JSW Steel Ltd (JSWSTEEL) Q3 FY22 Earnings Concall Transcript

JSW Steel Ltd (NSE:JSWSTEEL) Q3 FY22 Earnings Concall dated Jan. 21, 2022

Corporate Participants:

Ashwin Bajaj — Head, Investor Relations

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Jayant Acharya — Director, Commercial & Marketing

Analysts:

Amit Dixit — Edelweiss — Analyst

Sumangal Nevatia — Kotak Securities — Analyst

Indrajit Agarwal — CLSA — Analyst

Pinakin Parekh — JPMorgan — Analyst

Satyajeet Jain — Ambit Capital — Analyst

Ritesh Shah — Investec — Analyst

Abhijit Mitra — ICICI Securities — Analyst

Nitij Mangal — Jefferies — Analyst

Bhavin Chheda — Enam Holdings — Analyst

Kamlesh Bagmar — Prabhudas Lilladher — Analyst

Vishal Singh — Phillip Capital — Analyst

Prashant Kota — Dolat Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q3 FY22 Earnings Conference Call of JSW Steel. As a reminder all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Ashwin Bajaj from JSW Steel. Thank you, and over to you, sir.

Ashwin Bajaj — Head, Investor Relations

Thank you very much, operator. Good evening, ladies and gentlemen, this is Ashwin Bajaj, Head of Investor Relations for the JGW Group. It’s my pleasure to welcome you to our earnings call for JSW Steel for Q3 FY22. We have with us today the management team represented by Mr. Seshagiri Rao, Joint MD and Group CFO; Dr. Vinod Nowal, Deputy Managing Director; Mr. Jayant Acharya, Director, Commercial and Marketing; and Mr. Rajeev Pai, CFO. We will start with opening remarks by Mr. Rao and then open the floor to Q&A. So, with that, over to Mr. Rao.

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Good evening. Good evening to everybody. The Q3 FY22 is just held. It is a mixed quarter. Why I’m saying it is a mixed quarter, the steel consumption in India in this quarter, month after month has gone up. The overall demand growth in the quarter was 9% and in the month of December, the steel consumption was 9.29 million tons which is the highest from April 2021. So, these are the positives, which we are seeing that the month-on-month the consumption of steel has gone up in India. So, this is the positive side, but at the same time, if I look at it and compare with the Q3 of last year, the steel consumption in this quarter has come down by 7%. That means the kind of acceleration, which we were anticipating in the steel consumption in the second half of the financial year has not happened. The reason, as you know, as far as India is concerned, is either extended monsoon or too many holidays due to festival season in the month of November and the threat of Omicron, and also slight slow down in the overall global economic activity attributable to either tighter labor markets, tighter energy prices, supply chain dislocations, surging cases of Omicron. These are some of the reasons why we are seeing a slow down in the economic activity worldwide added by the factors which I suggest mentioned anyway.

In these circumstances, If I see JSW Steel, it is the highest ever quarterly crude steel production 4.41 million tons of crude steel. If I just break up this 4.4 million tons, 180,000 tons is from Dolvi expansion. So we have produced 4.23 million tons from the existing operations by operating our plants at 94% capacity utilization, relative to 91 in the — in the previous quarter.

Production wise, we have done quite well. Other than the Dolvi expansion, which was under ramp up during the last quarter. The sales also improved compared to Q2. We have achieved a 6% growth. It was 4 million tons of sales on a standalone basis. But here, what is interesting here is the domestic sales once again crossed over 3 million tons, we posted 3.1 million tons, which a growth of 31% quarter-on-quarter in the domestic sales. So there are many highlights as regards to the sales.

Our value-added steel products as a proportion of total sales went up to 62% and 60% in the previous quarter. In auto, we’re seeing improving demand, that’s why quarter on quarter, it went up by 2%. The sales between the solar sector went up by 26%, the appliances sector went up by 67%, the tinplate which goes into packaging went up by 34%. For domestic sales, there is a very good increase in the overall sales. To that extent, there was a moderation in the export. Export was around 806,000 tons.

The net sales realization quarter-on-quarter on a blended basis if I compare, there is an increase of 2%. Again auto sector, our prices got sectors in the last quarter, so that also got reflected. So, overall, there is an increase in the NSR by 2% but the cost pressure was too high as we have guided last time. The coking coal price is $100 we absorbed, so the blended versus the costs have gone up by 17%. So that has an impact on the overall EBITDA per ton on a standalone basis, it is INR16,980 per ton, which is 23.6%. Compared to Q2, it has fallen by around INR5,900 rupees per ton.

While a significant portion of this increase is attributable to the coking coal price but a part of it is also on account of IBM price succession for average selling price. So, generally, as you know IBM fixes the average selling price in the state-in-state, particularly in the state of Orissa considering the average of these sales prices that have been declared or that have been transacted in the state of Orissa. But this time what we’ve observed is that in the month of July and August when international iron ore prices were at a level of $220 to $230 per ton when they fall into as low as $85 per ton in the month of November.

The IBM prices which are getting declared are not reflecting the fall in prices either internationally or in the domestic market where an NDC reducing the prices that is not getting reflected in the IBM published prices, but intially when prices of September and October was declared by IBM, we noticed that there is a correction related to August, then after sometimes, they republished the numbers for September and October, increasing the prices again substantially almost similar to what is — what was in August. Just to give you a number 58% to 60% FE, iron ore, which were originally declared at INR2,305 for the month of September, they revised to INR4,095. So, there is almost INR2000 increase in the revised prices relative to what they originally declared.

So when we were trying to understand why this revision had happened in that due to exclusion of certain bonafide sales made by the company in the auction, e-auctions conducted, so those were excluded for the reasons best known to IBM, so we have contested but the revision has happened subsequently in the month of January 2022. We have immediately made the provision when closing our books of accounts. This provisions the net impact INR1,056 crores in the quarter and almost INR2,640 per ton.

When our EBITDA per ton came down by INR5,920, if IBM prices correctly reflecting what was there in the market, which fall in EBITDA would not have been there to the extent of INR2,640, so we have taken up this matter to the High Court of Orissa in the matter of subsidies, one hearing has happened and another hearing is expected in the next week. Considering these provisions, and then EBITDA at INR16,980 per ton, the EBITDA on a standalone basis is INR6,797 crores.

As far as subsidiaries and other Joint Venture companies are concerned, in the USA, Plate & Pipe Mill and also the Ohio Operations together, we have clocked an EBITDA of $55 million which was lower than the Q2. Again, in the State of Texas, there is a tax on inventory — there is a tax on inventories that are there as of, 31st December. So generally, sales would be lower. Our economic activity would be lower in the month of December that also contributed for lower sales and lower EBITDA in the — in the US Operations, but the current quarter that is Q4 of the financial year, we expect this would improve.

In the case of Italy, there is a EUR7 million loss. Out of that, approximately EUR6 million is one-off item. At the time before we took over, the-earlier management were contemplating to setup an electric-arc furnace and they did some engineering and some expenditure. The expenditure we had written off. So that is an amount close to around EUR6 million, including another small item. So this one-off item, if I take it out, the loss in Italy is only EUR1 million, so we feel in this quarter we should be able to do reasonably well even a little. So the overall EBITDA from overseas operations was INR340 crores in the Q3 as against INR485 crores in the previous quarter.

The Indian subsidiaries have done reasonably well. It recorded total INR769 crores of EBITDA from Indian subsidiaries, other than Bhushan Power and Steel. So I want to give you a separate number as far as Bhushan Power and Steel is concerned. There is INR1,547 crores EBITDA which has been recorded by Bhushan Power and Steel, including INR1,547 including Indian subsidiaries — other Indian subsidiaries EBITDA plus overseas minus consolidation adjustment altogether, the subsidiaries have contributed INR2,334 crores. So with that, the consolidated EBITDA stood at INR9,132 crores and it is INR19,707 per ton. This is our consolidated EBITDA number or profit after tax was INR4,516 crores.

We also consolidated from 1st October 2021 Bhushan Power and Steel. With that, the total debt got added — net debt got added was INR7,500 crores approximately. With that, the debt was INR66,312 crores as on 31st December on a consolidated basis, including Bhushan Power and Steel. If I take out the debt of INR7,500 crores of Bhushan Power and Steel, the balance debt on a comparable basis was INR58,827 crores, which was higher when compared to the 30th September 2021 but almost close to INR3,000.

Our inventories in the quarter went up by around 3 lakh tonnes and also some details were to be connected, so we have invested approximately around again INR3,000 crores in the working capital. That said, its debt has gone up. Our effort in this quarter is to reduce these inventories and reduce this debt to this extent and bring it back to the levels which we have seen on 30th September.

Debt to EBITDA in the phase of it appears to be 1.73 but actually, it is 1.53. Why I’m saying it is 1.53, when we take last 13 months trailing EBITDA, Bhushan Power and Steel only one quarter EBITDA has come in the 12 months trailing EBITDA till October to December. So previous 9 months EBITDA has not got reflected while calculating this 1.73. So if we annualize the EBITDA of the October to December quarter of Bhushan Power and Steel then this number will be 1.53 and debt to equity was 1.02.

As regards to 9 months performance, our consolidated production — crude steel production was 12.61. These numbers that without Bhushan Power and Steel and our sales number was 11.215 million tons. if you have seen our guidance, we have given 18.5 million tons for crude steel production and 17.4 million tons for the sales. So if I just break up this guidance, we have given to existing operations on the expansion of doing project, in the existing operations we are almost near to our guidance. We are at 97.5% to 98% both production and sales. But in the case of expansion because of the delay of commissioning of this project, instead of July, we could commission only in October and actual commercial production is from 15th November. So there we have lost volumes of production and sales from the Dolvi expansion project. Now it is stabilized. We will have a good value for the future considering the loss of production from Dolvi expansion project and 1% or 2% lower production from existing operations and the sales from existing operations.

So overall guidance for the year will be around 94% to 95% of the total guidance given for the year in Chile. Our Dolvi, as I mentioned to you, the expansion is more or less is over and it is stabilized, excepting power plants, which will get commissioned in this quarter, so that will reduce again cost of production once commissioning is complete. Out of the total 2 power plants, one is getting commissioned in the month of February and other one in the month of March. Then what is left out it the Coke Oven plant in Vijayanagar and we downstream units like one galvanizing line at Vijayanagar, one color coating line at Vijayanagar, one CAL line at Vasind and one Tinplate 2 at Tarapur. These are the downstream units which will also get commissioned before 30th June 2022.

This is briefly about the results. As regards to the overall performance for Q4 is concerned, there will be a good volume growth, which will happen from the expansion project at goodwill. Thank you.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Amit Dixit from Edelweiss. Please go ahead.

Amit Dixit — Edelweiss — Analyst

Thanks for taking my question, sir. And congratulation for the numbers despite one-off related to iron ore and all. So I have 2 questions. The first one is essentially on realization. So how do we see blended realization changing QoQ from Q3 to Q4 and in particular our export mix from Q3 to Q4? The second question is on coking coal cost. What was it in Q3 and how is it expected to change in Q4?

Jayant Acharya — Director, Commercial & Marketing

The coking coal prices. Amit, I think have been very volatile over the last few weeks so coking coal prices, as you may be aware, have elevated to $430 equal[Phonetic] to Australia, which was in the $357 range in the beginning of the month, so it will be difficult for us to quantify exactly what will be the quarter 4 outlook for coking coal the way usually we have given. I think we would — we would need to wait and watch how the situation moves with respect to the coking coal FOB prices. Having said that, we have, we have 2 months usually in the inventory cycle. So that’s something which you could take into account while you factor your calculations.

As far as MSR and realizations are concerned going forward, quarter-on-quarter. I think I would say that the prices in December have bottomed out, and we have been able to sell the automotive — settled the automotive prices. The quarterly prices for the January-March quarter also at by and large quite done, so therefore from an exit of December to January, I would say that by and large the situation on a monthly price basis will be similar. However, there is an upside on account of automotive in quarterly. Going forward into February-March, the cost push which is happening across the world both from coking coal, iron ore, zinc, and other raw materials, would keep the prices supported. We see over the last one week the movement in the secondary market on the prices, they have moved up and we see some reflection of that in the international prices as well. So we do expect that there will be some movement on the prices on the positive side between February and March. Difficult to give an estimate as to what the quarter on quarter delta will be. But this is the direction where we are seeing ourselves in.

Amit Dixit — Edelweiss — Analyst

Just a follow-up on this. What was the coking coal cost in the Q3?

Jayant Acharya — Director, Commercial & Marketing

It went up by $100 as we had estimated to 257 CFR.

Amit Dixit — Edelweiss — Analyst

Okay. Great. Thanks and all the best.

Operator

Thank you. The next question is from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.

Sumangal Nevatia — Kotak Securities — Analyst

Yes. Thank you. Good evening, and thanks for the opportunity. First question, just a clarification, the iron ore one-off of INR1,000 odd crores, is that’s possible to breakup between what was it with respect to September and October? That will help us to understand what was the one-off with respect to the previous quarter.

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Yes. Up to August, the prices were available when we closed our books — books in for September. After that, when IBM revised the prices, they have revised only for September and October. So the [Technical Issues] September was INR264 crores. In this up — in this quarter up INR1,056 crores. October prices were revised. So, we have provided actual based on — based on October IBM published price. Same trend we expect for November and December if IBM will continue the same trend. We, accordingly, made the provision. At the same time, we are contesting starting from September that this is not the way ASPs to be calculated. So, we have to see finally how the matter will be decided by the courts.

Sumangal Nevatia — Kotak Securities — Analyst

I understand. That’s helpful, sir. One clarification on the previous question what Amit had asked with respect to the prices, we understand exit December to exit January, as you said is flattish, is it possible to share what would be exit December prices versus the 3rd quarter average prices?

Jayant Acharya — Director, Commercial & Marketing

That would be difficult to give right now, but I think as I was telling in the last question, December and January are similar. International prices have seen an uptake recent bookings of international exports have been $30 to $40 up, secondary markets have moved up. So we do see a positive upside possible for February and March.

Sumangal Nevatia — Kotak Securities — Analyst

Understand. One just last question on the subsidiary. So Italy after turning positive at EBITDA level this quarter, we have again gone into a loss and also US we see prices are weakening, so is it possible to share what is our expectation going forward on a steady-state within this two international subsidiaries?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

The plate prices in fact have not fallen the way the HR coil prices have fallen in the US also. So therefore, we don’t expect the plate mill is concerned. There will be a decline in the overall performance either in terms of volume or in terms of EBITDA, but at the same time, in Ohio, we have seen a fall in the HR coil prices but the demand was weak in the last quarter. In this quarter, we expect the demand to come back. If that comes back, our view as sort of Ohio is concerned, it should continue to perform the way it is doing if not improving.

Sumangal Nevatia — Kotak Securities — Analyst

Okay, sir. And with respect to Italy?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Italy, as I mentioned in one of the calls last time, is basically the rail mill. If rail mill operates fully then we will be in green. if rail mill, there is an issue, then we will go into red. So the rail-mill operation is mainly dependent on the tenders by the Italian railways, so if the — if there is any delay in any quarter in awarding those contracts and rail mill operates suboptimally, so that will land in negative EBITDA. So we expect in Q4, it should come back. We’re expecting rail mill should operate well and it will come back to green.

Jayant Acharya — Director, Commercial & Marketing

We have already received one tender order from the Italian rail while that is the first initial order level, so part of that will get executed in this quarter. We are looking forward to another tender by the Italian rail during the quarter.

Sumangal Nevatia — Kotak Securities — Analyst

Understood. Thank you and all the best.

Operator

Thank you. The next question is from the line of Indrajit from CLSA. Please go ahead.

Indrajit Agarwal — CLSA — Analyst

Hi, thank you for the opportunity. Couple of questions. First, can you give us some color on the export markets right now? How are we seeing the exporting and do we expect to pull back to those 25% to 30% of sales and export this year as well versus [Indecipherable]?

Jayant Acharya — Director, Commercial & Marketing

So, on the export market, I think the overall quarter 3 exports to domestic ratio on consol basis without BPSL was 21% of export, 79% domestic. The export market today post the December holidays and in inventory liquidation stock — stock down which has happened, the inquiries are far better post the holiday season. People have come into the market to buy, therefore, in the last 2 to 3 weeks, the export bookings have seen a good movement upwards. Some of the products have moved better like hot-rolled prices and hot-rolled volumes have moved much faster right now than the downstream. However, the downstream, we do expect the movement to start as we go into the month of February.

The export ratios, I think, would be in the similar range between 20% to 25% in the quarter 4 as well. We are looking at the international market, but the domestic market is definitely poised to be better. We’ve seen the automotive demand in December has improved over October/November. In January, it’s improved beyond that. The outlook for quarter from automotive is very good. The general infrastructure pickup and construction activity is also quite positive. We have seen some tender announcements and some execution of the projects, which are now taking place for oil and gas and water pipelines, which — which will be again positive for servicing during the quarter and beyond into the next quarter as well.

Appliances and solar continue to do very well. So we are by and large looking at a positive domestic cycle in the quarter 4. So therefore, we will keep export the balancing number but the indicative could be between 20% to 25% on an increased volume reserved in quarter 3 last year. Quarter 4 this year will be higher in terms of overall volume as well.

Indrajit Agarwal — CLSA — Analyst

Sure. Sir, again coming back on the domestic volumes, do you think because of that the market has grown as much as say, in FY23, can we see a strong single-digit growth in the Indian market in terms of consumption, as the market as a whole, not [Indecipherable]. Do you think those levers are in place or do you think the market is still much weaker than what it was pre-COVID?

Jayant Acharya — Director, Commercial & Marketing

I think in general the investments across the physical infrastructure space, which we see, especially from the government side is quite positive. The entire CapEx cycle, the way we look at it today is the industrial CapEx and the infrastructure CapEx. About 25% of the CapEx is coming from private CapEx. The balance 75% is coming from the government spendings, mostly on infrastructure. The private CapEx was mostly on the industrial side. So the CapEx pipeline looks good. The way we are seeing the oil and gas and water pipeline projects rolling out, the metro projects coming in the high-speed bullet train execution picking up. The Expressway project is picking up. We are quite positive about the infrastructure and construction space the way it is building up.

The real estate launches by the real estate companies afresh on inventory liquidations that also quite positive. Construction activity is, therefore, picking up. Automotive, as we said, is picking up. So yes, I would say that if you look at GDP at 8.7% as indicated. And based on the elasticity of 0.8 odd, we see a decent single-digit growth possibility in 2023-2024.

Indrajit Agarwal — CLSA — Analyst

One last question. So for coking coal, is the benchmark prices are INR430? How much — do we have any forward concepts in terms of any contracted amount or actual purchase price much lower than the benchmark price or it generally at some point in time reflects the benchmark? How does the pricing of course for us?

Jayant Acharya — Director, Commercial & Marketing

The pricing is basically mostly index-based and it gets rolled up for the month depending on the shipments for the month. However, you have your inventory cycle for about 60 days in the system between quantities within the country port plant and whatever is on the sea. So that’s by and large the thing with contractual prices separately, we don’t have anything which is locked in at a particular price.

Indrajit Agarwal — CLSA — Analyst

Just to clarify, the 257 CFR will turn to say 430 FOB at some point in the next few months, it is likely?

Jayant Acharya — Director, Commercial & Marketing

So, yes. 2.57 CFR levels translates to let’s say roughly 305 level — let’s say it will be level roughly at about $240 to $245 levels. So from there — yes $430 is only a peak of today. If you were to look at the average for January, that is the way the index will count. So we’ll have to see how the movement of the indexes for the remaining 7 days and then take an average index number for that. [Speech Overlap]

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

I think one point I wanted to clarify. $430 doesn’t mean $430 is the entire cost of coking coal we buy. We buy proportion. It is the generated 50% to 55% frame hard coking coal, balance all semi-hard than the frame hard coking coal. So on a weighted average basis, if you see what goes into the coke — coke oven, they are not at $430 [Indecipherable] $430 will continue. The relativity will be lower. Number 1, we will get some discount to the index price, number 1. Number 2 is the relativity of the mix that goes into the coke oven to the index. That is also important. These are the 2 factors, which we have to take into account. $430 minus $245 is not the cost to us.

Indrajit Agarwal — CLSA — Analyst

Sure. That is very helpful. Thanks.

Operator

Thank you. [Operator Instructions] The next question is from the line of Pinakin from JP Morgan. Please go ahead.

Pinakin Parekh — JPMorgan — Analyst

Thank you. So my first question is, I’m trying to basically put all the moving parts together, so you highlighted the prices and broadly steady possibly into coking coal. There is an inventory on domestic iron ore prices would fall. So if you take the starting point of INR16,900 at this point of time in Q3. Will the — does the EBITDA per ton move higher or lower because obviously spot coking coal is higher but you have 2 months of inventory?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Here the issue is it is very difficult for us to say EBITDA per ton will go up or down because there are so many moving parts as you rightly said. Coking coal price, which we were seeing in the range of the $330 to $340 dollars, it moved up to $430 within no time. The fall may happen to the same extent. We don’t know what is going to happen. So it’s 60 days inventory when we have, so from today to the end of the month whatever coal we’ll be buying that is the extra cost that can come in in this quarter as for the coking coal is concerned. But the important point — iron ore prices are coming down, so hopefully it will continue in the following months and IBM or the course will decide in our favor thereby it gets revised downwards than what have been declining.

At the same time, if I look at other than iron ore and coking coal, ferroalloys have corrected significantly downwards relative to what it was in the Q2. Q3 part of it had happened. Q4 balance had happened. So we expect, because of the supply chains from China, why again we’re going back to China is that majority of the wrong inputs — other inputs, either you take refractory, you take electro, you take ferroalloys, the input that will come is again dependent on China. So Chinese supply chains are getting streamlined. Their production is coming back. Therefore, there is a likelihood given other costs are likely to come down relative to what it was in the Q3. But the main point which you have to understand as far as JSW Steel is concerned, the Q4, there will be a big volume growth. This is coming from Dolvi expansion. The 180,000 ton is what has come from Dolvi expansion in the Q3, that will be much more than that becuase when we gave the guidance of 94% to 95% of our sales target of 17.4 million tons of sales what we achieved 11.215 for the 9 months, then you can see the kind of growth in volumes that can come in in the Q4. So that will keep the absolute amount of EBITDA in a very healthy level even though EBITDA per ton will fluctuate based on the various moving parts.

Pinakin Parekh — JPMorgan — Analyst

Understood, sir. Sir, my second question relates to net debt. And so now net debt moved very sharply higher, you highlighted that some of this is because of working capital, which should reverse as the company sells on inventory. But clearly, the net debt has moved from the INR50,000 crores handle which was there for a long time to the INR60,000 to INR70,000 crores range. Now assuming that margins don’t materially change, the company has the CapEx plan in place, should we expect net debt to broadly remain in the INR60,000 to INR70,000 crore range for the next few quarters or do you think it can possibly even step up if there is an increase in CapEx?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

As far as the capital expenditure, which was incurred in the 9 months is INR10,350 crores. So even after incurring the CapEx, if you really see the net debt number excluding Bhushan Power and Steel. Bhushan Power and Steel has INR7,500 crore debt. If I look at the EBITDA of that particular company, it can easily be serviceable out of the cash flow of Bhushan Power and Steel. If I exclude the Bhushan Power and Steel and look at the consolidated date of the steel without bps number that is INR58,800 crores. Now let us look at this number compared with 31 March 2021 number, which is INR52,600 crores, actual increase is around INR6,200 crores. The INR6,200 crore debt increase, if I look at the two numbers, which is after spending INR10,350 crores on the CapEx over and above that, the investment in the working capital in this year is INR11,0 97 crores. So I talked about only 3 lakh ton increase in inventory in this quarter, but if I look at overall inventory as on 31st March 2021 versus 31st December 2021, there is a significant increase in the overall inventory. So we have to bring down inventory, not by 3 lakhs maybe another 2 lakhs per tons plus the debtors will come down. So whatever we have invested in the working capital, once this comes back, will go back to the level as you have seen as on 31st March 2021. So the number, which is more important here, the kind of investments which has gone in the working capital because of the extended working capital cycle either in terms of increased inventory or increase in debtors.

Pinakin Parekh — JPMorgan — Analyst

Understood. Thank you very much sir for the clarification.

Operator

Thank you. The next question is from the line of Satyajeet Jain from Ambit Capital. Please go ahead.

Satyajeet Jain — Ambit Capital — Analyst

Hi, thank you for the opportunity. Just one question can be one-off related to iron ore. If I understand it correctly when the IBM prices were calculated initially, the company’s e-auction volumes were included in the initial calculation and subsequently — in the subsequent calculation, those e-auction volumes were excluded. And if that understanding is correct, is it possible to quantify how much for these e-auction volumes and were that substantially basically lower prices than the spot prices at that time?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

The company has conducted total level volumes. There were 50 bidders. 37 bidders were the successful bidders, out of that 3 are related parties. Balance are all third parties. Total volume, which has been auctioned was 2.65 million tons. Out of that 1.9 million tons is unrelated. Yes, now this entire auction quantity as is not in line with the provisions of MCDR rules 2017. That is what we are contesting. So this is making a difference of INR2,000 approximately per ton in the declared prices — revised prices.

Satyajeet Jain — Ambit Capital — Analyst

Okay. Thank you so much.

Operator

Thank you. The next question is from the line of Ritesh Shah from Investec. Please go ahead.

Ritesh Shah — Investec — Analyst

Hi, sir. Thanks for the opportunity. Sir, I just want to take the prior question forward. Sir, you indicated 2.6 million tons of which 1.9 million tons are unrelated, did I hear it right, sir?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Correct.

Ritesh Shah — Investec — Analyst

Sir, would it be possible for you to quantify what was the pricing differential between related and unrelated transactions on a volume-weighted basis?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

When you auction, you can’t distinguish between related and unrelated. Anybody can participate in that. So the price will be the same in the auction or it could vary very marginally from A to B or B to C, so it cannot be significantly different.

Ritesh Shah — Investec — Analyst

Correct. Sir, the reason I ask is because you indicated 2,640. That number is pretty huge. That was the reason I asked that. Sir, a related question, Ministry of Mines has indicated basically National Mineral Index and State Mineral Index to what my limited understanding is the incremental premiums will still be paid on National Mineral Index. However, there is an element of quantities of grades which needs to be prefixed when we arrive at a particular index. Sir, where is this process at and given what has happened in the last quarter. How should one understand this particular variable actually flowing incrementally because it’s quite pertinent from a P&L standpoint?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

There are a lot of distortions the way the average selling price is calculated in the current provision. This has been brought to the attention of the government. Government has appointed a committee. This committee has met all the stakeholders, how to fix the average selling price even if it finally goes into National Minneral Index, so they have their recommendations and the recommendations are getting submitted I understand for the government. Then hopefully, something will come or clarity will come, how we get fixed in a transparent manner going forward.

Ritesh Shah — Investec — Analyst

Sure sir. And my second question is for Jayant sir. Sir, how are you looking at Chinese export trends going forward. And any color on Chinese infra stimulus or how are you approaching the local demand-supply situation in China. I’m just trying to get a sense on how are we looking at Chinese export numbers and the underlying economy? Thank you.

Jayant Acharya — Director, Commercial & Marketing

Chinese production is likely to be moderated during the next few months on the Winter Olympics and the winter months. They want to control the carbon emission. Certain regions are controlling the production more than others. That will result in a lower export or more moderate exports from China during this period. The other thing is that the Chinese economy now I think is looking — the government is looking it. We have seen print to say that the — the rates have been — the interest rates have been reduced. There is a more liquidity being pumped in. The support to the real estate market is likely to be given, so we are seeing some positive vibes from the government to stimulate the economy going forward. So I think that’s a positive. So therefore, we think that the Chinese domestic demand will be reasonably okay and exports will continue to be moderate at least for the first half of this year.

Ritesh Shah — Investec — Analyst

That’s helpful. Thank you so much. I’ll join back the queue.

Operator

Thank you. The next question is from the line of Abhijit Mitra from ICICI Securities. Please go ahead.

Abhijit Mitra — ICICI Securities — Analyst

Thanks for taking my question. I have 2 questions. Firstly, regarding the JSW coated EBITDA movement sharp decline, how do you explain it, is it because you have taken the CR price cuts but yet to sort of take any action or decision in the HR prices, so that’s question number one. And the second question is how to sort of bridge conceptually the EBITDA per ton that we’re seeing on the standalone and Bhushan because standalone EBITDA is around 17,000, Bhushan is around 26,000 so per ton. So how to sort of bridge this two. Thanks. These are the 2 questions I have.

Jayant Acharya — Director, Commercial & Marketing

On JSW coated the numbers have been little lower this time because of the cost impact on certain raw materials like zinc — zinc, aluminum, tin, and paint that has led to a moderation in the EBITDA numbers. We are watching that space. There is a raw material pressure HR prices to some extent have moderated and an exit number from December, so this situation for the quarter 4 should be better. [Speech Overlap]

Abhijit Mitra — ICICI Securities — Analyst

Just a follow-up on that, I mean the spread between CR and HR, is there anything to do with it? That was what I was trying to understand because we understand that you would sort of supply the steel strong JSW and get it converted out there because realizations are also down significantly, not only the costs. So, yeah, if you can just briefly build up on that?

Jayant Acharya — Director, Commercial & Marketing

I think the HR and CR trade you’re saying, I didn’t understand that part of the question. Can you just repeat the question, HR and CR, what did you?

Abhijit Mitra — ICICI Securities — Analyst

The spread — the spread between HR and CR. The compression in spreads between HR and CR prices, the compression of the gap between HR and CR prices, does that lay into the spread that is important in JSW reported?. Yes.

Jayant Acharya — Director, Commercial & Marketing

Okay. The HR and CR, the compression in HR and CR gap has moderated. That is primarily in the CRCA retail space, which you will see, but in coated, I think different products are behaving differently. If you look at tin prices are probably one of the best and we see a strong price support on tin going forward. The demand is also quite good. On the coated OEM space, if you look at solar and if you look at appliances, which take specialized galvanized and specialized GL, there also we are seeing decent demand and therefore the prices there are also holding up. These are high-strength steels and therefore not available from everybody. On the color-coated space while the prices have moved down but in certain brands of colors like color on plus, where we continue to have an edge, we see the price drop has been lower than the other level of color seen from competition, but there is a pressure in coated on commodity galvanized. Commodity galvanized in coated has, let’s say, come down more than especially in the retail of the pipe and tube segment that area is putting some pressure in the market, but going in the last 1 or 2 weeks as we were seeing in general commentary, the prices have improved, including the retail space of galvanized.

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

If I can clarify on the second question which you asked as far as BPSL EBITDA versus JSW team, I think we will have to move look at Bhushan Power and Steel. They have surplus capacity in the blast furnace, so they also sell pig iron. If you look at thier EBITDA, it includes sale of other material other than we finished team, so that adjustment requires to be made. Number 2 is if they are producing, let’s say, 2 lakh tons per month HR coil, what they sell in the form of HR is only 30,000 that is around 15%, balance 85% is in the form of value added whereas when you calculate JSW Steel standalone EBITDA per ton, that is not comparable actually with Bhushan Power and Steel because entire value addition is not getting reflected in the standalone EBITDA of JSW’s Steel. This is second. The 3rd point is when Bhushan Power and Steel participate in the auctions when they got the iron ore, they bought it at lower price whereas that cost is booked in the JSW Steel. That is different. These 3 differences if you adjust, I think EBITDA per ton on the board of companies are comparable.

Abhijit Mitra — ICICI Securities — Analyst

Okay. Good. Thanks. That’s all from my side.

Operator

Thank you. The next question is from the line of Nitij Mangal from Jefferies. Please go ahead.

Nitij Mangal — Jefferies — Analyst

Hi, good evening. Thanks for taking my questions. Firstly, for FY23, what kind of incremental volumes are we expecting from Dolvi expansion?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

I think we will tell you clearly the exact number in May, but the ramp-up is quite good and stabilized. The unit is working very well. The numbers we will give you when we meet in May.

Nitij Mangal — Jefferies — Analyst

I wish with thanks. And second one is iron ore issue. Is there any ambiguity on November-December pricing as well. And if it’s possible to share and what’s IBMs rationale for that change in the reference price? Thank you.

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

I don’t want to get into too many details what is the issue, which is there on the table, but the way the methodology which is being adopted by IBM for calculating average selling price in Orissa is not in accordance with what IBM follows in Karnataka both are different. In Karnataka, all the iron ore is auctioned, so the way the average selling price in Karnataka is calculated is not the same methodology, which is done in Orissa. Therefore, there are discrepancies and discrepancies are brought to the attention of IBM and also to the Honorable Court of Orissa, High Court of Orissa. So, I think the matter will get resolved in due course of time.

Nitij Mangal — Jefferies — Analyst

Okay. Thank you very much.

Operator

Thank you. The next question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead.

Bhavin Chheda — Enam Holdings — Analyst

Yes. Good evening. Two questions. One, what was the capital acceptances and revenue acceptances figure in the quarter and the second one was, what was your captive iron ore volume and if you can break that into Karnataka volume and Orissa volume?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

The sales sufficiency of captive iron ore in the last quarter was 47% on increased volume. I don’t have the breakup right now between Karnataka and Orissa. The capital acceptances which you have asked for raw material was INR1,486 because coking coal prices have gone up. The acceptance in the raw material side went up to INR1,486 but at the same time capital acceptances, we have brought it down to INR174 million, so total INR1,660.

Bhavin Chheda — Enam Holdings — Analyst

74 of India. Okay. And sir, early clarification of this the Bhushan Power EBITDA per ton what you explained is substantially higher because obviously the NSR also looks higher because obviously the pig iron and the other sales number, which gets captured in the sale divided by actual finished steel volume which means you’re indicating this — this spread is a sustainable number or there is no one-off there?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

There is no one-off accepting the iron ore pricing what happened.

Bhavin Chheda — Enam Holdings — Analyst

What is iron ore pricing, sir? I didn’t get part of it.

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

I explained to you about IBM succession of iron ore.

Bhavin Chheda — Enam Holdings — Analyst

Yes, that’s fine. That’s captured in standalone. I was looking at Bhushan Power EBITDA per ton which comes to roughly 26,600 this quarter, even last quarter was 26,600, so in fact has remained steady for last 2 quarters despite cost going up in this quarter. So we’re trying to figure out if there was some one-off in that numbers.

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

There is no one-off item.

Bhavin Chheda — Enam Holdings — Analyst

Okay. Okay. Thank you, sir. Yes.

Operator

Thank you. The next question is from the line of Kamlesh Bagmar from Prabhudas Lilladher. Please go ahead.

Kamlesh Bagmar — Prabhudas Lilladher — Analyst

Yes. Yes, sir. Thanks for the opportunity. Sir, just on this iron ore cost or the charge, which we have took in this quarter, if I see the right from October, November, December data based on Orissa minerals data, which is [Indecipherable]. Sir, every time like sir are like say realizations of which we have published there or reported there are lower by roughly around INR2,000, even for the December month. So — and if you see all other like say around 2025 odd miners which they have OMC or FL mining. This difference is there across the miner. So we are going to substantiate on that particular item like that our realizations are lower by roughly around INR2,202 on that count. Because they are also selling the mineral for last, let’s say, or around 25 years, so their prices how like so far 25 odd miners against us. So, how can we — how would we be able to establish that particular argument?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

We have been operating the mine since July 2020. Now we are in December 2021. Up to August 2021, we have not raised any issue. September 2021 onwards, there is a problem because we did the auction. When we auctioned, it did not prove anything. We are bidding on the MSTC platform new auction platform. Even OMC does auction on the MSTC platform. Karnataka does auction on the MSTC platform. When we do the auction, the next bidder has participated, you know the price, you know the quantity. So there’s nothing here to prove to anybody and we know the grade, we know the price, we know the bidder, we know the seller, we know the mine from which it is going. There it is quite transparent but the way there is separating, the way we understood is different particularly in the later months when the prices have fallen. That’s way we say there is an issue, which we took up very strongly not only legally but also through the government.

Kamlesh Bagmar — Prabhudas Lilladher — Analyst

I appreciate that, sir. And lastly, on this PLI let’s say we are doing massive investment in the downstream. So how much of our quantity in downstream or upcoming capacity because it would be applicable on the expansion would be covered under the PLI?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

PLI scheme just now they have announced the guidelines. So we are steady in those guidelines and we are working out based on those guidelines how much capacity can come in because there are certain timelines by which the production has to start, the expenditure has to come in, so those things which we are calculating I think next time when we meet in May, we’ll be able to throw light on that.

Kamlesh Bagmar — Prabhudas Lilladher — Analyst

And lastly, sir, we have mentioned that we have 2 months of booking core inventory. So, assuming that these current prices continue $10 to $15 here and there. So what increase or what change can we expect for the Q4 in terms of coking coal prices?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

The way — in fact we want — we wanted to give you a number, in fact. So we worked out the numbers based on the price prevailing up to 31st December, so when we calculate that number assuming that that would continue, it would be in the range of around $25 per ton. After that, the prices went up, so therefore, we have to now recalculate because the January month whatever buying that is happening part of the quantity will come in consumption in the month of March.

Kamlesh Bagmar — Prabhudas Lilladher — Analyst

Okay.

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Therefore that number, we don’t know. So minimum $25. After that, we have to calculate the number and then share.

Kamlesh Bagmar — Prabhudas Lilladher — Analyst

Great, sir. Thanks a lot, sir, and wish you all the best.

Operator

Thank you. The next question is from the line of Vishal Singh from PhillipCapital. Please go ahead.

Vishal Singh, your line is in talk mode, kindly go ahead with your question, please.

Vishal Singh — Phillip Capital — Analyst

Good evening, sir.

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Good evening.

Vishal Singh — Phillip Capital — Analyst

Yes. Sir, I just wanted to understand what is our landed cost as the January [Indecipherable] versus the bought out iron ore? If you can tell us the difference and which one is higher at this point of time?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

That is very difficult to tell. This is a number. Iron ores are different grades. As far as our mindsets, it is low grade. We get the low grade and then use it. So, it is not directly comparable; therefore, it is so not proper to give you a number.

Vishal Singh — Phillip Capital — Analyst

Understood. And sir, secondly, in terms of Bhushan Power. So just wanted to understand has we check whether we have this spare capacity addition potential because what we have heard that the capacity could be taken to 3.5 to 4 million tons. So anything you would like to share about by when you would like to start working there or what is our thought process in terms of utilizing that capacity going forward?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

Last time I think we have already mentioned that there are — there is a total CapEx of INR3,500 crores which is committed in Bhushan Power and Steel is currently going on. Out of the INR3,500 crores, INR1,500 crores for improvement in the various areas to reduce the cost — cost saving initiatives, including the PCA injection and also coke oven plant, which is not fully commissioned. So those are the areas where we are spending money to improve the operational efficiency of BPSL that will reduce the cost further. The second amount of CapEx is relating to INR2,000 crores to increase the capacity from 2.7 to 3.5 so that gets completed in the next financial year. So we expect at least by September 30th, we should be able to complete this project.

Vishal Singh — Phillip Capital — Analyst

Thank you, sir. Thank you. That’s all from my side.

Operator

Thank you. The next question is from the line of Prashant Kota from Dolat Capital. Please go ahead.

Prashant Kota — Dolat Capital — Analyst

Sir, thanks for the opportunity. Sir, I had 2 questions. First one is on the coking coal side. Sir, right now the FOB price for the low vol prime grade is 430, let’s say, we use a blend of prime grade in the mid wall and mixed in the second tire, even then if you see the FOB basket if you see 50% — 60% prime 2020 the rest two, still the price will be around $380 FOB and CFR will be $410. Sir, and as a country also if we see now, we have been one of the largest importers of coking coal in probably in the world and this is not just issues with JSW, probably it’s a national issue also, sir and the price behavior of coking coal if you see is just like oligopoly kind of behavior not now to the extent 12, 13, 14 years we are seeing. There is 15 days of rainfall and for 6 months prices remain elevated and various times various instances, it’s very substantial spikes et cetera. And sir, is there any way we can renegotiate as a country and carve out something as the coking coal price should be a percentage of the steel price, not a Platts index, which is quite liquid and sometimes we don’t know what exactly is going behind — going behind there and it’s a quite — it’s not that scientific maybe. So I mean it should be today rebar prices $725 in India and coking coal is 450 CFR, 65% just one commodity and they need us as much as we need the coking coal, there is no other use. So it is not a symbiotic — it’s a symbiotic relationship, but somehow there appears to be a lot of testing. I don’t know what is the solution for this if we have to form a syndicate as a country and do something. What is the solution, sir, just wanted to know your thoughts?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

We appreciate you’re anguished and we are also equally anguished in this issue, but for instance in the case of oil OPEC what entire world is able to do, they dictate while suppliers to be done what should be the price, nothing could be done. Same story with coking coal. Some story with iron ore, a very few players are there. So, they dictate what could be the price, how we should operate. The point remains is how India is a country where we have large the ambition to become a 300 million tons steel company by — steel country by 2030 where our coking coal requirements will continue to go up from current levels. So how we can become self-sufficient with regard to coking coal. Here, as a company, we have given the proposal to the government, which we are really pursuing very very vigorously on that. There is enough coking coal that is available within India. So how to develop taking into account all the stakeholders. One is the state government where the mines are located and other is central government, other is steel industryl. The 3rd one is the people who were affected due to mining. These 4 constituents have mutual trust and then work together to see that this problem can be structurally addressed, so we are on it hopefully something should happen.

Prashant Kota — Dolat Capital — Analyst

Okay, sir. Got it. Just next question — sorry for the follow-up on that. Sir, just because of the elimination of our company’s auction — auction bid, the IBM prices have been revised or is there anything else that they eliminated? Only just one — because we have 25 sellers. Only one seller’s prices have not considered, hence, it has been revised upwards or how does it — how is it, sir?

Seshagiri Rao — Joint Managing Director & Group Chief Financial Officer

We also don’t know how originally they calculated, how revised price has been calculated. The point is that when revision has happened then we understood that we learned that there is some exclusion happened, so then we took it up that issue with them and then followed by litigation in the court. What is that they have taken into account, what is that not taken into account, we don’t know but ours is excluded because they have issued a notice to us to give you the details of the quantity sold in the auction and whom we have sold, all those details have been provided to them, thereafter prices revised. Therefore, we feel that ours excluded then we took care.

Prashant Kota — Dolat Capital — Analyst

Okay, sir. Understood, sir. Thank you.

Operator

Thank you. Ladies and gentlemen, due to time constraint, we take that as the last question. I now hand the conference over to the management for their closing comments. Over to you.

Jayant Acharya — Director, Commercial & Marketing

Yes. Thanks, operator, and thanks, everyone for joining us. Feel free to reach out to us if you have any follow-up questions. Good evening.

Operator

[Operator Closing Remarks]