Let’s discuss the FY25 guidance that you have given for production as well as sales because that is suggesting an uptick of 6% to 8% only and that compares with the 8% to 10% growth you have been talking to me about earlier. Are you seeing a bit of a moderation in demand and that is why a bit of a lower guidance?
Jayant Acharya: No, I think we are still quite on that number of 8% to 10% growth in India going forward because last year, demand growth in India was about 13.6% on a back of 13% plus growth in the previous year. The numbers at 136 million tonnes last year was a 16 million incremental increase in volume.
Going forward even if you take the quarter four growth which was about 9% which was lower because of subdued domestic sentiments, pre-election activity, even then we would add incrementally 12 to 13 million tonnes in this coming year as well. So, from a volume perspective I think we are good to go. Our hot strip mill in Vijayanagar has been commissioned. The integrated facilities are under commissioning in the next two months or so but as they ramp up, the production volumes will increase. Similarly, BPSL phase 2 expansions have been completed and they are also going to be ramping up for this year. So, you will see the full impact of this capacity expansion coming in FY26.
Talk to us about the domestic steel price scenario. We understand that there is a slide due to imports actually coming and impacting the space and now there is an added concern of China dumping due to US-China tariffs which are coming in and will be applied. In the context of all of you, how do you see the pricing trends take shape for you?
Jayant Acharya: I believe that the prices in India have bottomed out. If you see in the last quarter while the costs were also higher and the prices internationally and domestically also did correct, but having corrected it has bottomed out and we have seen an increase in prices of steel both internationally and domestically in April-May. But even after that increase, we are where we were six months back. So, from that perspective I think we have reached a stable pricing environment and maybe range bound.
As far as coking coal is concerned, we see a drop in coking coal. In the last quarter we have seen an increase in coking coal cost. We have guided $20 to $25 increase between quarter three to quarter four. We had an increase of $22 which impacted us on cost and the prices were weaker and that had an impact on margin. Going into quarter one, we feel that the coking coal prices would correct for us by $22 to $27 a tonne.
If the coking coal price remains constant, we would see some more benefit going into Q2. So, the cost will go down. The pricing will be stable. Some of the cost levers which we have worked on over the last year or two will benefit us for better efficiencies and cost optimisation and higher volume, so that would give us an EBITDA margin improvement.Are you talking about improvement in EBITDA per tonne but let me narrow it down a bit more because this quarter there was a sharp dip to sub-8000 per tonne. Do you see it going above 10,000 per tonne let us say in Q1 itself or is it likely to happen in the second half of the year?
Jayant Acharya: In the last nine months of FY24 prior to Q4, our normative EBITDAs were between Rs 12,000 and Rs 12,500 per tonne. And we feel that quarter one was something which was more of a stress scenario. But going forward into FY25 we will be in the range of the normative EBITDA which we have been there in the last nine months of FY24. It will be difficult to put a quarter wise number for you right now and I think the prices do change. But directionally, for the year as a whole I think we will be in that range as I mentioned.You have also made announcements regarding a possible fundraising, 20,000 crore capex has also been spoken about. Can you break it down for us? How much are you deploying and how would you be going about it?
Jayant Acharya: The capex plan spent for this year is going to be Rs 20,000 crore. We would be spending on our capacity expansion. I am happy to announce also that the board has approved the phase 3 expansion at Dolvi which would be an incremental 5 million tonnes of integrated steel production which will be added and that should start operation somewhere by September 27. Part of the Rs 20,000 crore of capex which we will spend will be towards the phase expansion as well.
During the year we will ramp up our capacities in JVML and BPSL. We will also de-bottleneck capacity in Vijayanagar which would incrementally add capacities. So, overall, in this financial year end we would be incrementally able to add 8 million tonnes of full capacity which will ramp up and the impact of that will be fully seen in FY26. New capacities which will come with this phase 3 will then come in by September 27. So, therefore, going forward I think we are well aligned to be in meeting the Indian domestic demand which is growing very strongly.
Tell us about any development on the inorganic side. You detailed out your capex plan in terms of the expansion, but what about the inorganic route because a lot was being talked about let us say Vedanta Steel business being on the block. NMDC Steel is something that you have already shown interest in. What has been the update on that and the coal assets as well?
Jayant Acharya: So, on the coal mine side of the NMDC and steel no new development versus what we discussed last time. However, on the coal assets we have looked at an asset in Mozambique and the board has given a clearance to purchase 100% of that asset and that is an asset which is a pre-development mine with 800 million tonnes of JORC reserves and it is a good mine which has got prime hard-coking coal proximity to India and we will be able to use that in our blend to meet our hard-coking coal requirement which if you recall we have been looking at various assets of the world.
So, on that side it is a good asset to have. Subject to the normal approvals and preconditions precedent we should be able to close that in this financial year and move ahead to develop the mine. In addition to the coking coal mine we are also developing three domestic coking coal mines which we have got that should provide 2 million tonnes of clean coking coal to us. So, coking coal our targets and focus which we have been having I think is going in the right direction.
Lastly, how have the international assets scaled up for you and the performance of value-added products also?
Jayant Acharya: So, the overseas performance has been quite good. For the full year at large if you see US operations while Baytown did continuously better, Ohio has been able to reduce their losses. FY24 we saw US operations EBITDA level of $75 million versus $27 million the year before. Italy also posted about 52 million euros of EBITDA in FY24 versus 26 million the year before.
We see operations stability in both these locations and Italy would continue to be delivering EBITDAs in this range going into FY25 as well and we expect US operations to do better than what we have done in FY24. Indian subsidiaries have also done well. So, overall, overseas and Indian subsidiaries both have performed quite well.
In the last quarter 62% of our sales was from value-added and specials, a year as a whole 61% and in terms of absolute volume it has grown substantially and that is something which is helping us to decommoditize and reduce the volatility in our business specifically in the downstream areas.