Jindal Stainless Limited (NSE:JSL) Q2 FY23 Earnings Concall dated Nov. 04, 2022
Corporate Participants:
Ashish Kejriwal — Director Research Metals and Mining
Goutam Chakraborty — Head of Investor Relations
Abhyuday Jindal — Managing Director
Anurag Mantri — Director and Group Chief Financial Officer
Rea Sharma — Investor Relations
Shreya Sharma — Senior Manager
Analysts:
Amit Dixit — ICICI Securities. — Analyst
Rajesh Majumdar — B&K Securities — Analyst
Ritesh Bhana — Investec — Analyst
Vikash Singh — Phillip Capital — Analyst
Unidentified Participant — — Analyst
Unidentified Speaker —
Ankit Deora — Kotak Investments — Analyst
Hitesh Arora — Unifi Capital — Analyst
Dhaval Shah — , Annual Wealth Management — Analyst
Chetan Shah — Jeet Capital. — Analyst
Suraj Kokate — Axis Bank — Analyst
Saket Kapoor — Kapoor & Co. — Analyst
Presentation:
Operator
Ladies and gentlemen, Good day, and welcome to Jindal Stainless Limited Q2 and H1 FY ’23 Earnings Conference Call, hosted by Nuvama Wealth Management. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Ashish Kejriwal from Nuvama Wealth Management. Thank you, and over to you, sir.
Ashish Kejriwal — Director Research Metals and Mining
Yes. Thank you, Vivian. Good afternoon, everyone. So on behalf of Nuvama Wealth Management, we welcome you all for this Q2 and H1 FY ’23 post-third conference call of Jindal Stainless and JHSL. We are pleased to have here Mr. Abhyuday Jindal, Managing Director, JSL and JHSL; Mr. Anurag Mantri, Group CFO, Jindal Stainless; Mr. Ramnik Gupta, CFO, Jindal Stainless; Mr. Goutam Chakraborty and Ms. Shreya Sharma from the IR team.
We are pleased to note that this quarter, despite the difficult situation, the company has reported EBITDA part of 15,000 plus, which makes first half FY ’23, total EBITDA per tonne of around 18,000 plus — which is in line with their guidance. I hope our management will continue to maintain that guidance. And after that, I can just hand over the call to Goutam for further revision. Over to you, Goutam.
Goutam Chakraborty — Head of Investor Relations
Yes. Thanks, Ashish, and good afternoon, everyone, and thank you for joining us. We’ll begin this call with a brief opening remarks from the management, following which we will open the floor for an interactive question-and-answer session. Before we start, I would like to state that some of the statements made in today’s conference call may be forward-looking in nature, and the disclaimer in this regard is available in our results presentation, which was shared earlier with you. I would now hand over the floor to Mr. Abhyuday Jindal for his opening remarks.
Abhyuday Jindal — Managing Director
Thank you, Goutam, and Good Afternoon, everyone. On behalf of the management team, let me welcome you to the earnings call for Q2 FY ’23 of Jindal Stainless Limited and Jindal Stainless Hisar Limited.
I would first like to discuss the key business highlights of the quarter, following which Anurag will take you through our operational and financial performance.
Globally, demand for tender sales decelerated throughout Q2 FY ’23, primarily on account of high energy costs, inflationary pressure, aggressive rate hike by the U.S. Fed and recession risk in key economies. But on the domestic front, demand from end user segment continued to be strong. Development and supply of niche value-added stainless steel grades and critical materials across various sectors and our agile business model allowed us to effectively increase our sales volume and achieved highest ever quarterly domestic sales of around 95% on the total sales volume.
Demand continued to remain steady in the automobile sector registering a growth of nearly 28% quarter-on-quarter basis. The company supplied new stainless steel grades, including 432 along with existing grades like 436 and 439 to various auto majors. In the P&T segment, average sales in Q2 FY ’23 increased by 41% over Q1 FY ’23. Demand was also strong in the Lift and Elevator segment.
Indian railways continued its trust on increasing its share of business in freight. This led to a 25% jump in our sales to the railway wagon segment. We also see strong opportunities in core segment too. train set will remain a major focus area for the railways. It is also heartening to know that India is expected to invest INR80,000 crore in metro projects over the next five years, which will further increase the opportunity for our premium endorse offering.
On the export front, tendered industry has been facing continuous challenges with no relief on the export duty front. During Q2 FY ’23 and H1 FY ’23, combined exports stood at around 5% and 13% of the total sales, respectively. Domestic sales volume, on the other hand, has remarkably increased compensating for the volume loss in the export markets.
I am pleased to inform you all that we have successfully developed and stabilized various stainless steel grades in the 400 series. We have also concluded multiple strategic orders for the specialty grade in the lane Duplex family. Additionally, we have dispatched our first ever order of 304 grade for critical application requirements.
On ESG front, let me update you that we have initiated Project Samanvay, with in order to — for two-pronged strategy, a, to achieve its environmental, social and governance goals. And two, is predict greenhouse gases emissions and set carbon neutrality targets in accordance with the science-based target initiative. We are dedicatedly taking up real-time environment surveillance monitoring for air quality, water quality, work zone monitoring, affluent analysis and noise at various locations. We also carried out a plantation drive of over 2,500 trees inside the premises. JSHL has successfully commissioned a 3.5 megawatt rooftop solar power generation project. We are actively evaluating renewable energy projects for our future power requirements.
In addition to this, the company has set an organizational goal to reduce its carbon emissions by over one lakh tonnes in FY ’23 for the Merge entity. We are cognizant of our environmental responsibility and are committed to meeting the nation to prepare for a sustainable future.
With this, I would like to hand over to Anurag to discuss the operational and financial performances.
Anurag Mantri — Director and Group Chief Financial Officer
Thank you, Abhyuday. Good afternoon, everyone, and a warm welcome on the call today. I hope you had a chance to go through our earnings presentation, which was shared with the stock exchanges and today’s call discussion will be on the same lines.
As Abhyuday mentioned, and as you all know, that this quarter witnessed a major impact of the export duty, coupled with the ongoing challenges in the global macro situation. Raw material prices to continue to remain volatile during the quarter with nickel prices falling by 24% quarter-on-quarter and those of ferrochrome by 18% on quarter-on-quarter. This impacted the realization and profitability of domestic manufacturers.
Despite these challenges, we could adapt to the changed market dynamics quickly and emphasized our focus on the domestic sales through development and supply of niche value-added stainless steel grades and efficiently increasing our volume across segments especially into auto, railways, pipe and tubes and lift and elevators.
Let me now discuss the operational and financial performance during Q2 and H1 FY ’23. Backed by strong sales volume — the pro forma combined revenue of Q2 FY ’23 rose by 10% and 6%, respectively, on Y-o-Y and Q-o-Q basis to INR1,628 crores. EBITDA impact were recorded at INR694 and INR360 crores, respectively. On a half yearly basis, the pro forma combined revenue grew by 19% Y-o-Y to INR1,734 crores. EBITDA NPAT for the same period stood at INR1,526 crores and INR836 crores, respectively.
Performance of the global subsidiary was adversely impacted, as mentioned by Abhyuday, due to the tough global headwinds, inflationary pressures and recession risk in the key economies and export duty. On a half yearly basis, however, our combined EBITDA of all the operating subsidiaries stood at INR78 crores. At the end of Q2 H1 FY ’23, our pro forma combined entity net debt stood at INR2,757 crores, down by 42% and 12%, respectively, as against FY ’20 and FY ’22 level.
Despite being in the capex cycle, we continue to focus on the robust balance sheet and prudent capital allocation, which has helped us to improve our leverage ratios of the combined entity with the debt equity of 0.3x and debt EBITDA of 0.7x, which is one of the best in the metal sector.
On the merger update, let me intimate you that NCLT has given the next date of hearing on November 11, 2022. The merger is expected to complete in FY ’23. Also, I’m pleased to inform you that the shareholders of JSL approved acquisition of 74% of JSL from OPG STP through postal wallet with an overwhelming majority on September 3, 2022. Our agile business strategy has been helpful in supporting our overall performance during the challenging times. We will continue to focus on our core strength to optimize our operational and financial performance going ahead.
With this, I would like to end my discussions and would request the moderator to open the floor for the Q&A session. Thank you.
Questions and Answers:
Operator
The first question is from the line of Amit Dixit from ICICI Securities. Kindly proceed.
Amit Dixit — ICICI Securities. — Analyst
Yes. Good afternoon, everyone. Thanks for the opportunity. And congratulations for a good set of numbers in a very challenging quarter. I have 3 questions. The first one is on essentially volume growth. We saw a very impressive volume growth Q-o-Q in both JSL and JSHL while you have highlighted certain segments, railways or those that contribute to growth. Just wanted to understand better where this growth is coming from, particularly in 200 cities, whether it is 300 or 400 — was there any pent-up demand in certain segments that you expect to taper off? And what about the volume guidance for the year? That is the first question.
Anurag Mantri — Director and Group Chief Financial Officer
Okay. Thanks, Amit. So as we mentioned, the volume growth was in the domestic market for us came across the segment. And because most of the volumes, we actually then diverted to a domestic market due to the export duty. And good thing was that some of these growths which came into the premium segment, which is like auto, auto average sales grew almost 28% on a quarter-on-quarter basis due to the steady demand in this. Similarly, Railway, the growth primarily came from as users in the wagons. So wagons because on freight side, the rail continue to increase focus, which then wagonss took us the good demand from — of our overall sales mix.
Pipe and Tube was another segment, which grew almost 41% on a quarter-on-quarter basis. due to the good demand from construction and infra. So, it was across then their left and elevator was also like we captured almost 95% of the shares of the market and it supplies to all the major elevator, which is Kone, Otis, Mitsubishi, Shanler. So this is the across. So it was all across the spectrum of the various segments. On your question was on the mix, then I assume second question. So because of this, the overall, if you see 400 series volumes in JSL share was and 300 cities, which was last year about 56 has come down to 46%. And 200 cities also increased 18% to 23%. So that’s how — basically, it’s because the demand was coming across the segment, and we were able to capture balancing between the volumes and the price. So we continue to choose the segment carefully.
Amit Dixit — ICICI Securities. — Analyst
Okay. And what about the guidance? Because we heard that last time it was a slightly muted guidance. So, would you revise your guidance upwards?
Anurag Mantri — Director and Group Chief Financial Officer
So last time we gave the guidance of 5% to 10% volume dip expected than FY ’22. Now I think with this trend, we are expecting we will close at least a flat volume growth in line with FY ’22 of — so at this stage, so we will we are upgrading the guidance in terms of the volumes, which was earlier expected to be down by 5% to 10% from FY ’22 level. But now at least we expect that FY ’23 as should be flat of FY ’22 levels.
Amit Dixit — ICICI Securities. — Analyst
Great. The second question is on the capex end. The number in cash flow statement indicates that the ongoing expansion projects have gathered momentum because the capex spend has also gone up — so would you please let us know the status of completion of the brownfield expansion at JSL and what kind of — I mean, whether it would be like we can expect some volume growth from it towards the end of FY 2Q?
Anurag Mantri — Director and Group Chief Financial Officer
All the capex es are on track, and everything is what guidance we gave, all the facilities will come within that time line. So that’s on the capex side. On the growth side, we will — we were expecting a faster pace, but I would say we will — we’ll have to watch the next two quarters carefully. With that, we will see — we will — we are still expecting that at least 20% growth we should be able to deliver in FY ’24 over 23– but I think we will rather watch the development. Out of the new capacity, we are expecting at least 30% capacity utilization can be achievable despite all the other challenges, it continue to remain at in FY ’24.
Amit Dixit — ICICI Securities. — Analyst
Wonderful. The last question is on the share of imports. So if you can quantify the share of imports and domestic consumption in Q2 FY ’23? And what was the increase in export from imports from China and Indonesia. Do you need to provide this information frame earlier, but this time, I don’t know why it got listed
Anurag Mantri — Director and Group Chief Financial Officer
The imports in this quarter was close to 32%, 35% of the overall — overall consumption in the country. Chinese imports continue to however it used to be 60,000 in June, came down actually less than 40%, but again, it has crossed reaching almost 450,000 in September. So it’s been up and down on the Chinese import side.
Amit Dixit — ICICI Securities. — Analyst
And Indonesia?
Anurag Mantri — Director and Group Chief Financial Officer
Indonesia, we are seeing a declining trend in the import side. It used to be 20,000-plus — it’s right now running at less than 10,000.
Amit Dixit — ICICI Securities. — Analyst
Okay. So with the decrease in for pressure and our own volume growth — that should give you a lot of confidence actually to deliver good volumes in H2 also if imports remain I mean, or go down further
Anurag Mantri — Director and Group Chief Financial Officer
Yes. That’s the reason we are revising our guidance of — instead of volume decline, we are seeing at least the flat volume is looks achievable at this stage now with our confidence level what we delivered
Amit Dixit — ICICI Securities. — Analyst
Okay. Wonderful. Thanks a lot and all the best.
Operator
Thank you. The next question is from the line of Rajesh Majumdar from B&K Securities. Kindly proceed
Rajesh Majumdar — B&K Securities — Analyst
Good afternoon, sir, and congratulations once again for a decent set of numbers. So, my question was, sir, we have seen the effect of high-cost inventories also in this quarter, right, getting liquidated because of the high increase in volumes. So what would be the extent of that inventory liquidation impact? And since the prices are again forming now especially ferrochrome, etc, what kind of inventory-related loss can come back in 3Q and 4Q? That was the first question.
Anurag Mantri — Director and Group Chief Financial Officer
Rajesh, in our business, actually, because it’s a balancing between the volume and realization and the margins. So, it’s difficult to segregate the inventory valuations number in a concrete manner. But typically, the trend which we have been saying, we — it gets almost a time lag of 40 to 45 days to pass on to the customer. So, in a downward raw material trend, we always get a negative valuation impact which was there in the quarter also because of the downward movement in the prices. But quantifying that number looks far. So that’s why that guidance we gave is actually INR18,000, we are taking care of everything which comes — which could come into the play during these volatile times. So, we are not segregating that guidance that in case of continuous trend, we will not be able to deliver such volumes.
Rajesh Majumdar — B&K Securities — Analyst
Right. Right, sir. Fine. And my second question was, sir, Recently, we’ve been seeing a hardening of the spreads in S300 series, particularly where the product prices have been firm and increasing somewhat, whether it’s from September onwards, there is a sharp decline in the scrap prices. And how — I mean, I know you have a longer-term contract and all that. So, what is the impact? Because overall impact on the spread is nearly INR15,000-plus per tonne. So obviously, entire thing cannot be captured in terms of the spot spread, but what kind of impact on that can we see in 3Q and more in 4Q?
Anurag Mantri — Director and Group Chief Financial Officer
See, Rajesh, actually, the raw material is also, again, the source of raw material and we select on our supply chain is also a combination — so it’s not — it’s difficult to — because see what happened when the raw material and the scrap prices starts falling, the spot prices of the finished goods also start adjusting immediately. And also, because we have to lift a larger quantity of raw materials. So, we have seen the movement we paused for some time in the scrap market, we seasonally the prices falling down, but when we start gathering the quantity, the prices start going up immediately. So those scraps are available for the limited quantity. So that’s the reason it’s a very fine balancing of the various raw material sources for us.
Rajesh Majumdar — B&K Securities — Analyst
No, but the widening of the spot spread or the flattening should matter to you in terms of, right, the overall profitability of the product to some extent. I mean even if you are seeing that the quantity is impacted — impact the prices, like, for example, Scrap has fallen from nearly 34 scrap has fallen from INR one lakh 18 to INR1 lakh 80. And the finished prices have actually gone up in what the 1.5 months data suggests. So that means sharp increase in the spot spreads. So my question is, sir, how much of the sports spin impact actually comes in product, if you can get some kind of a judgment on that
Anurag Mantri — Director and Group Chief Financial Officer
So let me give you two parts to this. One is that why it cannot be exactly reflected because one is that it also depends on the sales mix, which we are selling. So, as we mentioned, like O2 Railway more on the 400 series as a scrap will not matter that much. So that’s one part because it’s always and for us, then we don’t go with that as much as 400 series mix has to be sold or this much of 300, what we go with that how we capture the best margin orders further across the series segment irrespective of the grid. That’s what our business strategy moves. Which is helping us in terms of maintaining the more consistent volumes and the growth in the earnings side.
Second part is that the scrap also, so the moment we have seen in the market, we or for some of the scrap buying, we see the prices going down. But the moment we start buying as a large buyer, we see that initial — those price sources are actually limited in terms of the quantity. So, it’s much more complicated than it’s like a similar way of stock buying, let me tell you because when you start getting the large order, we see certainly the prices the next order goes into the larger price. So it any
Abhyuday Jindal — Managing Director
Also to add that domestic as a scrap is not our only source of nickel or scrap that we buy, sort is only domestic, what you’re saying is correct, there’s been a sharp decrease. But in the world market and other forms of nickel, there hasn’t been any we need to look at all our sources.
Rajesh Majumdar — B&K Securities — Analyst
Okay. So let me just ask you a final question on GET. Would you have a higher EBITDA per tonne for 2H as compared to earlier guidance because of all the factors of inventory and spread, etc, because it’s like since the actual numbers are more complicated, would you have had a slightly higher profitability figure for the rest of the year?
Anurag Mantri — Director and Group Chief Financial Officer
Not right now. We will say that we will not change the guidance right now. FY ’23, what 18,000, I think we will maintain at this stage and we will rather go for one more quarter, this trend.
Rajesh Majumdar — B&K Securities — Analyst
Okay. Thank you so much.
Operator
Thank you. The next question is from the line of Ritesh from Investec. Kindly proceed.
Ritesh Bhana — Investec — Analyst
Yeah, hi, sir. Thanks for the opportunity. I have 4 questions. First question is, one is on JSL, JUSL, what are the incremental milestones that we have to look at? Secondly, if you can just help the debt and EBITDA numbers for JUSL for first half. So that’s the first question. The second question is any update on MCL. Third question is, if at all, reduction in pledges by when can we see that? And the fourth question is what will make us, again, competitive on exports. We know that we have Section 232 Europe. There are additional duties which are there, given by European Union press, the government’s 15% export taxes. So, if the export volumes has to move up again, what is it that we are doing about it? Those are the 4 broader questions. Thank you so much.
Anurag Mantri — Director and Group Chief Financial Officer
Okay. Thanks, Ritesh. Sorry, let me just try to see if I missed some questions, I think you can again ask me that question, I think because you have asked so many questions. but let me try to see what I captured. One is that you asked about the JUSL debt and EBITDA. The JUSL current debt is around INR1,965 crores, and the EBITDA for the H1 was INR275 crores. That’s one question. Second question was on the flat side, the reduction of the pledge. Reduction of pledge, as we mentioned, the banks are completely aligned. I think it’s taking a more a process time to how to actually navigate that into whatever has been released, but let me tell you the good story is that all the term debt, which was having a pledge, has been repaid. So, there is no term debt right now, which has a pledge right now in the JSL. The pledge, which is getting reflected now only on the working capital. So, See, for term that it was easier because we repaid the thing and we got it refinanced with the new debt, none of the new debt we have given the pledge. So, there’s no term loan now existing in JSL, which has a pledge.
Working capital thing, unfortunately because of especially the LC thing, which is ongoing, there cannot be a 1-day cutoff for the repayment and taking the new facility. So, it’s a process which we need to obviously get the press released from the old studio lenders, which is led by SBI. So, which we are actually in the process and they are assuring us because even in their new loan of term debt, which they have extended to us for the project, there is no pledge pledge in that particular low. So, they have removed all the pledge and subsidiary pledge requirement of a new loan and disburse that new loan on that basis. So just I think — I know we have been saying that, and we are also a bit of disappointed by the progress at the PSU lenders on working capital there. But as a proactive step, what we have done, we have repaid entire debt term debt in JSL, which was on a pledge. — and refinance it with the new debt, which was not under pledged. JSHL is still existing, but we will be — you are just waiting because of the certain assurance. Otherwise, we will do the same exercise in JSHL — and we will not have any of the share — term debt, which will have a pledge.
Ritesh Bhana — Investec — Analyst
That’s useful. Update on MCL then the export question.
Anurag Mantri — Director and Group Chief Financial Officer
The MCL, the matter is in court. So obviously, there was a bidding process and it’s been public news that the three key parties but there in the bids were actually us and 2 other players. And we are actually — we bought the friend run or in between, obviously, it was selling at the core. And in between the lenders also offered a loan to the ARC to offload which was led by Nasal offer. — because resolution sometimes can go long. So that process was also run separately, but other matters isn’t right. So right now, the — I would say there’s nothing to update on the progress of MCL. I think it will take its own course. Yes. Another thing was on export side that — your question on export side is that how can we gain the volume in export market? Is that the question?
Ritesh Bhana — Investec — Analyst
Sir, the question is, so government imposed 15% export taxes, that’s one thing. Prior to that, European Union import taxes on India, China and Indonesia. We were still able to export into Europe despite that more. But at that point of time, we did indicate that we will still be competitive in the U.S. market. So, I think export market is probably important and probably more lucrative — so if we have to regain our competitiveness back, what are the regions that we are looking at. So, when it was Europe, we did indicate about U.S. but U.S. also has Section 232. So, what are the other reasons that we are looking at, say, hypothetically if the domestic market is sluggish, is exports even an option for us? How should we look at it?
Anurag Mantri — Director and Group Chief Financial Officer
Yes. Maybe because right now, there was obviously a recessionary risk and inflationary trend and all sort of things in both the market, but I’ll let Abhyuday answer this question– and that how the recovery can come in export market.
Abhyuday Jindal — Managing Director
So yes. So Ritesh, thanks for your question. Basically, definitely, with the export duty overhang, it is going to be a big challenge for us. And like as you said, this section plus so as of now, it is a challenge. But because of our long-standing quality approval that we have, our customers are still sticking with us, they still want to still take some quantity. So despite selling at a very low margin export, we’re still continuing that and we will still continue with turnoff. If it does get further sluggish domestic, we are seeing good demand and we’re seeing good play in all segments of our infrastructure and auto and railway– railway especially Q4 always picks up. They always drag behind for the full year. And Q4 is always a bumper time for railways.
So we don’t see any real sluggish or slowdown in demand in the domestic market that we’re still quite bullish on. But with the export duty overhang, increasing export sales with the way the world market is in sort of a recession right now, it is looking like a challenge. So we’re quite bullish that domestic will– volumes will be maintained and they will further grow. And whenever required at very low margin, we can always push to export volume. As of now, we don’t want to do that.
Ritesh Bhana — Investec — Analyst
Sure. If I have to just rephrase the question, given the volatility that we have seen in the commodity prices, I’m pretty sure that our mission 200, 300 and 400 series would have changed on a quarter-on-quarter or a year-on-year basis.
Even if for that change, would you assure investors that our profitability when we look at it on an EBITDA per tonne basis– it is something which is pretty much similar across the 3 grades and it would not have much bearing on the profitability going forward?
Abhyuday Jindal — Managing Director
So our overall guidance we will still maintain. Between the three grades, there is definitely variation and there are certain segments and certain low-paying segments. But our overall guidance combined all three between 18 to 20, I think we will still maintain that.
Ritesh Bhana — Investec — Analyst
Sure. Thank you so much for the answer. Thank you.
Abhyuday Jindal — Managing Director
Thank you.
Operator
The next question is from the line of Vikash Singh from Phillip Capital. Kindly proceed.
Vikash Singh — Phillip Capital — Analyst
Good afternoon, sir.
Abhyuday Jindal — Managing Director
Good afternoon.
Vikash Singh — Phillip Capital — Analyst
Sir, I just wanted to understand this 20% growth in FY ’24, which you are envisaging, so is this taking into assumption that the exports have would resume or you see the scope that only from the domestic demand, you would be able to take up that let’s say, 15% or 20% growth in FY ’24? And if so, we are obviously talking about much higher growth than the industry level. So where this growth are coming from basically?
Abhyuday Jindal — Managing Director
See, one, let me just clarify that. It’s not that we are guiding right now for the growth on FY ’24 over FY ’23. That’s what I said will have to — directionally, we should target that, but it’s not the guidance right now. And we’ll have to watch for another 2 quarters. That’s what I mentioned. So that’s for clarification.
Second, what we — the question was asked about the capacity — new capacity utilization. So earlier, we would have — obviously, we would have ramped it up much faster. But at this stage also, we are working to ramp up at least the 30% of the enhanced capacity utilization during this period, 25% to 30%. That’s what our endeavor. But I think for guidance of 24% number, I think that’s what.
Overall, we can assure you that what we are working is that at least the new capacity, which comes at l5% to 30% of that utilization should be targeting to ramp up. But I think the next — end of the next ending call will be the best time to give us the FY ’24 for guidance.
Vikash Singh — Phillip Capital — Analyst
So my next question pertains to our once this capacity comes in, in terms of 30% utilization of 100%, how the operating leverage moves up? Have we done any internal calculations which you could which you could give us also a kind of idea that what kind of the operating leverage would come into play?
Abhyuday Jindal — Managing Director
What do you mean by operating — are you talking about–
Vikash Singh — Phillip Capital — Analyst
The EBITDA per tonne, the fixed cost element would get spread further. So some more savings would be coming in because of the higher utilization level.
Abhyuday Jindal — Managing Director
Right now, so effectively, if I understand, you are asking for FY ’24 EBITDA per ton guidance. Let me tell you, which is a bit early for us to say right now because, see, ultimately, it will be a fine combination as you would have seen in the last 2 quarters. We’ll have to have a very fine balancing between our volume and the price segment, which we want to go.
We have opportunity India– is still dominated by imports and assets. So technically, we can sell the entire volume, but at what price point and what price product quality we will compromise, that will have to be a very, very fine balancing. And we want to keep our thing into the premium and niche segment. And or on a quality segment, not getting into some standard quality segment and compete on the price.
So it’s a bit complicated than what it looks like. And — that’s what I’m saying, it’s difficult to have an EBITDA per tonne guidance that has incremental savings, which will be able to achieve to increase the EBITDA per ton guidance at this stage. I think, let’s wait for some time how we move development in the external market moves and how the other segment in the domestic market moves — and we will give you that guidance on–so when we give the guidance, we take care of all the things in terms of the inventory valuation in terms of the various savings which will be coming from the — which will– through operating efficiencies and sourcing efficiency, which we keep working.
Vikash Singh — Phillip Capital — Analyst
So fair enough. Sir, just one more question. In terms of– in the Jindal Stainless. Our subsidiaries had made losses. So just wanted to understand, is it some one-offs which translated to the loss at the EBITDA level — or how are they doing right now? Has the situation improved?
Abhyuday Jindal — Managing Director
Yes. So I think global subsidiaries were actually, as we mentioned, the global markets are actually under downward pressure in steel. One was because of across the economies which are facing the recessionary risk and inflation pressure. So we see some challenges on the European markets. Anurag, you want to explain this?
Anurag Mantri — Director and Group Chief Financial Officer
What was — sorry, can you repeat the question?
Vikash Singh — Phillip Capital — Analyst
Yes. So I was talking about the basically, European subsidiary is making losses than some other subsidiaries also — total loss in the JSL level is up there
Anurag Mantri — Director and Group Chief Financial Officer
So our service center has still done well. The center has still done well despite the challenging situation in the domestic market service centers still fully performing and done well. Lifestyle business — because it’s being a consumer-driven business and lot older prices that we were fixed, would there we face certain challenges — but now what we have done in Lifestyle business is also, we have gone and discussed with various government agencies and we’ve got a price variation clause done. So that we were taking care of any kind of future aberrations that happened because of this.
So both our domestic subsidiaries, definitely JSL has done well. Q4 guidance for Lifestyle is looking very good. We’re seeing all our orders coming back in black. So that will also perform well. The global subsidiaries are under a bit of pressure right now, and that will take, I would say, another two quarters until the global demand is back up and running or the export duty moves out. Until then, there will be still pressure on those two subsidiaries.
Vikash Singh — Phillip Capital — Analyst
Understood, sir. Sir, just one last clarification. So, we did not see any one-offs like some of your peers, one-off inventory losses or any kind of one-off losses during this quarter?
Abhyuday Jindal — Managing Director
It’s a– as I mentioned that inventory losses are difficult to be separated for us–it’s inventory losses is like the negative inventory valuation, which is in the falling raw material prices. That they are — as we mentioned, it was there in Q2 and even in Indian company as well as across. Because then in the falling recursion prices, you will always have a negative inventory valuation But those numbers cannot be quantified because it’s blended with the part of EBITDA by the time it gets past down.
Vikash Singh — Phillip Capital — Analyst
Understood, sir. That’s all from my side. Thank you for taking my questions.
Operator
Thank you. The next question is from the line of [Indecipherable]. Please proceed.
Unidentified Participant — — Analyst
Hi, Good Evening sir and thank you for the opportunity. I have a couple of questions. Firstly, what is the capex for the rest of the year in H2 and for FY ’24?
Abhyuday Jindal — Managing Director
The capex in H2 should be in the range of around maybe INR600 crores to INR700 crores. And–
Unidentified Participant — — Analyst
Both the entities combined?
Abhyuday Jindal — Managing Director
Yes, both the entities come in around say INR700 crore capex equity.
Unidentified Participant — — Analyst
Okay. And F ’24, what will be the maintenance capex?
Anurag Mantri — Director and Group Chief Financial Officer
Maintenance capex between these two companies combined together runs close to INR350 crores of the number.
Unidentified Participant — — Analyst
Okay. Sure. And sir, my next question is on JUSL what is the expansion status there to 3.6 million tonnes. And when will it be completed?
Anurag Mantri — Director and Group Chief Financial Officer
So JUSL expansion is on time, I think by end of this fiscal year, that also should be completed.
Unidentified Participant — — Analyst
Okay. So it will be at 3.6 million, right?
Anurag Mantri — Director and Group Chief Financial Officer
Yes.
Unidentified Participant — — Analyst
Right. And it seems that debt has decreased from March ’22 numbers. Is that understanding right?
Anurag Mantri — Director and Group Chief Financial Officer
In JSL?
Unidentified Speaker —
No. In JUSL.
Anurag Mantri — Director and Group Chief Financial Officer
Slightly, yes. That has decreased slightly, yes.
Unidentified Participant — — Analyst
Okay. Sure. And sir, what would be the pro forma net worth of the company? I believe there will be some cancellations. So if you can share that number
Abhyuday Jindal — Managing Director
It’s around INR10,400 crore.
Unidentified Participant — — Analyst
Okay, sure. Okay. So the investments in JSHL will get canceled out, right?
Abhyuday Jindal — Managing Director
Yes. cancel out, and then there will be some kind of additional addition also. So the total impact will be around INR10,400 crore — this is pro forma number. The actual number when calculated might be different, but — so far, pro forma number is discounting.
Unidentified Participant — — Analyst
Sure, sure. And sir, just one last question on JUSL. We mentioned that sometime in FY ’24, we’ll be acquiring — we’ll be completing the acquisition. So does that time line stay?
Anurag Mantri — Director and Group Chief Financial Officer
Yes.
Unidentified Participant — — Analyst
Okay. So, we’ll be paying out that INR950 crores and will be getting in the debt of about INR2,000 crores.
Anurag Mantri — Director and Group Chief Financial Officer
Yes.
Unidentified Participant — — Analyst
Right. Okay. Okay. Sure, all the best and thank you.
Operator
Thank you. The next question is from the line of Ankit Deora from Kotak Investment. Kindly proceed.
Ankit Deora — Kotak Investments — Analyst
Good evening, sir. Just a couple of questions. One, on the JUSL acquisition, Any specific milestones or by when we expect the payout anything in H2 or everything in FY’24?
Anurag Mantri — Director and Group Chief Financial Officer
So we have got the shareholder approval now, and we expect to close this in FY ’23 itself we gave the time line till June 24 last — June 23 last time. But I think on a priority in our approvals have been received. We will close this transaction during this financial year.
Ankit Deora — Kotak Investments — Analyst
Okay. And in terms of capex in JUSL, are we undertaking any blast furnace capex or something. There were some press releases around orders given to SRX projects or something? So, this sales to the current capex or–?
Anurag Mantri — Director and Group Chief Financial Officer
No, there is no last one. JSL will be coming with the hottest trip mill and cold roll unit as it is to the existing sector.
Ankit Deora — Kotak Investments — Analyst
Okay. Okay. Okay. Sir. That’s it. Thank you.
Operator
Thank you. The next question is from the line of Hitesh Arora from Unifi Capital. Kindly proceed.
Hitesh Arora — Unifi Capital — Analyst
Yeah, thank you. Just two questions, you could update on the NCLT status. What happened in the last year in, I mean what’s the expected are we still confident of closing this by the financial year?
Anurag Mantri — Director and Group Chief Financial Officer
See, the hearing is to take into account of all the NOCs received from the various regulators, which the tax authorities the authorities and all the things, which has been filed already finding the different certificate, we have got from all has been tied to the court. — hearing is on 11th. And now I am not too sure whether this will be closed in this hearing or may have another short hearing, which is we have seen typical pattern in the Indian court — but even with that, the short hearing, we are — now we know that all the authorities have submitted the NOCs to the court. So, it’s more a water process. And we hope to complete the transaction in FY ’23 as per the guidance.
Hitesh Arora — Unifi Capital — Analyst
Yes. And just then on the JSL and JSHL what — so we’ve given a guidance of 18,000 or maybe 18,000 to 20,000 tonne EBITDA. Just what’s the downside risk to the guidance? What can go wrong from here for us not to achieve the 18-20,000 tonne
Anurag Mantri — Director and Group Chief Financial Officer
For FY ’23, I think INR18,000 is right now an achievable guidance looks like. Obviously, the downside group is always could be external market. But this time, I would say, 18,000 because we have crossed the two quarters and looking outward for the next two, three months, we are confident of delivering 18,000.
Hitesh Arora — Unifi Capital — Analyst
And for the next year, we’ll see as it comes closer to the time. Would that be right?
Anurag Mantri — Director and Group Chief Financial Officer
Sorry. I think–
Hitesh Arora — Unifi Capital — Analyst
The next year, for the next financial year, we’ll see closer to the time.
Anurag Mantri — Director and Group Chief Financial Officer
Yes, I think Next was because there are too many volatility happening across on even policy front as well as the global front.
Hitesh Arora — Unifi Capital — Analyst
Sure. But we should be all things equal, we should be getting another, say, 3,000 odd or INR3,500 additional on account of the merger benefit — acquisition benefit of JUSL, which would be in the tolling charge that should also come to all things equal.
Anurag Mantri — Director and Group Chief Financial Officer
Yes.
Hitesh Arora — Unifi Capital — Analyst
Yes. Okay. Good.
Operator
Thank you. The next question is from the line of Dhaval Shah from Annual Wealth Management. Kindly proceed.
Dhaval Shah — , Annual Wealth Management — Analyst
Yeah, hi. Congratulations on good set of numbers. Am I audible?
Operator
Mr. Shah, your audio is a bit low.
Dhaval Shah — , Annual Wealth Management — Analyst
Is it fine now?
Operator
Yes, this is better.
Dhaval Shah — , Annual Wealth Management — Analyst
Yes. So I had a few questions. Firstly, on why there is an employee cost reduction in this quarter any one-off? Or can you throw some color on that? Also, if you can share some detail on the coal cost this quarter versus the last quarter and the current prices and how the sourcing is done?
Anurag Mantri — Director and Group Chief Financial Officer
So employee cost was just some provision thing which we do under a certain thing, which was actually a certain adjustment on the provision. Your second question was on that one was employed for second quarter?
Dhaval Shah — , Annual Wealth Management — Analyst
Coal cost. For power.
Anurag Mantri — Director and Group Chief Financial Officer
Our — actually, we did a very flexible thing on the power side
Rea Sharma — Investor Relations
So coal costs, those overall, if we look at the linkages cost and the other costs on the spot prices was pretty much on a higher side. But strategically, how we planned it is that we also procure the power from the grid. So in overall, we just balance our mix in terms of the cost on the terms of the per unit cost for us, so which has come out come down as compared to the last quarter, if you look at
Dhaval Shah — , Annual Wealth Management — Analyst
Okay. But can you share the per unit cost?
Rea Sharma — Investor Relations
I think that would be difficult to share, but the per unit cost of the coal.
Dhaval Shah — , Annual Wealth Management — Analyst
Okay. And also
Anurag Mantri — Director and Group Chief Financial Officer
Yes.
Dhaval Shah — , Annual Wealth Management — Analyst
Yes, continue, sir.
Anurag Mantri — Director and Group Chief Financial Officer
Yes. See, because it’s — we keep doing the cost efficiency on a flexible way, depending on the fuel prices, where a mentioned that sometimes we actually put a pause and then burn it from the grid and when the pool was higher and then do the blending thing. So that’s how we manage the entire cost.
Dhaval Shah — , Annual Wealth Management — Analyst
Okay. And sir, if you share some lights on this Hygenco-India tie-up or JV, how that deal is structured? And is there any capex or money we need to invest into that?
Abhyuday Jindal — Managing Director
So I can maybe quickly answer this. There is no capex involved at all from our side in this. It is a total investment done by Hygenco and it’s a power purchase agreement. So it’s a very pilot scale project. We wanted to test this project out. And if it does well and create good amount of green hydrogen, then we will go for a larger scale setup.
Dhaval Shah — , Annual Wealth Management — Analyst
So there’s no capex or any investment from
Abhyuday Jindal — Managing Director
No capex from our side. no capex from our side.
Dhaval Shah — , Annual Wealth Management — Analyst
Yes. And sir, one more question, if you could answer. Sir, can you just throw some light on the capital allocation policy over a longer period of time? — because we will be done with the capex by end of this year, and we will be generating roughly good cash flows. So how it will be — are you looking for further capex or some payout or — Some color on that would be helpful.
Abhyuday Jindal — Managing Director
So definitely, I think Anurag, you can take this. But we would like to give some dividend next year, that is still on our cards. And Anurag, maybe you can answer this question.
Anurag Mantri — Director and Group Chief Financial Officer
Yes. So as we mentioned last time that the Board approved the new dividend policy where it was mentioned that obviously, approval target dividend up to 20% of the PAT on a progressive basis in the future because–but only after the merger, we will consider that.
And on capex side, on this thing, it’s always normal as you saw, we –even in the capex cycle, we continue to maintain the ratio very prudently. So I think that what — you should take it more as a debt because as a growth, we will always continue to look for the right opportunity, but obviously at the right ROE and in terms of the overall balancing our ratio.
Dhaval Shah — , Annual Wealth Management — Analyst
Sure, sure. And sir, if I have one more question, if I could ask. Sir, on JUSL, you said that the capex will be completed by end of this year. So is there any capex — whatever the capex capex for H2, is there any debt required or it would be fulfilled from an internal accrual only– for JUSL?
Anurag Mantri — Director and Group Chief Financial Officer
No, there would be an additional drawing in JUSL.
Dhaval Shah — , Annual Wealth Management — Analyst
Okay. Can you quantify approx?
Anurag Mantri — Director and Group Chief Financial Officer
It would be probably INR200 — INR300 crores.
Dhaval Shah — , Annual Wealth Management — Analyst
Okay. And capex for H2 in JUSL?
Anurag Mantri — Director and Group Chief Financial Officer
It’s ongoing. It’s all — as I told you that it’s what the number which will be drawing the loan accordingly now.
Dhaval Shah — , Annual Wealth Management — Analyst
Okay. Thank you, sir, that was helpful. Thank you.
Operator
The next question is from the line of Chetan Shah from Jeet Capital.
Chetan Shah — Jeet Capital. — Analyst
Mr. Chetan Shah, can you hear us?
Operator
Yes, sir. Kindly proceed.
Chetan Shah — Jeet Capital. — Analyst
Hello?
Operator
Yes, sir, we can hear you.
Chetan Shah — Jeet Capital. — Analyst
Yes. So I just wanted to note the JUSL debt number. Is it INR1955?
Shreya Sharma — Senior Manager
It’s INR1965.
Chetan Shah — Jeet Capital. — Analyst
INR1965. Okay, okay. Thanks a lot.
Operator
Thank you. The next question is from the line of Suraj Kokate from Axis Bank
Suraj Kokate — Axis Bank — Analyst
Hi, sir. I just have a couple bit of questions. The first one is on finance cost of JSL. So I see that it has increased by around 19% this quarter on sequential basis. If you could provide some details on this? And second one, is that some of the recent media articles suggested that government is planning to improve anti-dumping duty on stainless steel. In this –China. So — like are you aware of these events or — and how likely — how likely is the possibility of implementation of this? And if this is implemented, what could be the impact on volumes?
Abhyuday Jindal — Managing Director
So let me answer first on the interest cost. This quarter, there was one-off items of around INR8 crores and the JSM cost, which was — one was on the interest on the income tax–advance tax, which was because last year, obviously, as we progressed the advanced tax, at the end of the year, the EBITDA increased in initial advance tax more than the short fall. So that was on this thing, as well as there was one interest payment on the settlement with the NESCO, which is the power utility company. So that was the one which was there, which is coming into interest cost.
And some of the other costs, which we do actually as part of the working capital management, actually, net income from the actors and discounting is going into the other income. So it’s not getting net of JSL. That’s how it’s been reflected. The second question was on this entering. I don’t know what are you referring is? Are you referring to some of the court case which happened in Gujarat? No On pipe and two coming from China. That is what your question was.
Suraj Kokate — Axis Bank — Analyst
Right, right, yes.
Abhyuday Jindal — Managing Director
So that is — that does happen, see, because we are not very — we don’t — not very big into pipe into ourselves. We are a supplier to them. So this is a welcome move, and it’s a good positive sign for us. Because that would help us further push our volumes, and this is exactly what we have been telling the government, that most people have become traders. They have started shutting their pipe and tube making facilities here and started trading material from China. So that would definitely be a very positive and welcome move.
Suraj Kokate — Axis Bank — Analyst
Okay. That’s it from my side, sir. Thank you.
Operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company.
Saket Kapoor — Kapoor & Co. — Analyst
Yes. Thank you for the opportunity. If you could provide us, historically, what was our domestic and export mix, as we have seen that we are currently more 95% towards the domestic market to the two, three years average, if you could provide?
Abhyuday Jindal — Managing Director
See, Saket, as we mentioned with our agile model, we keep fluctuating in our export and our segment depending on the margins and the volume that we can get. So typically, if you see that quarter four of last year, we reached to almost as high as the export volume of 30%. On a full year basis, FY ’22, export volume at 21% — and currently, this quarter, it has come down to 5%. So it’s quite fluctuating. Last quarter, it was still for Q1 was 17%. H1 overall, we still maintain 12% now. I can keep giving you that many numbers, but I think overall, the blended volumes and the margins which we target.
Saket Kapoor — Kapoor & Co. — Analyst
So sir, just wanted to understand the customer profile there in the export market. But this kind of shifting towards the domestic market, how are the customers in the export market then said — and what actually happens to those customers who are buyers of our products earlier if we take these long-term averages also?
Abhyuday Jindal — Managing Director
See our customers are still with us. Despite all these challenges and disruption, there has been a recession and a slowdown in their market itself. And like I said, we have long-standing approvals, long-standing supplies, quality supply that we have given. So it’s only a short-term aberration that is there, as soon as export duty or the European market picks up again, then our volumes and our supplies to these customers will again start.
Saket Kapoor — Kapoor & Co. — Analyst
And two small points here. First, sir, what are the benefit in terms of this acquisition of JUSL? And how is it going to be funded? And it is going to be consummated in FY ’24? The ones which we have taken a–
Abhyuday Jindal — Managing Director
— as we mentioned that it will — we are targeting to close in FY ’23 itself. And will make us a completely integrated stainless steel play and also eliminate all the related party transaction. So with JUSL, just to give you the numbers, FY ’20 to almost INR1,700 crores subactions were there for the related party because it was doing a job — so all these will help us to improve the governance and eliminate all these third-party transactions and which would have increased further with our increased capacity. So it will make — make us a completely integrated standard– will share with all facilities into the listed entities. That’s how I think–
Saket Kapoor — Kapoor & Co. — Analyst
And is there going to be a cash transaction completed this INR958 crore aggregate value that we have put?
Abhyuday Jindal — Managing Director
Yes. Yes, it will be a cash on.
Saket Kapoor — Kapoor & Co. — Analyst
And who is the ultimate beneficiary in the transition for JUSL. Who is owning– the same?
Abhyuday Jindal — Managing Director
It’s OPS TPL– is the company, which will be — which is owning this–the company.
Saket Kapoor — Kapoor & Co. — Analyst
We also find that there are–
Operator
Sorry to interrupt–
Saket Kapoor — Kapoor & Co. — Analyst
Just a small point to base
Operator
Sir, this was the last question that you could ask.
Saket Kapoor — Kapoor & Co. — Analyst
May I continue, sir?
Abhyuday Jindal — Managing Director
Yes.
Operator
No, sir. That was the last question. Thank you. We would now like to hand the conference over to the management for closing comments.
Anurag Mantri — Director and Group Chief Financial Officer
Okay. Let me thank everyone for attending this call. Sorry, Abhyuday is actually just on the car. So I’m taking this — we have been focusing on our agile business strategy to mitigate the external challenges. I’m confident that our strategic steps will augment the future performance of the company. I hope we have been able to answer all your questions satisfactorily.
Should you need any clarity further clarification or like to know more about developments, please feel free to contact our Investor Relations team. Thank you once again for taking the time to join us on this call. Have a great time ahead.
Operator
[Operator Closing Remarks]