Godawari Power And Ispat limited (NSE: GPIL) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Dinesh Gandhi
Analysts:
Unidentified Participant
Vikash Singh — Analyst
Vivek Ramakrishnan — Analyst
Siddharth Gadekar — Analyst
Manav Gogia — Analyst
Sahil Sanghvi — Analyst
Aditya Welekar — Analyst
Vinit Thakur — Analyst
Vedant Sarda — Analyst
Kunal Sukhwani — Analyst
Amit Lahoti — Analyst
Presentation:
operator
Ladies and gentlemen, g ood day and welcome to the Godawari Power & Ispat Limited Q1 FY26 conference call home hosted by Emkay Global Financial Services. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Amit Lahoti. Thank you. And over to you sir.
Amit Lahoti — Analyst
Thanks Nidhi. Good afternoon everyone. Welcome to Q1FY26 earnings call of Godavari Power. We have with us today Mr. Abhishek Agrawal, Mr. Dinesh Gandhi and Mr. Sanjay Bhotra. I thank the management for giving us the opportunity to host this call. I shall now hand over to the management for opening remarks. Over to you Mr. Gandhi.
Dinesh Gandhi
Thank you very much, Amit. Good day. Ladies and gentlemen, I welcome you all to the conference call to discuss Q1FY26 earnings result of Godavari Power and Limited. Our financial results, press release and earning presentation are available on our website as well as on the uploaded on stock exchanges.
I believe you had a chance to review the same. I’ll quickly take you through the results after which we’ll have Q and answer session. We have had a steady start to the year with a strong EBITDA and credit margin of 24% and 16% respectively. Our operational performance DPL has already achieved on an average 20 to 25% of FY26 volume guidance. We are confident that the volume guidance given by us at the beginning of the year will be achieved on full year basis. Production volume of pellet and value products largely remain flat quarter on quarter. Kerala’s production and sales volume increased by about 15 and 13%.
YOY and QoQ realization of almost all products were plate except galvanized products and therefore you can see the profitability and sales turnover more or less on the flat side. Coming on the financial results on QOQ basis, consolidated revenue, EBITDA and PET remained largely stable despite falling iron ore mining production due to delay in mining plan approval for Bojatiguo mines On WYO basis performance was lower primarily due to decline in self realization. The EBITDA and paid margin stood at 24 and 16% respectively. The performance of Thermopigment, the recycling unit of GPL was stable during the quarter JPL achieved a consolidated revenue from operations at 230 crore and EBITDA of 20 crores.
I would like to now give you few strategic update and operational developments. I’m pleased to announce that in line with our growth strategy and diversification strategy, the board has approved total capex of 1600 crores for two new projects. The first being a 900 crore investment in setting up a 0.7 million ton cold rolling mill complex which will enable the company to convert HRC into CRC and manufacture the other value added products like color coated steel, zinc, aluminum, magnesium steel that is called GEM Galvalam products. These are all value added margin accretive product which will get added to our portfolio.
The project cost includes the pre operative expenditure margin for working capital. The project will be funded through a debt of 600 crore and equity of 300 crore through the internal approval. The estimated timeline for commissioning of this project is Q1FY28, that is March 20th. Sorry, March 27th. March. No, not Q1FY28. March 27th. Additionally, a 10 gigawatt battery energy storage system project is proposed at a cost of 700 crore to manufacture battery pack and container manufacturing line. The project will be set up in Maharashtra at Vitkin near Chatpathi Sambhaji Nagar in 100% subsidiary called Godavari New Energy Private Limited.
The company has applied to the Government of Maharashtra for allotment of land for the said project under the package scheme of Incentive Policy 2019 which will entitle the company for various incentives like state GST capital investment subsidy, power subsidy at a concessional rate and subject to compliance of certain terms and conditions. The technology for manufacture of container and with lithium ion iron sales required for the project will be imported from China. Company is in discussion with few Chinese manufacturers for supply of technology and sale for the project. Part of raw material required for manufacture of containers will be supplied from our CRM proposed CRM project which will supply the raw material required for the container that is still required for the container.
The project will be funded by an equity investment of 40% from GPI and balance will be read by the debt in the SPV. The expected timeline for commissioning this project is also March 27th. Further to update you on ongoing CAPEX plan. We expect to receive all necessary approval for Adirondack remaining capacity expansion from 2.35 to 6 million ton by Q3FY26 and start operation in Q4 pellet expansion of 2 million tonnes is going on schedule and we expect to commission the same in the month of October the operations at Bojatimu mines have resumed after getting the approval for updated mining plan for Indian Bureau of Mines.
I would also like to mention that GPL has received an approval from PGCI to supply steel billet to the manufacturers of galvanized steel structure for transmission project. This is a significant milestone that reflects the superior quality of our product comparable to those of India’s leading steel producer. Previously, dependence on the high cost market source product that is Steel billets and roll products restricted our offering in the segment. With integrated steel production now in place, BPL can deliver comprehensive and cost effective product portfolio driving both volume and margin expansion. Notably, Japan is the only company in India producing galvanized steel structures end to end from iron ore.
Japan has also received approval of MOEF during the quarter for setting up 2 million ton greenfield integrated steel project Coming on the market Outlook on international front, global RNO prices have remained within a range of 95 to 105 dollars per ton so far this year currently hovering at around $100. The first half of the year was supported by weather related production losses, second half will see increased supply and might put some pressure on the R and R prices. The recent geopolitical tension continues to weigh on the global demand and supply dynamics. In response, China has been providing stimulus to boost household consumption and for the first time resorted to direct transfer of cash to promote population growth.
This argues well for supporting demand on domestic front iron ore prices. NMDC have largely been given Range bound between 4,500 to 5,500. Rising domestic steel prices and discovered demand supported by implementation of safeguard duties continues to support traction. Aron or pellet prices have followed the same trend and has traded in a narrow band of 8500 to 10,000 rupees return during the quarter with current level at around 9500 to 10,000 rupees a ton. India steel output rose 9.2% January to December June 25, making it stand out in a weak global environment amid sluggish demand. Still landscape India stands out as a rare bright spot driven by robust growth in infrastructure and construction and this growth momentum is expected to continue in coming quarters.
With this I write my opening remarks. We can now open the floor for Krishnajesh.
Questions and Answers:
operator
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 touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while Asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Vikasing from ICICI securities. Please go ahead.
Vikash Singh
I can’t hear anything. Am I audible?
Dinesh Gandhi
Yeah. Yes, yes please.
Vikash Singh
Good afternoon sir. So my first question pertains to your DESS business. Basically our surprise. In the past we have entered into solar thermal business as well and later on exited. So what actually prompted this and what kind of, you know, the returns this business can generate us over a longer period of time.
Unidentified Speaker
Okay, so good morning to all of you. So you know the idea to diversify into this best project is so just to give you history, I don’t know how much you know about the best project. So the idea is, you know all the solar generated states in India, especially states like Maharashtra, Gujarat, Rajan, where the solar capacity is quite high during the daytime there is peak generation and by the evening five o’ clock the generation becomes zero. So what is happening is the grid is getting very, very unstable for these states and it’s becoming a challenge at the national level as in terms of maintaining the grid.
If you see all the tenders which are coming out in the market now, you know, by the SECI or even the state discoms of these states, all tenders are now with so much megawatt capacity of solar, for example 100 megawatt solar and 200 megawatt hours of battery storage. It basically means for 2 hours 200 megawatts of solar power will be generated from the battery stored. Right. And that the government of the commerce will use to inject in the grid during the peak hour which is from EV6 to 6 and 11 as per their convenience and requirement.
So the way this entire feel is coming up into India is such a rapid pace because this is something which is necessity. Now autism need to go ahead with you know, all these qualifications to generate solar power. In month Of August only 8 GW of tender is going to be out by SETI and Siddiscoms. So what is happening right now is the entire container which basically is a 5 megawatt container is being imported into India from China at a 10 11% duty. And the tenders, the people who have been with tender, these people are importing and supplying in meaningful female norms.
The idea is to generate the domestic capacity we want to enter into this first stage is we won’t be, you know, getting into sales which basically requires 70% of the CapEx of the entire industry. We will import cell which is a 5% duty and we will do battery packs and then put the battery pack into containers with all automation and deliver to the consumer. This is the whole idea to tap this market. We definitely feel to give a number today the market rate for Import is about 3.2 crore for a 5 megawatt container. So if you consider minimum, you know even a 5% EBITDA level for our operations which is about 20 lakh, 15 lakh rupees per megawatt.
And when you apply with the capacity we are installing 10 gigawatts. So the ROI is very handsome. You know the ROI is hardly 18 to 24 months. So we do feel new energy is the way to go ahead in India and that is where we want to enter this project. Steel will remain the core part of Godavari and we will expand into steel. As we have been discussing on the same platform earlier as well. This is the whole idea to enter the best. You are very right. We did enter into that solar thing 10 years, 15 years back.
Unfortunately that didn’t pay a lot of dividends. We utilize that. But this is a very well thought, well explored decision we have taken because I think it’s time where you know Gulavari does enter you next to the growth it’s been three years, our volumes have been very constant. Finally our place we found this opportunity. We know we’ll be the first movers. If you don’t do it now then probably if we think of doing it five years later, four years later, we might be late. The whole idea is to keep the balance sheet healthy and diversify when there’s opportunity given.
So that’s the whole idea behind this.
Vikash Singh
Know the rational notice, solar thermal also we are the first mover. But fine sir, in terms of our steel plant Capex basically we got the environmental clearance I believe. So if you could just give us some insight that if the composition or the total tonnage which we are looking has been changed with respect to the Capex plant. If you could give us some more insight how that is panning out.
Unidentified Speaker
See we have received the AC for 2 million but as discussed earlier also you know, shared with all of you we will be going with the 1 million steel plant at the moment. That’s the whole plan is we are still working on the final optics and hopefully we should be able to, you know go for the approval in next board meeting. The idea to be honest is we want to. And now the field Capex along with capacity is when we get the mining VC which we hope we will get by end of October, early November.
The whole idea is entire Godavari’s profit is not hinges on the new mining capacity. The FedEx plan will also get commissioned. So we want to make sure once we have the mining issue then only we moved ahead with any kind of investment machine because the CAPEX will be on the higher side because it’s a 1 million steel. The idea is to wait for the mining you see and then probably go at messing into seeing further notice.
Vikash Singh
So just lastly one, one small question. We have been waiting for public heading for our mining extension quite some time. So what are actually delaying this?
Unidentified Speaker
No, so just to update you, just, just to update you, nothing is being delayed. So this week we will get the IBM approval for the revised mining plan. It takes about, you know, six to eight weeks. So this week we’ll get the IBM rule plan. This is which the state government now will take out a notice for public hearing. It’s a 30 day notice so public hearing should happen in month of September post 15th September when public hearing happen in September public meeting record will be submitted to the Share Pollution Board and a final benediction happened.
So everything goes well we are confident post Diwali early November we should get the issue so there’s no delay. They said the process is so long it takes time. Mining plan has been approved by the IBM will be approved this week. Revised mining plan for 6 million. So it is on flat. But I do understand there has been a lot of delays but sometimes, you. Know, things are not in the control process Notice.
Vikash Singh
Thank you and all the best for future.
Unidentified Speaker
Thank you.
operator
Thank you. The next question is from the line of Vivek Ramakrishnan from BSP Mutual Funds.
Vivek Ramakrishnan
Please go ahead Sir, Good afternoon, thanks for the call. I had three questions. One, in terms of peak leverage, as you do your capex stance, you’ve been a debt free company lately. So what would be the peak leverage to the, you know when you set up the CRM complex you’ll be buying I imagine the hot rolled coils from the market. Isn’t that a very low margin business or is it linked to your integrated steel plant plants? And three on the battery storage which the prior questions also came. Is the technology flat or are you going to have any technological collaboration? These are my three questions, sir.
Unidentified Speaker
Okay, just to answer you the first question. Hello, can you hear me? Yeah, yeah. Hello.
Vivek Ramakrishnan
Very well, yeah, very well.
Unidentified Speaker
CC for the, for the current CapEx which you announced it’s a 40:60 ratio and with the current balance sheet and a cash reserve, you know the leverage Will be very minimum, you know hardly 4 below 0.5 at the moment with the current CapEx once going forward, once you get the mining VP and if you go ahead with the free project, announce that then probably that might change the payment situation. So at the moment with the current CAPEX amount we will be taking small debts of you know say 800 crore. So it’s very, very within the one to one ratio.
Second question was on the your best project side. Can you come again with the question?
Vivek Ramakrishnan
I just muted, sorry. It was on the cold roll mill whether you know, you know C. If.
Unidentified Speaker
You, if you do understand, you know we work back and forth in last three years where you wanted to put a 2 million mill basically predicting HR coil, right? But the new model in India which has become a standard by the bigger players is a 5 million single mill with a 6 million digit capacity. So with so much of HR coil coming into India plus imports also happening, right. In spite of the cigar duty between hr, the premium which sellers were getting for HR coil earlier is not same anymore. You know, HR quality become more of a commodity.
So the idea is to further integrate buy HR quality from the market, do value addition in the form of you know the CRM complex where we’ll be doing the color coated lines, the printing lines and also the jam. Jam is basically a combination of zinc, aluminum and magnesium, right? This, this is quite, you know, quite hot like a hot cake in China. In India it has just started coming in. So the idea is to make value added steam and in a worst case scenario even if it be very conservative with all a product portfolio, I think 4 to 5 rupee return is what we’re looking at in a longer term basis for a 0.7 million capacity.
The idea is to get into validated team and tap that market. And the third question is regarding the bets. So the idea is we are right now open for collaboration in terms of technology. We are open collaboration in terms of supply and we’re also open terms of where the first phase, you know we pick and choose the best suppliers, start with the first phase and as technology. Because see this is a very technology driven industry. Technology will keep evolving, you know, keep changing. So we have to meet, you know, move with everyone. So going forward we’re also open if the technology changes, there’s a collaboration happening with a good liquid supplier, technology supplier.
We can always go ahead. Nothing is fixed at the moment but we are very much open in terms of any kind of collaboration going forward.
Vivek Ramakrishnan
Got it sir, thank you very much and wish you Good luck.
Unidentified Speaker
Thank you.
operator
Thank you. The next question is from the line of Siddharth Garakar from Icarus. Please go ahead.
Siddharth Gadekar
Hi sir. Good morning. First on the cold rolling mill. So can you help us understand the configuration that we are looking at and what kind of CIC that we would be producing from this asset.
Unidentified Speaker
See so basically we’ll be buying the, the full 250 meter with we’re going to be doing pickling then the CO rolling mill. You know there are two, three different products. One is the color coated, one is the printing line and one is the color coded with jam line which gives you better strength and more life. So basically the entire 0.7 million of input, you know will be distributed into three different products of different thicknesses. So we are targeting from a 0.15 thickness to as high as 3.5 meter thickness, 3.5m thickness. So. So we want to you know, cater all different segments so that you know our volume is not concentrated in only one product. You want to distribute into different products. So color coated, color coated lines. Jam Galvanium then also hr, HRPO which is you know, pickled and sell HR coin. So that’s the whole idea. Plus the container that the box basically which is which made out of steel. That particular container, steel will also be produced in the CRM complex. So it’s indirect backward integration of one of our important supplies containers. Raw material is HR coil only HR coil, pickle and then you know, cold round.
Siddharth Gadekar
So now in terms of sourcing the HR coil, where are we targeting to source the hr coil from? 1. And secondly in terms of selling the coal CRC what are the markets we are targeting?
Unidentified Speaker
See for sourcing, right being the location we are sitting in right now. Right. So you know there is Bhushan. So basically there’s JW Jatukura, then there is Satan, whole jsplangul. So we have multiple options Tata, you know, Jamship. So in terms of sourcing there are a lot of options. It all depends. And NBC is there in facilities that are started making HR coils. So we have a lot of imports. So sourcing is not an issue. Everybody is a seller of HR coils because the volumes they created for themselves is so huge and they haven’t, you know, put up lines to convert everything, every HR into cr.
So there’ll always be a center of HR call in the market. That’s the sourcing part in terms of finished product. See we are not very, you know, restricted to be on a sale in this only area depending on demand and Supply because we are not the only producers in this market. There are other players, established players from before on. So it all depends, you know how you brand it, you know in terms of quality and which market you want to target. So once we start making it that can be any demand and supply. So idea is to focus entire India.
We’re not thinking about focusing on XYZ and not do that.
Siddharth Gadekar
Will be a brand new.
Unidentified Speaker
So technology, technology is a prompt. So you know the, the main mail is from John Cockrell which is a Belgian company then SMS which is again a German company. So it’s a mixed match. So depending on the critical side of the operations we have gone with the best supplier. So some are European, some are domestically, you know, supplying some TV from China as well. A mismatch. But we ensure there is no complaint of quality so that you know, best things are picked up from the best suppliers.
Siddharth Gadekar
Lastly, when would we be doing the ordering for these equipment?
Unidentified Speaker
See now we have got the board approval so now we will move ahead with the, you know, fine tuning the entire proposal and probably I think when it is quarter we should be in a position to place the order. And for Diwali Monsoon, guess who was the idea is to start the civil work in November for both the projects.
Siddharth Gadekar
And so they will be putting up this plant. It will be the same location where the steel plant was supposed to come up.
Unidentified Speaker
Yes, so, so, so CR complex is already the part of EC for the new which we have received for 2 million. So it will be on the new, it will be in the new location along with the C complex.
Siddharth Gadekar
Secondly on the battery storage there also we have done any ordering or we. Will be looking to.
Unidentified Speaker
No, no we haven’t because you know we had to take the board approval so which we received yesterday only now since we have a go ahead from the board. So now we have done our working, we have done our homework. Now you know we need to finalize things with the suppliers and fine tune things. So as I said that might take a couple of months and the idea is to eventually start the groundwork in November for that project as well, the Venti project.
Siddharth Gadekar
The last question on the steel plants, when are we looking to target the. Steel and steel plan? That is some time away as of now.
Unidentified Speaker
No, it’s not away to be honest we are very close to finalizing a capex, you know, last bit of remaining things. But the idea is because the steep bank apex will be on, you know, substantially higher side compared to you know, these two ones. So we want to move Ahead only when, you know, we get the poor mining agency because today Godavari’s entire profits, you know, going forward which to deploy depends on the mining DC because a new Palestine will also be commissioned in a couple of months. So we are waiting for the mining EP to be received.
Once that is received, we will take appropriate approval from the board and then, you know, declared the soft exchange. That’s the whole idea.
Siddharth Gadekar
And lastly we will be targeting long steel in this or flat steel.
Unidentified Speaker
Now no, we are not looking into flat basically we are looking into long steel. Basically we’re looking to value added steel which is structured primarily that we’re working on. Basically we want to produce, if you see right now we just got approval from PGCL Supply. So the idea is to, you know, have entire basket of, you know, products where they can cater from, you know, transmission lines, railways, infrastructure. We want to produce high category beams, you know, 600, 800,000 size beams which are primarily used for internship projects. So the idea is you intend to, you know, validate steel now and move away from commercial.
Siddharth Gadekar
Okay, got it. Thank you so much. Thank you.
operator
Thank you. The next question is from the line of Manav Gurgya from yes, securities limited. Please go ahead.
Manav Gogia
Yeah, hi, good afternoon and thank you for the opportunity. So one question I had, you know, we are probably also nearing the greenfield steel plant coming up and along with this 1600 crores of capex that you have announced, can you give me the capex outlined for the next couple of years and how do you see the debt part going up especially if the field plant kicks in? Do we intend to take on more debt for the greenfield steel plant?
Unidentified Speaker
See the idea is for this year, FY26 which is running, we have certain ongoing projects which will be completed in this year as well. For the next step which we’ve already announced, we need to do a capacity of 1600 crores out of which about 900 will be, you know, taken on the books and remaining will be invested. So we are doing about you know, 800,000 crores of free cash every year. So you can assume whatever we generate next year that will be utilized in the two projects, you know, which have already declared to all of you for the steel capex.
As I mentioned again, it will be only moving ahead after the mining approval. So you know, if you see a bunch of mining approval received and when you sell fund getting commissioned so our free cash drastically goes up, you know, from FY27 because of additional volumes coming in from appellate and as well as. So if you Take that into consideration for FY27 and FY28 we should do about a free cash of you know, minimum 3,000 crore basis the mining approval. So if you’re able to do that and assuming a cheap grant capex of say you know four and a 5,000 corrode so we’ll be much below one is to one.
So the numbers are very well worked out. We have defined a timeline which capex how the money has to be deployed and this is that we will be going ahead.
Manav Gogia
Sure. And for the same capex do I assume that you know it should be peaking out more during your FY28 other than FY27.
Unidentified Speaker
So if you see if you want to break it up so probably you can say 2020 in FY27 and probably say 60 in FY28 and then probably lastly means we’re 20 in FY29 because. Because ordering requires only 10 advance. But then as the project progresses right. Supply starts. That is where you know the major deployment of cash will happen. So FY27 will be 1520 maximum will happen in FY28.
Manav Gogia
Sure. Got it. Yes, got it. My other question is, you know on the company’s diversification policy which we are currently into with the battery storage plant how do we you know basically study these projects going right. And do we see more such projects on the diversification side from steel coming up in the next couple of years apart from the.
Unidentified Speaker
No. See to be honest if you talk about the defecation strategy. So we have opinion today with all this make in India concept. Right. So we were, you know we have been looking for different business business opportunities from last two years where either a lot of imports happening to India, you know, so you can create a domestic capacity which the government also wants or you enter into new energy energy because energy is something which is here to stay be on the solar side, on the renewable side and of course the best is the biggest addition to that basket I would say. So the idea is we feel energy is going to be a cash flow for all the Indian businesses because the way India’s demand is going up accordingly challenge is also creeping up in the market.
For example debt stability is happening. A few states are running short of power so we always wanted to focus on energy side. We found this very lucrative. We have done a homework from last six months and that is why we are going. So we not say we want to keep diversifying but if there’s an opportunity present going forward also we won’t mind taking that route. We will ensure, we will ensure. Somebody also mentioned, you know, in the first call what we have done earlier. We do understand that and we have, you know, realize that and upon you will make sure we are never over leveraged and we don’t run tight on, you know, when the market turns around.
So we’re not running tight on cash. We will ensure that that is the whole idea.
Manav Gogia
Got it, got it. And so, you know, just an add on with the subsidiary that we have for new energy now do we intend to remain only an essential or probably evolve into a full stack energy storage company or down the line, five, six years if that is a focal point going forward.
Unidentified Speaker
Since the whole idea how we picked up this was the solar industry In India, right 10 years back it was hardly, there are hardly a few players but post Covid there has been, I would say a rat race when it comes to investment into solar modules capacity. India is adding up about 50 gigawatts of renewable every year with the target to go up to 50, 70, 100 megawatts every year. 100 gigawatts. So the way solar industry evolved into India was at a very slow pace. So initially they put a 40% tax on solar modules. That’s how a lot of people invested into making solar modules in India.
Now the government has come up with ALM for solar cell which is a key component for solar modules. So from 1 July 2026, Indian manufacturers cannot import cells they have to manufacture into India. So now all companies are investing heavily into solar cells because solar cells require a huge capex. Similar way we feel best is just picked up into India. A lot of imports are happening slowly and surely the way we are getting to manufacturing others will also do so. Once renewal capacity comes into India, government policy will come such a way that they will put duties, they will restrict imports into India and make this business more lucrative.
So we are taking a cue from the solar module space and we feel the way it’s progressing right now, similar things should happen in this category. That’s the whole idea. So the idea is to put 10 gigawatts first stage then ramp up, you know, to few more gigawatts. And when we feel there is support of policies, we will also enter into solar cell manufacture. Sorry, this battery cell manufacturing. And we are, we are also open for collaboration for tech transfer. So the idea is this is a long term idea, it’s not a short term idea.
The five year seven is down the line idea.
Manav Gogia
Got it, got it. So just one last question. You know that the battery storage unit is going to be somewhere in Maharashtra, whereas.
Unidentified Speaker
It’S called Oric.
Manav Gogia
Yeah, okay, got it. So the battery storage unit is going to be Maharashtra, whereas the CRM unit is going to be in the state of certificate and dry pool.
Unidentified Speaker
Right, right.
Manav Gogia
How do we, you know, look at the logistics of supplying the CRM towards container manufacturing in Maharashtra?
Unidentified Speaker
So no, no, So I, I don’t know. If you say distance wise, hardly, you know, five kilometers. So by road, by rack, if rack is available, we can sell the. Basically we’ll be selling the raw material, you know, processed raw material. Eventually assembly, assembly of containers will happen in that Maharashtra factory only. So only the coils in different shapes will be sending from dry code. So we don’t say selling vessel also. And we’ve already accounted that in terms of the raw model price for making containers.
Manav Gogia
Got it, got it. And what would be the captive requirements? I mean I’m assuming you’ll be making. Roundabout 2,000 units of these containers. Right. If we assume a five megawatt capacity. Per container.
Unidentified Speaker
S ee we’ll be doing about six containers every day. So you can easily consider six into, you know, 325 days of working. So around about. Yeah. So 2,000 containers is right. You what you’re estimating? Perfectly fine. Sure. Containers every day to achieve a capacity of 10 gigawatts.
Manav Gogia
Sure. Thank you so much. I’ll join back. No longer being recorded.
Unidentified Speaker
Thank you.
operator
Thank you. The next question is from the line of Sahil Sangvi from Monarch Network Capital. Please go ahead.
Sahil Sanghvi
Yeah, hi, good afternoon. Thank you for the opportunity. My first question is roughly any understanding as to how much of the current demand for this vessels imported.
Unidentified Speaker
See right now if you see just for information, in August month only there are 8 gigawatts of tenders out in the market by the state discom and NTPC and other sectors. So if you say 8 gigawatt which is 8,000 divided by 5, 5, so roughly about 16 containers is required, is up for bidding in month of August only. And this figure will keep going up every month and month. You know, if you can, if you can, you know, follow substitutions like renewable watch, you know you will, you’ll find every day there are 10 vendors, pretenders being uploading system for bidding and everything.
For right now one facility of 1 gigawatt is being commissioned in Pune and 2 gigawatt has been commissioned in near Bombay. Right. Other companies like for example Tata has done a 100 megawatt battery storage in Chhattisgarh Rajindore where they have Tied up with a company called Goshan which is again in China. So they supply the contains Tata and they burn the tender and install 100 megawatt hour battery storage. So now close to more than 99% is being imported into India with a certain duty. Duty on sales is 50% of that. So you know, if you consider everything, you know, put zero whatever we manufacture in the VHL it you know saving 5% of duty itself will give you a, you know, a margin of 50 grain asset fees per megawatt.
That is the whole idea. You know we are being so conservative the demand is going to keep going up month and month.
Sahil Sanghvi
So you’re saying roughly 80, 90% of the demand has been imported for this product.
Unidentified Speaker
More than 95% more than other 98% right now. Now India people have finally you know somebody’s done a tie up, somebody started doing you know, retrofit, somebody is doing you know, pick and choose and now they’re integrating the investment to battery. So probably somebody will do container, somebody will do only battery packs. But nobody’s entering the cell right now. The cell is where your 80, 70% CAPEX is required for the entire supply chain.
Sahil Sanghvi
Right, Right. And roughly what kind of margins do you expect to make over your margins and rocs?
Unidentified Speaker
So see today the fee value of one container being imported is about 3.2, 3.25 crores. So which is about 3.25 divided by five comes about 55 lakh rupees per megawatt hour. So assuming you know we do a minimum margin of bare minimum margin of 5% only. Right. On a 3.2 hectare road it comes about you know, 15 billion lakh rupees. So when you multiply that with 10 gigawatt which is almost 10 mega thousand megawatts the numbers are as good as 350 crores. 400 crores at 10 gigawatt capacity. So we’re looking at ROI. It’s more than you know, 40, 50% of 700 crore which includes the firm one time land cost, Mahindra cost also including our working capital.
So the machine investment is only about 250 crore machine in shares remaining is the working capital because cells have to be imported so working capital is going to be in the higher side plus one time cost of the land which will be given to us one time cost of the intra, you know, fulfilling their conditions of land, you know, power connection and all those other things. When you do a 20 gigawatt, probably do another 10. So the CapEx will be less than 50% of what we’re doing right now.
Sahil Sanghvi
Right, Right. So I just wanted to, I mean I understand the whole story and the whole, you know, the attraction about the whole demand scenario. But then profitability wise we are getting into low profitable businesses. So don’t you think that’s something? That’s not the right.
Unidentified Speaker
It is low profitable but then the volumes can be very high. So for us the idea is it’s 10 gigawatt gigawatt. The whole idea is if everything goes well we want to take it to 40 gigawatt. That’s what the plan, you know, we have committed to Maharashtra government, you know, for the policy. So the idea is to scale it up. It’s more of a volume game, you know, when you do a 5% EBITDA. But the moment you mentalize the volume, you know you get the numbers against investment, against investment. And still we’re very clear we want to go ahead but then we’re not looking at volume gain.
We want to be validated Steam which requires certain higher capex compared to probably a commercial scheme. But then we want to do a volume game. So if there’s opportunity we felt right and that’s why we have, you know, diversified.
Sahil Sanghvi
Got it, Got it. And lastly whatever, you know, tech, you will require a tech collaboration over here. Right. And that will entail some royalties or some fees over there. How do you think about that margins after considering those.
Unidentified Speaker
Yes, it is, it is. So right now, you know we are very much upon to do pick and choose, you know, better deal machine from the best supplier in the long term basis when we want to further backward integrate say we want to do sales. So we have also a discussion with few companies on tech tie up. The structure can be in form of equity or a royalty, you know, depends on the Chinese and Indian government law as well. So we are very much open but for the 10 gigawatt we are also okay doing you know, pick and choose, you know, with the best suppliers.
So. But it’s a long, long story. It’s a very long one story. So it’s not something you’re thinking of.
Sahil Sanghvi
Okay. Okay. Thank you. Thank you. I’ll come back in the queue and all the best.
Unidentified Speaker
Sure Sahil. Thank you.
operator
Thank you. Before we take the next question, a reminder for the participant. Anyone who wishes to ask a question may press star and one on the touchstone telephone. The next question is from the line of addictive Elekar from Access securities. Please go ahead.
Aditya Welekar
Yeah, thanks for the opportunity sir. Again on the battery electric storage front. So Just wanted to understand means we are, we will be just in the EPC part of it, right? We will not be.
Unidentified Speaker
No, no, no, no, no, no, no, no, no, no. We on the EPC part of it, basically we’ll be suppliers of the container. So people who are bidding for tenders and they people who are being right now importing from China. So instead of reporting from China we can be one of the potential suppliers. So the container they are reporting From China for 5 megawatt Godali New energy will be one of the suppliers for the 5 megawatt container for the end use.
Aditya Welekar
Understood. So see the context is means we have seen the capacity fees for battery electric storage coming down from 10 lakh rupees per megawatt per month in August 22 to currently it is almost 4 lakh rupees per megawatt per month.
Unidentified Speaker
Very correct.
Aditya Welekar
So there is a steep fall because of the falling the lithium battery prices. So there might be some pressure on the utility generators that they want to bid. So the currently also the bids are very competitive. So in that context our margins will be secured. Right, because we are just supplying parts.
Unidentified Speaker
Exactly. We are entering into where we want to be tender basically at whatever price. You know, somebody is winning the tender ad eventually either he’ll import from China or he’ll buy from India or he’ll make his own containers. It will be one of. One of the supplier of containers. Nothing to do with what price the tenders are going at. Nothing to do with that.
Aditya Welekar
Understood, understood. And then means from that perspective, is there any possibility that like which we have seen for solar sales that government has put that approved list of solar sense.
Unidentified Speaker
Exactly. It’s called alm. Yeah, yeah.
Aditya Welekar
So there is a DCR basically domestic content requirement.
Unidentified Speaker
Exactly. Very, very correct. Very correct, yes.
Aditya Welekar
So is there any possibility that for battery storage also that the imports will be restricted from China and we have to manufacture the sales domestically?
Unidentified Speaker
As I said earlier, we have picked up this from the solar space as well. We do, you know, we also have this in mind moment. India is able to, you know, manufacture the desired capacity. You know where the demand is coming from the all these tenders. I’m sure government policies will be framed in such a way that they will protect the domestic industry the way they are turning solar cells like solar, solar modules in the cell. So we are hoping government will, you know, take a cue from this policy and the same kind of policy will be blended.
But of course provided enough capacity happens, capacity expansion happens in India in terms of manufacturing of these containers, then Only government will come with its best policies. So we feel we are one of the first movers and in the long run we will be one of the beneficiaries of such policies.
Aditya Welekar
Right, Right. So means what I understand is that our margin will be protected irrespective of. And then from unit economics perspective means you said that solar definitely that the sales will be the major cost. So balance of land, what will be the means? If you can just throw some light on Capex. And how much will be you will require for in terms of working capital means how much will be battery and then how much will be the steel. So apart from the.
Unidentified Speaker
Cell. Exactly. You know, so if you, if you do a makeup of the entire container. So consider cost of you know, $65. So out of which 55, 35 is about the cell which will be imported. $20 is about the battery. The BMS which is basically the backing diamond system which is like you know the USB of technological suppliers. And the main $10 is include everything else, you know, your container steel, your fire protection and other accessories. So the breakup is 35 cell, 20 for the back BMS. And then remaining $10 is for your other, other experience to make entire container.
This is in order to take up.
Aditya Welekar
Understood. And our ballpark margin means per container.
Unidentified Speaker
Or see worst case scenario today you know price of container is at 3.25 crore rupees INR. So if you even consider rough minimum margin of 5% it gives you about 70, 80 lakh rupees. So when you multiply that with 10 gigawatt you know it comes to, you know, close to 350 crore rupees. 370 crore rupees. So then investment of you know what we’re doing right now so we can see an RR of more than 40, 50%.
Aditya Welekar
Understood. Understood. And this margin will be mostly fixed, right. If the raw material prices changes we will be able to pass on that.
Unidentified Speaker
Of course. Yeah, of course. Whatever the imported Buddha goes up, say domestic price can also go up. Demand is much more than the supplier. The selling banks will also go up. So it will keep happening. You know, it’s part of the business.
Aditya Welekar
Perfect. Sir, thanks a lot. Thanks for answering the question.
Unidentified Speaker
Thank you.
operator
Thank you. The next question is from the line of Vinit Thakur from Plus 91AMC. Please go ahead.
Vinit Thakur
Hi sir. Thank you for the opportunity. I would like to know why is there a jump in the galvanized harmonization. Product on a year, on year basis? As we see last year we did around 13,000 tons and this year we did around 24,000 tons. What would be the guidance regarding this Steve?
Unidentified Speaker
As you are aware Mr. Gandhi also mentioned we have received so we have received the part approval to supply into PGCL almost three months back and now we have received the second part. So now rf pass the garnish product is we have complete approval to supply into PGC is because of which you know the volumes will further go on. We’ve seen you’re comparing 13 to 23. I think from this quarter, next quarter onwards you can see the volumes crossing 3,000 tons every quarter and quarter because since we have received the approval so now we are eligible to supply to all the big EPC companies like Kalkaru kec, Tata Adani.
So because of that and the demand you know, keeps going up because the way you know the transmission line can be laid into country so the volumes will keep going up. And you can also see more healthy margins coming out of the galvanized product business. Now after the approval we have received.
Vinit Thakur
So are we looking to increase the. Capacity for government fabrication products? Because.
Unidentified Speaker
To be honest, you know, last month only they received the, you know, the final approval. So once we you know get stabbed in the market they’re able to run the entire planet full operations for six months, eight months and then only probably we think of reinvesting the new Capex. You know the idea is to first, you know, get the money back whatever you invest in last two, three years then probably think of investing into further.
Vinit Thakur
Okay, thank you so much.
Unidentified Speaker
Thank you.
operator
Thank you. The next question is from the line of Vedant Sarda from Nirmal bank cms. Please go ahead.
Vedant Sarda
Thank you for the opportunity. I want to know the CRM Complex project we are targeting the capacity of 1,7 million ton. So what kind of margin we can expect from that?
Unidentified Speaker
If you’re looking we’ll be looking at the margins of say four to four and a half, four to five rupees per ton of the finished product. So we will not be shifted to one single product out of the CRM complex. We won’t be, will be making three, four different products. So one is the color coated line, one is printing line, then there is jam which is basically a part of, you know, improved version of galvanized footing. So again thickness from 0.15 to 3.5. So we want to enter into all kind of products of value addition where the application is different.
Some is in automotive, some is in household. So depending on the application the idea is to have the entire cluster in the basket and the Demand is supply. We can always change the configuration of the output. The input remains 0.7 million ton and we targeting 45 rupees a ton.
Vedant Sarda
Okay, thank you, thank you.
operator
Thank you. The next question is from the line of Kunal Sukwani from Invest group. Please go ahead.
Kunal Sukhwani
Hi sir. Thank you for the opportunity. My question was regarding the basically what is the current deficiency, what we are getting from their mines and what is the beneficiary need and what is the, what will be the cost of beneficiaries?
Unidentified Speaker
Okay, so Boria, the current mining capacity we have is 0.7 million ton. The average grade in Borea is right now about 50, 50, 48 to 50. It’s again, you know, a part of magnetite family. And so right now since we don’t have a plants in Borya mines, we’re getting the entire row in the plant and verificating. So here the Yield is about 50 to 55% because the AC is on the lower side to maintain the, you know, quality of concentrated, you know, pellet. And the cost cost is hardly, you know, 200, 250 rupees. Managing cost is not very high.
Very, very, very, very minimal. And we are further increasing the capacity. We have started working on filing the revised EP with the state government. So from 0.7 million we’ll be taking it to 3 million tonnes and also putting up a plant inside the mine to beneficiate so that we do not pay extra transportation costs which we are currently doing. So the idea is to beneficiate in the mine, make a high gas concentrate and directly bring it produced in the mine. But that will take about three years. So the idea is to you know, club to club the commissioning of Borea verification along with the new steel plant from now on.
Kunal Sukhwani
Yeah, and so same similar for BNQ bmq. What would be the need and what would be the beneficiary cost?
Unidentified Speaker
See the cost, the overall cost remains the same. Doesn’t see in BNQ because the FC is on the lower side, say 30, 35. So the yield goes down to 40%. So see tack around input. Basically the Bodia mines you can say across different about 20% because there’s a yield is 50% here the yield is 40%. So 20 yield loss will increase your operating cost by 20%. That’s it, not a major issue.
Kunal Sukhwani
Oh sure. Thank you.
Unidentified Speaker
Thank you.
operator
Thank you. Ladies and gentlemen, please limit to one question for participants and rejoin the queue for the follow up question. The next question is from the line of Divyanshu Kumar from Craving Alpha Wealth Fund. Please go ahead.
Unidentified Participant
Thank you for the opportunity. Sir, my question is related to the. EPS which has been dropped from. Dropped to 3.5 from 4.5 last year. Q1, could you explain what led to the drop in pocket? Was it due to lower prices, higher. Cost or something else? And also what will be the estimate for the year? Thank you.
Dinesh Gandhi
Sorry. The drop in probability I had mentioned in my opening remarks is primarily because of the reduction in selling prices. Falling selling prices. Our volumes are more or less consistent, maybe one quarter here and there. But overall the Falling profitability in Q1 is mainly because of the following sales realization. Hello.
Unidentified Participant
Thank you sir. Thank you sir. What’s the estimate for the year. Is.
Unidentified Speaker
Very difficult to guide in the sense that since we are giving the volume. Guidance it all depends on the how. The selling price is rolled. But we believe that with which we are expected to intervene towards the busy season and prices have already started moving up. So this is what we believe that it should be the benchmark, it should be, you know, better from here on. This is how we, you know, our understanding is. But it’s very difficult to predict on the pricing side.
Unidentified Participant
Okay, thank you for the answer.
Unidentified Speaker
Yeah.
operator
Thank you. The next question is from the line of Ashish Soni from family office. Please go ahead.
Unidentified Participant
Regarding this bss, the tech transfer, are. You open for like, is it like Japanese or Chinese? Because we have seen.
Unidentified Speaker
No, no, no, no, no, no. To be honest, no, no, no. I think, I think no. No one beats China in terms of technology. For at least best we have visited, we have visited a lot of companies and our tech transfer, of course we will ensure whatever the Indian loss permit how the tech transfer can happen, we will explore that. But whatever is going to come at the moment for best is going to come from China. According to us, nobody can be cheaper than China in terms of, you know, this technology. We are very sure of that.
Unidentified Participant
But we have seen challenges with existing. Players tied up with Chinese and all they are not able to scale up. So will there be some learning or. We are hopeful that it will go through smoothly.
Unidentified Speaker
See, because what we have understood as an industry is that the major tech goes into the filmmaking which is, you know, probably you can say the heart of the entire business. Right. So right now we will be importing cells from agate suppliers for which we’ll be doing somewhere of tire. Once that is sorted, remaining battery pack and container is more than. It’s not a very, you know, tech savvy, I would say supply chain where you know, things can go wrong, you know, if the tech transfer company is not performing as per the commitment. So the challenge is probably making sales for which we have to do a transfer or tech tie up.
But when it comes to assembly we don’t see it’s a very technical, tech savvy thing to do.
Unidentified Participant
But this cell manufacturing, when we plan to start and how much investment for megawatt of per gigawatt.
Unidentified Speaker
See to be honest, we haven’t worked out because sell can only happen when you know the policy by the Indian government, you know, restrict import of cells into India. Because today even if you want to make cells you will never be able to, you know, make money because the, the prices of Chinese are, are way lower because the volumes, for example, I, I see, I see I saw a single location of Chinese manufacturing where they were doing 20 gigawatt of cell manufacturing only for the battery, 20 gigawatt single location. So when you compare to that scale, it doesn’t make sense at all to you know, enter into making sales.
Right now better to import cells at a 5% duty and then do the remaining part. But we have the idea, we want to provide it. We are, we know we have to, to, you know, to make, keep making money the way it happened in Solar. So earlier 40% duty on solar modules, then government came, no duty, you can’t import. It’s bad now that people start manufacturing India now they have come up with same for cells. Now today cells are being imported from China but from July 26th you can’t even import cells, solar modules. So now people are starting messing into solar, solar cell.
So as industry progresses, technology keeps changing. We will also evolve so that you know, we don’t get left behind, you.
Unidentified Participant
Know, in the race is it like safe to assume like three, four years. Away from the cell manufacturing?
Unidentified Participant
Approximately 100. At least. @ least, at least. We don’t see, at least for next two or three years. For sure. At least Benny, two to three years. Unless you know, Indian government really, you know, comes up with very, very, you know, probably becomes a policy very soon which we don’t see happening because the sea does strike women in India. You know, now people are trying to understand what is bad. So I think it’s a long way to go. Yeah. To be honest.
Unidentified Participant
Thanks for all the best.
Unidentified Speaker
Thank you.
operator
Thank you. The next question is from the line of Aditya Agarwal, some Finn Avenue. Please go ahead.
Unidentified Participant
Good afternoon sir. Am I audible? Yes, you are. Yes sir. I just wanted to know about the. Pellet pricing that we are forecasting for.
Unidentified Speaker
Next, you know, 12 to 18 months with the kind of pellet capacity that is coming on in the market like Lloyd’s is also planning a major capex over there. We are increasing our capacity. So what pricing do we forecast? Because you know. Yes please. Firstly, the price ban for a commercial standard 6263 dipod. I feel it will be hovering, you know, I would say 9,500 plus minus 10%. So a range of say 87, 88 to 10,000 rupees. That has been the trend in last, you know, 18 months as well. So I don’t, I don’t see any change. For example, you know, last month the pellet prices were as low as 86, 87 ripur. And with, you know, steel price going up at 10% today pellet is about 98, 99 at ripur. So the price band remains intact which is about say 85 to 10,000 rupees in the longer term for Lloyds they’ve already commissioned the pellet plan for information but they haven’t started targeting the ripur market.
What we understand is they’re also a big supplier of, you know, Iono fines in the market to different Paris players. So if they do flood the rifle market with pellets, eventually the pellet prices will take a hit and that might prompt them to keep away from the rifle market. So our capacity is being added to rifle market of 2 million. But you need to understand that capacity is being added with backup of iron ore mines. Today if you tell me you want to put up a merchant pellet plant where you have to buy pints in the market, I will not a single penny could appellate.
You cannot make money by buying pints in the market. The whole idea is to supply own in ore from your own mind and then make money. So I don’t see a challenge in terms of pricing because of oversupply because Lloyd is still away from this particular market and we will be the only addition. And there is right now there is a shortage of pellets in Naipur because the dre capacity in Raipur has gone up at least two weeks. So everybody who’s also into steel making has, you know, went into addition capacity of bri. So right now, today the pellets are in shortage in the market.
Other people are waiting when will the plan get commissioned so that the demand and supply can be, you know, come to similar the for me a long term basis nine thousand ten rupees X lightboard is very much achievable.
Unidentified Participant
Yes sir. Sir.And any plans on further blast furnace in our plants or on the new integrated steel plant or it will be.
Unidentified Speaker
We have received the issue. We have plans. We have plans as I said earlier. But we’re still working on the, you know, pine building the. But it will be productive board eventually once we get the mining issue. They’re not going as a steel plant unless they give you the money. That is very clear as a management.
Unidentified Participant
Yes. Thank you. Thank you.
operator
Thank you. The next question is from the line of Bharat Pathak, an individual investor. Please go ahead.
Unidentified Participant
Thank you for the opportunity. My question is like on the container side of things. So you said like there’s going to be some kind of technology tie up. This battery typically requires cooling. So is there tariff on the side like you need to take care of the cooling aspects while designing the container or it’s something else?
Unidentified Speaker
No, it is, it is. So depending on your container weight, your container design, because the battery scan, the cells can be in series, can be barrel. So cooling is one of the part. Fire production is second part. The heart is of course the BMS which is the entire battery management system for charge and discharge. And the last is the PCs. So basically which will convert, you know, your AC to DC and DC to AC. That’s how you generate power in solar. Right. You have to convert. So there are other components like PCs like the cooling system, the fire system and also the bms.
So apart from containers, these are also one of the critical components to make the entire container work apart from sales. So as I said right now we are okay, you know, pick and choose model. If this is company suppliers, this is where the supply chest. The same time we’re also storing a tire for different things. But PCs. In India there are three companies that are already into PCs but we always try to talking to them to supply PCs to us on long term basis. So we are, we are working, you know, with different companies for different suppliers.
Unidentified Participant
So subsequent question is like this BEF. Will be our long term strategy or. Like how it is.
Unidentified Speaker
It is a long term strategy. It is a long term strategy. We’re not looking at, you know, one year, two years. We’re looking at how the solar module industry has evolved in last 10 years. So we’re gonna keep depending on how industry evolves. We will rank up a capacity as well and if required going forward probably be also enter into solar with the cell manufacturing if the policies of government, you know, tells you to do that. So we are very open and it’s a long term strategy. Short term strategy.
Unidentified Participant
Okay, thank you very much.
Unidentified Speaker
Thank you.
operator
Thank you. The next question is from the line of Manav Gogia from yes, securities Limited. Please go ahead.
Manav Gogia
Thank you once again for the opportunity. So my first question is much on the operational front. What was the landed cost of imported.
Unidentified Speaker
Coal from the quarters you want, it’s about 11,000 rupees. 11,500.
Manav Gogia
And how is it shaping up in the next quarter? Do we see some benefits of the pricing falling down?
Unidentified Speaker
Prices have, have come down by, you know, not much. I would say 5%. But you know, if you see dollar was 84.85, now dollar is 87.88. So that 5% down in the incoming five years, you know, at the second time by the dollar. So I would say 11,500 rupees for the Q2 as well as Q3 is a very practical number. 11,500 rupees.
Manav Gogia
Sure, sir. And so how are the realizations shaping. Up for the long products across the board? Do we see a flattish trend or a little uptick?
Unidentified Speaker
No. So see, to be honest, last month the demand was very lull. So that’s. And the price is also downside. But you know, second of July, the demand has come back and we are able to, you know, from sponge to probably say finish steel. We are still able to do a margin of, you know, hedge margin of 70 rupees, you know, depending on the demand. There was a volume of how you do 0.4 million tons of steel, 0.5 of billets. So the volumes are quite intact as well, just rising in terms of the retail level.
Manav Gogia
Thank you so much.
Unidentified Speaker
Thank you.
Manav Gogia
Yeah, yeah. All the very best.
operator
Thank you. Thank you. Ladies and gentlemen. We’ll take this as a last question for today. I would now like to hand the conference over to the management for closing comments.
Dinesh Gandhi
Yeah. Thank you very much for joining us on this conference call and appreciate the same. We are confident that we have adequately addressed all your queries. Should you have any further question or need additional information, please feel free to reach out to our investor relationship at Goindia Advisor. Once again, we sincerely thank you for all active participation and the unwavering support of the investors. Thank you very much. With this, we end this call.
operator
Thank you. On behalf of Emkay Global Financial Services t hat concludes this conference. Thank you for joining us and you may now disconnect your lines.