Indian Metals & Ferro Alloys (NSE:IMFA) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Indian Metals and Ferro Alloys Limited Q2 and H1 FY 'twenty seven Earnings Conference Call hosted by Factors PR. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Balada from Add Factors BR. Thank you, and over to you, sir. Thank you, Yousuf. Good evening, everyone, and thank you for joining us today on the Indian Metals and Ferro Alloys Limited earnings conference call for the second quarter and half year ended 09/30/2026.

0:50 Today, we have with us Mr. Shubrutan Panda, Managing Director mister Shauna Gupta, chief financial officer, and mister, Vijayaam Visakanda Moputra, old time director and chief operating officer. We will begin the call with the opening remarks by mister Shubri Khan Panda, who will provide an overview of the company's business performance, the operational developments and the outlook on the business. This will be followed by the question and answer session. Before we begin, I would like to remind everyone that certain statements made today or discussed on today's call may be forward looking in nature and should be viewed in conjunction with the risks and uncertainties that the company faces. A detailed explanation of the risk is included in the earnings presentation that has already been shared on the stock exchanges.

1:40 The company does not undertake any obligation to publicly update these forward looking statements. With that, I would now like to hand over the call to Mr. Subrikanth Pandha. Over to you, sir. Thank you very much, and good afternoon, ladies and gentlemen. A warm welcome from my side and on behalf of IMFA to this investor call for Q2 FY twenty twenty seven results, which were approved by the Board a couple of hours earlier. I will keep my opening remarks brief and then jump into the Q and A session, which is I think the most value is there for you as well as for us. In terms of our Q2 performance and H1 FY twenty twenty seven performance, these are noticeably higher than the corresponding periods from the previous year.

2:42 And that is, of course, on account of two things. One, that there is significant capacity addition, which has come online. And secondly, that prices in general have been better than they were in the corresponding period last year. In terms of capacity, as you know, we have we started operating KNR2, which is the unit acquired from Tata Steel. We started operating that from March of this year. We have steadily increased production over there. Initially in the first half of the year, production was slightly lower than we had planned. And I have shared the reasons for that in the last call, which is that in two sets of transformers in two furnaces, the transformer parameters were not ideal and therefore we were limiting load a little bit.

3:33 But I'm glad to report that in the month of October, we have reached a rated capacity of roughly about 84,000 tonnes per annum production, which will go up to the full rated capacity of about 100,000 tonnes per annum from the existing core furnaces by December when we will complete the changing of the transformers in the two furnaces. That being said, as far as our greenfield unit is concerned, KNR1, the first furnace achieved hot metal tapping on August 25. And we have already initiated pre commissioning activities for the second furnace. And we are expecting hot metal tapping around the November 15, give or take a little few days, but we are there and thereabouts, which means that we will quarter is a significant, I think, period for us where we expect to cross 100,000 tonnes of output in the quarter for the first time.

4:45 I think market continues to be strong while prices have moderated a little bit from Q1 to Q2 and we see a slight moderation happening in Q3 as well. And equally, think certain raw material prices like metallurgical coke are starting to move up. But again, that is not unexpected when you see significant margins in the ferrochrome industry. Then upstream, there is a tendency for prices to raw material prices to move up a little bit. Luckily, we are mostly sort of insulated from that because the biggest impact comes from chrome ore, which is of course in house for us. But even with the marginal moderation of margins going ahead, we have more than sufficient volume to see that in absolute terms we outperform.

5:39 But overall, I remain confident about where the industry stands while South Africa is scaling up output, but we expect that China will I mean output of Ferro from China will reduce. So we remain confident about the industry and we remain especially confident by what it is about IMFA's own position where we have worked very hard to build resilience and competitiveness into the business model and we are realizing the benefits of that now. One quick point, we have, of course, you would have seen in the press release that the Board has approved the CapEx of about INR $3.75 crores for two things. One, to increase the chromo ranging from Mahabri underground mines from six lakh tonnes to 7.5 lakh tonnes.

6:36 Eventually, this will take our total output beyond 1,200,000 tonnes, which is what I have indicated earlier in phone calls and interactions. And secondly, we have also announced a CapEx for low carbon ferrochrome for producing low carbon ferrochrome, which is of course value added product, which will bolster margins and diversify the product basket. So that's for the broad overview of the business and I think it will be good to get into the Q and A now. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone.

7:22 If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only headset while asking a question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participant in the question queue, please limit yourselves to two questions only. Should you have a follow-up question, please rejoin the queue. Ladies and gentlemen, we'll now wait for a moment while the question queue assembles. First question is from the line of Joe Shah from Seven Seas.

8:16 Congratulations for diversifying into low carbon Ferrofoam. That will definitely be improve our margin. And question is, I would like to have update about critical minerals. I think I understand that we are trying to get some critical minerals mined in the auctioning. So kindly let us know what is happening on this critical mineral front. And one more thing, I will come across a report that IMFA is planning to go beyond the cementing of. So, earlier, we have said that after 2029, once we know the growth underground mining of Tukinda, new underground mining of Tukinda, we know it shall put and then based on that, we'll be planning for expansion capacity beyond 5%.

9:08 So kindly give us some thoughts on this item also. Thank you. Thank you for your kind words on performance. As far as Critical Minerals is concerned, there is no update at this point in time because while we have participated on a couple of auctions prior to, I mean, leading up to today, but we have not been successful in terms of a breakthrough. And of course, as you know, that critical mineral auctions happen from time to time. So we remain alive to the opportunity that is an area of interest for us. And we hope that sooner rather than later, we will be able to break through.

9:54 But nothing to report at this point in time. And I wish to clarify one point very clearly that not just with regard to Critical Minerals, but our overall approach to capital allocation is very clear that we will only allocate capital when we see when we are confident about our ability to add value and create value for stakeholders. So we would only move ahead on any opportunity if it meets certain criteria. Secondly, as far as our smelting capacity is concerned, with in terms of actual smelting capacity, we will go beyond five lakh tonnes with the commissioning of the seventh furnace, which is En route, which is happening shortly. And we, of course, have the partially built furnace at KNR2, which we expect to be operational around July or so of next year. We have got some initial environment clearances and all that.

11:00 But I think we will be able to give a more accurate time line perhaps in a couple of months' time when all the provisions are in place, but we are fairly confident about commissioning that by July 2027. So our guidance in terms of tonnage continues to be 380,000 tonnes for FY 2027. The slight reduction being on account of lower output from KNR1 and a slight delay in KNR2. And our volume guidance for FY 2028 remains 475,000 to around 475,000 tonnes. And beyond that, in terms of further increase in ore output, the CapEx approved by the Board today will eventually take us beyond 1,200,000 tonnes.

11:52 And what it will initially do is hasten the achievement of 1,200,000 tonnes, make the time line a little shorter. But eventually, basically, our 1,200,000 tonnes was coming 600,000 from Sokinda and 600,000 from Mahagiri. So this is underground. So this CapEx will take Mahagiri from 600,000 to 750,000. So net net, it increases our ore raising ability, and we will, therefore, add further smelting capacity in due course. Okay. Thank you. Thank you. Next question is from the line of Parthiv Chonsa from Anandrati.

12:41 Please go ahead. Mister, your line is unmuted. Please go ahead with your question. Yeah. Am I audible? Yes. Please go ahead. Yeah. Yeah. Happy... Sir, sir. Happy Diwali in advance. So my first... Yeah. My first question is pertaining to some... I I I might have missed missed the starting comment. But just on the global, you know, macros, now considering, you know, a couple of your peers from South Africa. I know you... Know, in the last call, you have said that the global balance is the same. But a couple of peers in South Africa actually started, you know, increasing their ferrochrome production, and they're consistently increasing 20, 30% on a quarter on quarter. So we think that the price at the global industry is also not taking up for the...

13:31 This will remain under stress in near term? Is there an expectation of that? Yes. So, Kartik, basically our analysis remains the same, which is that ferrochrome production in South Africa had fallen drastically in 2025. And there is clearly a revival underway, thanks to the special tariffs, which have been approved. And as you correctly quoted, some of our peers there are ramping up production. What we expect is that as ferrochrome production in South Africa ramps up, it may not be immediately thereafter, but very shortly thereafter, you should see reduction of ferrochrome capacity elsewhere, primarily in China.

14:22 And net net, we will broadly be balanced apart from any other factors, which may have an influence on the stainless steel and ferrochrome industries. Now could you see a little bit of turbulence in between potentially because it's these are not it's not a question of flipping a switch and starting in South Africa and flipping a switch and stopping in China. But by and large, it is not in the interest of South African producers to have surplus ferrochrome production, which brings down ferrochrome prices as well as chrome ore prices. So from that point of view, we continue to be guided by what companies like LENCORE have said, which is that in terms of chrome units, they see parity being maintained.

15:10 So now beyond that in as much as the stainless steel dynamic industry dynamics are concerned, what we see is that stainless steel growth continues to be focused in Asia, primarily in China. Having said that, I think India is also joining the party now in terms of significant increases in stainless steel capacity and I'm not surprised by that because as I have often talked about that when the mindset changes from initial acquisition cost where stainless steel is more expensive compared to carbon steel. So when it changes from initial acquisition cost to life cycle costing, that's when the advantages of stainless steel becomes obvious. And that is where there is greater degree of adoption.

15:57 So going I mean, India's stainless steel per capita consumption remains about 3.5 kilograms and there is substantial scope for improvement as the economy grows and matures. So we are quite confident about the medium to long term prospects. And even in the short term, as we have said in our press release, we expect prices to be by and large supported. I mean, course, you will see a slight moderation of prices happen. We are still seeing an average of about 117 or so for the quarter. We'll moderate a little bit on the input cost side, primarily metallurgical coke is moving up. So margins might get might tighten a little bit, but we will more than make it up with volumes.

16:46 So we remain quite confident about the second half of FY 2027. That's actually quite elaborate answer, sir. Thank you. Just to take the first question forward, your next quarter expected realization will be the range of INR 116,000 to, say, INR 118,000 around the similar level? No, no. What I was saying is roughly around 1 lakh 16.5 or something like that is what we are seeing in Q2. So slight moderation to that, but I mean not I mean it's something that we expect. So you're seeing a slight moderation in prices, you're seeing a slight increase in costs.

17:31 So net net, the margins will tighten a little bit, but we have that will be more than made up with volumes. The one point I think you perhaps missed out is that in terms of Q3, we are expecting to cross 100,000 tons quarterly output for the first time. So that is the planning as of now. Sir, my second question was pertaining to the ore raising. I believe this quarter, the ore quantity has been considerably lower than previous four quarters, right? So what should we consider? Was this because some seasonality factor or it would be, say, a certain x of the production going forward. So I think this time around, it was 1.7 x the production, the over 18 which was done. Can this increase going forward considering that, you know, Sopina underground will take some time to come on stream and you would require more ore. I know that you have excavated ore in the past as well, additional quantity, but what will be the ratio going forward? That's the major question.

18:36 Okay. So two things. There is certainly a seasonality to ore raising. At least currently when we still have open cast output. And therefore, during the monsoon season and this time around, the monsoon has been extended and quite severe for lack of a better word as in terms of more number of days with heavy rainfall. And what that definitely means is that as far as opencast output is concerned, it definitely takes a hit. So there is clearly a seasonality to raising. So if you go back and look at past five years data or something of that sort, you will find that ore raising in Q2 is always a little bit lower. That's a question of how many days of rainfall you have had and what impact that has.

19:23 But our target for FY 'twenty seven continues to be 1,000,000 tonnes of ore raising, which is a milestone in itself and of course, required to support our smelting targets, ferrochrome output targets. The other point I just want reiterate so that it is clearly understood that our short term target is 1,200,000 tonnes of ore raising overall, which is 600,000 tonnes from Sukinda and 600,000 tonnes from per annum that is from Mahogiri. What I have indicated in earlier interactions and investor calls is that we are reasonably confident or fairly confident that we will go beyond the 1,200,000 tonne mark in terms of ore raising and that will enable us to add more smelting capacity.

20:15 So what the Board has approved today is CapEx to take Mahogiri from 0.6 lakh tonnes to 0.75 lakh sorry, point 6,000,000 tonnes to 750,000 tonnes per annum. That will be available in stages in increments of 50,000 tonnes per annum more starting in 2029. So in the short term, what it will do is it will help us get to the 1,200,000 tonnes mark faster. And secondly, looking beyond that, it takes it will take ore output beyond the 1,200,000 tonne mark, thereby enabling us to add more smelting capacity.

21:14 Mr. Patil, does that answer your question? Mr. Pativ, you are not audible. I think we can go on to the next person in the Q and Pativ can join back. Okay, sir. Next question is from the line of Harsh Vassa from SBI Cap Securities. Sir, thank you for the opportunity, and congratulations on a great set of numbers. And sir, happy to evaluate advance. Sir, most of the questions are answered. I just had one, if you can quantify, sir, how much increase has been there in the metallurgical book q o q sequentially, if it is possible? I don't think we have the numbers in any case. Broadly, we don't want to go down to the specifics of cargoes and the pricing.

22:12 But broadly, I would say that we are in around the $3.75 to $3.80 mark in terms of coke pricing and there is a little bit of upward momentum going ahead. But that is understandable because of currency fluctuations as well as various other issues, high freight costs. But having said that, I think we are as I repeatedly said that while we will see a slightly tighter operating environment, but we have more than enough volume increase to report better overall numbers. Okay, sir. Thank you and all the best.

22:59 Thank you. Thank you. Next question is from the line of Prajyam Lata from Omni Management LLP. So sir, earlier, we had guided that we are looking for some long term contracts for selling Ferrochrome. So where are we on this? And what are the capacity expansions in the steel industry which you are aiming at to supply maybe general or some other peers? So actually, we've Prakash, we generally sell against long term contracts.

23:46 So significant quantities are against long term contracts. And even when we sell what we call spot contracts, these are not random customers, but repeat customers where we just don't have the legal backing of a long term contract or annual contract or anything of that sort. Now in terms of marketing and enhanced output, we are when we were 260,000 tonnes of output, which is what we ended FY 2026 with, we were ninety-ten in favor of exports. And as you would know, we have repeatedly mentioned that going ahead by 2028, we will be targeting about sixty-forty still in favor of exports, but selling significant tonnages into the domestic market.

24:35 So in absolute terms, out of zero five million tons production, we are targeting about 300,000 tons of exports and about 200,000 tons of domestic sales. But depending upon market circumstances, these are can easily be both components can be moved up or down a little bit. Now broadly in terms of exports, we are looking at expanding our presence in existing customers. And as far as domestic sales are concerned, we did have small tonnages that we were selling to a couple of customers. Now we are doing a broader base of customers. So all the practically all the medium and large sized stainless steel producers are our customers, and we are selling tonnages there.

25:26 So just to reiterate, if I were to read between the lines that in terms of comfort regarding being able to sell 500,000 tonnes, We are very, very confident and the market situation is such that even in the domestic market, there is plenty of opportunity. And of course, as the largest producer, we feel that it is our responsibility as well to make sure that the domestic market is properly gated. Okay, okay. Second thing sir, on your cost per tonne, this quarter the cost per tonne is quite higher than Q1. So is it some seasonality or one off cost from the from starting the new furnace and how do you see this cost going forward in Q3 or maybe FY 2027 and FY 2028?

26:19 So there are without getting into the specifics, would say there are two things. One, as I have indicated that metallurgical coke prices have moved up a little bit. Secondly, I think there has been a slight upward revision in grow more pricing as well because of more mix coming from more of the ore coming from underground, the open cast, so that means up the costing slightly. There will be a slight element of royalty as well. That apart, yes, there are certain one off costs relating to start up of the Greenfield site. And the final element, which I have mentioned earlier also is when you are scaling up operations, both at the Greenfield site as well as the acquisition, which for all effective purposes was lying unutilized for a long period of time.

27:12 So there are certain inefficiencies at beginning, which settled down. So in the acquisition, for example, we had some inefficiencies in terms of our power utilization that has now settled down. But we also are paying for a hybrid energy corridor, what's known as a GNA RE corridor, but our renewable energy hasn't started flowing as yet. So the first tranche of 70 megawatts from JSW Energy, are expecting by the end of this month. So for example, we are carrying some monthly cost towards the hybrid energy renewable energy corridor without actually utilizing it. So those inefficiencies we I had in previous calls said that until, let's say, December 2026, all these up and down will happen, but we expect to start the New Year on a much cleaner slate in terms of these inefficiencies relating to start up being starting up and scaling up a new location being ironed out.

28:15 Sir, any guide? Do you have anything to add to on the costing thing? I think I've pretty much covered it, but if there is anything else you'd like to add? Yes. So on the parking part and what you said is correct, Medco cost and the start up cost are the key things, which has to some extent increased the overall cost and also a little bit of the selling and distribution, even though the shipping costs have also increased due to the geopolitical situation. So that has led to EBITDA cost going up currently. But once the scaling up happens in both KNF one and two, this cost is expected to go. Is there any numerical guidance on what the cost can be put in for, say, next year when things normalizing and new capacities are up and any guidance in terms of either pricing or costing.

29:14 But what we historically look at what our average EBITDA per ton has been and not in any particular quarter, but on a period if you look at it at one year or eighteen month period, we are expecting that due to economies of scale, due to a more Kalinagar being a more efficient coating a more efficient site, we are expecting the EBITDA margin to be a little bit more robust going ahead. We expect that to be to all other things remaining the same, we expect EBITDA to be about INR 1,500 to 2,000 a ton higher because of the more efficient logistics of Ferro Alloys.

30:01 Okay, sir. Thank you. Thank you. Congratulations for the good set of numbers and all the best. Happy Devan sir. Thank you. Next question is from the line of Avantika Jawahar from Banyan Tree LLP. Please go ahead. Yeah. Hello. Am I audible? Hi. Yes. Yes. Please proceed. About the aviation investment that you've made. What exactly is that, and how does it roll into the company's plan? So actually, in IMFA itself, we have certain aviation assets which are, you know, given that our mines and other sites are far flung. So we have, you know, some aviation assets, primarily helicopters. But because of certain restrictions, which are applicable on the main operating company because of the aviation assets, so we are therefore moving those assets to 100% subsidiary.

30:57 So that IMFA which is the main operating entity is not settled with certain compliances which are not relevant to the core business. So beyond that, this is not related to aviation per state as in we are not getting into aviation or anything of that sort. It's just the transfer of certain aviation assets from IMFA to 100% subsidiary. So that the main operating entity is not settled with certain unnecessary compliances. Those are carried out by the operating entity for aviation assets. Thank you. Next question is from the line of Kartikya Pandey from three sixty one Capital. Please go ahead.

31:45 Yes. Hi. Thanks for the opportunity. I have two questions. Firstly, sir, how much are we exporting to China? So China, I would say broadly what we are exporting at the moment is about 120,000 or 1,000 tonnes per annum, and we expect that to get close to about 180,000 to 200,000 tonnes. Okay. And sir, but the thing is, I think in China, there are some curtailment of stainless steel productions. So how are we looking at this, like you said?

32:32 So it's not so much curtailment of stainless steel capacity as phasing out of smaller, older furnaces and being replaced with newer, more efficient stainless steel capacity. So in terms of demand, are absolutely fine, no concerns on that front. And as I mentioned, we're pretty much on track to starting next year to with our existing customers to increase the tonnages based in line with not just our expansion, but their increased consumption as well. So one of our customers, for example, has gone from about 1,500,000 tonnes of stainless steel production to 3,000,000 tonnes of stainless steel production.

33:19 So they are definitely looking for more tonnage, which is what we are placing with them. And one of our other customers is very large stainless steel producer, who's we are I mean our Ferropro is a fraction of their consumption. So there is we've had a very good relationship and therefore we are looking to I mean both sides are looking to increase that in terms of tonnage which is placed. Understood, sir. Sir, my next question would be on the cost front. So, given the explanation, we have seen what what kind of a... Hello? Mister, there is background noise from your end. Your audio is not clear.

34:10 Hello? Yes. Please go ahead. Yeah. So, sir, I was asking, like, what what... What's your thought process on the cost front? Like, a lot of cost increase has happened. And so like what is the outlook for the next two, three quarters, like, on a per ton basis, if you can describe me? So, we don't give any forecasts in terms of selling price or costing. But as I just clarified that in terms of cost per tonne, clearly there is a slight increase in met coal prices and we are seeing a slight upward trajectory happen as well. That apart because this quarter, we have consumed more ore from underground mining than open cost. So that has marginally impacted the costing.

35:05 There is also a slight because chrome ore prices in India have remained elevated. So while that does not affect us, but elevated chrome ore prices leads to higher royalty outgoes. So these are the three factors which are there from an operational viewpoint. And secondly, certain startup costs, etcetera, which are there, which once all the furnaces stabilize will cease to be relevant from that perspective. So that's where we stand on the costing front. Okay, sir. That was helpful. So if I assume like if I think of it, like, if this quarter the way the next two quarters' margin trajectory is going to be early, how should I think of it? Just a broader understanding.

35:58 So again, we will not give specific numbers because we don't do that. If you look at the trend in FY 2027, first quarter was an exceptional quarter where we had very robust EBITDA margin of close to 30%. That has moderated as it should because with prices easing a little bit and costs moving up a little bit, we are still seeing a per ton EBITDA of about INR 28,000 in this quarter, which is significantly above the long term average. So for a quarter or so, we do see a potential tightening environment. But any contraction in margins will be more than made up by the volume push, which is which will be fully seen in Q3 onwards.

36:51 Therefore, in absolute terms, we are expecting a good performance. But like I said, I think we remain confident about both the short and medium term output as I should also say about the long term outlook because I think stainless steel prospects, particularly in India are very, very robust. And I think we are ideally positioned to benefit from that. Okay, sir. It was very helpful. Thank you. You're welcome. Thank you. Next question is from the line of Saket Kapoor from Kapoor and Co. Please go ahead. Yes. Namaskar, sir. Hope my voice is clear. Yes. Yes, sir. For the for the sales part, you may... As we have I think 167 is the number we did for the first half and 3360 is the number that you you have guided.

37:47 We have done Ferro from sales of 1 lakh $61,002.65. We are looking to close the year with three sixty number. 3 lakh 60,000 would be 1 lakh of volume for the quarter No, we are our volume guidance for in terms of output, our volume guidance for FY 'twenty seven continues to be 380,000 tonnes. 380,000. That's production volume. Production volume. And by and large, sales volume will match that by and large, but we have been giving guidance is production volume. Sir, and also in your investor presentation, we have seen that the cost per tonne has moved from say 85,884 to 88,003 and 68. So taking into account the current...

38:44 The trend, this is what the range would be, so some that... It could be in the vicinity of this three to 4%. That is how the cost will trend or that since you have mentioned it that it will be cost will be slightly higher. So this 3% bracket or is a good assumption? No, would not like to get into specifics of numbers because then we are getting into projecting costs which I don't want to do that. Having said that, I've as I have reiterated that there is a slight upward trajectory as far as coke prices are concerned. And secondly, I think promo, we should not see any significant change. And you will continue to see some inefficiencies in operations at the start up. For example, until you cross 60% threshold in terms of power consumed from the grid, it's a very high rate.

39:41 So it's only when you cross 60 that it drops and when you further cross 80% or 90%, whatever that threshold is, that the rate drops further. So obviously, when we are starting up a furnace initially, that is that inefficiency is there. But on the flip side, we are also expecting renewable energy to flow in from late November onwards. So once that settles down, we should see that advantage from next quarter onwards as well. Okay. Just to add to it, sir, on your presentation, Slide number 14, you have very well mentioned also that the power and fuel costs are higher primarily due to higher production also along with the startup and the stabilization cost, which you are just alluding to.

40:28 And sir also Yeah. You have mentioned about this mark to market impact also on the forex. So can you just give quantify a number for these two events, proceed the stabilization cost? I'll respond ask Sonal to mark to market. But fuel and power has been higher on three counts, higher because coal prices have been high. I'm sure all of you have read about the extended monsoon creating some difficulties in coal dispatches and all of that. So coal prices have moved up a little bit, that is one. And secondly, of course, we are consuming more in terms of quantum, so that is there. And these are the two primary factors that I have mentioned about fuel and power.

41:15 But Shona, could you want to quantify the MTM, please? MTM, it is, as you know, in September end, the currency dollar was at INR95.98 compared to INR94.6 in June end. So there was about INR8 crores impact in notional impact in the profit and loss statement, which was embedded in the other expenses. Next question is from the line of Josha from Seven Seas. Juvekar, this is quarterly output of one vector you mentioned is for Q3 or Q4?

42:03 And the second thing is Q3, okay, very good. And Q4, I understand that K and R one would be fully operational, Q4. Well, actually, even Q3, we will be fully operational, but I mean, obviously, starting the middle of the quarter. So like I mentioned, we are expecting the second furnace in K and R one to be first hot metal tapping around November 15, give or take a little bit. So by the time we end the quarter, we should be at close to ideal load. But yes, in terms of a full quarter, it will be in Q4 that all furnaces will be operating at optimal load. And that's where in Q3, we are expecting crossing one lakh tonnes of output.

42:50 And in Q4, it should move up a little bit more in order to get to INR 3 lakh 80 crores, which is what we are still maintaining. Okay. Okay. Very good. Okay. Thank you. Yes. Thank you. Next question is from the line of Vini from Gen Investments. Please go ahead. So my question to you is IMFA is a fully integrated business model, so spanning chrome ore mining, some captive power and ferrochrome production. So as the company scales towards the 5.34 lakh tons of ferrochrome capacity, how should we now quantify the competitive advantage of this integration, which you compared with the stand alone ferrochrome producers who produce just ore and power externally?

43:43 So look, I think clearly the advantage of of being fully integrated as in having captive ore and captive power is, you know, not just from a competitiveness angle, but also from a resilience angle. But equally, when you look at it from the smelting side of things, it's not necessarily a poor cousin, if I can put it that way. In the sense that regulations the way they stand, we are required to and we believe it does make more sense for us to add value. That is number one. And secondly, once you once we get to the stage of zero five million tonnes and all that, there are certain advantages in terms of economies of scale as well. Finally, there is one other point, which is that with a broader pool of with a broader base of ore available to us, that is where we are able to produce certain niche grades and that is why we are looking at the diversification into low carbon ferrochrome.

44:45 So niche grades at the moment will produce about 10,000 to 12,000 tonnes per annum of low cost material, which is 15 phosphorus max, which has 15% to 20% premium. So that is and in fact, we have recently just concluded a long term contract for 2027, which will enable us to place about 70% of that output with the Japanese customer. So that is a significant advantage. And secondly, once we get into low carbon ferrochrome, which we hope to be by early twenty twenty eight, we will sacrifice a little bit of high carbon ferrochrome output because that becomes one of the furnaces we'll be dedicate having some of that output will be dedicated as a raw material or feed material for low carbon ferrochrome.

45:40 But net net, we will be producing 20,000 tonnes of low carbon ferrochrome, which has a significantly higher price per tonne and margins. So besides broadening our product basket, it also sort of bolsters our margins. Got it. So my follow-up to that would be, so where would IMFA currently position itself on the global Ferro firm cost curve relative to the major producers in the South Africa, Kazakhstan and China? And has this company's relative cost competitiveness improved after the integration of the CNR2? So look, I mean, all I can say is that we are extremely competitive and amongst the lowest cost producers in the world, but very difficult for me to give a particular number, but I would certainly say we are in the lower decile in terms of costing.

46:47 But second and specifically if you look at China, this is something that I have mentioned a couple of times in the past, which is that China is today the world's largest producer of ferrochrome, but it is entirely dependent upon imported ore, which makes it a relatively high cost producer. They do have certain advantages, which is met coke is produced in China and logistics cost to sell to stainless steel producers is significantly lower than companies like us who sell into China. But that being said, overall, the advantage arising on account of promo is quite significant. And one other point which you mentioned about integration of KNR too, let me actually broaden that question and say that with regard to Kalinganagar becoming IMFA's largest site for Ferrochrome that will significantly improve our EBITDA realization.

47:47 That is the number of INR 1,500 to INR 2,000 a tonne, which I was mentioning. Because if I break up our production capacity, so about 150,000 tonnes or 160,000 tonnes is produced at Chohduar with the costing of X. For a moment, please disregard what that X is. And we were producing 100,000 tonnes at Tarubali, which is $6.000 to INR6500 a tonne more expensive. Now while in the next year to couple of years, we are not really looking at scaling back Tarubali, but we will do that eventually. But in the meantime, what is happening is close to about, I mean, well about 250,000 tonnes of Ferroprom will be produced in Kalinga Nagar and that is at par with Chodhwar maybe even marginally better on certain counts.

48:32 So therefore, the whereas with 260,000 tonnes of production, only 160,000 was being produced, which was very efficient. When we touch 500,000 tonnes of production, 400 out of the 500 will be very efficient. So that leads to an expansion of EBITDA margins is what we have been mentioning. Okay, got it. I think that answers my question. Thank you very much and I'll be very happy to see you, sir. You're welcome. Thank you. Next question is from the line of Shrivan Modi from Syndicate Family Office. Go ahead. Evening, sir. Am I audible? Yes, sir. Yes, please go ahead.

49:19 Yes. Thank you so much for the opportunity. So my first question is about, if you see China remains a major driver of global stainless steel and ferrosion consumption. So what is the management observing in terms of Chinese stainless steel production, inventory replenishment and domestic production? Are the current demand trends strong enough to absorb incremental global supply? So China is absolutely, I mean, is lot is representative of stainless steel production and China is definitely where you're seeing a lot of incremental capacity and growth happening. Yes, there has been the Chinese economy, if you look at it, has been has slowed down. But you're talking of a much, much larger economy. So I don't think it is a correct comparison to say China is growing at 4% now compared 6% or 8% or 10% earlier because the size of the economy is very different today.

50:20 Having said that, they do have some challenges. It's not I don't think it's it makes sense for us to do a deep dive on Chinese economic outlook. But yes, it is of course relevant for us. But what I would also like to pause it here is that India is rapidly moving in terms of being an important market, not just for stainless steel, but I mean not just for carbon steel, but also stainless steel, which is why we are going ahead, we are looking at targeting about 40% of our output to go into the domestic to go towards the domestic market. And that can go up further if warranted because these are fairly interchangeable. And why we remain confident about ferrochrome demand and stainless steel demand in India is that the per capita consumption is at about 3.5 kilograms, whereas China at its peak was in excess of seven in excess of eight kilograms. So we believe that as the Indian economy grows and as it matures and I mean if you look at the public CapEx allocation in successive budgets, now it's pretty much I think the government has indicated it will be about 3.3% of GDP. But with the GDP itself growing that 3.3% in absolute terms will be a significant number.

51:42 And therefore, we and as the economy mature, believe a little bit of sort of move towards stainless steel will also happen. Because when you again that point that are you looking at initial acquisition cost where carbon steel is cheaper or are you looking at lifecycle acquisition cost with stainless steel because of its recyclability and other ease of maintenance etcetera is generally considered to be more a better choice. So, Shivan, one point here in terms of absorbing incremental capacity, as I said, there are we may be doubling capacity, but we are still part of roughly 17,000,000, 18,000,000 ton industry.

52:31 So in the overall scheme of things, it is the concentration risk is not significant at all. Got it, sir. So my second question is about... So if you see South African producers such as Glencore and Samencore have been benefiting from preferential electricity tariffs. So if these producers progressively increase furnace utilization, how do you see those impacting global ferrochrome prices, particularly in our Asian market? So actually, I dealt with exactly this question, but I think it's being an important subject that we reiterate that Ferroproo production in South Africa collapsed in 2025 because of high power costs and inland logistics costs.

53:18 The inland logistics disadvantages continue, but as you correctly pointed out that preferential tariff is in place for two producers. And as a result of that, they are scaling up output. But what has been what seems to be the strategy is that there will be parity in terms of chrome units, which is that when ferrochrome production went down, more chrome ore was exported. And when ferrochrome production goes up, less chrome ore will be exported, therefore impacting China's ability to produce ferrochrome. So but having said that, we there could be a little bit of turbulence when China when South Africa is scaling up and until such time that China or somewhere else, a corresponding reduction happens.

54:04 But having said that, it is not in the interest of South African producers to flood the market with excess tonnage and which will bring down prices, which will not just affect I mean, which will affect us for sure, but it will affect every single ferrochrome producer, including the South Africans themselves. And so therefore, I think it is in their interest as well to find that balance so that there is not is no glut in the ferrochrome availability. Thanks, Thanks, most of all. That's it from my end, and I wish you all the very best. Thank you very much. Thank you. Next question is from the line of from Oracle Investments. Please go ahead.

54:52 Yeah. Hello. Good evening. Am I audible? Yes. Yes. Please go ahead. So the one twenty k l d ethanol project is expected to be commissioned in January 2027, following the delays related to geopolitical and monsoon disruption. So, sir, what would be the expected annual revenue contribution and the EBITDA margin of this project? Also, you could provide some color on the working capital requirement of this project. Shantanu, could you want to answer that, please? Yes. So overall, the revenue is expected to be INR $3.20 crores and EBITDA is around 10%. That's what is the current position based on the pricing, which you know is also regulated is the overall situation in the ethanol project and ethanol market.

55:49 And working capital is the normal one. It is around what we are factoring is sixty days, forty five to sixty days, depending upon how we enter into a long term agreement with the grain suppliers, which will be the typical one yet. Okay. And, also, what would be the kind of return on capital that the management expect on the ethanol business? So we have internal either of 15% that we have kept. Okay. But it will depend upon how the grain prices actually plays out in the market in future. So it can go up. So conservatively, we have kept IRR at 15% on the investment. So your ROC will be also somewhere in the range of 13 to 15%.

56:40 Okay. Okay, sir. Thank you so much, and all the way best for your future. Thank you. Thank you. Thank you. Ladies and gentlemen, due to time constraint, will take this as the last question for the day. I now hand the conference over to the management for the closing comments. Thank you very much. As usual, we look forward to the opportunity to interact with all of you. We thank you for taking time out from your schedule to be here on this call. I think we have an exciting story to share and therefore we look forward to this opportunity. But your insightful questions do provoke us to not just be well prepared for the call, but also sort of do a deep dive into various aspects of the business and be clear about our strategy moving forward.

57:38 I think what I would like to end with is to say that we have worked pretty hard over the years to put together the building blocks for what is today a very resilient and competitive business. And now we are in the process of realizing the advantages or realizing the benefits of that fully integrated business model. But we are also looking to not just expand capacity, but also diversify into higher value added products, which will diversify the product basket as well as bolster margins. And as I mentioned, we are also sitting in we have also set in motion today, the process of increasing mining output beyond 1,200,000 tons. So we are quite excited about what lies ahead and would like to assure you of our best efforts to deliver a performance which is not just better than our peers, but do so in a manner which is transparent so that have clear insight into the operations of the company and what makes us or what gives us the ability to deliver these superior performances.

58:54 Thank you very much. Thank you, sir. On behalf of Indian Metals and Ferro Alloys Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.