Ladies and gentlemen, good day and welcome to the SAIL Q2 FY 2023 earnings conference call hosted by Nuvama Wealth Management. As a reminder, all participant lines will be in 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. Ashish Kejriwal from Nuvama Wealth Management. Thank you, and over to you. Thank you, Aman. Good afternoon, everyone. On behalf of Nuvama Wealth Management, we welcome you all for Q2 FY23 post-result conference call of Steel Authority of India. We are happy to host, Mr. Anil Tulsiani, Director of Finance, along with his team, who will be representing SAIL in this call. Now I would request Mr. Tulsiani for his opening remark, and thereafter we'll open the floor for Q&A. Over to you, sir. Thank you, Ashish. Good afternoon, everyone. I welcome you all to the investor con call on the financial results for Q2 and H1 financial year 2023 of SAIL. Am I audible? Yes, sir, you're audible. Please go ahead. Thank you. The last few months have been quite challenging for the economies across the globe in general and steel industry in particular. Though demand for steel in India has been relatively better, the impact of falling prices of steel, coupled with the spike in the prices of raw materials and inputs, has put the margins for Indian steel producers under severe stress, as visible from the results of the companies published so far. I will briefly take you through the results of the company before we take up the questions. Let me start with the economic scenario. The global economy has been waging a severe battle with the inflationary forces in the post-COVID era. With economies like U.S. taking corrective action by tightening the fiscal and monetary policies, the GDP growth rates have been continuously reducing. The scenario has been getting worse, with China's growth slowing down on the back of a real estate sector-related issue. The Russia-Ukraine conflict has accentuated the inflation problem due to supply chain disruptions. Agencies like IMF and World Bank have revised the projected GDP for various economies downwards. IMF, in its latest world economic scenario, has reduced the global GDP forecast to 3.2% in calendar year 2022, and the rate is further expected to slow down to 2.7% in calendar year 2023. The major advanced economies, which include countries like U.S., Germany, Japan, U.K., France, are also seeing projected growth rates curtail significantly. The emerging economies are faring only slightly better than their advanced counterparts. The silver lining for us, however, is the growth trends for the Indian economy. The economy is placed much better and pegged to grow at the in the range of 6%-7% over the next year in various reports like IMF World Economic Outlook, World Bank projections, Monetary Policy Committee, the Committee of RBI. Though Indian economy is akin to the world economy has been seeing downward trend in GDP projections, yet the projections of growth in 6%+ range mean India will remain among the fastest growing major economies. The domestic industry will, however, have to guard themselves from the import threats. The global steel industry has seen a decline in demand and corresponding realization for past few months. With China seemingly cutting down its production in the wake of environmental concerns, it has had an impact on the prices of iron ore. The concern also remains in the area of coking coal, which remains quite volatile. The fossil fuel, which is a major input of steel industry, earlier saw unprecedented high price in the range of $670-$680 per ton for HCC during February to May following the Russia-Ukraine war. Thereafter, the prices saw substantial reduction from June-July onwards, having come down to levels of INR 200 per ton. However, they have now again started inching up. The forces of inflation, uncertainty, et cetera, have all had a negative impact on the global steel industries. The impact has percolated to the Indian market as well. The prices of steel, which were at a peak during April, have considerably reduced by around 25%-30%, with flat products feeling relatively much more greater adverse impact than the longs since it is guided by the international markets. In the long segment also, the prices have declined of late as one of the major components, that is scrap used in EAF/DRI route, has seen prices coming down to $350 level CFR Turkey lately. The demand projections for steel in India, however, remain upbeat, with the domestic steel industry recording a growth of 5.3% in crude steel production during April to October 2023 over CPLY. The consumption of steel has grown by 11.4% in the country during this period. The company has recorded its best ever H1 production performance for hot metal, crude steel, as well as saleable steel during H1 financial year 2023. The sales in the domestic market by CMO have grown by 9% during H1 financial year 2023. Overall sales have, however, been affected due to lower exports during the period. Exports are down by around 5.5 lakh tons during this period. The numbers during H1 and Q2 financial year 2023 vis-a-vis CPLY are as follows. Production in H1 2022-23, crude steel 8.63 million tons. In H1 2021-22, 8.24 million tons. Q2 2022-23, 4.3 million tons. Q2 2021-22, 4.47 million tons. Saleable steel H1 2022-23, 8.17 million tons. H1 2021-22, 8.09 million tons. Q2 2022-23, 4.09 million tons. Q2 2021-22, 4.32 million tons. The sales volume H1 2022-23, 7.36 as compared to H1 2021-22, where it was 7.61. The financial performance has seen a growth in the top line, whereas the profitability has taken a hit in line with the industry trends. The revenue from operations for H1 2022-23 is at INR 50,275 crores as compared to INR 47,469 crores. EBITDA is at INR 3,780 crores for H1 as compared to INR 13,921 crores in H1 2021-22. The PBT is at INR 523 crore as compared to INR 10,898 crores in CPLY. The profit after tax is at INR 391 crores as compared to INR 8,154 crores in H1 2021-22. The average realizations during H1 remain higher than the CPLY period. Though there has been a substantial reduction during the period. This has helped in revenue growth in H1 compared to CPLY. Profitability has, however, been adversely affected due to higher costs, especially of coking coal. With the coking coal prices coming down, we expect the cost of production to also correct and enable us to deliver better results in the coming quarter. With these words, I hand it back to Mr. Kejriwal for opening the question and answer session. I'm sure you all have lots of queries on the performance. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Amit Dixit from ICICI Securities. Please go ahead. Yeah, hi. Good afternoon, everyone, and thanks for the opportunity. I have two questions. The first one is essentially relating to the waterfall chart that you have given in slide 29. So, if I see there, unlike your peers, you have gained from raw material usage and input price cost. In fact, input price cost, like, is almost gain of INR 1,994 crores. So just wanted to understand, you know, better that where did this gain come from, because coking coal prices, for your peers at least didn't correct substantially. And also raw material usage, where this benefit has come from. That is the first question. Actually, when we compare the quarterly results, the prices of coal have come down in the second quarter as compared to Q1. I will give you the figures. The imported coal prices which were at around INR 39,000 in Q1, they were at the levels of around INR 33,000 in Q2. Okay. This was the chief driver of this, you know, INR 1,994 crore thing. Yeah. Okay. What about the raw material usage? Where this benefit of INR 550 crores came from? Is it due to improvement in technical, techno-commercial parameters or something else? Yeah. It was basically because of the techno-commercial, techno-economic parameters. Sir, what kind of coal, coking coal costs are we expecting in Q3 from base level of INR 33,000? We expect a reduction of around about INR 5,000. INR 5,000. In the Q three. In Q three. Okay. The second question. Around about $50. Okay. Fair enough. Got it, sir. Thank you. The second question is on the working capital buildup. If I see your debt has gone up significantly, I mean, if I compare it in the first half of the year, and working capital buildup is also quite significant. What kind of relief do we expect in H2? And what would be the debt level that you will guide by end of FY 2023? Actually the debt level increased by, you can say, around about nearly INR 9,000 crore in the first quarter. In the second quarter it has gone up by around about INR 5,000 crore. In the third quarter, we expect not much of an increase in the debt levels and in the fourth quarter, we will try to surely reduce it to some extent. It may not reach the levels which we had at March 2022. Surely we will try to reduce it to some levels of around about, you can say, INR 25,000-INR 26,000 crore. Great, sir. That's very helpful. Thanks and all the best. Thank you. Thank you. The next question is from the line of Pinakin from JP Morgan. Please go ahead. Sure, sir. Thank you very much. My first question is, if I look at the plant level profitability, surprisingly Durgapur and IISCO have seen a positive EBIT versus a negative EBIT in the last quarter, while the other plants have negative EBIT. Can you walk us through what are the drivers of this improved profitability seen in Durgapur and IISCO? Because historically they are long product, you know, product segment plants. Actually, what has happened is that the long product prices have not been much affected because of the shortage of thermal power. The secondary steel producers also who are into making these long products, they could not reduce their prices. Whereas the flat product prices have been greatly impacted during this particular quarter. So that is why our other flat product plants which are Rourkela, Bokaro and to some extent Bhilai, they have been severely affected by this fall in the prices of the steel products. Whereas the long products prices have not gone down to that extent. Thank you, sir. My second question is, we are entering the seasonally busy period for construction demand in India. There were some reports about companies raising prices in the month of October. Given this backdrop, sir, how do you see sales realizations trend over the next few months versus the average realizations that the company saw in the second quarter? As compared to the second quarter, the realizations may not be better. We may try to keep it at that same levels in the third quarter. Understood. Thank you very much, sir. Thank you. Next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead. Yeah, good afternoon. Thank you for the chance. First question is on the other expense; there's a sharp decline of almost INR 1,000-odd crores. Also employee cost trend rate is also lower this quarter. Is there any one-offs or is it sustainable gain? If you could just explain what are the drivers. Actually, there is a one-off also. It is in case of royalty. The royalty, what is happening is that in case of our Odisha group of mines, we were paying royalty at the highest rate for lumps, for fines also. In the month of July or August, the government had come out with a notification that the highest rate of lumps will not be applicable for fines. It will be the highest rate of fines which will be applicable for fines only. This has a one-time impact. It's only applicable from April onwards, April 2022 onwards. It had an impact of around INR 400 crore in this particular quarter. Of course, out of 400 you can say 200 is for this quarter and the 200 is for the earlier quarter. The other thing which is there is that in because of the rising dollar rate, we had a foreign currency loss of around about INR 570 crore in Q1, which we could reduce it to around about INR 280 crore in the second quarter. These are the main major things where the miscellaneous expenditures have come down. Regarding salaries and wages, this should be the gradual trend of a gradual reduction in salaries and wages over the years. Okay. Just to understand this, the Forex you said from INR 570 it has gone to INR 280. The gap which is INR 290 is a one-off gain which is recorded in the other expense. It is not a one-off gain. Actually, it was an expense. It was a major expense in last quarter. That expense has come down. Okay. Sorry. Got it. The royalty you said is INR 400 is the one-off gain which is recorded in 2Q. Yeah. Basically, it's the normal royalty will now come down by INR 200 crores per quarter you can say. For the first quarter also we got the benefit in this quarter, the second quarter. Okay. Got it. The second question on the working capital buildup of almost INR 15,000 crores. I mean, what sort of normalized level of working capital do we expect? Because this sort of increase, we've not seen in any of the peers. If we connect the fourth quarter of last year or the entire last year, we had reduced our working capital very substantially. I mean, what is the sustainable level, if you could explain, sir? Actually, what has happened is this increase is basically because of the increase in the price of imported coking coal. We had shifted to LC-based payments. We had a payment cycle, you know, extended. So because of that, this working capital increased. If you really see from, I think, from Q1, the position has improved marginally. Yeah, got it. Lastly, for the full year CapEx, what is the guidance for this year and next year? We have spent around INR 6,000 crores so far under CapEx. We have targeted to the extent of around INR 6,000 crores for the entire year. Okay. Just one last small clarification. We have a cash tax of around INR 300 odd crore. Our understanding was that we have accumulated losses. What is our guidance for the cash tax payout? No, that has been fully adjusted. Okay. Net-net, we will not be paying any tax on a cash basis this year, right? No, we'll be paying tax on cash basis from this year onwards. From this year onwards. What, 25% is what we should build in? Yes, yes. 25. Okay. Thank you and all the best. Yeah. Thank you. The next question is on the line of Abhishek from HDFC AMC. Please go ahead. Sir, thank you for taking my question. Just one question, sir. If you look at the steel price movement in last three to six months, there has been a very sharp reduction in prices in the international market, including China, Japan and Korea. If you look at the domestic prices, the correction has been limited. Because of that, there is a high premium that the domestic prices are kind of commanding, especially in the flat side. I just wanted to understand your view, you know, how the situation should pan out, and how do you see the steel prices moving from here? The prices in Q3 should be more or less at the same levels as Q2. There was a sharp decrease as compared to Q1 in Q2. We feel that in the Q3 it should be more or less at the same levels as Q2. That is based upon the prices in October and November. What is your sense of how the prices should move in December and January? Will there be an alignment to the import prices, or you would expect the prices to remain at a strong premium to import parity prices? It's very early to say all these things because the thing is that basically the long products we should see the prices firming up a bit. All these things also depend on another factor, which is the coal prices. If the coal prices also start shooting up because they have gone up in the past one and a half months substantially by nearly $60-$70. If the similar trend continues, maybe it will surely have an impact on the prices of the steel also. Understood. Sir, just one more question. On the coking coal, we saw a decline which happened two-three months back, and you are guiding for a lower coking coal in 3Q. But the spot prices have again moved up. So how should we think about, you know, coking coal given going up here? That impact will come in fourth quarter? Yeah, it will come in the fourth quarter. It may not come in the third quarter because there's this, the cycle is of round about, you can say three months. When you import from USA, it's around for three months, and it's also around two to two and a half months for the Australian coal. So we'll be getting the benefit of the imports which we have made in the month of, say August and September. We'll get the benefits of that. Maybe whatever coal we are procuring now, it will be shifted over to the fourth quarter. Sir, the spot price that we are buying, you mentioned it's going to 28,000 INR per third quarter. Spot prices are higher by how much amount, sir? 300+. 30-31,000 range. It should be around 31,000. Around 31,000. Oh, okay. Thank you, sir. All the best, sir. Thank you. Thank you. Next question is from the line of Arijit Dutta from Kotak Mutual Fund. Please go ahead. Hi, sir. One question from my side. Our understanding is, for the government contracts which we directly sell to government, the prices are a bit sticky and the changes come after a lag. I mean, if you can guide us, what government price contract that we can expect in the upcoming years, especially to the railways. Whether we have already taken the hike that has already been when the steel prices were skyrocketing or we took that hike and a date that is going to come in. Any so clear view on that. Are you talking about the rail pricing? which we supply to the government agency, for example, the railway. See, majority of our supplies are in the form of rails. We supply nearly 1 million tons of rails to the government. Besides that, there are small purchases made by them, which are not very significant. This rail pricing is actually finalized on an annual basis. At the moment we are getting it on some ad hoc basis. We get a price at the beginning of the year. The ad hoc price has been fixed at around about INR 67,500. The final price, we will be submitting for 2022-2023 in the year 2023-2024. Now, we'll be submitting the price for 2021-2022 shortly. Whatever is the price which is finalized between us and the railways, that benefit or if there is any reduction, will be in the year in which we actually get the final pricing from the railways. In that case, when we'll be doing the finalization then at the end of the year on April, I mean, 1Q of FY 2024 we will be getting Some prior year adjustment here, right, sir? We will be submitting it now. Actually, we have already submitted for 2021, so we will be getting the final pricing of that probably in this financial year. That will be on our gain side in case, if I assume that, your price will be accepted. We have submitted which is a higher price to the railways and let us see. We finalize that then mutually. We expect a higher price, no doubt about that. Very good, sir. That's all from my side. Thank you. Thank you. Next question is on the line of Vishal Chandak from Motilal Oswal. Please go ahead. Thank you for the opportunity, sir. My question was with regard to the CapEx plan. You've mentioned that so far you've spent about INR 2,000 crore and your target for the year is about INR 8,000 crore. That means, in the interim INR 6,000 crore will be spent. Yeah. No, no. It's 6,000. Around 6,000. INR 6,000? INR 6,000 crores is for the full year? Yeah. Right? For the full year, yeah. Additional INR 4,000 crore that you will be spending between October and March. If you could just guide us on what kind of projects you are planning to spend, that would be quite useful because as I understand, there are no more volume expansion projects that are in the pipeline. What kind of productivity improvement are we looking at, sir? We are actually putting up our casters in Bhilai and even in Bokaro. In Rourkela. Besides that, we are having some projects of blast furnace refurbishing, some major refurbishing of blast furnaces and coke ovens also, which are coming up this year. Besides this, normally what happens is there are very many small-scale which are being taken up in all the steel plants. Some other major projects are there like some water pipeline projects with the government and providing additional power for our plants on deposit term basis, which are also being taken up this year. I understand. Just one follow-up on this point. We have incurred about INR 50,000+ crore on modernization and expansion. I would presume that this would have covered blast furnace, caster, coke oven batteries. No, these are the. You see that we have still, lot more modernization plans pending? No, actually these are basically what is happening is that in the modernization plan, basically three blast furnaces came up. One at IISCO, Burnpur, the other one at Rourkela, and the third one at Bhilai. The other blast furnaces which are there, say at Bokaro, then there is one at Durgapur and in other units also and even in Bhilai and all, wherever there are blast furnaces, the older blast furnaces, we are refurbishing them because they have to be refurbished also within certain timelines. Say 20 to 20 years down the line, you have to completely refurbish it. Then also we are taking up certain capacity enhancements in increasing the volumes of the blast furnaces also. Those are ongoing projects which are taking place. Sir, instead of refurbishing the old blast furnaces, does it not make more sense to rebuild a new large blast furnace with matching casting capacity? And then- No, what do I do with the existing casting? You should have looked into that aspect as well. No, what do I do with the existing casting capacity which is there? I have to use that also. We can add more casters, right? Ultimately, it goes from the SMS into casting. Adding more casters will add to, you know, solve the existing problem also. See, we have got our own expansion. The use of the new caster can also be deployed. We have got our own expansion plan in all the plants. In that only the new blast furnaces will be coming up with matching casters and with matching mills and all. My limited point was that instead of refurbishing smaller sized blast furnaces which are more expensive, can't we look at, you know, putting up bigger sized blast furnaces which will be more economical going forward? Yes, those are in the pipeline. That is our expansion plan. These are basically removing some bottlenecks or, you know, refurbishing the existing blast furnaces. Sure, sir. Yeah. Thank you so much. Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead. Hi, sir. Thanks for the opportunity, sir. Two questions, actually three. First question is how are we looking at government's PLI scheme? Have you put any proposals? How should we read into this? Yeah. In this, we have submitted our applications mainly for our Rails. Okay. Sir, can you indicate the quantum of capacity, CapEx that we are looking at and what sort of benefits could be expected out of it? Actually, it is an existing thing where we are developing new products. The head hardened rails are there, which are being produced, which we are developing. New profiles are also there. It is basically from that only we are for that we have applied in the PLI scheme. Sir, what sort of benefits can one expect, if the proposal goes through? We will get an improved NSR for that also. The price of the rails, of these particular rails will be substantially higher. Sure. That is helpful. Sir, the second question is on export taxes. Any thoughts over here? It has been lingering since quite some time. Export taxes. This is purely on the government to decide upon it, what is to be done. We have always been requesting the government to waive off these taxes, but it's basically the government who has to decide it, not us. Okay, fair. Sir, last question was on iron ore integration, and we had earlier indicated that we will be looking at another 13-15 million tons of capacities. Specifically on iron ore, if you can indicate mine-wise, what the progress has been. I haven't heard on this variable from the management since quite some time. Specifically, if you can touch upon Meghahatuburu, Bolani and Goa. I think those are the three larger ones, and the incremental expansion plans of around 15 million tons. Thank you. Actually, coming to Bolani first. Bolani is now at a capacity of almost 7-7.5 million tonnes. We are still going ahead with the plan of having a 10 million tonne plant out there, 10 million tonne capacity out there. It's going on. In probably say two years' time, we'll be able to produce at that capacity. Coming to Kiriburu and Meghahatuburu, the resources out there, the reserves out there have depleted. So we are now going in for. There are two new areas out there, the south and the central blocks. Once these blocks open, the capacities are ready in these mines. Like, Kiriburu has got a capacity of 5.5 million tonnes, and Meghahatuburu has a capacity of 6.5 million tonnes. Both these capacities can be operated once these new blocks are open. Out there also we have got a lot of clearances, and we expect the production to start from there in maybe a year or so time. Coming to Goa, we have already, as the board has cleared, a mega project out there of operating the mine through a mine developer and operator, where we will have production of 10 million tonnes, out of which 4 million tonnes will be pellets, 4 million tonnes will be fines, and 2 million tonnes will be lumps. This project also like we have the board has accorded in-principle approval, and we are working on tendering out for the same. Perfect. Sir, Rowghat and Chiria? Chiria is now become a non-mining zone, so we are trying to convince them to allow us to do some mining out there. Rowghat is moving at a good pace now. We have appointed a contractor out there. We deployed a contractor for doing interim mining out there. Already a lot of, I think a couple of rakes of iron ore have also been dispatched from there. We are in the process of, more or less most of our clearances are available. We have also appointed an MDO out there. The things will move fast out there. The only thing is the rail line, which has to be brought till Rowghat. Out there also substantial job has been completed up to 60 km mark. It's a total 93-km line. Up to 60 km mark, and then from 83 to 93 km, the line has been completed. The remaining line will be completed maybe in a year or so. Great. Sir, last question on the incremental expansion, 15-17 million tons, what we had indicated earlier. Any update over there? We have already appointed a consultant for this. We have appointed a product consultant. The product consultant will be giving what is the, you know, like a future requirement for the products, say 2030 onwards. He's been giving his thing. Besides that, we have already also appointed a consultant for our IISCO Steel Plant, Burnpur, where we are, he'll be also submitting his report about the means how we go ahead for expansion in IISCO Steel Plant, Burnpur. Sure, sir. Thank you so much for the detailed answers. Appreciate it. Thank you. The next question is from the line of Prashanth Kota from Emkay Global Financial Services. Please go ahead. Sir, good afternoon, and thanks for the opportunity. Sir, in this quarter, what would have been the inventory losses that would have been there, sir? Around INR 500-800 crore, is it the right number or more or less, if you could guide on the same. The high cost inventory we saw liquidated. Also come back. Could you explain what do you mean by inventory losses? Because of the higher cost inventory sitting at the beginning of the quarter, which would have been sold out this quarter. I think we'll get back to you on this offline. Okay, sir. No worry. Sir, second question. Sir, if I remember correctly, three quarters ago, we had a line of acceptances or some kind of a facility for coking coal, because of which our working capital debt was somewhat It was advantages to our working capital debt in terms of pulling that lower. Now, have we done away with that line, sir, that acceptances line which does not necessarily have to be reported as debt? Is there some change in your strategy there, or am I in the right track? No. Actually, we still have our payment terms similar in case of coal. Mm-hmm. Which was there earlier. That is, having a two-three months of line of credit from the coal suppliers, and so that still continues on now. Okay. There's no change around that. Okay. Understood. There's no change. Sir, lastly, if you could, wherever possible, since sector itself is in a challenging space, and whenever there is possibility, if you could align your CapEx to be asset profitability on the P&L side, sir. It'll help everyone. Of course. SAIL as a company and also the investors as well. Is that the right point to make? Fine, fine. We've noted the point. Thanks, sir. Understood, sir. Wish you all the best. Thank you. Thank you. Next question is from Raina Somaya from Spark Capital. Please go ahead. Yeah, thanks for the opportunity, sir. First question is on the 4 million tons sales that we have done in this quarter. How much of this would have been part of contract? I'm just trying to understand the quarterly fluctuations in prices. To what extent you know because of the contract insulation has not actually impacted the quantum. You did mention about rails 1 million ton. I presume that is for the annual. That probably would not have got impacted. Similar to that, what you know to what extent do we have contracts and you know what are the time period of those contracts? See, basically, we don't have many such contracts. We basically do it on a monthly pricing system. Apart from rail, mostly we can think about to be on a monthly basis. Is that right to- Yeah. Mainly on monthly pricing system. There may be some contract, but that's a very small quantity, actually. Quantity. It's very small quantity which may be there, but otherwise it's mainly monthly pricing system. Understood, sir. Second thing on the rail, which you mentioned. The accounting, let's say in case the prices get revised on the higher side, so the accounting happens in one single quarter when we get the price confirmed? That's the way it gets done? Yes. It's like that only. Got it. For FY 2022-2023, we have submitted or we are yet to submit? We have. You said for 2021- We have submitted. For 2021, we have submitted already, and it's nearing finalization. For 2021-22 also we'll be submitting shortly. Actually, the Railways normally advise the Chief Adviser Cost to take the information from us, then only we are supposed to submit it. This information by the Railways has been given to the Chief Adviser Cost in the end of October, so we'll be submitting it shortly. Got it, sir. One final question. On the realization part, our NSR is down close to INR 14,000 a ton QOQ from INR 76,000 to, say, INR 62,000. Between flat, semis and long, if you can provide some color during the quarter, where the maximum impact was and how is it trending currently? Actually, now in Q2, the flats and longs are more or less the same. I was looking for, in the quarter, the INR 14,000, I mean, the difference that came in the quarter, I mean, it was mostly led by, you know, flat and, to small extent by longs, because you did mention that, long prices are not corrected. I was looking for which had kind of, really weighed heavily on the 14K impact. It was basically what has happened is that the flats which were hovering in the range of INR 70,000 and above have fallen drastically, whereas the longs have been more or less at similar levels. Gotcha. Thank you. Thank you. Thank you. Next question is from the line of Pritam Roy from B&K Securities. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. I have only few questions. First of all, that the inventory has gone up by, it's currently stood at around INR 28,000 crore, okay? The working capital is also gone up significantly. In the range that you mentioned in the presentation, that is showing that we are getting a mean price raw material price benefit. My question is that how these things is to pan out? Means my question is that whether we are holding some high value in inventory which we are going to release in the next quarter or maybe next quarter, or we are procuring current prices and we are blending that so that we can maintain the margin? If you can shed some light on that. Actually, our raw material inventories are on weighted average cost basis. Over the year, it smoothens out. Okay. Over the year it will easing out gradually, right? Right. Correct. Okay. What is the current NSR you just mentioned? The INR 62,000 is the correct understanding? The current NSR for the H1 is. For the quarter. For the quarter. Yes. For the quarter, it was in the range of 57-58 thousand. Okay. In the previous question I kind of corrected the long products prices had fallen by around about INR 6,000 and the flat products prices had fallen by around about, you can say, INR 13,000. Okay. INR 56 thousand-INR 57 thousand rupees is the current trade of that. Yeah. One more question, sir. Just, what is the contribution on change, the inventory part. How much is the raw material inventory and how much is the finished goods inventory that company is holding currently? Is that data available? Finished is around INR 16,000 crore and raw material is INR 12,000 crore. Okay. Okay. Thank you, sir. Thank you. Thank you. Thank you. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead. Kirtan, your line is unmuted. Please proceed with your question. It seems there's no response from the line of Kirtan, hence we will move to our next question. That is from the line of Chirag Singhal from First Water Capital. Please go ahead. Thanks for taking my question, sir. Just couple of questions. Firstly, on the employee expense. This is at the run rate of INR 1,800 crores per quarter. If I annualize this and take FY 2022 as the base, then it's roughly 1,600 odd crores per annum savings. Can we work with this number going forward? No, you should not. Okay. When you compare it last year, we had a one-time payment for the wage revision arrears also. That had a major impact. When you go with a QoQ with this particular year, it's working out to around about INR 2,800-odd crores per quarter. We can take this forward. INR 2,800 actually. Okay. Sure, sir. Thanks. Second question is on the raw material usage savings of INR 550 crores per quarter. In the quarter we have presently reported that there is a savings of INR 550 crores from the raw material usage. Can you throw some more light on this? What exactly is this and is it like a structural, you know, savings that will continue in the quarters going forward as well? Actually, there has been a reduction in the usage of coal. Using the coke ratio. Yeah. In the usage of coal there has been a substantial reduction. Moreover there is one more thing that we have started using a bit more of the indigenous coal. CDI. This has got a substantial impact on the usage of coal. Besides that, in the other elements also like, iron ore and all, there have been some improvement in the consumption pattern. Understood. Okay. Sure. Thanks. Sir, just one last question. It's more for clarification actually. You gave some numbers on coking coal. Just wanted to clarify that. Did you mention the spot coking coal prices is around INR 31,000 per ton? Just one second. Yeah. It is basically the price which we had told you about INR 32,000 is for the imported coal excluding CDI. Right. That is the spot price. It's not the spot price. It's basically the average consumption cost of imported coal. Consumption cost for the current price. Of imported coal. Right. Right. This you're expecting it to reduce by INR 5,000 per ton in the current quarter? Yeah, it should. Okay. Sir, what is the spot imported coking coal price? Around $300 odd. $310 today. Hard coal. That's for hard coking coal. That's the flats and. Sure. Platts index for hard coking coal. Sure. Understood. That helps. Thanks a lot and wish you all the best. Thank you. Thank you. The next question is from the line of Falguni Dutta from Jet Age Securities. Please go ahead. Yeah. Just had two questions. One is, what is the current HRC price as we speak? Indian price? Indian. It is somewhere around INR 55,500. Hello? It is, yeah. It is around about 56,000. Currently. Okay. Sir, what would be our production and sales guidance for the year and for FY 2024? Production will be around about. Seventeen 17-17.5 million tons. Sales. Sales will be also on similar lines. 16 now. Around 16 million tons. Okay. Sixteen to sixteen point five. The number for FY 2024, if we have any. We've not yet finalized anything. Actually, we'll just see what additional capacities are there or whether we are having major shutdowns or anything, and then we'll finalize that during the month of. At our current full capacity, sir, how much can we go? If assuming we run all the plants at full capacity, how much should we be producing? Crude capacity is around 19.5. We can think about saleable steel production of around about 18.5 million. Okay. Thank you, sir. That's all from my side. Thank you. Thank you. Next question is from the line of Raashi Chopra from Citigroup. Please go ahead. Thank you. Just on the debt levels, you know, what kind of net debt EBITDA will you be comfortable with? Where is it at currently? Is generally- See, it's always we are very comfortable when there's no debt, but then we cannot accept that on today's date. We are planning that we should bring it down to around about INR 25,000 crore levels by the year end. Okay. Currently it's at about INR 26,700? Yeah. 27,400. That's as on 30th September. Okay. Okay, thank you. That, and the other question is what is the level of inventory that you currently hold? 1.1 million tons. It's the current inventory of finished goods is around about 1.1 million tons. You unbound around 200 KT? Pardon? You liquidated around 200 KT during the quarter? Yeah. Okay. Thank you. Thank you. Next question is from the line of Rajesh Majumdar from B&K Securities. Please go ahead. Yeah, good afternoon, sir, and thanks for taking my call. I just wanted one clarification on the NSR and the long-term rates. Barring the rail rates and long term, the entire sales is on spot, if I understand. The 57-58 you talk about NSR is on excluding the 1.2 million tons on all the other sales. Is that correct? Is that the correct assumption? It's included in that. The Rails price is also included in that, but it's a very small component. It's around about 1 million tons in the total sales, 16 million tons of saleable steel. Then, besides that, we don't enter into very many long-term contracts. The only contracts which we enter into is with some PSUs and all who want us on a long-term basis. Otherwise, ours is mainly on a monthly basis. Right, sir. The 57-58 includes the rail, but what I want to say is that when you guide on similar prices in Q3, you are basically talking about the spot market, right? Mostly the spot market. Yeah. We are talking about spot. Yeah. My other question is, I'm sorry to harp on this again. On the rail mill again, when are we starting to produce head hardened rails, and what is the difference in realization we can expect when we can see a sizable quantity of head hardened rails being sold from there? Actually, the trials for the head hardened rails are going on. Okay. Regarding the pricing part of it, we are still in talks with the railways because this is going to be a mutually agreed price based on what is our cost for that, what is the additional cost, what is the, you know, because it will surely have a impact on our productivity also. Considering all those things, we are in negotiations with railways. It will take some time to finalize it. Yeah, that's fine. I just wanted to know the expected volumes from the head hardened rails in, say, one or two years, whenever the thing stabilizes or is finalized. What are the kind of volumes you're expecting from the HSR side, given the fact that NSRs are nearly 10K higher than what the current rail prices are? If I'm not mistaken. Yeah. It will be higher. It will basically depend on the requirement of the railways, how much they want from us. We can produce the entire 1.4 million tons, 1.2 million tons in head hardened rails or. No, no. PSU capacity will be. It's not possible. Yeah. Yeah. It's not possible. Okay. What is our capacity there? That's what I wanted to know. Yeah. It will be made from the same mills. It's not that it is going to be made from a different mill. The only thing is the operations will change, so that will have an impact on the productivity. That also we are in talks with the railways, but the quantity will not be that high. Like, the entire 1.4 million tons will not be there. It will be small quantity, maybe a couple of lakh tons or something like that. Okay. 200-300 KT. Is that the correct assumption? You can say 200-300. Okay, sir. Thank you so much. Thank you. Next question is from the line of Mohit Bhansali from Bonanza Portfolio Limited. Please go ahead. Yeah, thank you for giving me the opportunity. First question is, sir, on employee cost, you're gradually, I think, reducing your high cost employees. Is it safe to assume that your downward trend will continue for another two-three years? Yeah, it should continue. It should surely continue. We are the normal retirement in every year will be around about 2,500-3,000. That impact will surely be there. Of course, one thing is there that we have to consider that the pay keeps increasing every you know the DA is increasing every quarter and there are normal increments and increments from promotion. They'll be more or less offsetting whatever retirements are taking place. Sir, right now, what is the employee strength current in the quarter ending? 60,000. Around 60,700. Okay. Second question is, sir, regarding coking coal. If there is any improvement in your own mining, like the production in your own mining, like Tasra and Mozambique, or you are looking for some other opportunities for the coking coal since being it's a very high cost raw material in your production? Tasra, we are going in for a mine developer and operator. It's at the tendering stage. That is at a tendering stage and Mozambique is doing well. It's gradually picking up and then I think we are getting around 1-1.2 million tons from them. That is being utilized by us as well as RINL. Sir, any tie-up with BCCL, an Indian company, BCCL, for production of coking coal? Yes, yes. We have got a tie-up with them. We have got long-term contracts with them for supply of coal to us. They are being washed in our washeries as well as the washeries of BCCL. There's a co-washery of Tatas which is facilitating and washing the coal which is being supplied by BCCL and CCL. Sir, you are getting 1 million tons from Mozambique and Tasra. Also you'll be getting. It will be beneficial or it will be around same cost what you are purchasing at the spot market? No. Actually, in case of Mozambique, it is guided by the Platts and Argus index. There is a certain discount to the Platts and Argus index, which is there. In case of our mines, like Tasra and our coal, it will be on cost. That is going to be a real game changer in future. Okay, sir. Thank you so much, sir. Thank you. All the best. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to Mr. Ashish Kejriwal for closing comments. Thank you and over to you. Thank you, Aman. On behalf of Nuvama Wealth Management, we again thank the management of Steel Authority of India for giving an opportunity to host the call. Sir, any closing remark you want to give? No, it's okay. Just, we are keeping our fingers crossed that the NSR is maintained or it goes up during this particular quarter and the coal prices stabilize or come down to some extent. That will also help in improving the bottom lines of not only us, but of other companies also. Production and borrowings. We plan to bring down our borrowings to some extent in this by the year end. Production, of course, now in the second quarter, second half, normally, all the steel manufacturers just go in for higher production. We'll also be endeavoring to get the best in this second half. Thank you. Thank you and wish you all the best for the future, sir. Thank you, everyone. Thank you. Thank you very much. Ladies and gentlemen, on behalf of Nuvama Wealth Management, that concludes today's call. Thank you all for joining us and you may now disconnect your lines.