Jindal Steel & Power Limited (NSE: JINDALSTEL) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Vishal Chandak — Head, Investor Relations
Mayank Gupta — Chief Financial Officer
Pankaj Malhan — Executive Director, Angul
Sabyasachi Bandyopadhyay — Executive Director
Sunil Aggarwal — Former Chief Financial Officer
Analysts:
Amit Dixit — Analyst
Amit Murarka — Analyst
Sumangal Nevatia — Analyst
Indrajit Agarwal — Analyst
Rahul Gupta — Analyst
Parthiv Jhonsa — Analyst
Pallav Agarwal — Analyst
Ashish Kejriwal — Analyst
Rajesh Majumdar — Analyst
Satyadeep Jain — Analyst
Somaiah V — Analyst
Ritesh Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Jindal Steel & Power Limited Q3 and FY ’25 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions].
I now hand the conference over to Mr. Amit Dixit from ICICI Securities. Thank you, and over to you, Mr. Amit.
Amit Dixit — Analyst
Yeah. Thank you, Manav. Good evening, everyone. At the outset, I would like to thank the management for giving us an opportunity to host the call and congratulate them for a good set of numbers in a very challenging quarter.
Without much ado, I would hand the call over to Vishal to introduce the management and begin the proceedings. Over to you, Vishal.
Vishal Chandak — Head, Investor Relations
Thank you very much, Amit. Good evening, ladies and gentlemen, and thank you very much for joining us for the Q3 FY ’25 investors briefing of JSP.
I have with us our senior members from the management, Mr. Sabyasachi Bandyopadhyay, our Whole-time Director; Mr. Pankaj Malhan, CEO of Angul Facilities; Mr. Sunil Kumar, our CFO. And I would also like to introduce Mr. Mayank Gupta, our income [Phonetic] CFO designate. He has been — he has been appointed as CFO today. So, ladies and gentlemen, please join me in congratulating Mayank sir.
Just to give you a quick background, Mayank sir has an extensive experience at GE. And over the last several years, he has been working with our technology startups under the entrepreneurial environment. So we are really very excited to have him on-board and we look forward to his leadership. And at the same time, I would also like to extend my heartful gratitude and thanks to Sunil sir, for his continuous guidance and support. He will continue to be working with us in, in a different capacity, but we will surely have his guidance continue going forward.
So with this, I will hand over to Sunil sir, for his opening remarks. Sorry, I’ll hand over to Mayank sir for his opening remarks. My apologies.
Mayank Gupta — Chief Financial Officer
Hi, good evening, everyone. I am super excited to join JSP. And I’m still learning. I will do my best today to represent the company. In case I’m not able to answer any questions, we’ll take a follow-up. And Vishal, our IR head will follow it up for queries.
So I welcome you all to the Q3 FY ’25 performance briefing of JSP. Total steel prices in the third quarter of FY ’25 continued to be subdued in the key regions, including China, where steel prices dropped below $500 [Phonetic] tons — with 500 per tons. Imports in India, continue to put pressure on domestic prices, which is reflected in declining HRC prices. However, TMT prices on the contrary showed resilience as construction seasons was under full swing.
Coming to the domestic steel demand supply scenario. India steel production for the quarter was 38.4 million tons, which is up 6% quarter-over-quarter. Consumption grew at slower pace at 4% sequentially to 38.7 million tons. Exports rebound with a strong growth of 44% quarter-over-quarter to 1.8 million tons, while imports saw a drop of 13% quarter-over-quarter to 2.8 million tons, as import order bookings slowed after government initiated the investigation into steel imports originating out of Vietnam. The government has also started investigations on the merit of imposing safeguard duty on steel imports.
As mentioned in the opening remarks, despite the headwinds that the industry continues to witness, your company, I’m happy to say that your company reported a strong performance, reflecting adaptability in production in catering to the customers’ need for diversified products, while also maintaining cost leadership in the industry. We continue to focus in value-add — we continue to focus on value-add sales, which increased 6% sequentially. JSP continues to focus on improving share of value-add products.
In terms of our operating highlights, production for the quarter grew by 3% year-on-year to 1.99 million tons. Sales in the quarter also improved 5% Y-o-Y basis to 1.90 million tons, led by surge in export. Net revenue for the quarter stood at INR11,771 crores, up 5% on a Q-o-Q basis, largely due to uptick in the sales volume. On the cost front, coking coal prices were down $1.39 per ton during the last quarter, in line with the guidance given in our last quarter briefing, which is partly offset by higher iron ore prices during the quarter.
As we look ahead for Q4, we expect a reduction of around $10 per ton in coking coal prices. Our adjusted EBITDA on a consolidated basis for the third quarter remained flattish at INR2,133 crores. Adjusted EBITDA per ton stood at INR11,209 per ton, which was down by 2% on a sequential basis on higher iron ore costs. Profit after tax increased 6% on a quarter-over-quarter basis to INR909 crores on the back of forex gain.
Our consolidated net debt at the end of the quarter is INR13,551 crores. The higher net debt is reflective of our projects, closing to the commissioning stage and related payouts related to the expansion at our Angul facility. Importantly, our net debt to EBITDA is at 1.4x. Our capex in the quarter stood at INR2,857 crores. With this, the cumulative capex spent under current expansion program is now INR23,612 crores.
As we enter the final phase of current round of expansion, we are really excited to announce that we also embarking on the next round of capex where we will focus on cost efficiency, sustainability, increasing share of value-added addition products and improving supply chain, which will finally result in unlocking higher shareholder value.
With this, I will conclude and hand over for question-and-answer session. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions]. We have our first question from the line of Amit Murarka from Axis Capital. Please go ahead.
Amit Murarka
Hi. Yeah, hi, good morning. I’m sorry, good evening. Thanks for the opportunity. Just on volumes, I think the first question I wanted to ask is, when do we actually see volumes kind of scaling up to cross 2 million tons quarterly run rate and go higher, particularly given the commissioning that we are planning on the capacities?
Mayank Gupta
You know, so, let me just check it, this is Mayan Gupta. So look, you know, there are two ways to increasing volumes. One, we — we are increasing our capacity — we are enhancing our productivity in our current facilities. And as you know, our large Angul project, as, as we shared in the opening remarks, we are moving towards commissioning and we expect in FY ’26, quarter-over-quarter, slowly and slowly volumes will start to increase and hopefully we will realize a full potential towards end of financial ’26.
Amit Murarka
Towards end of ’26?
Mayank Gupta
Yeah, end of financial year 2026, yes, and partly early FY ’27.
Amit Murarka
Okay. So you mean to say that the — the new blast furnace that comes up will get fully ramped-up by end of ’26, right?
Mayank Gupta
Yeah. So look, there are multiple assets of our steel plant. We expect the blast furnace to have commissioning done within — within this quarter is what we still expect. And normally once commissioning is done, it just takes a few weeks to have hot metal coming out. So then there are integrated parts. And we expect within this financial year and on an overall basis, we expect to move towards a very good utilization of that capacity.
Vishal Chandak
I would also request, Pankaj sir, who is the CEO of the Angul facilities to add to this.
Pankaj Malhan
If I’ve understood your question, your question is when we’re going to go past 2 million tons per quarter run rate. Look, I’m very happy to share with everybody that we are in the last legs of starting the commissioning of our blast furnace in Angul. And we are very hopeful this quarter that our commissioning will come up. And given your question that 2 million ton run rate, we are very hopeful that quarter one FY ’26, we should be going past 2 million tons in the run rate.
Amit Murarka
Okay, sure. And also I just wanted to check like why was there a drop in realization Q-o-Q in the third quarter? I believe the rebar was up roughly INR2,000 per ton on an average basis. So could you just explain that also?
Pankaj Malhan
So that’s a wonderful question. If you really look, you know, Angul plant has also started moving into the flat side. We have already started our hot strip mill and also our coal rolling complex. So, if you look into the price movement in the previous quarters, flats had seen some kind of dip coming up. While we did recover product portfolio, but flat seen a lot of corrections to the level of 9% to 10%, that was one of the reasons why there is a slight kink in terms of the blended NSRs, which we’re looking at.
Amit Murarka
So what is the split between flat and long now in, in third quarter?
Mayank Gupta
So — so I will just explain, in the third quarter, long is around 59%, and flat is 41%. And last quarter it was 52% and flat was 48%. And — and NSR, if you see on the ASP basis, so it is basically up by 1%, that is from INR60,150, no, it is INR60,931 per ton.
Amit Murarka
No. And what are the semis? Are you clubbing semis into longs? There are some semis as well, right?
Mayank Gupta
So there is some small portion of semis also, but not to a large extent, but the small portion is of the semi as well.
Vishal Chandak
Amit, if you remember, you know, there is always a system generated semis, which we cannot avoid, and it has always clubbed as part of our long product portfolio.
Amit Murarka
Okay. Got it. Sure, I’ll come back in the queue. Thank you.
Operator
Thank you. [Operator Instructions]. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Sumangal Nevatia
Yeah. Good evening. Thank you for the chance. My first question is on the capex on Slide 27. Now we are seeing a new — I mean, a lot of additions to the tune of almost INR15,000 crores. That’s almost 50% addition to our stated capex of around INR30,000 crores without any addition of capacity. So, I just want to know what are the heads where there is a cost overrun and all these sustain and contingency we were of the understanding that it’s already included in our earlier announcement. So, it’s slightly coming as a surprise. So, if you can just elaborate on this point, please.
Mayank Gupta
Yeah. So, this is Mayank Gupta. So, you know look, I think this is first answer is, this is a three-year outlook for next two years. The number we have given was for the current ongoing budget, which was given a few years ago. On that, around INR7,388 crores is remaining. And as we are looking for next three years, we want to invest in, you know enhancing the overall capability of the company. So there are enhancement of projects.
As you see, we are planning to invest more in value-added engineering products and the purpose is even it may not show a direct impact on enhancing capacity, but it will help us drive better EBITDA per ton. Similarly, indicated supply chain projects help us control logistics, make it, you know smooth and have efficiency in our cost. So those are the two big helps. Rest is sustaining and contingency. There is no surprise. And you know largely we are on track of what we have said.
Sumangal Nevatia
Okay. But if, if you look at Slide number 6, there is no addition of any downstream units. So any tangible unit which you can share as to any different product or different downstream rolling unit, which we are putting, which will kind of help us understand this better?
Mayank Gupta
So, to your point, so look, as an example, we have our CRM project. So now we are adding a color coated line as well as a galvanizing line. Additionally, another example of a product — project is a Q&T facility. All of them adds to building up value-added engineering products, which enhances our price in NSR.
Sumangal Nevatia
Okay. And can you give us some capacity what color coating line and galvanizing line we are adding?
Pankaj Malhan
This is Pankaj. You know, if I’ll add to what Mayank just said, so we are starting with our mill two in co-loading complex, which is around 400,000 tons. We are in the vicinity of starting in a very, very short-term, which could be in couple of our basis now.
Second, what Mayank added is the galvanizing and the color coating line. So we are about to start 200,000 tons of galvanizing line as of now and the color coating line would be superseding this and would be downstream of fit would be close to 200,000 tons.
Mayank Gupta
So look, if there are more questions, I would suggest please — our IR team can help you connect offline.
Sumangal Nevatia
Yeah. Just one follow-up. On overall, we do share a quarter-wise timeline. This time the presentation doesn’t include that. So just want to know where are we with respect to slurry pipeline and BOF 2 and Blast Furnace 2? Are we on track for the fourth quarter commissioning as we had kind of shared earlier?
Vishal Chandak
Pankaj sir, I request you to take this.
Pankaj Malhan
Sorry, I lost your voice, please.
Sumangal Nevatia
Yeah. Can I repeat? Can you hear me?
Pankaj Malhan
Yeah, yeah. Very well.
Sumangal Nevatia
So I just wanted to know we’ve not shared the regular quarter-wise update in the presentation for different projects. So I just wanted to know where are we with respect to slurry pipeline, BOF 2 and Blast Furnace 2, which was earlier kind of expected to come in fourth quarter, which is this quarter FY ’25?
Pankaj Malhan
So I’d just not mention that we are very happy to share the timelines that we are about to commence the commissioning of our blast furnace. Most of the project continues to be on the timelines, which been guided before. And that’s the reason potentially we thought of holding to the dates that been promised before.
Sumangal Nevatia
Okay. Got it. Thank you and all the best.
Operator
Thank you. [Operator Instructions]. We have our next question from the line of Indrajit Agarwal from CLSA. Please go ahead.
Indrajit Agarwal
Hi, thank you for the opportunity. My question again is on the capex. So earlier you had guided for a mid-teen IRR of the INR31,000 crore capex. Now that we have another INR15,000 crore capex here. So would we stick to that mid-teen IRR on a INR46,000 crore capex total? Or does that number change anywhere?
Mayank Gupta
Yeah. So look, I would like to — this is Mayan Gupta. I would like to reiterate. This is over next three years, okay. And this is not, you know, so the balance guide forward from the Angul INR31,000 crores is on the existing list of capex is INR7,388 crores. Rest, as we have gone through in the details, this is going into efficiency and focusing more on value-added engineering products.
Indrajit Agarwal
No, sir, I understand that. So at INR31,000 crore and at 15.9 million ton capacity, we could have arrived at, say, profitability, the implied profitability or the increase in profitability or EBITDA through this capex. Now that the capacity — overall upstream capacity is not rising, would that INR15,000 crore additional means that, that EBITDA per ton will be that much more higher to generate mid-teen IRR?
Mayank Gupta
Yes. So each project, we have shared the capital allocation strategy a year ago to all the stakeholders and we maintain high-teens ROCE for every project evaluation. So all of these projects have gone through that evaluation or will go through evaluation, because this is a futuristic outlook. And we will make sure there is a — there is already a very, very strong capital allocation or monitoring within the company. So each of them will generate enough ROCE as we have committed already to the stakeholders.
Indrajit Agarwal
So when you calculate that ROCE, is there any kind of spread improvement that you build in, in your assumptions? Or you are taking current spot spreads?
Mayank Gupta
Yeah. No. So, as I said, it is in high-teens. So I would suggest if you need any specific details, please connect offline with Vishal.
Indrajit Agarwal
Okay. My second question is on realizations. Can you just explain it again how much was NSR increase Q-o-Q? And how do we end up having a decline? I understand the mix part, but on flats and longs, each how much was your NSR movement quarter-over-quarter?
Vishal Chandak
So as I explained earlier also, our ASR for the — this quarter, it is INR60,931, which is up by 1% over the last sequential quarter basis. Last quarter, it was INR60,150 per ton.
Indrajit Agarwal
All right. Thank you. I’ll take that offline as well.
Vishal Chandak
Yes.
Operator
Thank you. We have our next question from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Rahul Gupta
Hi. Thank you for taking my question. And I’m very sorry to harping on this capex question again. Just to understand this better, so this INR15,000 crore of additional capex that would happen over the next three years, how do we look at the IRR of this INR15,000 crores? I understand it would be for sustenance and cost savings, et cetera. But what is the internal maths you would have done in terms of benefits both in revenue side and opex side? Thank you.
Vishal Chandak
Thank you so much. I thought we have answered this question. You know, I will refer still back to what we just answered. There is no incremental information we want to give. We are targeting high-teens ROCE for each of these projects. And for a scale of our company, INR15,000 crore capex in three years is not like a significantly material number. We think at the scale we are operating, all our focus is to drive profitability and ROCE up.
Rahul Gupta
Okay. Thank you so much.
Operator
Thank you. We have our next question from the line of Parthiv Jhonsa from Anand Rathi. Please go ahead.
Parthiv Jhonsa
Yeah. Thank you for the opportunity and congratulations, sir, for the new role. Sir, my question pertains to the debt. I believe this quarter the debt has actually gone up significantly compared to last quarter. What will be your expected exit run rate for the current year as far as the debt is concerned?
Mayank Gupta
Yeah. So look, we have maintained — we will be under 1.5x net debt to EBITDA across the cycles. This quarter, as we have shared, we are very, very excited as the commissioning is getting closer. So we have touched 1.40, but we are very confident to maintain — we will maintain 1.5x net-debt to EBITDA for the cycle. So that will be the thing what we will do. And on an absolute number, the net debt actually has gone up from INR12,464 crores to INR13,551 crores, which is roughly almost INR1,100 crores. With from a context of capex we are investing is still we think is in the reasonable number what we have already given out for you.
Parthiv Jhonsa
Okay. Thank you, sir. Sir, my second question pertains to the coal mine. So what is the quantum of coal what you have done in this quarter? And are we still on track for the Utkal B1, which was in, I think expected in quarter four to come on stream, right? So, are we still on track?
Pankaj Malhan
Let me take this question. Utkal B1 continues to be on track. We have secured the approvals to start the mines. And we are in the process of starting the mines and very hopeful of delivering the mines by end of this quarter.
Parthiv Jhonsa
And so what will be the quantum of material excavated during the quarter?
Pankaj Malhan
So difficult to say right now, but this mine is roughly around 5.5 million tons per annum.
Parthiv Jhonsa
No, I’m asking for Utkal C, sir?
Pankaj Malhan
So, it would be just a startup. We are expecting close to 100,000 not more than this.
Parthiv Jhonsa
Okay. Because I believe somewhere you had mentioned in Q2 that you had done about 1.3 million ton, if I’m not mistaken.
Vishal Chandak
Parthiv, just quickly will clarify on the coal produced out of our captive coal mines in this quarter. Just give us a second. Yeah. So basically, we will — we have the permission of 3.37 million from this mine and we’ll achieve that target in the Q4.
Parthiv Jhonsa
Okay. Okay. Thank you so much, sir.
Operator
Thank you. We have our next question from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Pallav Agarwal
Yeah. Good evening, everyone. In your opening remarks, you mentioned that the iron ore cost had gone up this quarter. So, is it possible to quantify what was the increase and what is the expectation for 4Q, given that NMDC has taken some price cuts, so do we expect some benefits in the fourth quarter?
Mayank Gupta
So last quarter, there — there was total increase of around INR96 per ton. And coming for the next quarter, we are expecting that INR100 per ton to INR200 per ton reduction in the iron ore price over the quarter.
Pallav Agarwal
So last quarter there was an increase of INR96 per ton and next quarter or 4Q, we’re expecting a INR100 to INR200 reduction in the cost.
Mayank Gupta
Yes, yes. You’re right.
Pallav Agarwal
Okay. Okay. And, and how are like, you know spot — have steel prices stabilized at broadly the third quarter average levels, do we expect some uptick happening or broadly flat realization in the next quarter?
Pankaj Malhan
I think the way the infrastructure spending and government first has come back on the track. We are very hopeful of the prices going better than what we have seen. But yes, the Chinese import is something that we are very mindful. And you’ve, you’ve seen the impact of the Chinese imports coming to the country and the impact that had on the prices. But the way our government has been sounding very positive about the Indian steel market, we are hopeful of prices being some up — upward takeover from here.
Pallav Agarwal
Sure, sir. Perfect. Thank you, sir.
Operator
Thank you. We have our next question from the line of Ashish — Ashish Kejriwal from Nuvama Wealth Management. Please go ahead.
Ashish Kejriwal
Yeah. Hi, good evening, everyone. Sir, quickly two questions. One on the results, we mentioned that we have seen 1% increase in realization as well as we have a benefit of lower coking coal costs also, whereas iron ore price has increased just by INR96 per ton or INR100 per ton. Then why our EBITDA per ton is still lower quarter-on-quarter?
Mayank Gupta
So other than add on price, unfortunately, in our Tensa mines, our — as per mining plan, where our production from the Tensa mines was lesser during the quarter, which has resulted in increased our cost also.
Ashish Kejriwal
But sir, will that be meaningful, because you know, or you can, if you can say, what’s the overall iron ore consumption cost increase that will include your Tensa mines also in that?
Mayank Gupta
So basically this will recoup in our Q4. We are restarting our production from the Tensa mine and we will stabilize the cost.
Ashish Kejriwal
So, that’s okay. I was looking at what happened in the first — third quarter.
Vishal Chandak
Ashish, just to add to it, this is as per the mining plan, the production has been lower in this quarter. So, in the next quarter, the production will ramp-up again and there will not be such issues.
Ashish Kejriwal
Okay. I will take offline then. Second question is, we have been underutilizing our pellet plant for more than one-and-a-half years. So — and because of which maybe we are unable to fully utilize our steel plant also at Angul. So I was just trying to get a sense of where we are in that pellet plant utilization stage, as well as what gives us comfort that in our blast furnace as well as basic oxygen furnace will be commissioned by FY — by March ’25, because before that we have to — we have to increase — we have to do the gas to our blast furnace light up.
So when can we — because these are the things which one should look at, otherwise, you know every time we see a delay in the project, which is not taken appropriate by the investors also. So, if you can help us giving that confidence, then it will be great for them. Thank you.
Pankaj Malhan
I think it’s a very long question, but happy to share with you the utilization rates of the Angul pellet plant is roughly around 90% as of now. So we are operating our pellet plant at 90%. And Angul pellet plant is good enough to feed both existing DRI as well as the blast furnace.
Ashish Kejriwal
Okay. So that means we are operating at maximum capacity, because what we understood was in the second quarter or maybe November, December, we were operating at 40% utilization. Is that right?
Pankaj Malhan
So this has started going upwards. There were some technology issues where we have fixed them out. And right now we are able to self-sustain Angul on that.
Ashish Kejriwal
Okay. And sir, what about blast furnace and basic oxygen furnace?
Pankaj Malhan
So this is what we just mentioned, happy to share that we have two commissioning will commence in this quarter itself.
Ashish Kejriwal
Okay. And sir, lastly on second one, when we are seeing integrated supply chain project of INR4,500 crores enhancements of projects, all these things. So in last, last increase in the capex also from ’24 to ’31, we have included a part of the supply chain project, which means that railway rigs and other things. So what exactly we are having in this integrated supply chain budget, because we are increasing our capex by INR16,000, and I’m not sure how much incremental earnings or EBITDA we can generate on the same. So more elaborate answer on this will be really helpful for us.
Mayank Gupta
So look, yeah. So look, you know, steel industry is always, you know, we are always evolving, and we always looking for future enhancement as we said, towards profitability. So with that context, you know, this specific supply chain is for driving, you know even better port logistics, enhancing our capacity in rail logistics as well. So, it is increasing of rates. It is building core capabilities for a better connectivity.
Ashish Kejriwal
But sir, these things were already there in INR31,000 crores. So, what extra we are doing here that we are unable to get a sense on?
Mayank Gupta
Yeah. No. So there is also a transmission line. There is — that will help us drive towards better —
Vishal Chandak
Sir, sir, if I may —
Mayank Gupta
Yeah, please go, Vishal.
Vishal Chandak
So Ashish, let me add over here. If you remember in our INR31,000 crore capex, we did not include the port capex, okay. Once, only very recently, we have started investing in our port project, which is a 41 — 51-49 JV with the group company, okay. So that part of the capex is also there. In addition to that, we have increased the number of rigs, looking at our long term vision of 25 million to 27 million tons.
In addition, there are several other logistics related projects like coal pipe conveyor, which was not part of our earlier capex and transmission lines as, as well. So overall, if you look, with the kind of new capex that we are doing, the ROCE would really move up, and we would be among the best steel producers globally. That’s the — that’s the vision with which we are working.
Ashish Kejriwal
So just to conclude that, which means that even if we increase our capacity from 12 million to 24 million, 25 million in Angul later on, we don’t have to spend much incremental on the supply chain projects or –?
Vishal Chandak
So Ashish, as, as Mayank sir mentioned, steel is an industry which is continuously evolving. We don’t know what kind of other logistics facilities could be made available to further optimize our supply chain capabilities and reduce our cost. As we foresee, yes, we are trying to work on what is the best available solutions in the market. But if things change rapidly in future, we might look at other options. So we would want to keep our, our options open and that’s what we are working on.
Ashish Kejriwal
Understood. Thank you and all the best.
Operator
Thank you. We have our next question from the line of Rajesh Majumdar from B&K Securities. Please go ahead.
Rajesh Majumdar
Yeah. Good evening, sir, and thanks for the opportunity. So my first question was, is there any delay in the slurry pipeline commissioning? And when can we expect the cost savings in the slurry pipeline to start flowing in for us, a realistic date for that?
Pankaj Malhan
Well, slurry pipeline continues to go strong in terms of the erection activities, and we are very hopeful of delivering the timeline stated earlier.
Rajesh Majumdar
Which is, what mid-2026, mid FY ’26, or somewhere around there?
Pankaj Malhan
No. We, we already promised a quarter one of FY — FY ’26, we should be able to deliver that.
Rajesh Majumdar
Okay. Sir, my second question, yeah. Yeah, Vishal.
Vishal Chandak
Just a minute. Yeah. Okay. Yeah, it’s — it’s the right number, sir. Please continue.
Rajesh Majumdar
Yeah. So my second question was on the, the market opportunity for steel structures for transmission towers. I mean, what kind of a capacity do we have in place for this? Because as I understand that there is a huge shortage of demand in this supply, in this particular category, the number of approved suppliers to fulfill this requirement of expansion for Power Grid or any other player is very, very less. So are we doing any capex on this front, and we are trying to increase the capacity of this particular area?
Sabyasachi Bandyopadhyay
Hi, good evening. Thanks for the question. I think from the perspective of transmission line towers, we are — we have quite enough capacity to cater to the market, that our actual profile mill, medium light structure, we have a capacity of 0.8 million tons per annum. And based on what we see in the market, we have enough to get it to the market at this point of time. Obviously, there are other plays in the market, but we are equally poised and if not better.
Rajesh Majumdar
Okay. Thank you, sir. Thank you.
Mayank Gupta
So just to add, I think this is a very exciting segment, which there is a — there’s a strong tailwind. We are collaborating with the large customers. And some of our key mills, including our SPM and RUBMs, you know we are trying to allocate a good percentage of its capacity to address this strong segment.
Rajesh Majumdar
Thank you.
Operator
Thank you. We have our next question from the line of Indrajit Agarwal from CLSA. Please go ahead.
Indrajit Agarwal
Hi, sir. Thanks for the opportunity, again. I just wanted to understand the process for the blast furnace commissioning. So once you have it commissioned, I understand technically it will take some more time to get it stabilized, get the ramp-up up. But on the customer or sales side, what are the steps do you need to first tie-up the sales, the customers need to approve the facility, get it certified, et cetera? So the reason I’m asking is, when can we see it actually contributing to sales volume?
Pankaj Malhan
Wonderful question. The day we start getting hot metal, it’s getting added to the customer delivery straight away.
Indrajit Agarwal
So it does not need any kind of certification or approval. Okay. All right. Thank you.
Operator
Thank you. We have our next question from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Satyadeep Jain
Hi, thank you. Just — I know many questions have been asked on this capex. Just wanted to drill down further on this. First, on the enhancement of projects, I believe I heard a color coated line galvanizing, what is — can you quantify how much is the expansion for color coated and galvanizing? And QNT was anyway a part of when the thin slab cast rolling TSCR was changed, QNT was anyway put in place. I’m not able to understand is why is QNT a new project in this? And what is the color coated in galvanizing expansion you’re looking at?
Pankaj Malhan
Okay. Let me mention about QNT first. When we talk about QNT, we’re adding 250,000 tons of value addition in the existing assets. So there are two new furnaces which are getting added, which are at a very high level of commissioning as of now. So that will enhance our — the value addition in the plate portfolio itself, so which means our value addition in the existing plate portfolio will go up by around, I would say another 10% level.
Second, if I was to mention in terms of color coating and the galvanizing lines, which you asked for, our installed capacities of galvanizing would be 600,000 tons and color coating capacity would be around 500,000 tons in Angul.
Satyadeep Jain
But in QNT, this was already a part of INR31,000 crore capacity.
Pankaj Malhan
Sorry, there’s noise in the network.
Mayank Gupta
Sorry, Pankaj, if I may just add a little bit onto the QNT side of things. In addition to what is being put in Angul of 250,000 tons, we are putting an equal capacity in Raigarh as well. And that will initially be furnace normalized and quenched material and subsequently fully furnace normalized and quenched and tempered facility. So equal amount is going into and in the end of the whole process, JSP as an organization will have 0.75 million tons of total furnace normalizing and QNT capacity established.
Satyadeep Jain
Okay. So you’re saying basically initially it was only Angul, now you’re adding in Raigarh?
Mayank Gupta
Yeah. Initially — initially we had conceptualized for Angul. There was a plan in place for Raigarh, but keeping at the view of the strong market demand and growth in that segment, both domestic and exports, we have decided to put in, in Raigarh as well.
Satyadeep Jain
Okay. On the supply chain, one, is it possible to quantify how many rigs are you looking at, when you mentioned this figure, how many rigs, what is that you’re looking to do at both? In transmission line, I didn’t understand this is transmission line from the Monnet Ispat project to the plant? Where is this transmission line?
Pankaj Malhan
You got it very right. We are talking about two transmissions. One definitely is for iron ore, the slurry pipeline project that we discussed. Our second definitely is the pipe conveyor project that we are connecting our mines, coal mines to our works, be it power plant as well as steelworks.
Second you mentioned about the rakes. The company is looking for a good self sufficiency in terms of the rake movements within their own control. Our plan is to add close to 67 rigs into our kitty going forward and keep adding as and when the need comes up, that’s what our plan is.
Satyadeep Jain
Okay. So you mentioned some — just wanted to clarify the, the slurry pipe, there is another slurry pipeline in this enhancement project pipeline?
Pankaj Malhan
That’s a coal pipeline, I mentioned.
Mayank Gupta
Yeah, yeah. So look, guys, I — sorry, look, you know, we have changed the format of capex this time. And look, we had the lowest capex per ton in the industry and we have you know built it the fastest, we started it in 2022 and we are in ’25, and we are saying we are getting ready for commissioning. So this is the level of capex we are expecting. Overall, we are within the ranges of what we have said, all the — and all this outlook we have given is to ensure that you have a visibility of how the company is thinking. This is an outlook over next three years, each project with a high-teen ROEs.
And to just reemphasize, all this is being done while maintaining the lowest leverage in the industry, you know, and ensuring it is below 1.5 net-debt to EBITDA, which is — which is almost the best balance sheet in the — at least in the entire peer group. The last thing I would add in this, this includes an element of having opportunistic capex as well, that if we see even any other opportunity to optimize the cost or driving value engineering products, we want to, you know, avail that opportunity and immediately move towards higher ROCE and higher value engineering products. So, of course, overall answer, but we want to share with you how is the thinking.
Satyadeep Jain
Okay. Thank you and wish you all the best.
Sabyasachi Bandyopadhyay
And I would like to add one more point to that. The transmission line when we are talking about, there is also the transmission line for connecting to the renewable energy portion for the central grid connectivity in the Raigarh belt.
Operator
Thank you. We have our next question from the line of Somaiah V from Avendus Spark. Please go ahead.
Somaiah V
Hello. Hello. Am I audible?
Operator
Yes, sir. Please go ahead with your questions.
Somaiah V
So my first question is on the blast furnace utilization. So where do we see by end of FY ’26, the utilization level on this the expanded blast furnace capacity?
Vishal Chandak
Pankaj sir, if you could kindly take this question.
Pankaj Malhan
Sorry, your question is, where do we see our blast furnace number two capacity utilization in FY ’26, correct?
Somaiah V
Yeah, yeah. By end of FY ’26. If you can just give up the ramp-up timeline?
Pankaj Malhan
While I mentioned about the start of the commissioning, we are very hopeful of reaching to the capacity utilization of 70% to 75%.
Somaiah V
By March ’26, is that right understanding?
Pankaj Malhan
The exit of their FY ’26 would be at a full ramp-up. The utilization what I mentioned is for the entire year and the exit should be at the full rate.
Somaiah V
Okay. Got it, sir. Second, on the CRM complex, the timeline remains the same. Is it Q1 FY ’26?
Pankaj Malhan
Yes, we holding on to the timelines as of now. The project is going on a good swing. So like I mentioned, the mill 2, which is 400,000 tons, we are expecting to start anytime.
Somaiah V
Got it, sir. Sir, the HSM utilization, if you could just give that number for Q3, and how do you see that for FY ’26?
Pankaj Malhan
See, first of all, we just mentioned about the market dynamics, how the market dynamics played in quarter three. The mix between flats to longs what was shared to you. We did see the markets correcting for NSR of HRC. So we also tweaked our product portfolio between longs and flats. So the utilization was impacted because of the market dynamics. Of course, it was limited because of the steel availability in the plant too. So going forward, as and when the, the market looks favorable, HRC utilization would be continue to go upwards.
Somaiah V
Okay. Sir, one last question on this capex number that you said this INR23,000 crores. So is this the accrued number on a — or is it a cash basis that you’re referring to when it comes to INR23,000 crores?
Mayank Gupta
Look, this is a three-year outlook, you know. So as we get closer to the year, we will again form it up, but this is kind of a three-year outlook.
Somaiah V
Sorry, sir. My — sir, my question is on, this so far what we have spent, you have mentioned the number. So I just want to understand is this accrued, or is this a cash flow number that you have actually spent this, or, or if something is still remaining to be spent as, as payables or something that still remains?
Mayank Gupta
No, no. So —
Somaiah V
Just want to understand —
Mayank Gupta
On a cash flow basis — this is on a cash flow basis. The only thing it doesn’t include is, let’s say, any import GST credit, and that gets, comes separately, but that is you know we get credit. So this is on a cash flow basis is what we are projecting for next two years.
Somaiah V
Okay, sir. I had a small query. I’ll take it offline. Yeah, sure. Yeah. Thanks.
Operator
Thank you. We have our next question from the line of Rahul Gupta from Morgan Stanley. Please go ahead.
Rahul Gupta
Hi, thanks for the opportunity again, and thanks so much for providing additional color on the new capex plans. Just one question. So this new plan will run through until fiscal ’28. So when can we expect next leg of crude capacity expansion? So, what’s the roadmap of moving from ’16 to say ’25, or beyond fiscal ’27? Thank you.
Pankaj Malhan
Look, look, that’s a great question. We are all very excited and that’s our vision. We are still forming our plans. At the right time, we’ll come back to you.
Rahul Gupta
Great. Thank you so much and all the best.
Pankaj Malhan
No, I would say, we are all excited about the next level. And I would say, the next blast furnace, we are almost finalizing the details and we should be coming back to the market very soon of that.
Rahul Gupta
Thank you.
Vishal Chandak
Operator, can we please take the last question?
Operator
Last question will be from the line of Ritesh Shah from Investec. Please go ahead.
Ritesh Shah
Yeah, hi. Sir, thanks for the opportunity. Two quick questions. One is anything that you would like to highlight specifically on raw material integration both for iron ore and coking coals now and going forward?
Mayank Gupta
Sorry, can you please repeat your question?
Ritesh Shah
Yeah. Hi, my question is pertaining to iron ore and coking coal, raw material security. Are there any specific variables or strategic roadmap that you have for, for both of this to increase raw material sufficiency?
Vishal Chandak
Saby sir, may I request you to take this one.
Sabyasachi Bandyopadhyay
So currently in terms of the iron ore segment, we have our own captive mines in Kasia and Tensa, and rest of the requirements we are filling from the mines in Orissa and Chhattisgarh. That’s primarily our sourcing for the iron ores. And we have linkages and then we participate in the auctions, open auctions as it happens.
In terms of the coking coal, we have a good reserve in our own mines in Mozambique. And then other than that, based on the needs of different varieties, we get it from the, the reliable sources that we have been already been able to establish our connections with.
Ritesh Shah
Sir, my question was, are we looking to increase the percentage of captive sufficiency for iron ore and coking coal going forward versus what we have right now?
Sabyasachi Bandyopadhyay
At this point of time, we are under discussion on those things. It’s not that it is of the desk, it’s just a matter of time and opportunity that we are looking at.
Ritesh Shah
Okay. So this is not part of the INR15,000 crores capex when we say value addition strategic initiatives. This is something which would be over and above that?
Sabyasachi Bandyopadhyay
As Mayank clearly suggested that it’s an evolving situation. And the way we look at it, basis the need of the country and overall direction of the steel business growth and depending on where — how we position ourselves, we will take those calls as time comes and we will keep on updating you.
Ritesh Shah
Sure. That’s helpful. And last data question, if it’s possible, if you can quantify how much was a metallics purchase on nine-month basis, and given blast furnaces will fire up, what is the incremental cost savings that we are looking at, because we will look to substitute this? Any indicative numbers that we can work with?
Sabyasachi Bandyopadhyay
Sunil ji, can you take that call, please?
Sunil Aggarwal
Absolutely, Saby. Sir, just you — if you can repeat the question?
Ritesh Shah
Sunil ji, the question is, over nine months, how much was the external metallics purchase we had and given as we are looking for blast furnace commissioning, which is quite soon, what is the incremental cost saving which will come as the — as we substitute the field with captive furnaces?
Sunil Aggarwal
So, let me answer. So the first question itself is, is practically zero. It’s practically — it’s like very negligible and all.
Ritesh Shah
So we didn’t have any metallic purchases in nine months. Is that what we are saying?
Sunil Aggarwal
Yes, yes.
Ritesh Shah
Okay, sure. Thank you so much for the answers. All the very best.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. And I now hand the conference over to the management for closing comments.
Mayank Gupta
Thank you, everyone for joining today. Look, I’m very excited. Pardon me, as I am learning in, in case any still follow-up questions, do connect with us and our IR team and with Vishal, we will be happy to answer. We are very, very excited as we enter the commissioning phase, and we’re trying to be having a long-term strategic view to build a higher ROCE and focus on value-added engineering products and saving and optimizing our costs. Very happy to have the best balance sheet in the industry. And you know on that note, you know, thank you very much and we’ll close the call.
Operator
[Operator Closing Remarks]
Sabyasachi Bandyopadhyay
Thank you very much. Have a great evening everybody.