this point of time for the industry. Of course, we have certain things that our export orders are comparatively less, so not much of an impact is expected because of this. Yes, extra quantum which comes into the country and even, so that will surely have an impact on and will put some pressure on the prices also. Sir, can you give some more color on how the Q1 has been shaping, sir? Generally, we find the quarter preceding the monsoon being the strongest quarter in terms of build-up and also the demand push is there on the construction front. How have you seen this 45 days shaping up for Q1, sir? Also sir, the finance costs have been significantly higher for this quarter. Sir, any one-off item that you have factored in for this quarter? Yeah. Saket Kapoor, can you just repeat the question? Yes, sir. Sir, finance costs have been significantly higher Q on Q, sir, when we take December versus March, from INR 316 level to INR 440 level. What explains this increase? Secondly, what's the business environment for us for the current 45 days with the first quarter being a strong quarter just preceding the monsoon. How is the demand currently shaping up? Your thought process, your thought on the same. Yeah. Actually, I don't know your finance cost, what you are telling about. Yes, sir. Yeah. Finance cost for 31st March 2022 is INR 440 crore, whereas for 31st December it was INR 316 crore. I was just looking for the reason for the increase, Q on Q. Mainly the forex loss, which has also been accounted for out here. The interest cost is quite low. Actually, the interest cost for the particular quarter is in the range of around INR 250 crore. The balance is the forex loss. Currently the forex loss. Okay. Now on the demand part, sir, how is the demand shaping up? Currently, as per what we executed March quarter, how are the realizations currently for the flat and the long products, sir? Realizations in April were better. I think the entire industry had better realizations. That was basically the pressure of the rail cost. Of course, May again, like, there are some pressures on the prices. We are trying to cope up with that. There have been a decline in the realization, sir. Can you quantify for us how, what kind of cuts have been factored in? See what happens is that this quantification cannot be done at this moment of time because there are certain long-term contracts which we are continuing, and there will be certain contracts which will be entering now. Overall, what is going to be the impact, we cannot assess it during the month. It is possible only after the month is ended. On the iron ore sales, sir, can you quantify what have been the revenue number we have booked for this quarter and for the entire year on the sale of iron ore? We normally do not share this figure. On the inventory part, sir, there were some litigation issues with the Jharkhand government. Any update on the same? No, there's no update. It is proceeding as usual. Lastly, sir, on this disinvestment of the loss-making unit at Visvesvaraya, and the Visvesvaraya Steel Plant, sir, and any update you would like to share? Also, in the segment results, we have found the other segment showing a profitability of INR 240 crores on a revenue of INR 434 crores. If you could explain the same, sir. Other units. Actually, here we pay the incentive, PRP to the employee of the field. So last time it was kept in the actual group. This time it is appearing in the plant group. That is why that INR 208 crore we're getting is appearing in the previous year. This time since it is coming in the plant group, the other units, it is showing the profit. Right. On the disinvestment part, sir, where are we on the divestment of the Visakhapatnam Steel Plant? Yes. Hello? Yes, sir. The divestment of the small units, sir. Yeah. The- Actually there is not much headway made in that for the disinvestment of the smaller units. It is more or less at status quo, what it was say a year back. Basically what is happening is that DIPAM is driving this particular disinvestment. We are not much in the know of these things, what they're finally going to do about it. Okay. One point, sir. When we- Thank you. Yeah. Yes, ma'am. I have got sufficient time. Thank you. Thank you. The next question is from the line of Naresh Majumdar from B&K Securities. Please go ahead. Yeah, good afternoon, sir. My name is Naresh Majumdar. Good afternoon and congratulations on a good set of numbers. Sir, I have one question on the wage bill. We've been seeing a lot of wage settlements and payouts this year. We've also seen a reduction in the number of employees as on 31st March 2022. What should we take as the wage bill going forward now that all the earlier arrears have been paid? What should be the steady kind of wage bill now going forward? It should more or less stagnate at this level or maybe a bit less. What is happening, this particular year we have taken some major hits because of the actuarial valuations of our leave encashment and gratuity, which will not be a similar impact in the coming years. With the reduction in manpower, which is expected around 3,500 odd. The reduction of 5% over the year surely will help in reducing our wage bill. Overall, we feel that with the normal increment in there and this reduction in retirement and this bar, we'll not require this provision for actually actuarial valuation of leave and all. I think it will more or less be along these lines or maybe slightly less. No, sir, the total for the year is INR 12,800 crores and that's a sharp jump. On a steady state basis, I mean, in the earlier call we had guided at INR 11,000 crores, INR 11,500 crores. Is that a correct figure to take for a steady state, wage bill? See, what has happened is there are two major impacts. One is what I was telling you about this actuarial valuation, which has impacted us around about 700 crores-800 crores. In addition to this, as compared to the previous year, there has been an additional impact of around about 300 crores-400 crores approximately. That is for the PRP payment for the employer. Right. These two factors have basically added up to that, additional amount that we have. Okay. Is that correct? INR 11,500 crore, is it a good figure to take steady state? You mean for the coming year? You can- Coming year. That's it. Maybe you can use a figure at around about INR 12 crore. INR 12 crore should be the comfortable figure for. Okay. Thank you very much. Thank you. The next question is from the line of Aditya Welekar from Axis Securities. Please go ahead. Thank you. Thanks for the opportunity. In FY 2022, our saleable steel production stood 15% higher at 16.9 million tons. How do you see the production profile going forward in FY 2023? Do we see any reduction in semis as a proportion of total production going forward? If you can throw some color on that. Yeah. See, basically it's always our endeavor to reduce our semis. Okay? First we take care. What has happened is now most of our plants are stabilizing. Like we have the Medium Structural Mill at Durgapur and USM, Universal Structural Mill at Burnpur. They have now stabilized. They will take more of the volumes of semis for their own consumption. Whatever is available we will be probably taking it to the market. We are very optimistic that this year it will be lower than what it was in the previous year, in 2021, 2022. Okay. Thank you. The next question is from the line of Manish Ostwal from Nirmal Bang. Please go ahead. Mr. Manish, please go ahead with your question. Your line is unmuted. Mr. Manish, may we request yourself if muted from your end? Hence, please unmute you. As there is no response, we'll move to the next question, which is from the line of Ritesh Shah from Investec Capital. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, can you quantify the average flats and long prices for the quarter that you usually give? Secondly, sir, how should one read into the trend line on flats and longs into this quarter, specifically after this export duty? Sir, even if you don't quantify, that's perfectly fine. Just wanted to have a sense on the trend line given flats account for a bulk of exports out of the country. Should one assume that the impact over here will be far more as compared to longs? Or are there any other industry variables that one needs to take into account to understand this, sir? Thank you. There is still a substantial difference between the prices of flats and longs. In our case, of course, the longs have a component of semis also in that, which is also impacting the NSR of the long. We can say that there's a difference around of INR 8,000-INR 9,000 between the two today. Second question please. All right. Sir, my question was currently the HR coil prices are let's say around INR 72,000. The export pricing, what we understand it would be around say INR 61,000. So there is a huge gap of INR 60,000 and INR 72,000. So how should one understand after this export duty, where is this that this can actually end up? Would it be at the midpoint? How should one understand the scenario, sir? All right, Mr. Tulsiani, this is Amit. See, the question is quite relevant. Of course, the export duty is definitely like we said earlier also is going to impact the prices and demand as well, maybe. See, overall it would be difficult to say anything right now, how and where the prices would move, how much quantity would get diverted into the home sales market from the exports. What kind of qualities would shift into the country. That would be difficult to say. Of course, what happens is the prices, whatever impact would be there would be in line with the market, and we'll have to move in line with those. What we also understand from our competitors, like say JSW and VSP and Tata Steel and all, they were into exporting this HR coil quite a bit. They will definitely have a direct negative impact. How much of the demand impact or the price impact overall would be difficult to quantify right now. Sure, sir. Additionally, we would also be looking at the prices of imported coking coal to correct somewhere, because that is also not sustainable at the current levels. Hopefully we'll be able to make margins, given if those prices do correct themselves. Sure, sir. Sir, a related question, sir. How do we How should one understand the iron ore pricing locally, given there are these export duties even on pellets over here? Are we looking at a significant surplus locally and hence it can pull down prices? How should one understand this? We expect the iron ore prices also to soften. Because of the export duty, there will be a softening of the prices, which will in fact help us to some extent. Because the softening of the prices will be reflected in the IBM rates, and our royalties are basically paid on the IBM rates, so we will stand to benefit from that. Sure, sir. This is quite helpful, sir. I'll join back with you. Thank you so much. Thank you. The next question is from the line of Mohit Bhansali from Bonanza Portfolio Limited. Please go ahead. Yeah. Hi, sir, and congratulations for the good set of numbers. Question regarding your Bhilai Steel Plant. You were earlier mentioning that you're going to start the head-hardened rail production. Have you started that? And what will be the order book this year? We have started on trial basis. About the quantities to be supplied, we have to be still very, you know, like, we have to see into it because, once we produce the head-hardened, there's an impact on the normal rails production. We are still trying it on trial basis. We had some trials in the month of April. I'm not too sure that how much we'll be able to produce during this year. The railways are insisting for quite a lot of large quantities, but it depends upon, you know, like, how much we are able to do. Sir, you are facing some problem regarding production? I just want to understand, because from quite long time you are trying to produce this head-hardened rail. Yeah. Actually, it takes some time because it's a new item and it takes some time to stabilize. It has taken some time. We have our foreign experts also who are also on this thing. It will take some time to stabilize. Okay. Second question, sir. Since you mentioned that you are facing this coking coal pricing problem shooting up like anything, what are your plans for your in-house production? Like you have Tasra coal block, you have ICVL coal block, and second, you are sourcing from BCCL. Please go ahead, sir. Yeah. Actually, we have planned from our internal from Indian sources around about 2.5 million tons of coking coal. This thing it includes Tasra as well as BCCL and our other mines out here. Yes, we are also following up with our ICVL mine at Vizag, and we expect a slightly higher quantity in the coming year from there also. Overall, we have planned that imported coal component, which will also include this Jhanjra mine, will be around about 86%. Okay. In the coming year as compared to around about 87.5%-88% in this year. In 2025, 2026. Okay. Sir, this rail order, it's been increased this year or it's on the similar line last year? They always want. Because it is very significant part of your, you know, the sales. I just want to ask that thing also. They always want rails from us. They want more. Actually, in various forums, they are projecting more than 1.5 million tons also. They say, "Let us see what best we can supply." Because, we are very much keen in supplying as much quantity as possible to the rails. Okay. Sir, regarding your de-leveraging plan for the future, as you have already reduced your loan to INR 13,500 crores, any quantify you can quantify to any figures? Actually, it depends entirely on the market scenario. The coal prices and the steel prices. It's very difficult to give any projection for the time being now. You plan to make it zero as soon as possible? Because last conference call you were saying that in next two quarters of this financial year, you will try to make it zero. Sure. That was a scenario when coal was very low and the NSR was also very good. Now with the coal prices going up substantially, we are under some pressure. Okay. Last question, sir. What is your inventory level as on 31st March 2022? Just one second. 6 lakh tons, no? I think it's around 6 lakh tons. It's around 6 lakh tons. Okay. Yes, sir. Okay. Thank you, sir. Thank you, sir. Thank you. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead. Good afternoon, sir. Thank you for this opportunity. I wanted to understand more about the, basically the Bhilai and Durgapur problems where the segment results have sort of dropped over last two quarters. What are the specific problems that we are facing at Bhilai and Durgapur plant, and when do you expect them to resolve? See, basically what happens in case of you can say Bhilai is more or less 50% a long product plant, and Durgapur is completely a long product plant. The long products, the NSRs were lower, as I had explained earlier, as compared to the NSR for the flat products. This has impacted the profitability of Durgapur. Secondly, there is one more issue that we have requested the railways to give us the pricing for 2021-2022 we are not yet there. Once the pricing of the railways rails come, the revised pricing of the rails come, we expect that the benefit of that will get it in the subsequent period. We expect a substantial increase in the rail pricing in 2021 and 2021-2022, which we are considered at the rail level for 2019-2020. Right, sir. In terms of the Rourkela and Bokaro, both plants have sort of shown particular improvement in Q4. Rourkela profit increased from INR 637 crore to INR 1,800 crore and Bokaro's profit increased from INR 986 crore to INR 1,432 crore. What are the key changes that has happened during this quarter which supported this better performance? Actually, the NSR in the fourth quarter for the flat products was again better than the third quarter, firstly. Secondly, we would have done better volumes also. That is one of the factor which has helped. Right. Sorry to interrupt you, Mr. Mehta. May I request you to please rejoin the queue? We have participants waiting for their turns. Sure, ma'am. Can I just go for one last question? I would request you, sir, if you can rejoin the queue. Sure. Thank you so much. Participants are requested to please limit their questions to two per participant. The next question is from the line of Rakesh Dubey from Dow Jones Capital Company. Please go ahead. Good afternoon, sir, and thanks for the encouraging. We cannot hear you clearly, sir. Your voice is sounding muffled. Okay. Actually, I just wanted to congratulate the management for coming up with this initial presentation. Sir, voice is. We cannot hear you, Mr. Dubey. Sir, voice is not clear. Mm. I would request you to please check. Am I audible now, sir? Oh, yeah. Now, yeah. Yeah. See, actually, I just wanted to congratulate you for coming out with good financial results in fourth quarter as well as in previous financial year. As you have mentioned that coking coal was a major factor which might have impacted your profitability to certain extent in the quarter as well as in the financial year. Coming from that level, we have been hearing that, you know, offers for Russian coking coal are likely to come at substantially discounted prices. What would be your strategy? Would you be planning to increase Russian intake in coming days? And if yes, what would be the payment mechanism like? Because that is the main concern at this point in time. Uh. This is my first. Actually, we normally have long-term agreements with our coal suppliers. Okay. With Russian coal suppliers, we do not have any such long-term agreement. However, we are trying to get some consignments on trial basis from them. Once those trial consignments are found to be in order, then we will try to get more coal from the Russian suppliers. This will show you- When that is likely to happen, sir? Actually, we are just trying to get it now only, but the only problem is there are some payment issues with them. You know, there are some issues relating to insurance of the vessels and even you can say some other issues which are there linked with that. We are trying to resolve those issues. The moment these issues are resolved, we will surely try to start taking from Russia. Thank you. Thank you very much. My second question is related to the indication which has been given by RBI Governor that interest rates are likely to firm up further to tame inflation. What impact this will have on sales overall financials? Actually, if the interest rates are expected to firm up, it will surely have an impact on the entire industry and actually on the entire economy, you can say. It will be impacted by that also. Yeah, there is just one thing that we are getting our borrowings, whatever are there, they are at very competitive rates. Bankers are willing to give it at the, you can say, the lowest rates also to us. Of course, whatever the difference is there, we will also be bearing the impact of that. I don't think it will have much of an impact with the borrowings coming down to the levels of INR 13,300-INR 13,400 odd. I don't think it will have a major impact on us. Okay, sir. Thank you. This is all I had to ask you. Thank you. Thank you. The next question is from the line of Shashank Kumar from Dolat Capital. Please go ahead. Sir, good afternoon, sir, and thanks for the opportunity. Sir, you have mentioned that the CapEx planned for this year is INR 8,000 crore. Do you intend to incur this CapEx irrespective of whether cash flow supporting or only if the free cash flow supports you will do this level of CapEx? Of course, to some extent, cash flow will have to support it. What happens basically in all these plans, some are committed already, so that we'll have to continue on. Okay. Okay, sir. Understood. The next question, sir. Sir, today we see our EV, enterprise value is lower than the pandemic low, that is the flash crash that we had in March 2020. In such a scenario, although the external environment is quite challenging, high coking coal prices, international markets being very tough to crack into and things like that. In this type of a situation, government has imposed these duties. Sir, by when do you expect to go into, sort of, some sort of a cash flow situation? Would you sound the government that, you know, this is a situation out there is not easy. Sir, exporting steel itself is an achievement. Now, sir, 18 million tonnes India is doing that. That in itself is an achievement. Patting the back they are doing this kind of duties et cetera. But today, barring industries where there's labor arbitrage, being able to establish ourselves as a country in the international market at a global scale, competing with the best of the world and actually being able to sell volume, that itself is an achievement now. Why are we not getting credit for that, I think? Actually, sir, to answer your question, this is basically something beyond our control. It's a government decision, and whatever they decide, there are factors. They don't necessarily look at only steel industry. Keeping in mind the entire economy, they have to take the decisions. Of course, steel industry, given whatever the impact they would be facing or are facing, we would definitely be talking to the government on that. If it starts to hurt the margins and all, there would be maybe representations from the steel industry also. As of now, we are not planning anything on that. We'll have to wait and watch how the impacts turn out. It can also give us a benefit in the sense that if steel prices come down, it can, on the other side, also help us in getting a higher demand from the consumers of steel. So if that happens, maybe it can, you know, turn out to be a silver lining in that cloud for us. We'll have to wait and watch. As far as government decisions are concerned, we are going to be with them for the time being. We'll take whatever call is to be taken in future, keeping in view the entire economy and the industry as such. Okay, sir. Thanks and all the best, sir. Thank you. Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah, thank you for the opportunity. My first question is on working capital, which you see last two years, we've reduced debt by INR 36,000-INR 37,000 crore, but INR 20,000 of that has just been contributed by working capital, almost INR 10,000 in each of the last two years. And if you look at our receivables, debtors, inventory, they've all gone favorable to a very unprecedented low level. Just want to understand, I mean, these low levels of working capital, how is it sustainable, and how do you see this working capital movement in FY 2023? Actually, what has happened is these debtors which were substantially high in the earlier years, we had a special drive, and we took up with the railway. The main debtors was, railways only. Out of the INR 8,000-odd crore which was there in the earlier year, almost INR 4,000 crore-INR 5,000 crore was from the debtors. From the railways. This, we had taken it up with the railways, and, we were quite successful in litigating most of the, most of them. There were some, invoices which are, you know, two to three years ago, which they were not clearing. We had a special drive with them, and we could clear it. That has basically helped us in reducing the debtors. If you see basically the other debtors which are there, we have got PHC debtors, which always hovers in the range of, you know, like sub INR 1,000 crore, INR 1,000 crore, say INR 800 crore, INR 700 crore. It's in the range of that only, around INR 600 crore. The other debtors also, that is, normally in the range of around about 3,000 or so. It is at the same level. It's basically the railway debtors which were in the way, which were very high, which we have brought it down to around about INR 1,100 crore in the current financial year. Yes, it is a thing that maybe the debtors will go up. The impact is the basic reason for debtors going up is also it depends on the price of the material which we are selling. so that also has an impact on the debtors. If the price is high, it tends to the debtors also tend to increase. Okay. Any further benefit are we expecting in the financial year? No, I don't think. This is actually absolutely rock bottom, I think. I don't think we'll be able to because again, railways, it depends on the budgets, whatever they get. Last year they were quite liberal in releasing all the budgets to us. We do not know what is going to be the impact in this year. Sir, what about the liabilities? I mean, even the payables, et cetera, have gone up substantially. These levels have never been seen before. If you can just explain on that front as well. It is basically what is happening is that we have got arrangements with our coal suppliers. Basically what happens is that since the coal price has gone up, it has had a subsequent impact on these payables, because we have got credit lines with them of, you can say, two to three months. We take advantage of that. Since the pricing has nearly, you can say, traveled from what levels it was since, say, March 2021, this has also had an impact on the payables position also. Okay. Since the credit increasing from INR 7,000 to INR 17,000, once the coal situation normalizes, this benefit which is sitting in working capital is also should reverse, right? Yeah, yeah. It will reverse, right. Okay, understood. Also, second question is on the coking coal front. I mean, what sort of inventory levels do we have? You said a 10%-15% increase in 1Q. What is the dollar per ton cost we are factoring in that estimate? Come again. One is, in terms of inventory days, what sort of coking coal inventory do we have? Inventory days, we normally have 35 days of inventory with us. That is. Okay. Being at the ports as well as at our steel plants. When you said a 10%-15% increase in coking coal cost in 1Q in the coming quarter, what is the dollar per ton cost have you calculated? It should be in the range of around about $450 or maybe. Because, see, what is happening is depends on entirely on the blends, what is being consumed. If there is higher level of CCI, the rate of CCI is lower, we stand to get an advantage. As well as for the soft coal. Now our emphasis is mainly on higher quantity of CCI and higher usage of soft coal. Hard coal is one of the most expensive, we are trying to restrict it to the optimum level so that the cost, overall cost of coal comes down. Even we are planning to have more of indigenous coal in future. The overall cost of coal should come down to some extent, but it will be high. It will be at least 15% high. Okay. What would be the spot rate? Mr. Nevatia. May I request you to please rejoin the queue, sir. Sir, this is a follow-up. Just one second. Just want to understand, sir, on the coking coal front, I mean, what is the spot rate versus what we will average out in terms of cost in 1 Q? Just want to get some directional sense as to in 2 Q, what sort of inflation one can expect if coking coal prices stay flat from here on. Basically, we are also guided by the spot rate. We take the average for the month for the Argus and Platts indices, and based on that, whatever we have, we have got some long-term agreements, as I've explained earlier, with our suppliers, so we get a discount on that. We avail that particular discount and we arrive at a price for a particular month. What happens is, that is at the load port, whatever the rate is there, that is there. By the time it comes and gets consumed, it takes normally 1.5 to two months. That arbitrage is there, means whatever we are going to get today, it may not affect, say, the month of June. It will probably affect the month of July or maybe even August. Sir, is the understanding correct that if there is no change in coking coal prices in the market in the next few months, your second quarter coking coal cost will further increase from first quarter as well? If you have, this is queue of industry, sir. Okay. All right. Thank you and all the best. Thank you. The next question is from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead. Good afternoon, sir. I had a question on our capacity. Now, you know, when will we start to actually realize this 20.2 million tons of saleable steel capacity, you know? Because now all units have stabilized. I guess July there was some issues with the finishing capacity. When can we expect, you know, utilization of close to 90% over at all the plants? Actually it's, see, we were having some issues about utilization of our facility, due to which, we were not able to, you know, like, reach our capacity. 2022-2023 we expect that we will surely be doing well as compared to even 2021-2022. We expect that we will be very near to our capacity in this 2022-2023. Yes, sir. You think that the Indian market can absorb this incremental volume now, especially with the export duties coming in? You think there'll be some sort of, you know, production cuts that can happen across the industry? It's too early in the year to talk about it. See, what happens is like we did not expect a COVID year, and suddenly things turning around last year. It's too preliminary to talk about this. Maybe whatever policies the government has introduced now, whether they will last for the entire year or they may come out with some swaps for us, we really do not know. It's really a preliminary phase, so we cannot just think whether. Yes, our intent is to produce and sell the most. Sure. Just lastly, so what was our export proportion in FY 2022? Around 8.6%. Okay. Yeah. Thank you. Thank you. The next question is from the line of Falguni Dutta from Jayprakash Securities. Please go ahead. Yeah. Good afternoon, sir. Sir, I have two questions. What is our coke rate? Coke rate for the current financial year is 440 kg/THM-445 kg/THM. 445 kg/THM. Okay. Sir, what was our average realization for Q4? Um- Average steel realization for Q4. Around, just one second. Around 60,000. Sorry, sir? Sorry to interrupt, Falguni, but there is a lot of disturbance which is coming from your end. Yeah. Sir, what was the average realization for Q4? I just missed that number. 60,000. 60,000. Sir, if you could just give me the flat price, flat realization separately for Q4. It was around between 64,000-65,000. Sir, lastly, what would be the current flat realization currently? We really do not know. In April it has improved to some extent, but. If we just say as on date, like we know that it's not possible to, in this volatility, judge anything, but as on date. Yeah. Again, I had explained it earlier that it is the average rate or whatever rate we arrive at. It is basically the earlier contract as well as whatever we have entered in this month, plus, you know, what we plan, plus with the project we have got around. The project rates are something different. Okay. Similar to its, to tell you the figure for me. Okay. That's all. No problem, sir. Thank you. Thank you, sir. Thank you. The next question is from the line of Sagar Gandhi from Future Generali India Life Insurance. Please go ahead. Yeah. Sir, my question is on dividends. Sir, is my understanding correct? This year we've paid 30% of profit after tax. Next year, as we cannot predict our PAT, is it fair to assume that of the INR 54,000 crores net worth, 5% is what we will have to pay, the number which will be close to INR 2,600 crores in absolute terms? Yeah. That, see, what is happening is that we will decide that basically based on our profitability and our capability to pay out also. Because it depends on the cash flow also. If we are finding some difficulties since we are having substantial investments in CapEx and all, so we will have to take up with the government at that point of time. Sir, in case you choose to do INR 8,000 crore CapEx as you guided, then can you convince the government or is it a negotiable item? Or because in my understanding, whichever is higher, I mean 30% of PAT or 5% of net worth, if you are a profitable enterprise, then that is what you will have to pay. Yeah. In previous years also. Okay. This guideline was there, but we have somehow got our exemptions from the government. Okay. Yeah. Sir, second thing is, because we've made solid OCFs over the last two years, and debt is also at very reasonable levels. Even assuming that debt levels will go up from here, is there a scope that the company will consider a buyback of, I mean. Sure. Is this something on your agenda? We are not. We won't plan to have any buybacks in the near future. Okay. Thank you, sir. That is it from my side. Thank you. The next question is from the line of Kamlesh Bagmar from Prabhudas Lilladher. Please go ahead. Yes, sir. One question on the part of coking coal. It seems very unlikely that your cost can hardly grow 15%. Even if we take, like, say, whatever lag which we want to take on the spot prices or the benchmark prices. It should not be lesser than, like, say, 25% or 30%. When we say that, we consume PCI, but even today, PCI is at the lowest ever discount to the prime coking coal. It's really difficult to understand your guidance on hardly around 15%, 12%-15% increase in coking coal cost when our inventory is hardly at around 35 days. See, basically what is happening is that we expect to, you know, improve our blends to some extent and then higher level of usage of pellets which have already started. This will bring down the coke rate also to some extent. Like, whatever we have planned nearly a reduction of around 5% in the coke rate for the year in this current financial year. We surely expect that all these cost control and cost-cutting measures will surely help us in bringing down to some extent the impact of the coking coal cost. It's not about, like, say, adjusted for input output mix. It's just purely on the coking coal cost. Coking coal costs have priced in and nothing to do with what your consumption will cost. Consumption cost. No, we are talking about the consumption cost. Like, say, usually we used to give the precise number for the coking coal cost, and this time around, surprisingly, you are giving the range. Sir, how much was your cost in or consumption cost in the previous quarter, and what has been the consumption cost in, like, say, FQ? You want the consumption cost of fourth quarter? Coking coal. Yeah. Okay. We could send it. We'll send it to you. Offline, we'll send it to you. Yeah. Secondly, on the CapEx side, sir, we had roughly around INR 3,500 crore CapEx in last year, and this time, like say, we are guiding INR 8,000 crore CapEx. What incremental CapEx we are going to take? Because we have not ordered any single machine in the last one to 1.5 years because we were focused on commissioning those assets which have been due for commissioning for years and ages. What all new CapEx or new ordering we have done in last six months? Sir, we have actually had lot of automations in Bokaro, and we have also gone in for our stamp charging batteries. We have also got clearances for our stamp charging batteries which are very capital intensive. Moreover, the major other expenditures are in the small schemes which the plants will be taking up. You can say each plant will be taking up around about INR 300 crore-INR 400 crore worth of schemes at the local level which AMR. which are known as AMR schemes which will be taken up. We feel that actually we are not too sure that how we are going to achieve it, but then, yes, our targets for the year are INR 8,000 crore. Some major schemes are in the pipeline for which the major expenditures will also take place. Okay. It would be appreciated, sir, if you can give at least some break-up, like, where we are going to spend. Because in the earlier presentations you used to give, like, say, how much would be on the, let's say, process management and all those things. We'll send it to you offline. Thank you, sir. Thanks a lot. Thank you. Please let this be the last question. We'll take the rest of the queries then offline. Sure, sir. I would like to hand over the conference to Mr. Vishal Chandak for closing comments. Yeah. Thank you everyone for participating in today's call. I can see a huge amount of Q&A question answers still there, but unfortunately due to want of time, the management has to leave. I would like to thank Mr. Tulsiani for the time and his team as well. Mr. Tulsiani, handing over to you for the closing comments, please. Yeah. Thank you, Vishal. This year is a real challenge for us. Last year was really a dream year for I think the entire steel industry. We just hope for reduction in the prices of coal and other inputs which will help us in reducing the rising cost of production. Going forward, our focus will be on improving volumes, improving the product mix, and improving operational efficiencies for controlling costs. Hopefully, we are able to deliver sustainable results in the coming quarters also. Thank you. Thank you, sir. Thanks. Thank you. On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.