INDIAN METALS & FERRO ALLOYS LIMITED (NSE: IMFA) Q2 2025 Earnings Call dated Nov. 08, 2024
Corporate Participants:
Prem Khandelwal — Chief Financial Officer and Company Secretary
Sandeep Narade — Head Mines Business Unit
Suresh Babu — Head of Ferro Alloys Business Unit
Binoy Agarwalla — Head of Power Business Unit
Bijayananda Mohapatra — Chief Operating Officer
Analysts:
Aryan Rana — Investor Relations
Unidentified Participant
Dhviti Shah — Analyst
Joe Shah — Analyst
Sanjeev Goswami — Analyst
Saket Kapoor — Analyst
Sid Mehta — Analyst
Kaushal Kedia — Analyst
Akhilesh P — Analyst
Pavan Kaware — Analyst
Presentation:
Aryan Rana — Investor Relations
Thank you, Farah. Good evening, and thank you for joining this conference call with Indian Metals and Ferro Alloys Limited to review our financial results for the second quarter of fiscal year 2025 ending September 30, 2024. IMFA, it has been a remarkable year with about 80% increase in market valuation in the past one year and over 700% the last five years, recently got the reaffirmation of our credit ratings by ICRA.
Our long-term facility rating remains at AA- with a stable outlook, while our short-term rating continues at A1+. This endorsement reflects IMFA’s robust financial performance with sustained profitability, strong cash flows and current debt coverage indicators projected to remain strong in the near-term. The improved financial profile is largely a result of effective debt reduction since FY ’22 and the company is favorably placed for growth in the ferrochrome sector.
As a fully integrated manufacturer of quality ferrochrome and a dealer in the industry, IMFA benefits from a highly competitive cost structure driven by self-reliance and chrome ore and power production. We remain one of India’s top telecom exporters with a diverse operational portfolio, encompassing chrome ore mining, electricity production and ferro alloys smelting. Our financial results are available on our website, and the stock exchanges for further reference.
Please note that today’s discussion may contain forward-looking statements that involve with uncertainties and other factors. These statements should be considered in light of our businesses, which could impact future performance or results.
Joining us today are key members of our management team, Mr. Prem Khandelwal, Chief Financial Officer and Company Secretary; Mr. Bijayananda Mohapatra, Chief Operating Officer; Mr. Saunak Gupta, Deputy Chief Financial Officer, Mr. Binoy Agarwalla, our Head of Power Business Unit; Mr. Sandeep Narade, Head Mines Business Unit; Mr. Suresh Babu, Head of Ferro Alloys Business Unit, and Mr. M Venkatesh, Head Sales and Marketing, Ferro Alloys Business Unit. We will start the brief overview of our Q2 FY ’25 results, after which we will open the floor for questions.
With that, I will now hand over the call to Mr. Prem Khandelwal ji, our CFO. Over to you, sir. Thank you.
Prem Khandelwal — Chief Financial Officer and Company Secretary
Thank you, Aryan, and good afternoon, everyone. Thank you for joining us on today’s earnings call for Q2 FY ’25. We are pleased to report results that exceeded our expectations for this quarter, reflecting the hard work and commitment of our team and our strategic focus on operational efficiency. Our profits came in stronger than anticipated, bolstered by solid performance across our key segments. This positive outcome reinforces our confidence in the strength and resilience of our business model, even as we navigate a dynamic market environment.
Looking ahead, we expect the upcoming quarters to continue this trend. We anticipate stability in demand and pricing, which should allow us to maintain a steady performance. We remain committed to driving sustainable growth supported by our investments in technology and efficiency improvements.
We are grateful for the continued support of our stakeholders, and we are eager to build on this momentum. Thank you once again for your trust and partnership, and we look forward to your questions now.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin with the question-and-answer session [Operator Instructions] The first question is from the line of Sid Mehta [Phonetic] from H&I. Please go ahead.
Unidentified Participant
Yes. Can you hear me?
Prem Khandelwal
Yes.
Unidentified Participant
Okay. I have a question if you can clarify my understanding of the operations going forward. If I see, read it correctly based on the CNBC interview I saw today, it seems that in the future, in the year FY 2025-2026, there will be probably the quantity of production will be more or less what we have going right now, but there may be an improvement in the price as well as there is currently a reduction in the cost of coking coal and that should both aspects together should be expected to increase our profitability going forward. So is this one correct outlook that I’m having?
Prem Khandelwal
No. For the next quarter, I don’t think Andy [Phonetic] has indicated that.
Unidentified Participant
No, I mean for the next 15, 18 months, 15 months going forward.
Prem Khandelwal
No, no, that would be — I don’t think he has indicated that because in our business, predicting more than two quarters is very difficult. So, what he has mentioned in the interview that next two quarters looks like that we are going to maintain these kind of margins. Beyond that, it is very difficult to predict anything. So, we need to see where the markets are at that point of time and demand and supply situation will determine the price.
Unidentified Participant
Okay. All right. So in FY 2025-2026, we will be setting up the expansion facilities. And after the FY 2025-2026 year after that, we would start seeing pretty much — you would start seeing some result of the expansion, right? So, the quantity of production would increase only at that time. Today, we are producing everything we can, and we are selling everything we can.
Prem Khandelwal
Yes, yes, that’s right.
Unidentified Participant
So our any improvement in the next year, next FY would come from — mainly from price increases, if any, if they take place, right?
Prem Khandelwal
Correct.
Unidentified Participant
And maybe foreign exchange improvements also?
Prem Khandelwal
Maybe some cost reduction. It all depends on where the market is at that point of time.
Unidentified Participant
Once we pass over this scenario, if I’m understanding it correctly, we will get an expansion of roughly 40%. So if our capacity would go from, say, about 2-point something lakh tonnes to another probably 1 lakh tonnes added into that.
Prem Khandelwal
Yes. Yes.
Unidentified Participant
And say, two, three years after that, we would look to probably spend another 2 lakh tonnes, if I’m understanding correctly?
Prem Khandelwal
Another 1 lakh tonne.
Unidentified Participant
Another one lakh tonne only. Okay, the second expansion also would be this underground mining and all that?
Prem Khandelwal
Yes.
Unidentified Participant
That would also be only one factor.
Prem Khandelwal
Yes, that will start from here in FY 2028 or 2029.
Unidentified Participant
I see. Okay. Would you like to add anything to this outlook as I’m seeing?
Prem Khandelwal
No, I think it’s pretty much you are on — this thing. I mean, whatever — the next year, as you said, next year, we cannot predict anything. For next two quarters, yes, that we can predict, but it is more or less likely to be like this.
Unidentified Participant
Okay. Now in terms of the global situation, our position today is such that we can sell everything that we are making, we are one of the lowest cost producers. If Africa maybe — if the situation improves or if the world goes slightly into recession a little bit here and there, I don’t see that it should affect us, right, very much?
Because right now at $0.90, $0.95, we’re already among the sort of pretty low price at the moment.
Prem Khandelwal
You see we are at such a level as far as cost curve is concerned, if prices come down at an unsustainable level, and most of the facility would be shut down worldwide. So almost 70%, 80% capacity will shut down. But even at that level, we will be making some money.
Unidentified Participant
Yes. So right now, you don’t foresee any such — so such a bad scenario seems unlikely that people will drive the price down so low that…
Prem Khandelwal
Yes, very unlikely, very unlikely. And if it happens, then we see the kind of jump back, we have seen earlier also.
Unidentified Participant
Yes. Correct. Very good point. A very good point. Yes. One last question. What is your view on what are the options available to us to discuss the money that will come to us?
Prem Khandelwal
No. The money we are — as you may be knowing that the expenses — a lot of expenses have been lined up almost we have to spend almost INR2,000 crores in the next six, seven years. So, apart from the dividend, I don’t see any further disbursement.
Unidentified Participant
No, no further windfall disbursements or anything?
Prem Khandelwal
No. As of now, we are not anticipating any such kind of thing. We will be needing money for expansion, lots of expansion.
Unidentified Participant
Absolutely. No, it’s a correct thing also. Okay, thank you,so much.
Prem Khandelwal
Thank you.
Operator
[Operator Instructions] The next question is from the line of Dhviti from Molecule Ventures. Please go ahead.
Dhviti Shah
Hi, sir.
Prem Khandelwal
Yes, Dhviti.
Dhviti Shah
Hello. Yes. Congratulation with set of numbers, sir.
Prem Khandelwal
Thank you.
Dhviti Shah
So I had a question that given the new capacities will be on stream in 2 years, and we already have our mining capacity approval, so do we plan to expand to any inorganic growth like acquisition of some spending capacity just to achieve the volume growth in FY ’25, ’26.
Prem Khandelwal
We are open to that, Dhviti, and we are, in fact, looking for those kind of opportunity in the market also, but nothing lucrative available at the moment. So if something comes up, definitely, we’ll look for that.
Dhviti Shah
Okay. And sir, if you could help me with the cost of production Q2 FY ’25.
Prem Khandelwal
Q2 ’25, just a moment, let we see. The cost of production was INR69,600.
Dhviti Shah
And EBITDA?
Prem Khandelwal
EBITDA was INR176 crores, which is around 2.38%.
Dhviti Shah
And sir, for the past quarter and also if you could help me with the coal cost and coke cost.
Prem Khandelwal
The power cost, variable cost was INR3.85. And the coke cost was INR16,545.
Dhviti Shah
That’s all from my side, sir. Thank you
Prem Khandelwal
Thank you, Dhviti
Operator
Thank you [Operator Instructions] The next question is from the line of Joe Shah from Seven Seas. Please go ahead.
Joe Shah
Good evening to you. thank you very much for the very good numbers, Thank you very much. And after a long time today, shareholders of IMFA had a broad smile. Thank you very much. gross Yes. Now Prem, regarding this major stakes, we know that Supreme Court has rejected a review petition filed by Union of India. All the legals roads are closed now. And now this hanging major stakes is a big tension for us, and we are also not able to utilize the compensation which we have received for UC. So now I think only option left is some parliamentary action, which is not a small job. But I remember our Vice Chairman during Manmohan Singh’s time, he was coordinating with all the Central India states for minerals matters, who is a brilliant person we know, and he is elected member of Parliament from Orissa and very active in parliament. So I think this matter should be taken up by him, not just for the benefit of IMFA, but for the benefit of entire mining industry. And because it’s very important that this matter is sorted out amicably in the interest of the industry, which Indian Government of India also believe that this is very unjust ruling by Supreme Court. So now do you have any idea of what is happening in parliament for this matter?
Prem Khandelwal
No, I have no idea about that situation is like. But I believe this matter has been taken up by all the mining companies with the government. And in fact, FMI has also given their representation that this levy should not be allowed. So beyond that, I have no idea. And our MD has also taken up the matter with the ministry. So all the companies are jointly taking the action. So hopefully, there should be some amicable solution to this. But beyond that, I won’t be able to comment anything on this.
Joe Shah
Okay. Thank you.
Prem Khandelwal
Thank you very much.
Operator
The next question is from the line of Sanjeev Goswami from Fractal Capital Investments. Please go ahead.
Sanjeev Goswami
Yes. Thanks a lot for the opportunity. Sir, I have three [Technical Issues] the ferrochrome production has actually increased by more than 10%. So is it that we buy chrome ore from outside also from other — just like Odisha Mining Corporation or did we have enough inventory of chrome ore?
Prem Khandelwal
Sanjeev, you got cut off in between. Can you repeat your question again?
Sanjeev Goswami
Hello?
Prem Khandelwal
Yes. Can you hear me now?
Sanjeev Goswami
Yes. I was saying your production of chrome ore actually declined by almost 50%, while ferrochrome production has gone up by more than 10%. So do we really buy chrome ore from other mining companies like Odisha Mining Corporation or we had enough inventory of chrome ore initially?
Prem Khandelwal
Sandeep, would you answer that?
Sandeep Narade
Yes, we are having the inventory and if you compare to the last year, it sounds to be a drop, but this year, the monsoon was quite long and there was a rainfall almost all the days. So that was the main reason. And last year, the monsoon was delayed, so we could make up the production in H1. And you can see the difference of almost 1 lakh tonnes. So there is no direct impact of rates. So we are in line and in Q1, it was 100%. In Q2, about 18% less. But yes, we have the stock. We are having the inventory of ore. So no need to buy from others.
Prem Khandelwal
Okay. And generally we don’t buy chrome ore from outside because — we don’t buy it.
Sanjeev Goswami
Okay. The reason I’m asking is because if you look at FY 2021 to FY 2024, your ferrochrome production per chrome ore has come down from 0.5 to 0.39 FY 2024. So is it because the quality of the chrome ore coming out is better? Or what exactly explains that?
Prem Khandelwal
No, no. Sanjeev, we didn’t get your question. You are talking about ferrochrome ore — consumption in terms of ferrochrome?
Sanjeev Goswami
Yes, yes, exactly.
Prem Khandelwal
No, I don’t know from where you got the figure, but chrome ore in terms of ferrochrome, the chrome ore consumption is almost 2.3%, 2.3%, I am seeing all the year, 2.3% — 2.4% it is not coming down.
Sanjeev Goswami
Okay. So if you look at FY2021 to FY 2024, the chrome ore production increased from INR521,000 to INR670,000. That is increase of almost INR150,000. While the production of ferrochrome increased only by INR5,000.
Prem Khandelwal
But that is not a comparison — because then we are holding inventory.
Sandeep Narade
FY 2024, we have been large inventory.
Prem Khandelwal
Yes. But consumption is same. It’s around 2.4 tonnes — per tonne of ferrochrome.
Sanjeev Goswami
Its not changing.
Prem Khandelwal
Yes, yes.
Sanjeev Goswami
Okay. Perfect. Thanks a lot.
Prem Khandelwal
Thank you.
Operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor Company. Please go ahead.
Saket Kapoor
[Foreign Speech] Thank you for the opportunity. Sir, we have spent around INR41 crores for the first half, the purchase of property, plant and equipment. So how much of this is to be our new furnace project? And when are we going to start — spending in a major way the capex for the new project?
Prem Khandelwal
Suresh?
Suresh Babu
Yes, hello. We have started our boundary work from the last month and the boundary work will be completed by the end of this December. So are we expecting to start the furnace by 2026 July.
Saket Kapoor
Okay. And we have placed the orders for the equipment?
Suresh Babu
Major packages we have ordered like power plant and other electrode systems of the furnace and furnace alloy packages we have already made alloy and ordered, some of them were ordered.
Saket Kapoor
Okay. And then will we draw money — when will you be paying them for that? In which quarter we’ll be drawing cash for the sale?
Suresh Babu
The payment will begin from the Q2 beginning of the next year. Some of them in the Q1 and major will be come in Q2 of the 2025.
Saket Kapoor
Okay. And how much have been entrusted with? What will be spending on this in terms of plant equipment?
Suresh Babu
Plant equipment for furnace packages, it will be around INR181 crores and power plant is around INR95 crores. And other, we have paid till date around INR63 crores.
Saket Kapoor
Okay. Sir, what is our cash balance?
Operator
Mr. Kapoor, can we ask you to return to the question queue?
Saket Kapoor
Only one question I have, ma’am. And cash balance, sir, if you could give me in terms of our investment in liquid funds and what is the cash on books.
Prem Khandelwal
The total cash and bank balance as on date is INR869 crores.
Saket Kapoor
Okay. And our working capital requirement is?
Prem Khandelwal
Working crores is INR240 crores.
Saket Kapoor
Okay. So that minus INR600 crores net cash we are carried as of now.
Prem Khandelwal
Yes, yes, yes.
Saket Kapoor
Okay. Thank you, sir, and all the best to the team.
Prem Khandelwal
Thank you.
Operator
Thank you. The next question is from the line of Sid Mehta from H&I. Please go ahead.
Sid Mehta
Yes. My question relates to our expansion going into ethanol production. I’m just curious, not a criticism or anything that about what is the reason that while we are making chrome ore, we decided to get into a different field altogether? And right now from my understanding, the sales route on that would be around INR300 crores, which is a fairly small amount for us as a company.
So, doing some different business, getting into a whole different area but getting a small amount of revenue. So I’m just curious what was the reason, I’m not criticizing or anything, I’m just curious about this? And will this INR300 crores one day become INR3,000 crores also? Or it will remain INR300 crores, INR400 crores like that?
Prem Khandelwal
Binoy, would you answer that?
Binoy Agarwalla
Yes. Actually, we have diverted this new project as a diversity question, and we have land at Therubali, so utilizing that on this one. And initially, we were going for 120 KLD. Afterwards, we’ll go on increasing the capacity single plant performance.
Sid Mehta
So if we go for maximum capacity in the future, given our land, roughly, what would we expect the sales in today’s prices to be? In theoretically, what would be the maximum sale?
Binoy Agarwalla
Maximum, sir, 120 KLD means around INR300 crores. So as you add on another 120, you will reach to another INR300 crores like that. Sales-wise, we will expand, not [Indecipherable].
Sid Mehta
Total, how much KLD we can put?
Prem Khandelwal
That will be difficult to say anything at the moment because it depends — we are just experimenting now with 120 KLD and if we successful and if we get extra land there, then we’ll expand further.
Sid Mehta
Okay. So it will go 2,000…
Prem Khandelwal
1,000 [Indecipherable] no doubt.
Sid Mehta
Okay. So in the future, we can go for INR300 crore, INR500 crore, INR1,000 crore, like that?
Prem Khandelwal
Yes, because you see the ferrochrome production in that area, logically there is disadvantage is around INR600 per tonne. So it doesn’t make any sense in expanding ferrochrome in that area.
Sid Mehta
I see.
Prem Khandelwal
So we have enough infrastructure available there, a lot of land available, railway side we have available and that is a full agriculture belt, so maize, rice, everything available in plentily there. That was the reason for expanding in ethanol and we are seeing located business. And if it is successful, then we expand further.
Sid Mehta
Yes. It is likely to be successful, because are there any other people doing the same business they’re taking ethanol out of maize in that area and selling it?
Prem Khandelwal
No, that area, I think nobody else is there. So that’s why we have started. We are the pioneer there.
Sid Mehta
Okay. All right. Let’s hope it all works out. I’m glad that some new initiative is there. And by God’s grace, let’s say one day you can go from 120 to maybe 1,200 also.
Prem Khandelwal
Let’s hope so. Thank you.
Sid Mehta
All right. Thank you.
Prem Khandelwal
Thank you.
Operator
Thank you. The next question is from the line of Kaushal Kedia, an individual investor. Please go ahead.
Kaushal Kedia
Hi sir. Congratulations on a good set of numbers. Sir, I want to ask you in one of the annual reports, you mentioned that you have proven capacity in the results at 21 million tonnes. And in some earlier interview, I think someone had mentioned that it can increase also, you’ve not done of course, survey of the area. Is there any — do you want to — I want to know what is the kind of reserve that you have in the mines?
Prem Khandelwal
Sandeep, would you answer that?
Sandeep Narade
Can you please repeat the question? It was voice was not clear.
Kaushal Kedia
What is the mining reserves that we have, proven reserves.
Sandeep Narade
Number as of now, I’m not having with me right now. But yes, we’re having enough results for our lease period from both the mines.
Kaushal Kedia
So we are comfortable for the next 20, 25 years.
Sandeep Narade
Yes, yes.
Kaushal Kedia
So it’s upwards of 521 million tonnes then?
Sandeep Narade
Yes, roughly.
Kaushal Kedia
Okay. Sir, and can you just repeat what was the EBITDA cost per tonne?
Prem Khandelwal
EBITDA cost per tonne is around just INR77,500.
Kaushal Kedia
Okay. Sir, I mean is this — the new furnace that we are setting up, where will we take the power from?
Binoy Agarwalla
Yes. Actually, we are — we have to setting up the power plant in Kalinganagar and whatever our thermal capacities now is now catered in the year. So for future, we are taking tie-up with the renewable energy is a hybrid, solar plus wind. So with that gridpower, we will go for that one.
Kaushal Kedia
So this capex that we are doing, it includes setting up of how many megawatts of power plant?
Binoy Agarwalla
Small power brand, utilizing the furnace here, it will be around 9 megawatts that is the beneficial to — that’s using the heat from the CO gas, that’s real thermal power plant.
Kaushal Kedia
Okay. Understood. So this balance will be dependent on the grade.
Binoy Agarwalla
Not in grid, we’re getting tie up with a captive hybrid power plant in the world.
Kaushal Kedia
What does that mean, captive hybrid power plant?
Binoy Agarwalla
That means somebody setting up of solar plus wind energy, we are other stakeholders as per hour custodies.
Kaushal Kedia
So we will be investing in that as an equity shareholder?
Binoy Agarwalla
Yes, yes.
Kaushal Kedia
Okay. So a third-party setting it up, and we will be investing in that.
Binoy Agarwalla
Yes.
Kaushal Kedia
Okay. And what is how much of that investment? INR95 crores?
Prem Khandelwal
INR100 crore, INR120 crores.
Binoy Agarwalla
INR120 crores.
Kaushal Kedia
So that is included in this capex, you have included in this capex. So that is a separate investment now?
Binoy Agarwalla
No, no, that isn’t separate CapEx. It is not included in the furnace — Kalinganagar.
Kaushal Kedia
Okay. And sir, to set up 1 lakh tonne of furnace, what is the cost, is it INR500 crores or INR1,000, I am confused because I’m listening to the last…
Prem Khandelwal
No, it’s around INR650 crores, Kaushal. For furnace, it is INR650 crores. And for mining, it is around INR1,000 crores.
Kaushal Kedia
And this mining needs to go to 1.1 million tonnes?
Prem Khandelwal
Yes. 1.2 million tonnes.
Kaushal Kedia
1.2 million tonnes. Okay, sir. Thank you. Thank you, sir.
Prem Khandelwal
Right. Thank you.
Operator
Thank you. The next question is from the line of Joe Shah from Seven Seas. Please go ahead.
Joe Shah
Regarding our investment maintenance of about INR85 crores in Kalinganagar, there is further producing power from the grid, right?
Sandeep Narade
No, that is — sorry.
Prem Khandelwal
Yes, please go ahead.
Sandeep Narade
The Kalinganagar power plant is around 9 megawatts that power generation will be done from the furnace of gas.
Joe Shah
I see. So we’ll be producing 9 megawatt of power from this furnace gas.
Sandeep Narade
Yeah.
Joe Shah
Okay. Okay.
Sandeep Narade
Now one more thing. Prem, this Sukinda underground mining, which we are going to start then we are starting with the project underground. I mean it is a very challenging project in the ground mining. And what is the time line and how much investment would be needed?
Prem Khandelwal
Sandeep?
Sandeep Narade
Yes. The timeline is next 5 to 6 years outlast the improved production and investment will be about INR1,000 crores.
Joe Shah
Okay. And when will be starting with underground project?
Prem Khandelwal
We have already started some work.
Joe Shah
Right, right. Okay. Okay. Okay. Thank you. Yeah.
Prem Khandelwal
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Akhilesh P, who is an individual investor. Please go ahead.
Akhilesh P
Yeah. Hello. Am I audible?
Prem Khandelwal
Yeah, Akhilesh.
Akhilesh P
Yeah. Sir, congratulations sir…
Prem Khandelwal
Thank you.
Akhilesh P
…and your whole team for a great set of numbers. Good execution as usual. Sir, I have two questions. So one is on the Supreme Court verdict, which we had a few months back, but the state government can also levy royalty? Have you had any discussions with your state government in Odisha, is there any idea you’re getting about how it will proceed going ahead?
Prem Khandelwal
No. The act has been struck down in Odisha High Court and the state government has gone to Supreme Court against that. So that is pending since so many years now. So unless the act is reenacted, nothing is payable as of now.
Akhilesh P
So you have no contingent liability on our royalty?
Prem Khandelwal
No, no, no. There is no demand, there is no contingent liability. So that’s how we are not showing anything in our books. And even Tata Steel also which had quantified earlier, this quarter, they have also withdrawn that note, because there is no demand, there is no act as on date.
Akhilesh P
So as on date royalty is still decided by the center?
Prem Khandelwal
Yes. IBM not center, IBM.
Akhilesh P
IBM, yeah.
Prem Khandelwal
Royalty which is fixed, royalty 80%, 15% and IBM declares the price on which we pay royalty.
Akhilesh P
Okay. And that is status quo, nothing has changed since before
Prem Khandelwal
Nothing has changed yet.
Akhilesh P
And unlike Tata Steel, we didn’t even have any contingent liability or demand in the past. So that was
Prem Khandelwal
I doubt even, Tata steel had any demand. I don’t know how they are so neat. Because the act was struck down, so obviously, there is no demand.
Akhilesh P
Okay. Don’t worry, lot of investors at there.
Prem Khandelwal
Now they have modified the note for this quarter, yes, they have now modified the note.
Akhilesh P
Okay. And sir, second question is can you refresh us on this ethanol project what is our total CapEx? So when is the payback period, our expected EBITDA in the constant transfer get any pressures on these?
Prem Khandelwal
Bijayananda?
Bijayananda Mohapatra
Sonal, [Phonetic] can take that. Hello, Sonal,?
Prem Khandelwal
Sonal,, are you there?
Unidentified Participant
Hi. So on the ethanol project, our capex is approximately INR140 crores. And we expect to get this around in six years’ time, the payback period.
Akhilesh P
And what can be the projected EBITDA at full utilization?
Bijayananda Mohapatra
To the full utilization, we expect it should be somewhere around 14%, 15% EBITDA will be there in that.
Akhilesh P
Okay sir.
Bijayananda Mohapatra
Okay. Thank you, Akhilesh.
Operator
Thank you. The next question is from the line of Pavan Kaware from NMV Securities. Please go ahead.
Pavan Kaware
Hello. Am I auditable?
Bijayananda Mohapatra
Yeah, Pavan.
Pavan Kaware
Hello and congratulation for your good numbers. Sir my question is on capex in quarter four of FY 2024, you have given a capex number of INR1,500 crores. Is there an improvement in that number?
Bijayananda Mohapatra
Improvement you mean say that some?
Pavan Kaware
Increase audit. Increase obviously you said INR2,000 crores in today.
Prem Khandelwal
No, no, INR2,000 crores is because there are several capex items are there, like we have furnace capacity, then mining, then ethanol, than ARI power. All put together, it is around INR2,000 crores.
Pavan Kaware
Okay. So you can give me a breakup of this INR2,000 crores?
Prem Khandelwal
Estimated around INR654 furnace, INR1,000 crores for mining, INR140 crores as Mr. Sonal, said, for ethanol and roughly INR120 crores for ARI power.
Pavan Kaware
Okay. So what is the expected capex for this year different next two years?
Prem Khandelwal
Sonal, do you have that number?
Bijayananda Mohapatra
Yeah. So this year, we expect to be around — if I go by the order release will be around INR600 crores EBITDA, CapEx. Next two years, we are in the finalization stage. So we will be actually semi it out.
Pavan Kaware
Okay. So out of the INR600 crores for this year, what was the executed capex step in half year.
Prem Khandelwal
So as of now, what Suresh mentioned, especially the Kalinganagar project. So there, we have around — if I say executed around INR60 crores and a portion with the ethanol has started. So there we have some.
And the rest of them would be the routine CapEx, which we have spent around INR50 crores.
Pavan Kaware
Okay. Yeah. Continue sir.
Prem Khandelwal
That’s the thing as of now. So what we mentioned is, basically, we mentioned this on the business of order release. So the overall order released is in that tune annually 600. But as of now, we have released in the tune of about INR300 crores, INR350 crores.
Pavan Kaware
Okay. So out of this 600, is it include maintenance CapEx?
Prem Khandelwal
Yes, yes, routine capex is included.
Pavan Kaware
What is your routine CapEx, sir?
Prem Khandelwal
It is around INR70 crores to INR80 crores.
Pavan Kaware
INR70 crores to INR80 crores yearly?
Prem Khandelwal
Yes.
Pavan Kaware
Thank you, sir.
Prem Khandelwal
Thank you.
Operator
The next question is from the line of Mohit Madiwale [Phonetic] from Envision Capital. Please go ahead.
Unidentified Participant
Hello sir. Thank you for taking my question. So I just wanted to understand that, has there been any reclassification of costs in the cost of material consumed line item?
Prem Khandelwal
Yes, this — from this quarter onwards, we are showing power and full separately. So if you see our results, there is a line item of power and full expense of INR101 crore.
Unidentified Participant
Right. So this was earlier being….
Prem Khandelwal
Yes, but the auditors have advised that this is not part of raw material. This is a separate line item. So we have segregated this and that’s the 2 items are paying now.
Unidentified Participant
Okay, sir. Fair enough. And I just wanted to confirm a few things in terms of the capacities that we have and all of that. So on our ferrochrome production capacity, we are currently at 284,000 tonnes, right?
Prem Khandelwal
Yes.
Unidentified Participant
And what would be the utilization for this quarter?
Prem Khandelwal
I didn’t get you, utilization for this quarter, we are running at full capacity now.
Unidentified Participant
Right.
Prem Khandelwal
So on average, we are producing around 55,000 tonnes every quarter.
Unidentified Participant
Okay. And I also wanted to check on the ethanol plant just in terms of when the revenues are expected. Just a little bit on that as well.
Prem Khandelwal
We are expecting it to be operational by the end of December 25, okay? So first quarter of FY ’26, I mean first — last quarter of FY ’26, we should be seeing that.
Unidentified Participant
Sorry, last quarter of FY?
Prem Khandelwal
FY December ’25, we’re expecting it to be operational. So January to March quarter ’26, we should be seeing the win out of that.
Unidentified Participant
Okay, sir. Understood. Right. That’s all from my side. Thank you.
Prem Khandelwal
Thank you, Mohit.
Operator
Thank you [Operator Instructions] The next question is from the line of Joe Shah from Seven Seas. Please go ahead sir.
Joe Shah
So Prem, this is a rather futuristic statement. Now we are there a lot of interest in discussing about ethanol. Now there is a very interesting product, which is called sustainable aviation and fuel, SAF, which is produced using ethanol, as the feedstock to process like alcohol to get Jet 50J. Now India is taking expedites from U.S., Europe, about the SAF blend and SAF blend is getting mandated for aviation? So we should consider this SAF production in future, once we are established in ethanol. So ethanol, we do mainly for the vehicles on the road. Now this is for the aviation fuel, is India supposed to become the global hub of this SAF because of our location? So this is number one.
Number two is this is an interesting point of CBAM is a carbon border adjustment item tax, it is coming into effect in Europe in 2026 because now everyone is becoming aware of carbon tax, carbon emission and they want to control it. So Europe is going to maybe tax on this or the carbon emission and that will make a freight very expensive. So freight of chrome ore from South Africa to China will become more expensive.
And China, U.S., Japan, Korea, they’re also going to — they’re also considering this kind of carbon tax. So that will put us in benefit in a way because we are already, we are — as a power generating confirm, there will be renewable energy and our underground mining is also producing less of a pollution, so these are our benefits. So maybe time will come when forest import wood kind import of for us more beneficial than doing all the processing and getting from other places. So this is another. CBAM is a very interesting point, which we should keep in mind.
Prem Khandelwal
Yes.
Joe Shah
Yes, thank you.
Prem Khandelwal
Thank you. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Pavan Kaware [Phonetic] from NMP Securities. Please go ahead.
Pavan Kaware
Sir, my question was on our capex plans on our mining and chrome capacity expansions. So what is the expected time when we can see the full capacity expansion in mining and chrome production both…
Prem Khandelwal
Mining will be in stages. Sandeep, could you give the date?
Sandeep Narade
Yes. So we are expanding the Sukinda Mine for the production capacity of — in the first phase, 6 lakh tonnes per annum. Right now, we are producing 3 lakh tonnes. So from that, we’ll move to 6 lakh tonnes. So that will come in FY ’31.
Prem Khandelwal
Pawan, you got it?
Pavan Kaware
Yes, yes. This is about the mining. And what about this 1.2 lakh tonnes expansion?
Prem Khandelwal
No, no. That is the mining, Sandeep is talking about. Pawan. 1.2 million tonnes. Ultimately we reached 1.2 million tonne to 1 million tonne. From both the mines together, it will be 1.2 million tonnes.
Pavan Kaware
And this will be expected in FY ’31…
Prem Khandelwal
Yes.
Pavan Kaware
Okay. And what about the ferrochrome capacity increasing by 1 lakh tonnes…
Prem Khandelwal
That will come in second quarter of FY ’26.
Pavan Kaware
Okay. So it will be counted in financial year ’27?
Prem Khandelwal
Yes, yes.
Pavan Kaware
Okay. So our current capacity of mining is 6.51 lakh?.
Prem Khandelwal
6.51.
Pavan Kaware
Yes, 6.51 lakh. So will it be possible to produce this much tonnes of ferrochrome because for this 3.84 lakh, we will be requiring nearly 880000, 8.8 lakhs.
Prem Khandelwal
Just a minute. These are our production. Our capacity is now 9 lakhs already. Mahagiri’s underground is 6 lakhs and Sukinda’s 3 lakhs. So as on date, our capacity is 9 lakh…
Pavan Kaware
Okay. Capacity is 9 lakh…
Prem Khandelwal
Yes.
Pavan Kaware
Okay.
Operator
Are you done with your question?
Pavan Kaware
Yes.
Operator
[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Abhishek Savant for closing comments.
Aryan Rana
Thank you, Farah. Our Q2 performance has been solid, driven by consistent growth, higher revenue and improved margin, thanks to our fully integrated model and debt-free balance sheet. While the global stainless steel demand is under pressure due to economic slowdown, China’s recent economic indicators show promise with their October PMI marking the first growth in six months, along with stability in the real estate prices. This is encouraging for the ferrochrome market, especially as many global regions face uncertainties. Rising power cost in South Africa may also drive China to seek alternative ferrochrome sources, potentially benefiting our industry. As we move forward, we are focused on our expansion plans, which are progressing on schedule. Thank you all for joining, and we look forward to a continued positive momentum. On behalf of the Board of Directors and management, we thank you all for your participation in this call today. Have a good day.
Operator
Thank you very much, everyone. On behalf of Indian Metals and Ferro Alloys Limited and Veritas Reputation, that concludes this conference call. Thank you all for joining us, and you may now disconnect your lines. Thank you.
Prem Khandelwal
Thank you.