INDIAN METALS & FERRO ALLOYS LIMITED (IMFA) Q4 FY23 Earnings Concall Transcript

INDIAN METALS & FERRO ALLOYS LIMITED (NSE: IMFA) Q4 FY23 Earnings Concall dated May. 31, 2023

Corporate Participants:

Aryan Rana — Moderator

Prem Khandelwal — Chief Financial Officer & Company Secretary

Deepak Mohanty — Head of Ferro Alloys Business Unit

Bijayananda Mohapatra — Chief Operating Officer

Binoy Agarwalla — Head of Power Business Unit

Analysts:

Unidentified Participant — — Analyst

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Sagar Gandhi — Future Generali Life Insurance — Analyst

Joe Shah — Seven Seas — Analyst

Saket Kapoor — Kapoor & Co. — Analyst

Unidentified Speaker —

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Earnings Conference Call of Indian Metals & Ferro Alloys Limited arranged by Veritas Reputation. [Operator Instructions]

I now hand the conference over to Mr. Aryan Rana from Veritas Reputation. Thank you and over to you, sir.

Aryan Rana — Moderator

Thanks, Melissa. Good evening to all of you and thanks for joining this earnings conference call of Indian Metals & Ferro Alloys Limited to present and discuss the financial results for the quarter and full-year ended 31st March 2023. With a market valuation of over INR1,500 crores, the company operates in metal and mining business space, with 190 MVAs installed furnace capacity and 204.5 MW captive power generating capacity that includes 4.55 MVA solar power and chrome ore mining cracks employs India’s almost fully-integrated manufacturer of quality ferro chrome. The company’s business focus have changed the mining of chrome ore, the production of electricity and the smelting of ferro alloys. We have sent you the results, I hope you have received the same. The results are also available on the company’s website and the stock exchanges.

Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risk, uncertainties and other factors. To discuss the results and address the queries of investors we have with us the management represented by Mr. Prem Khandelwal, CFO and Company Secretary; Mr. Bijayananda Mohapatra, Chief Operating Officer; Mr. Deepak Mohanty, Head Ferro Alloys Business Unit; Mr. Binoy Agarwalla, Head Power Business Unit; Mr. Sandeep B. Narade, Head Mines Business Unit. We’ll start the call with a brief overview of the Q4 and year ended financial year 2023 and then we’ll open the floor over to Q&A session. Each participants please can ask two questions and then can come back in the queue.

So that said, I will now hand over the call to Mr. Prem Khandelwal, over to you sir.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Thank you, Aryan and good afternoon, ladies and gentlemen for taking time out in joining this earning con call for the company. For the fourth quarter, fourth quarter had been remarkable for the company because we are back on the track with a net profit of INR63 crore as compared to INR10 crore in the previous quarter. And for the entire year, we had highest-ever turnover in the company with INR2,640 crore and highest ever total income of INR2702 crores. Although the PAT numbers are not as comparable, not as good as the last year which was exceptional year, but even then it is a credible year in the sense that this is one of the best year in the history of the company, barring exceptional year last year.

As far as production sales numbers are concerned, for the fourth quarter, we have produced 61,200 tons of ferro chrome and we had mined chrome of 1,93,000 tons and we have sold around 57,652 [Phonetic] tons of ferro chrome. The price rise was INR117,000 per ton roughly for the for the fourth quarter and for the entire year it was INR116,000 a ton as compared to INR109,000 tons in the previous year.

With that, we can start the question & answer session now. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We have the first question from the line of Saket Kapoor from Kapoor & Co. Please go ahead.

Saket Kapoor — Kapoor & Co. — Analyst

[Foreign Speech].

Prem Khandelwal — Chief Financial Officer & Company Secretary

[Foreign Speech]

Saket Kapoor — Kapoor & Co. — Analyst

Thank you, sir for the opportunity and a good set of number, sir, as as per our last conversation it was conveyed to the investing community that we have hit the peak in terms of the raw material prices and both the benefit of lower raw-material and better realizations will accrue to the number and that is what we have seen for this quarter. Sir, and just taking from gist of what our MD told today at CNBC, so couple of points from where he left there. Firstly, sir, if you could, there was some understanding on the capex part that spoke about capex in two phases. First, the one lakh the one which would be done by 2025 and then for another one lakh. So if you could elaborate what are what is our capex plan for the coming four to five years, sir?

Prem Khandelwal — Chief Financial Officer & Company Secretary

No, Saket, I think there is some confusion there because MD spoke about one lakh ton of ferro chrome capacity will be coming up online in second quarter of calendar year FY 2025, again he spoke about the an year one lakh ton. So I think there is some confusion there. So as of now what we’re planning is one lakh ton of ferro chrome capacity we then investment of INR550 crores incoming another.

Saket Kapoor — Kapoor & Co. — Analyst

Correct sir. And last year sir we capitalized around INR200 crores in the capital work-in progress, so what would we attribute that INR200 crores, sir?

Prem Khandelwal — Chief Financial Officer & Company Secretary

N, that is too specific a question, we need to check that one, Saket, send us a mail, we’ll answer that separately.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, okay sir. Sir can you again give us some color on the major raw material especially the coal and the coke prices and how have they paired the met coke I think especially from the from Colombia is the one which we are using because of some specification. So how are the price trend and we also guided for EBITDA margins improving from 22% to 25% for H1, so (22:20) elaborate?

Prem Khandelwal — Chief Financial Officer & Company Secretary

See, Q4 as far as Q4 is concerned, coal cost, the variable power cost has come down from INR4.77 to INR4.26. And although the coke cost has not come down in Q4 because we are using the old inventory high-cost inventory. But the coke cost has come down. Deepak, would you like to expand on the coke front?

Deepak Mohanty — Head of Ferro Alloys Business Unit

Yeah, actually we have coke in the INR4.50 level earlier, but that has come down by another $70, $80 at the moment, but that coal will be reset in the Q2 while it will be utilized. So it is coming down with near — it was above 500 which has come down slowly and ultimately we have to — in the Q2, we are seeing a slightly much lower price for the coke particularly for that reason. So impact below $400 we have now booked which we’ll visit in the month of July.

Prem Khandelwal — Chief Financial Officer & Company Secretary

So we had bought at the peak of $700 in last year and from there it has come down to around $380 now, so as you intimated earlier also the costs are coming down gradually.

Saket Kapoor — Kapoor & Co. — Analyst

So the benefit of lower coal cost would be accrued from second quarter?

Prem Khandelwal — Chief Financial Officer & Company Secretary

In first quarter and second quarter also.

Saket Kapoor — Kapoor & Co. — Analyst

The first and the second quarter. Sir, if we look at the lower volume part, there also the MD mentioned that for the sales for the quarter have been 57,000 and there were some inventory at the vendor managed inventory yard. So, if you could elaborate, what would be amount of the stock that would percolate to Q1, sir?

Prem Khandelwal — Chief Financial Officer & Company Secretary

So, 7,000 tons of ferro chrome were shipped on 30th of March, so billing would be done this quarter, current quarter.

Saket Kapoor — Kapoor & Co. — Analyst

So, we guess 7,000 ton realization is quarter number two?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yes, yes, yes, yes.

Saket Kapoor — Kapoor & Co. — Analyst

Okay. And sir, if you could also throw some light on the inventory part, sir, that is again the inventory higher because of this one is sir we have inventory at INR337 crore…

Prem Khandelwal — Chief Financial Officer & Company Secretary

Because that 7,000 tons see again appearing in the inventory.

Saket Kapoor — Kapoor & Co. — Analyst

Correct sir. And lastly about the phospho part sir, earlier because of some natural calamity last time there were some port major for phospho, so are the deliverables now evened out and they have close to that 7,000 ton per month?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Deepak?

Deepak Mohanty — Head of Ferro Alloys Business Unit

Yeah, as you said, the impact it was soft in the month of September phospho major that discussed and from month of January that started kicking at the moment for this quarter also it stood at 21,000 level and going on also it will be in that range as per our content.

Saket Kapoor — Kapoor & Co. — Analyst

And sir, could you throw some more light on the realization for ferro-chrome currently. And one more request sir, as we see in many company website, there is a provision for the latest update on the international prices of the commodity that the company, our is a single product commodity and for all investors it is not difficult to track the prices, so if a link could be created for us so that on a monthly basis or on a quarterly that is updated, so we can get an idea of how the current ferro-chrome prices are trending, if it is available with key men, but everyone cannot source the same on a real time basis, so it is a request if that could be done for this…

Prem Khandelwal — Chief Financial Officer & Company Secretary

That will create more confusion in the investor community because there are different kind of prices for different kind of grade. What we are producing, what the price we are quoting you don’t know, so that might get more confusion.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. So then what are the current realization and how has been the contract done if you could give some color on the same?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Deepak, would you help us on that?

Deepak Mohanty — Head of Ferro Alloys Business Unit

It is similarly around one lakh 20 around, it will be for this quarter which is slightly higher than the last quarter [Indecipherable] higher than the last quarter for that reason, last quarter in Q4 it was 116 or 117 around. And this quarter, it will be around 119, 120, one lakh 20.

Saket Kapoor — Kapoor & Co. — Analyst

120 will be the realization for Q1?

Deepak Mohanty — Head of Ferro Alloys Business Unit

Right metric, yeah.

Saket Kapoor — Kapoor & Co. — Analyst

Yeah, please come again, hello?

Deepak Mohanty — Head of Ferro Alloys Business Unit

[Speech Overlap] ferro chrome price, ferro chrome.

Saket Kapoor — Kapoor & Co. — Analyst

Correct sir. And sir, you did spoke about this renewable tie-up also going ahead, I think so we have currently 5 megawatt from the solar, so going ahead sir are we looking for this open access source forum that had been availed by the government going ahead or what kind of capex do we envisage going ahead to have renewable tie-up?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Bijayan, I would request you to answer that one?

Bijayananda Mohapatra — Chief Operating Officer

For our — that upcoming project, we have to get power through renewable energy that will be hybrid system, that means solar plus wind. So we are going for 50 MW capacity and that will be captive on our token assets, it will be captive, so we taking care on that one, so we’ll get benefits, we are being a captive either.

Saket Kapoor — Kapoor & Co. — Analyst

And what would be the investment there, sir?

Bijayananda Mohapatra — Chief Operating Officer

Investment, captive share, it will be around in the tune of INR100 crores.

Saket Kapoor — Kapoor & Co. — Analyst

And sir for the coal prices, what have been our coal cost, I think 2700 was guided towards Q4? So what is the current coal cost and what was for Q4?

Bijayananda Mohapatra — Chief Operating Officer

Both sir, what we source from the rejection coal, the average coal cost, sir?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Okay, okay. Binoy, would you like to?

Binoy Agarwalla — Head of Power Business Unit

Yeah, yeah, I’m answering. Actually in Q3, the weighted average MCL plus watery reject was to around to INR2800, but in Q4 weighted average of watery reject in MCL has come down to INR2600, that is difference of INR200.

Saket Kapoor — Kapoor & Co. — Analyst

And what would be that for Q1 sir?

Binoy Agarwalla — Head of Power Business Unit

Q1 will be remaining as now in Q4.

Saket Kapoor — Kapoor & Co. — Analyst

Okay. Coal India did announce some increase in coal prices, will that affect, how…

Binoy Agarwalla — Head of Power Business Unit

Coal India has increased, I mean given the notification from G2 to G10, but we are using G12, G13 coal, so there will be no impact on G12 and G13.

Saket Kapoor — Kapoor & Co. — Analyst

And lastly on the OTS part, Prem sab, it was — the settlement has happened at INR52 crores and we were emphasizing it at INR71 crores. So that understanding is correct sir for post…

Prem Khandelwal — Chief Financial Officer & Company Secretary

No, INR71 crore amount we have to pay that we have paid, so that was the amount to be paid, not the settlement amount. But we have booked INR52 crore I think so, INR52 crore and quality provided for INR26 crore in the books already, so the balance I didn’t provide it now.

Saket Kapoor — Kapoor & Co. — Analyst

Okay. And now the issue is put to rest, sir?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Sorry, amount to…

Saket Kapoor — Kapoor & Co. — Analyst

Now the issue is put to rest, now we don’t have any other contingency right now?

Prem Khandelwal — Chief Financial Officer & Company Secretary

No, no, I think the final settlement we have to enter into with them.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. Other than this sir, any other contingencies line-item we have on that is pending to be resolved in the near-future?

Prem Khandelwal — Chief Financial Officer & Company Secretary

There are other items also, there are other items also, so we are kind to resolve them.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. Sir, I’ll join the queue, sir. And thank you and all the best to the team sir, going ahead, sir, for the AGM also I think the notice is not yet, the dates have not been provided [Speech Overlap].

Prem Khandelwal — Chief Financial Officer & Company Secretary

Within time due course.

Saket Kapoor — Kapoor & Co. — Analyst

Okay. Thank you sir. I’ll join the queue.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Thank you.

Operator

We have the next question from the line of Manish Shekhar, an investor. Please go ahead.

Unidentified Participant — — Analyst

Sir, just wanted to understand with cash flow coming in and with the kind of cash flow we’ll get in H1 and H2, we’ll have decent amount of cash on books by the end-of-the year, with market cap at around INR1,500 crores and perhaps INR260 crores already in the books and maybe some more coming through. Would you think buyback makes sense for enhancing shareholder value at the current prices that the shares are trading at?

Prem Khandelwal — Chief Financial Officer & Company Secretary

See, Manish, we have lined-up lot of pencil of source, so buyback at this point of time is not sensible in our opinion. So although we are paying good dividends, so by way of dividends we’ll be rewarding shareholders, but buyback I don’t think is feasible at the moment, given the expansion plans we have lined-up.

Unidentified Participant — — Analyst

Sir, but expansion would be how much in terms of value because you had announced INR500 crore?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Around INR2000 crores we are investing in over a period of seven years, so we need to have that cash-flow also in our, we are planning it through internal accruals only.

Unidentified Participant — — Analyst

So INR2000 crores of total capex over next seven years is what you see?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yes, yes.

Unidentified Participant — — Analyst

Okay. Fine. Thank you so much. Do you think that will increase dividends, perhaps if not buyback?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yeah, wherever possible, we are trying to give the maximum dividend.

Unidentified Participant — — Analyst

Okay, one final question in terms of cost of production, what you are seeing now versus Q4?

Prem Khandelwal — Chief Financial Officer & Company Secretary

That will be difficult to answer at the moment, because it depends on what kind of material we are using when. So I won’t be able to give the exact number for that, but, yeah, it should be lower than Q4.

Unidentified Participant — — Analyst

So, sale price higher and cost of production lower so that means [Speech Overlap].

Prem Khandelwal — Chief Financial Officer & Company Secretary

So Q1 is better than Q4 we are expecting.

Unidentified Participant — — Analyst

That means, much better that in fact.

Prem Khandelwal — Chief Financial Officer & Company Secretary

That is very difficult to pinpoint at the moment too early because it all depends on where the spot prices of ferro chrome and what kind of cost we are going to have. But yes, overall we are expecting better quarter than Q4.

Unidentified Participant — — Analyst

Okay, thank you sir.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Right, thank you.

Operator

Thank you. The next question is from the line of Vaibhav Badjatya from Honesty And Integrity Investment. Please go ahead.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Hi, sir, thanks for providing the opportunity. Sir just few questions from a longer-term perspective. So if you can help us understand how ferro chrome convention stainless steel series 200, 300, 400 differs, that will just help us understand how the demand can fluctuate going forward, so if you can just highlight it would be…

Prem Khandelwal — Chief Financial Officer & Company Secretary

Deepak, would you answer that one?

Deepak Mohanty — Head of Ferro Alloys Business Unit

So, let’s say, nobody can sell, but let me tell you the 2022 calendar year, stainless steel output was at 55.255 million tons which is which was lower by 3 million tons from the previous year that is 2021, but all credit itself are there that in the current year 2023, it would be reaching a new height of 60 million ton. So once the stainless steel is picking-up, totally ferro chrome has to go up, ferro chrome demand and as such no stainless steel ferro chrome is used mostly in stainless steel and the [Indecipherable] particularly in India is still in the range of 2 to 2.5, while the international standard or pretty developed countries it is there around 15 kgs and China has this almost around 10 kgs. So even if and with the government interventions and AatmaNirbhar all those things without a kind of project since Government of India has undertaken moment towards that. So naturally if it gets doubled also, ferro chrome will be in demand. So that’s why I told…

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Yeah, I understand that, sir, but what I was trying to understand is that how the ferro chrome consumption differs between different grades of steel, which is between 200, 300 and 400 [Speech Overlap] kind of thing that would be great.

Deepak Mohanty — Head of Ferro Alloys Business Unit

So basically ferro chrome congestion varies between 12% to 30% and lowest 10% to 12% in 200 cities and 400 cities this above 25 plus, so that’s highest category and is well versed and depending upon what grade of ferro chrome you are using because internationally India produces around 50%, but South Africa produces around 40% to 50% and certainly like Tajikistan they produce more than 60%, so it depends that percentage what I had told, so I told in the context of mostly 60%.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Okay. Got it. And as I understand some of the ferro chrome manufacturing capacity in India is flexible to shift to even manganese coal. So if you can just highlight what is the total ferro chrome capacity and out of that how much, how much is actually shift able to manganese depending upon the economics between manganese and ferro chrome, if you can help us understand that.

Deepak Mohanty — Head of Ferro Alloys Business Unit

So let me tell you, niche furnace which is producing ferro chrome can produce silico manganese or ferro manganese with minus 10 not much thing anything can get over. So at the moment ferro chrome capacity which has been utilized is in the range of 1.7 million tons. So and we are producing around 1.3 million tons in India. So depending upon the market scenario, those who are not integrated may shift to some quantity method to basically manganese alloys, that has happened in past also, they have gone to manganese and come back to chrome depending upon the market scenario.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Got it, understand. And lastly, sir, from a longer-term perspective, is then anyway you are seeing that this trend of electric vehicle that is surely creeping in everywhere across the world is going to have an impact on the supply for on a global supplier of UG2 mine which actually determines a price for our mining portion of our business. So we think that there is an link and this trend versus we can impact either positively or negatively to us or long-term?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Do you have any idea about that, I don’t think [Speech Overlap].

Deepak Mohanty — Head of Ferro Alloys Business Unit

I don’t see there is a link between we versus UG2 chrome view because that’s not relevant…

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Sir, I was coming from the perspective that UG2 is mind only mainly because of good metals and in AV is the ratio of platinum group metal usage is very low, so I was coming from that point-of-view that over long-term do you see any impact on that?

Deepak Mohanty — Head of Ferro Alloys Business Unit

Actually, I don’t think so. In South Africa even if platinum grew we are pretty simple to from other side also, they are getting tailings from which they are making use it too kind of fees. So I don’t think it will impact.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Okay, got it. And sir, lastly, is there any other alternate to ferro chrome usage in system, is there any other alternate metal or something that can be viewed, so there is no alternate?

Deepak Mohanty — Head of Ferro Alloys Business Unit

I don’t think there is any alternate because stainless property comes from chrome basically which to some scrap is used, stainless steel scrap, so because in the scrap also stainless steel scrap to get the chrome as well as we get. So to some extent, but it is not major margin ferro-chrome is required.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Okay. Got it, sir, that’s it from my side. Thank you. Thanks for answering all the…

Operator

Thank you. We have the next question from the line of Sagar Gandhi from Future Generali Life Insurance. Please go ahead.

Sagar Gandhi — Future Generali Life Insurance — Analyst

Yeah, sir my first question is on the thermal coal cost. So we have seen prices of thermal coal globally going down. So, sir, your guidance of INR26 per ton for Q1 is it not slightly conservative in estimate considering your Q4 cost at similar levels?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Binoy?

Binoy Agarwalla — Head of Power Business Unit

Actually, I have, I told you, Q4 2028 average of possibly we get in MCF is around INR2600, but in Q4 MCL the weighted-average is INR2800. And we have linkage option back size is quite low, because if we are getting coal from linkage that weighted-average is around INR2700. If we are not getting sufficient cold from linkage, that is the reason why we are going spot auction, spot auction coal price is high, so weighted average of MCL cost is going high.

Sagar Gandhi — Future Generali Life Insurance — Analyst

Sir, what is the normal proportion between spot and linkage, I mean, contribution from both?

Binoy Agarwalla — Head of Power Business Unit

We have linkage as per our required quantity per annum we have linkage, but in case we are not getting linkage, linkage coal from MCL, then we are going for spot auction. In Q4, we had bought only 5000 of spot auction, but in Q3 we had gone for 30,000 around 30,000 of spot auction, it depends how it comes from MCL.

Sagar Gandhi — Future Generali Life Insurance — Analyst

But normally whatever is our consumption fifty-fifty comes from both avenues, is that the broad understanding?

Binoy Agarwalla — Head of Power Business Unit

No, no, it is not 50-50, suppose we are getting as for our required quantity from linkage auction then we need not to buy it from spot auction because spot auction price is quite high, it is ranging from 5000 to 6000.

Sagar Gandhi — Future Generali Life Insurance — Analyst

Okay. Okay and sir, what was your volume number for Q4?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Ferrochrome?

Sagar Gandhi — Future Generali Life Insurance — Analyst

Ferro chrome?

Prem Khandelwal — Chief Financial Officer & Company Secretary

It’s around 64,000 [Speech Overlap].

Binoy Agarwalla — Head of Power Business Unit

Q4 is 61,200.

Sagar Gandhi — Future Generali Life Insurance — Analyst

Okay. And Q3 number was?

Prem Khandelwal — Chief Financial Officer & Company Secretary

58,122.

Sagar Gandhi — Future Generali Life Insurance — Analyst

58,222?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yeah, one.

Sagar Gandhi — Future Generali Life Insurance — Analyst

Okay, yeah, yeah. Thank you. Thank you so much.

Operator

Thank you. We have the next question from the line of Joe Shah from Seven Seas, please go ahead.

Joe Shah — Seven Seas — Analyst

Prem, I have some question for you. Number one, as you said that sales growth particularly 53,162 ton in Q4 and 7,000 ton versus 30th of March, so which is to be, yet to be invoiced?So now in the form of inventory in-transit [Indecipherable] how come this reduction in work in progress and finished goods inventory by INR28.50 crore actually this should have gone up, now your inventory has gone down by INR28.50 crores. So this is a one question and second question is, what is the status of utkal fee value attempt report from export community was to repay this and price this valuation report, so what is happening with the report, that is two question.

Prem Khandelwal — Chief Financial Officer & Company Secretary

So this report has not yet come, we are still waiting for that report, the valuer has not given the report and we are putting pressure on them to really as soon as possible. They were suppose to call us in the end of May for the settlement that has not happened, so maybe in the month of June we should be getting, we should be getting invitation from the Ministry to for discussion. And as far as changes in inventory is concerned, I think it is we are showing decrease in inventory, we are showing around INR29 crore compared to INR50 crore because in Q3 also we had lot of inventory which we have liquidated in this quarter, okay?

So, maybe because of that you are seeing this number.

Joe Shah — Seven Seas — Analyst

Okay. Okay. Prem about this pay local PA that value report discussion in June you are saying in June, July, but after that they will straightaway make the payment or there will be some discussion?

Prem Khandelwal — Chief Financial Officer & Company Secretary

That part I’m not aware of, what process they are going to follow, after the discussion, once we agree to the value, then we should be getting back money, but the process at the government level is going to be cumbersome, maybe 15, 20 days they will take in raising the money.

Joe Shah — Seven Seas — Analyst

That is repayable 15, 20 days, 30 days either or we have waited for so many months?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yeah, I’m not aware of that part, so that is the government process, they will take their own time.

Joe Shah — Seven Seas — Analyst

Right. So Deepak two questions for you, export on ferro chrome piping and everything. Now, we understand that the China ferro chrome prices are improving because of port usage some scarcity is there and demand is also improving. And China ferro chrome portion is going down and due to price is also strong. So it is over rule also this Chinese ferro chrome pipe is improving, so what you think about ferro chrome piping next two quarter?

Deepak Mohanty — Head of Ferro Alloys Business Unit

Actually ferro chrome prices which we look at I mean ferro chrome price, if you look April to May towards that low level and May to June they have it has gone up by RMB200 correct?

Joe Shah — Seven Seas — Analyst

Right.

Deepak Mohanty — Head of Ferro Alloys Business Unit

So RMB200 means it is around 2.3%, but the exchange rate, the Chinese currency RMB has depreciated by around 3% from if you look at initial opening up May or mid May, let’s say three and now, it has grown from 6.9 to 7.10 already, okay? So effective price has really not gone up. It is if you convert it for because international transactions are ultimately done in dollar terms. So in that nearly not much gone up, and as such, because of the Euro, it’s not in good position, they are also dependent on price in there construct some activities that has not yet cashed up so far. So, but looking at the things it should improve and as you are telling UG2 prices have gone up, so there is cost pressure on ferrochrome producers in in China so have to go up, but this is the timing depending upon how the demand pans out, less the reasons demand supplies under it can go up, that’s the way I look at it.

Joe Shah — Seven Seas — Analyst

Okay. Now before one more question about our Therubali, Therubali smelter because of distance I think now Therubali distance from chromite mines in Sukinda, I think Therubali is grouping importance they are more focused on Choudwar area, is there possibility of our testing Therubali power from ferro chrome to ferro memory is there possibility, so that we can utilize our impact say in Therubali?

Deepak Mohanty — Head of Ferro Alloys Business Unit

So we have highlighted many time, but as you know manganese robe is not available in India, it’s all import based and you have to be close to the port because all manganese set ups in India either it is near Vizag port or near Calcutta port mostly. So logistical cost and otherwise it will not be [Indecipherable] going and as per we have to utilize our own chrome and we are utilizing always that maximum thereafter only you are using that [Indecipherable], so effectiveness so working up.

Joe Shah — Seven Seas — Analyst

Okay, okay. Okay. Now, Prem, regarding this renewable energy plant, it — this Kalinga Nagar our person from power was saying that about 50 MW will be in tolling, INR800 crore, so that is very good amount and therefore 50-50 MW if we’re able to catch-up INR100 crore investment that is a very good campaign to thermal, it’s very much cheaper, so how long it will take the 50%…

Prem Khandelwal — Chief Financial Officer & Company Secretary

Joe, bhai, you understood it wrongly, we are not fitting away renewal power plant in Kalinga Nagar, we are are entering into a captive consumption with a party we are setting up and we are just going to continue our 25%, 26% equity in bag, which should amount to around INR100 crore.

Joe Shah — Seven Seas — Analyst

Okay, okay [Speech Overlap]. So we ill be outsourcing our renewable power from that third party?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yes.

Joe Shah — Seven Seas — Analyst

Okay, okay, okay, okay. Right, Prem, last question, regarding this Q1 FY 2024, as you said that real as we’ve improved to about 1,20,000 and also cost of coal is also going down. So can we generalize that Q1 will be much better than the Q4?

Prem Khandelwal — Chief Financial Officer & Company Secretary

That I’ve already told that Q1 should be better than Q4.

Joe Shah — Seven Seas — Analyst

Okay, okay, thank you. No more question.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Thank you.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Jyothy [Phonetic] from Molecule Ventures. Please go ahead. Jyothy, your line has been unmuted. Please proceed.

Unidentified Participant — — Analyst

Hello?

Operator

No, Jyothy, we are not able to hear you, could you use the handset?

Unidentified Participant — — Analyst

Hello?

Operator

Ma’am, please use the handset while speaking. We cannot hear you clearly.

Unidentified Participant — — Analyst

Hello?

Operator

Yes, please go ahead. Thank you.

Unidentified Participant — — Analyst

Yeah, congratulations on a robust performance. So my first question is, what could be our cost of production for Q4?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Q4 cost of production would be around 78,000, 79,000.

Unidentified Participant — — Analyst

Okay. And what do you expect that numbers going forward in Q1 FY 2024?

Prem Khandelwal — Chief Financial Officer & Company Secretary

As I said, it would be very difficult to give any pinpoint number for that. What we can give a guidance that it will be lower than Q4.

Unidentified Participant — — Analyst

Okay, okay.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Very, very difficult, yeah, somehow it will be very difficult to calculate now.

Unidentified Participant — — Analyst

Okay. Sir, one question regarding South Africa. So after the ramp rise in power prices, our ferro chrome smelters still viable in South Africa. So what would be roughly the breakeven cost because during correction of ferro chrome prices, news of putting about shutting down of plant so if you could just throw some light on that?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Deepak, would you answer that?

Deepak Mohanty — Head of Ferro Alloys Business Unit

Yeah, let me tell you, actually South Africa and ferro chrome production with the power cost higher than the other page, they are much viable than China because you know out of total 15 million tons stand up which is around 7 million tons which is at a much higher cost, which is [Indecipherable] from South Africa and then convert into China. So that’s where that advantage is always there with the South African products, as far as chrome cost is concerned, it is a major part and reductions also in China is quite low, South Africa. So they are always cost-competitive that [Indecipherable] mainly it’s with the power availability, but you must have hard that power situation in South Africa is extremely bad and now there will be [Indecipherable] to Nagar, there winter is coming, where the tariff is higher, as well as it is going to be the instead of power crisis which means in a turn of 32 hours 16 hours black out. So we have to see how things are coming out, there were power crisis its not the rate what capex spend, availability can change the ferro chrome prices then actually in a different way and hence it can increase, step up prices in South Africa types.

Unidentified Participant — — Analyst

Okay, okay thanks sir. On Utkal fee if you could give a revised timeline for when do you expect the amount?

Prem Khandelwal — Chief Financial Officer & Company Secretary

That would be very difficult to give in tandem, madam, because you see last six months we are expecting this many to come, but government is taking its own sweet time, so very difficult. They were suppose to call us in end of May, this is that has not happened. So maybe in June the discussion will happen and then next quarter we can expect in-the-money. But again, you see those are again expected things government is taking their own time.

Unidentified Participant — — Analyst

Okay, okay. Sir, my last question is what take up a unit power cost for this quarter?

Prem Khandelwal — Chief Financial Officer & Company Secretary

It’s INR4.26 variable power cost.

Unidentified Participant — — Analyst

Okay, okay. Thank you.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Thank you.

Operator

Thank you. We have the next question from the line of Krishna Kansara, an Investor. Please go ahead.

Unidentified Participant — — Analyst

Hello?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yeah.

Unidentified Participant — — Analyst

Sir, I had two questions, one has been answered. So just one last question, what would be your volume guidance for the next quarter?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Deepak?

Deepak Mohanty — Head of Ferro Alloys Business Unit

It will be margin guidance is around 64,000 production.

Unidentified Participant — — Analyst

Okay, okay, okay, sir. Thank you rest of my questions have been answered.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Okay, thank you madam.

Operator

Thank you. We have the next question from the line of Saket Kapoor from Kapoor & Co. Please go ahead.

Saket Kapoor — Kapoor & Co. — Analyst

Yes, sir. Sir, in continuation to the answer. 64,000 is our production schedule for Q1?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yes,.

Saket Kapoor — Kapoor & Co. — Analyst

And sales will be in the vicinity of?

Prem Khandelwal — Chief Financial Officer & Company Secretary

64,000 whatever we produce mostly we’ll send it out.

Saket Kapoor — Kapoor & Co. — Analyst

And then there will be 7,000 out that is they are in the inventory, so 71,000 should reach the industry.

Prem Khandelwal — Chief Financial Officer & Company Secretary

No, no, not like that to agree, it will be basically in COVID, the quantity, the quantity which we have set in the month of by end of period end March, basically that win for the twin that lateral we made those spend that was going ahead. So it will not be an additional quantity that way, it will be in that range only, 64,000 total. Only thing our inventory was not there at our major supplier, but that within it was in the last quarter it was lower.

Saket Kapoor — Kapoor & Co. — Analyst

Sir, come again, inventory loss…

Deepak Mohanty — Head of Ferro Alloys Business Unit

We supply that customer on this basis, for reason we have to move because the back idea reflects 20 to 25 bps raising the material, supply investment were to be in the previous month which use to do, but it had stopped at certain point in time, so we have little inventory over there for which treatment what we view as, so that is vertical for at least supply not an additional.

Saket Kapoor — Kapoor & Co. — Analyst

Sir, the glimpses on the other income part we have seen for an year-on-year it has moved up from INR16 crore to INR24 crore, so what are the key constituent of the same?

Prem Khandelwal — Chief Financial Officer & Company Secretary

Other income lot of things are there, scrap sales then interest income, then mutual fund income, so lot of components are there. Not related to operations.

Saket Kapoor — Kapoor & Co. — Analyst

Not, not, they are not related to operation. And even sir for the depreciation part also I will mail as you you told because we — our supplies more than INR200 crore, but the depreciation has gone down from INR110 crores to INR107 crore on an year-on year basis. So that part is also not here, why that…

Prem Khandelwal — Chief Financial Officer & Company Secretary

These are very specific questions…

Saket Kapoor — Kapoor & Co. — Analyst

I will write, yes sir, I will definitely write…

Prem Khandelwal — Chief Financial Officer & Company Secretary

[Indecipherable]

Saket Kapoor — Kapoor & Co. — Analyst

Separate mail for the same and if you could give us…

Prem Khandelwal — Chief Financial Officer & Company Secretary

No SIG question.

Saket Kapoor — Kapoor & Co. — Analyst

Correct sir, you are right sir, I will do that help. Sir, if you could give me some only the last point some color on the break up of the raw-material cost for Q4 and the trend for Q1. And sir and one more part about the sales realization when you mentioned about 1,20,000, it includes the blending of both the spot and contracted because spot keep on changing, we are still one month left for the quarter to end, so what is that 1,20,000 number sir?

Prem Khandelwal — Chief Financial Officer & Company Secretary

It is a blend of spot and long term and as far as cost is concerned, chrome ore for Q4 I’m telling you the chrome ore cost 8,600, [Indecipherable] 47,800 and power 26. And Q1 number should be lower because that number we cannot save right now.

Saket Kapoor — Kapoor & Co. — Analyst

Right sir. And coal prices also sir…

Prem Khandelwal — Chief Financial Officer & Company Secretary

[Speech Overlap] INR4.26.

Saket Kapoor — Kapoor & Co. — Analyst

That will cover, yeah, yeah.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yes,.

Saket Kapoor — Kapoor & Co. — Analyst

Sir, when you were mentioning about that 1,20,000 is the blended. So the spot prices will change for the month of June also, so how are we arriving at this number 1,20,000.

Prem Khandelwal — Chief Financial Officer & Company Secretary

We are calculating as of now if it goes down, if we go down further.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, and out-of-the total sales mix, sir, what percentage is spot and how much is contracted the volume out-of-the 64,000…

Prem Khandelwal — Chief Financial Officer & Company Secretary

What is the percentage, Deepak?

Deepak Mohanty — Head of Ferro Alloys Business Unit

Maybe, maybe it will be something like 30% to 40%, 30% is your contracted lump some and balance is spot kind of thing, although there is annual contract and other things including all those thing not directly spot.Long term, I’m telling long-term means more than one year, so that will be around 30% to 40%, balance is some of them are to 30% to 40% also in the range of one year contract basis and balance 20%, 30% is on spot, real spot.

Saket Kapoor — Kapoor & Co. — Analyst

Sir, I’m confused sir, once again if you could just simplify me, basically you tell sir, you tell sir, they are on 75% around is your long term basis and 25% on — 25% [Indecipherable].

Prem Khandelwal — Chief Financial Officer & Company Secretary

Yeah.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. Thank you for the elaborate answer, sir and we hope for the continuity of these call, these are very informative and gives an opportunity to interact with the management and we hope to hear on a continuous basis, sir. Thank you and all the best to the team, sir, [Foreign Speech] sir.

Operator

Thank you. Ladies and gentlemen, we will take one last question from the line of Vaibhav Badjatya from Honesty And Integrity Investment. Please go ahead.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Yeah, thanks for the follow-up. So in terms of Utkal compensation, so I think most of the amount that we’ve invested there would be sitting in capital work-in progress right?

Prem Khandelwal — Chief Financial Officer & Company Secretary

No, [Indecipherable] you mean?

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

The amount that we have invested in Utkal…

Prem Khandelwal — Chief Financial Officer & Company Secretary

That would be in the form of investment and loan, not capital work-in progress, capital work-in progress will appear in the balance sheet of utkal coal which is non now, anymore after the [Indecipherable]. [Speech Overlap] in Utkal coal balance sheet it now recurrable from Government of India.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Okay, so what is the total amount which is there in terms of investment and loans, which is…

Prem Khandelwal — Chief Financial Officer & Company Secretary

Around INR370 crore.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

INR370 crore and the expected amount that you currently see that we are going to realize?

Prem Khandelwal — Chief Financial Officer & Company Secretary

I think we should be getting that entire money.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

So there will be no write-off as such?

Prem Khandelwal — Chief Financial Officer & Company Secretary

No, I don’t think, I don’t think we’ve there should be there.

Vaibhav Badjatya — Honesty And Integrity Investment — Analyst

Okay, that’s it. Thank you.

Prem Khandelwal — Chief Financial Officer & Company Secretary

Thank you. Thank you.

Operator

Thank you. Ladies and gentlemen, that was the last question. I would like to hand the conference over to Mr. Abhishek Sawant for closing comments. Please go ahead. Mr. Sawant, we are not able to hear you.

Prem Khandelwal — Chief Financial Officer & Company Secretary

I think he is not there, so we can close it now. There are no further questions, we can close it.

Unidentified Speaker —

Hello?

Operator

Yes, please go ahead.

Unidentified Speaker —

Yes. We thank you for taking the time in our earning call today. IMFA is going through a significant pace of growth and we are hopeful of a fantastic year ahead. On behalf of the Board of Directors and management of IMFA, as well as Veritas [Indecipherable] here, we thank you all for your participation in this call.

Operator

[Operator Closing Remarks]