Sarda Energy & Minerals Limited (NSE: SARDAEN) Q3 2025 Earnings Call dated Feb. 10, 2025
Corporate Participants:
Pankaj Sarda — Joint Managing Director
Padam Kumar Jain — Chief Financial Officer
Manish Sethi — Company Secretary
Analysts:
Vinita — Investor Relations
Vikas Singh — Analyst
Mahek Talati — Analyst
Balasubramanian A — Analyst
Unidentified Participant
Aman Madrecha — Analyst
Rajesh Bhandari — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q3 and Nine-Month FY ’25 Earnings Conference Call of Energy and Limited. 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. Should you need assistant during the conference call, please signal an operator by pressing 0 on. Please note that this conference is being recorded.
I now hand the conference over to Ms Vineeta from IR. Thank you, and over to you, ma’am.
Vinita — Investor Relations
Thank you, Mr good afternoon, everyone, and thank you for joining us today. We have with us today the senior management team of Sarda Energy Minerals Limited; Mr Pankar Sarda, Joint Managing Director; Mr Manish Sarda, Deputy Managing Director, Metals and Alloys Limited; Mr Padham Kumar Jain, Director and Chief Financial Officer, who will represent Sarda Energy Minerals on the call. The management will be sharing key operating and financial highlights for the quarter and nine months ended, 31 December 2024, followed by a question-and-answer session.
Please note this call may contain some of the forward-looking statements, which are completely based on the company’s beliefs, opinions and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. The company also undertakes no obligation to update any forward-looking statements to reflect developments that occur after a statement is made. I now hand over the conference to Mr Pankat Sada. Thank you, and over to you, sir.
Pankaj Sarda — Joint Managing Director
Thank you and good afternoon, ladies and gentlemen. Welcome to Sada Energy’s Q3 earnings call. I hope you have had the opportunity to review our results, press release and presentation uploaded on our website and the stock exchanges. Macroeconomic overview. The global economic growth has remained steady and is projected to maintain stability through the Sea by 2025. Stronger growth in US is likely to offset slowdown in other economic economies, including Europe. The recent ceasefire in Middle-East should help ease the geopolitical tensions leading to stabilization in energy prices and ocean freight rates.
However, potential tariff escalations and policy shifts could heighten trade tensions, could disrupt supply chains and weigh on global growth. In India, we have observed growth moderation over recent months. The Trump 2.0 era in USA may bring significant changes to international trade policies and climate change regulations impacting global economic order and consequently, India’s economy.
The US spread after three rate reductions in 2024 has kept rates steady due to persistent inflation concerns. India’s fiscal deficit is projected to decline to 4.4% against 4.8% estimated for the current year. RBI has rolled-out plan to infuse INR1.5 lakh crores to ease liquidity. Tax rebate for lower-middle class is expected to boost consumption and economic activity. The recent reduction in the repo rate after five years signals the start of an easing cycle, though banks may take time to pass-on the benefits due to-high deposit costs and tight liquidity conditions.
Operational performance, we achieved highest-ever quarterly generation of captive power plant at our plant in Raipur. Hydropower generation grew by 7% Y-o-Y, supported by a strong monsoon. The performance of IPP thermal power plant improved significantly, achieving load factor of 74% during the quarter and 67% for nine months compared to 56% in FY ’24. Various operational efficiency measures have contributed to this improvement. It could have been even better, but for plant maintenance, shutdown and lower-power prices on energy exchanges. We expect further improvement with January already recording PLF of 97%. Additional capital expenditure, capex has been planned to ensure sustained operations at full capacity.
Our coal mine, which resumed operation in September 2024 produced 0.33 million ton coal. In Raipur, one of the five ferro oil furnaces was under shutdown for modification from 1st September to 1st November 2024. The captive power plant at also underwent a 22 day maintenance shutdown affecting ferroids production there. Expansion and project updates, coal mines, Pulma 4×7. The mining capacity at Gare Pulma 4×7 is set to increase from 1.68 million ton to 1.8 million ton. Gare Pulma 4×5. We have acquired another fully explored underground coal mine, Gare Pulma 4×5 with 78 million tonne in geological reserves and 39 million ton in an extractable reserve Grade G8. The Westing order was received on February 4, 2025, and we anticipate coal extraction within the next financial year. Sharpo West Coal mine. The mining lease has been executed.
Mine opening permission is expected this quarter with production targeted within two years. Health JV coal mine, we are preparing the detailed project report and mining plan. Hydropower project 25 megawatt. The project has begun trial run and is expected to be commercially operational by the end of this financial year. Captive solar power, 50 megawatt. While progressing on-schedule, delays in the construction of CSPDCL substation Bay and transmission line may slightly impact the timeline. Mineral Wool project. This sustainability initiative is progressing well and should be operational before the financial year’s end. 30 megawatt TG set replacement. Work is on-track with operations expected to commence in mid-FY.
Now I hand it over to our Director and CFO, Finance, Mr PK to discuss about financial performance.
Padam Kumar Jain — Chief Financial Officer
Thank you, Pankar jeep. Revenue. The company achieved consolidated revenue of INR1,319 crores in-quarter three FY ’25, marking a growth of 43% year-on-year and 14% quarter-on-quarter. Profitability. Despite challenges in steel and segment, due to downturn in prices, lower production, inventory losses and lower profit from hydro segment due to seasonal effect, operating EBITDA almost doubled year-on-year from INR194 crores to INR382 crores. Despite mark-to-market provisioning of INR46 crores on investments, consolidated profit-after-tax grew 75% year-on-year to INR200 crores and remained steady quarter-on-quarter.Debt and liquidity. Net consolidated debt, including working capital loans stood around INR1,400 crores. Long-term loans repayable within next one year is INR223 crores. The liquidity is strong with cash and liquid investments of exceeding INR1,400 crores as on 31st December 2024, which is in addition to loans given as part of our treasury operations. The credit rating of the company is reaffirmed at AA minus by post-acquisition of SKS.
I now hand over to Sri Manish to discuss the steel and ferology industry overview and outlook. Over to Manish.
Manish Sethi — Company Secretary
Thank you, Mr Jains. Global steel production declined by 0.9% to 1839.4 million tonnes in CY 2024 with China recording decline of 1.7%. India, however, bugged the trend growing at 6.3% to 149.6 million metric tons due to slowdown in domestic economy. Despite fall in steel production, China recorded the highest-ever steel export of 110.72 million metric tons steel in CY 2024, recording a growth of 22.7% over 2023. Aggressive exports from China weighed on global steel prices. In December alone, China exported 9.72 million tonnes, which is higher-than-average for most previous months.
Many countries have invoked safeguard measures against Chinese imports. India remained net importer of steel despite moderation. During the calendar year ’24, India imported 10.82 million metric tons of steel against 9.03 metric tons in CY ’23, whereas the exports fell to 7.63 million metric tons against 7.83 million metric tons in CY ’23 in 2024. Prices remained subdued during the quarter. Merchant power prices also remained subdued due to above-average rainfall and increased generation. Power prices on the exchanges remain belowee INR4 on an average.
The Indian coal Index recorded fall of 14.84% from INR155.44 in December 2023 to INR132.38 in December 2024. Domestic crude steel production in Q3 FY ’25 was 37.78 million metric tons, up 3.5% year-on-year and 2.9% quarter-on-quarter. Domestic finished steel consumption grew by 7.64 year-on-year and 3.33% quarter-on-quarter to 38.46 million metric tons. Our export during the quarter was down to 23,250 metric tons due to fall in-production as compared to 28,200 metric tons in last quarter and 33,400 metric tons in-quarter three of ’24. We expect pickup in credit offtake and economic growth supported by liquidity infusion and government spending, net import of steel and fall in the coking coal prices, a major input for primary steel producers expected to keep steel prices in check.
Expected safeguard measures to check steel imports in India will help in improving margins for Indian steel industry. India remains the fastest-growing major economy driven by domestic demand and favorable demography. The reversal of interest-rate cycle will enhance competitiveness and encourage capital investments, creating demand for steel and other metals. Improved PLF and sales realization in our IPP business and foreign finance cost should further strengthen profitability. That concludes our performance and outlook. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star in one on the touchtone telephone. If you wish to remove yourselves from question queue, you may press star in two. All participants are requested to use handsets for your questions. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles the first question is from the line of Vikas Singh from PhillipCapital. Please go-ahead.
Vikas Singh
Good afternoon, sir and thank you for the opportunity. Sir, I just wanted to understand the RM cost even on the standalone level, if I see, there was a sharp uptick. So any particular reasons for the scene?
Pankaj Sarda
Madam, voice is cracking. We are not able to hear the question clearly. There is a problem in the line. Can you switch the line or
Vikas Singh
Is it better? Hello
Pankaj Sarda
A call. Yes, sir,
Vikas Singh
Hello, is it better now?
Operator
Sir, can you speak again?
Vikas Singh
Hi, am I audible?
Pankaj Sarda
No, sir, it’s better now there is a cricking in-between. Should I sir, reconnect you again better should I disconnect
Operator
We have connected with the management line. MR. Vikas, you can go with the question, please.
Vikas Singh
Am I audible?
Pankaj Sarda
Yeah. Yeah, yeah.
Vikas Singh
Yeah, sir. Sir, just wanted to understand our RM costs on a standalone level has jumped up pretty sharply. So what are the main reasons behind the same?
Pankaj Sarda
Iron-ore.
Vikas Singh
Our total raw-material cost has increased very sharply. One could be iron-ore, what are the other cost component which has led to such a sharp increase on the sequential iron-ore cost iron cost, I’m interesting.
Pankaj Sarda
No, it’s not only the iron-ore because we have a power plant also to them, coal package is also there, the oil is. And in case of is you see the selling prices has gone down. So raw-material cost has not gone down. So raw-material consumption includes the effect of the higher-cost of the inventory of the so-far as total metro consumed is concerned, that includes the coal consumption in the IPP.
Vikas Singh
Understood. Sir, in terms of realizations, how should we look at the spot realizations right now versus the 3Q averages, how much they are higher or they are at the same level? If you could give us some idea?
Pankaj Sarda
More or less prices are at the levels at which these were for the quarter three average.
Vikas Singh
Understood. Sir, our SKS power plant would have been 70 or higher PLF level this quarter. So if you could tell us by when we can see the full utilization and the Phase-2, any idea on the Phase-2 expansion plants because we have already utilized 600 megawatt as of now.
Pankaj Sarda
Yeah. He has already conveyed in our opening address, in January, we have achieved 97% PLF. So the machines are operating at full capacity, but in-between we are facing certain maintenance issues. So we are addressing all those issues. So average PLF will improve. But yes, we have to take certain — more steps to ensure that at sustainable level, we achieved 100% capacity utilization. So that is the case with the PLA, but as of now plant is operating at 100% capacity and is generating a capacity of 600 megawatt.
Vikas Singh
So any plan to expand this capacity? I believe we have some — already the infrastructure is already there for the next 600 megawatt.
Pankaj Sarda
Yeah, basic infrastructure is readily available, but we have to seek all the approvals and carry-out the technoeconomic viability study and all the environmental-related clearances. So it will take a strong time, not in the immediate future. But yes, we will take steps one-by-one. Effectively, first we have to go for the approval.
Vikas Singh
Understood. Sir, my second question is related to division. Are we making PVT level losses right now and since the magnese prices are sharply up in last few days. Have we seen this to reflect in the finished product prices as well?
Manish Sethi
The fertilize prices recently have moved up and we have seen a little bit of improvement on the ore side as well. But we’ll have to wait-and-watch in the coming two, three months as to what happens because there are protectionist measures which have been taken by, you know, many countries like Europe, US, they both announced. So we’ll have to see how the demand pulls up in the coming two months.
Vikas Singh
Yes. But for this quarter we had PBT level losses is that assumption is correct looking at the number right now
Pankaj Sarda
We had an inventory losses to some extent, but not PBT loan losses at the PBT loan.
Vikas Singh
Understood, sir. Understood. So that’s all from my side for the timing. I’ll join the queue if I have further questions.
Operator
Thank you. The next question is from the line of Mahek from Algility Advisors. Please go-ahead.
Mahek Talati
Yeah, hello. Hi, thank you for the opportunity. Sir, sir, wanted to understand more on the price — more from the pricing point, okay. So what is the pricing difference between the power in which we sell from the hydro power plant and from the SKS power plant as well as the profitability.
Pankaj Sarda
Hydropower plants, we have long-term pricing contracts. So those are supplied at a fixed-price and there are different prices for different plants which commissioned at different points of time. So-far as the thermal power — our IPP thermal power plant is concerned, we are selling part of the power in the long-term part of the power, in the medium-term part of the power in the short-term and the remaining power we are selling in the exchanges. So these prices are subject to-market fluctuations. So comparing directly is very difficult because there we have a long-term contract here, we are selling in the — majorly in the spot market. And part of it is going into the medium-term also.
So there cannot be a direct comparison with prices of IPP power plant will be subject to the market fluctuations and seasonal effect also. During any season, the price relations may be lower during summer seasons, you may get much better prices. So there is no direct comparison between both the projects.
Mahek Talati
Okay. But any ballpark number like what would be the average realization like for in thermal, you mentioned in the last previous con-call, it’s close to INR5 unit. So similar, what is in the hydropower plant as well any ballpark number.
Pankaj Sarda
A hydropower plant in one plant, we have tariff of INR3 85%, another plant, we have INR21%, third power project is subject to cost-plus formula. So that vary from maybe INR7 to INR5 or so. So in case of thermal power plant, we can definitely expect INR5 plus on average for the whole year.
Mahek Talati
Okay. And profitability will be different for both like a thermal EBITDA level if EBITDA is close to 40% in hydropower, it would be more or it’s in the similar range.
Pankaj Sarda
Yeah, hydropower EBITDA level is in the range of 50%.
Mahek Talati
80%, okay. Okay sir, last question.
Pankaj Sarda
You don’t have any raw-material cost there you have more of the interest cost. So EBITDA cannot be compared for both the projects. One is the raw-material, another is the interest is raw-material. So there is no direct comparison on EBITDA level.
Mahek Talati
Okay, understood. And sir, last question, any update on the Supreme Court ruling for the SKS power plant?
Pankaj Sarda
Hearing has not yet taken place.
Mahek Talati
Okay. Okay. Done. Thank you.
Operator
Thank you. A reminder to all participants, you may press charge in one to ask question the next question is from the line of Balansh from Arihant Capital Markets. Please go-ahead.
Balasubramanian A
Good afternoon, sir. Thank you so much for taking my questions. So my first question regarding this prices, it’s Q-on-Q 19% decline in average realization for around 8% Q-on-Q in silicon mechanism. So like any specific reasons like what are the dynamics in the market?
Pankaj Sarda
Can you repeat the question, please because I’m not able to hear you clearly., can you hear clearly? No. We could. We could. Yes, sir.
Balasubramanian A
Okay. Sir, like in price trend, I’m looking at, it’s a 19% Q-on-Q downside for ferro and around 8% Q-on-Q downside silicon management. Any specific reasons for it and what are the minor market dynamics in the — at this point of time?
Pankaj Sarda
Sorry, we are not able to hear your question clearly. Voice is very muffled.
Padam Kumar Jain
Voice is very muffled. It is actually coming very muffled. I mean, I can hear some parts of it that you want to know the silico magnese prices in the ferroloys overall pricing coming down and what are the reasons thereof? Is that correct?
Balasubramanian A
Yes, I mean.
Padam Kumar Jain
Yeah. So particularly there is no reason. It’s a commodity and there is a cycle we have seen that there have been a bit of a slump in-demand, you know, and that’s the only reason
Balasubramanian A
Hello.
Padam Kumar Jain
Hello. Y
Balasubramanian A
Es, sir. Sir, my second question is regarding on looking at the sales volume data for the iron-ore pallet and sponge ion, etc. So only Spanch and only year-on-year, year-on-year 48% growth. The remaining are into less than — like some of the — like volumes are looking at 20% and the remains are 18% kind of downside only. So our revenue has reported 40% to 43% year-on-year and like how much it comes from price realization side and volume realization side?
Pankaj Sarda
Can you actually rejoin because everything that you’re saying is muffled up. We can’t hear you clearly. At least I’m not able to gent up. No, we are not able to hear clear. If I’m able to like echoing or muffling up I’ll come back-in queue. Jab, can you just rejoin and again, come back and ask the question, please?
Balasubramanian A
Fine, sir thank you.
Operator
A reminder to all participants, you may press and one to ask questions. The next question is from the line of Devang from Eagle View Ventures. Please go-ahead.
Unidentified Participant
Hi, sir. My voice is audible?
Pankaj Sarda
Yeah. Clear. Yeah, clear, clear. Absolutely clear.
Unidentified Participant
Sir, our long-term borrowings increased from INR1,000 crores to INR2,400 crores. What are the peak debt we can see in coming quarters?
Pankaj Sarda
I think this must be the peak for the coming quarters.
Unidentified Participant
Okay. So this is a peak number for debt.
Pankaj Sarda
Yeah, at least for — unless we go for some other major activity for — at least for next few quarters, this is the peak. Now it is getting reduced as we are starting repaying the loan taken for SKS acquisition. So it will go down from here.
Unidentified Participant
Okay. And sir, my second question is, we have a good place on-balance sheet. We have a we have very low debt. Can we expect dividend payout in coming quarters or coming years?
Pankaj Sarda
That is a matter to be discussed at the Board meeting and decided by the Board. It’s very difficult to comment on this at this juncy.
Unidentified Participant
Okay, okay. Thank you, sir.
Operator
Thank you. Thank you. The next question is from the line of Vikas Singh from PhillipCapital. Please go-ahead.
Vikas Singh
Hi, sir. Thank you for the opportunity. I just wanted to understand our capital allocation preferences, given right now our debt is high, but obviously, we would be paying with the cash-flow. If we have a second round of capex, then our choice of the business would be majorly — first choice of the investment would be steel, power or oiler. How should we look at it?
Pankaj Sarda
No, we are investing in a diversified way. We are investing in hydropower projects also, we will be taking up two more hydropower projects. We are investing into the coal mines also as a backward integration. We have planned even for the iron-ore mine. So majorly it will be going on the backward integration side and definitely if we come up with the expansion of the SKS power plant, that will be another major capex. So the capex — capital allocation will be distributed over all the different segments of the activities carried out by the company.
Vikas Singh
Understood, sir. Yes. And sir, we haven’t participated in any magnese ore mining panels. I think basically.
Mahek Talati
There is no major magnese mine which has come up in the country right now, there have been two, three auctions, which are all small mines. There are six hectares, seven hectares, eight hectares and the reserves are very, very meager. They are like some 60,000, 50,000, 40,000, those are not viable workable mines with low grades of magnese in it so we are not participating in these tenders
Vikas Singh
Understood that’s all my work
Operator
Thank you. The next question is from the line of Aman Matrija from Augmenta Assets Managers. Please go-ahead.
Aman Madrecha
Yeah, hi, sir. Thanks for the opportunity. Sir, firstly, I would like to understand our strategy on the coal mines, like for example, the upcoming coal mine would be the capacity expansion on the side and another would be the Sharpur west coal mine. And so how are we looking at the same and what is our strategy towards the same? And how are we looking at all these mines under the underground mining thing? Like what is your view on the same and how much viable is the underground mining scenario in India currently?
Pankaj Sarda
So underground iron-ore mine, as we go beneath the surface, the grade of the coal increases. So the capex and the cost of production increases, but at the same time, the quality of coal also increases. Now we are little dependent on our imported coal substitute also that we are buying from South Africa. So all these underground coal mines will help us to reduce our imports of RB2 and RB1 grade of coal from South Africa. And even for our ferroloys units, we are dependent on high-grade coal. So that will — that raw-material base will also come from the underground coal mines.
Aman Madrecha
So I just wanted to understand today, the underground mining things like for example, if I — correct me if I’m wrong, around 95% of the coal mining in India is from open cost mine currently and around 5%, 7% is from underground mine. So what was the thing that was hindering this underground coal mining operations in India and what will change this going-forward because we are entering into various revenue-sharing agreements with Coal India and MBOs. So what is your take on the sales?
Pankaj Sarda
No, we have taken only one mine under coal — revenue-sharing arrangement from Coal India. Rest of all are direct allocation to us from the Ministry of Coal. So in one coal mine and that will not be underground as of what we have planned for the mine in revenue-sharing that will be open cast mine. And underground miss, we have taken 200 ground mines, one is waste and then another is another 4×5. 4×5 was an operational coal mine, which was operated earlier by Monet and on by Hindalco. Now it has come for auction third time and now we have taken to this is an operating underground coal mine and it is both high-grade of coal near our existing coal mine 4×7. So the five-grade coal which will be utilized for our sponge ion plant and plant and to that extent, the capacity of our 4×7 will be freed for SKS power plant.
Mahek Talati
And just to clarify that I assume you think that underground coal mining is difficult and just has started happening, but India has been doing underground coal mining, iron-ore mining, mining for the longest period of time. So there is absolutely no problems in underground coal mining per se.
Aman Madrecha
Understood, understood. So sir, like going by your comments, like for example, this Kara 4×7 will gradually meet the requirements fully of our SKS power plant. This the Palma 4×5, the approvals are under process and the Sharpur waste coal mine that will be used for our sponge and sponge iron and operations, right, correct.
Pankaj Sarda
Yeah, and surplus coal, if any will be sold-in the market.
Aman Madrecha
And sir, what is the expected timeline for the? It can take another one and a half year?
Pankaj Sarda
One and after two years. Two years we are considering from here once we get the mining opening permission during the current quarter, it should take not — more than minimum one and up and again two years of the time to commence. We are considering two years time to start the production.
Aman Madrecha
So sir, sir, sir, as on-date for this for the existing operation, like how much of this Gari Palma four by seven mines we are selling outside and how much we are consuming in captively?
Pankaj Sarda
No, we are not selling any coal outside after accretion of first case.
Aman Madrecha
Understood.
Pankaj Sarda
We are falling short of the requirement, rather we are bank all from the market.
Aman Madrecha
Okay, sir. That’s all from my side. Thank you, sir.
Padam Kumar Jain
Thank you.
Operator
Thank you. Before we move to the next question, a reminder to all participants, you may press star and one to ask questions. The next question is from the line of Bala from Ariant Capital Markets. Please go-ahead.
Balasubramanian A
Yes, sir. Sir, overall international market earlier it’s been impacted by international air market and
Pankaj Sarda
We are not able to hear you.
Balasubramanian A
Hello, right hello.
Pankaj Sarda
Yeah.
Balasubramanian A
Sir, I’m audible?
Pankaj Sarda
A little better.
Balasubramanian A
Yes, sir. Sir, in earlier you mentioned about the overall international market has been little bit impacted because of Australia has impacted by flood and alli market also is quite slow and attack also have been impacted in the international market. You have mentioned about the demand expected to pick-up from February month onwards. So like what is the status on that overall international market side?
Manish Sethi
Yeah. See, the overall international market side right now it is subdued and it will take some time, I guess, once the clarity on the protectionist attitude by European Union, we have to see, we have to look at that. Again, Trump has just announced duties on steel you know today, but it’s not clear how many countries they are going to apply the duties onto. So we have to wait-and-watch. Right now, the focus more will be on India’s domestic demand that will come in, the infrastructure push and the growth that we will see in India. So India will be quite in a comfortable position because I think the most of the duties will be targeted towards Canada, China, Mexico, Latin-American countries. This is what we expect. So I think overall, you know, after maybe a month or two, we’ll have the complete clarity on the international markets. But right now, the demand is a little slow.
Balasubramanian A
Okay, sir. Sir, I’m looking at the sales data, sales volume data, Span only have more than 48% year-on-year. The remaining are less than that only, but our revenue has been 43% year-on-year in this quarter. So do we understand like about the growth side, whether it’s volume-driven or price-driven?
Pankaj Sarda
So you see is one of our engineering products which is partly consumed in the downstream production and partly sold-off in the market. So when the production has gone up, if you see, there is no material change in the production, slight change is there definitely. So in the nine months, we have produced against 238,000 tonnes, so we have produced 249,000 tonnes. So the higher sell is on account of the lower consumption in the steel steel production because the steel production has reduced a little bit because we have been selling power in the market.
That’s why percentage-wise it appears to be on the higher side because we are selling a very small quantity of the stone iron in the market. So even slight change in the sales side. There is no material change in the production side, but yes, sales side, it has gone up because we have consumed less quantity in the production of steel. Otherwise our steel capacity is more or less constant and stable. So except marginal improvement on account of the efficiencies, there is no material change in the production side in the steel segment?
Balasubramanian A
Okay, sir. Sir, is there any clarity on the growth at 43% in this quarter year-on-year growth, whether it’s driven by price or volumes?
Pankaj Sarda
Now as stated, our steel production will remain more or less stable, except slight improvement on account of the efficiencies. So sales of one-product may slightly go up, another product may slightly go down that may happen, otherwise it will remain more or less in the similar levels because if we are selling surplus power, because if we are getting better realization on-sale of the power, we are reducing production of the steel billet that may result into increase in the expansion sale, but that may reduce the sale of the billet. But it will not affect the profitability because ultimately we are generating revenue either by sale of the steel or by sale of power.
Balasubramanian A
Got it, sir. Got it. Thank you thank you.
Operator
A reminder to all participants, you may press R and one to ask questions. The next question is from the line of Rajesh Bandari from Nakota Engineers. Please go-ahead., sir.
Rajesh Bhandari
Sir, presentation gives you quality on presentation the content, both are extremely good.
Pankaj Sarda
Thank you.
Rajesh Bhandari
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Pankaj Sarda
[Foreign Speech]
Rajesh Bhandari
[Foreign Speech]
Pankaj Sarda
[Foreign Speech]
Rajesh Bhandari
[Foreign Speech]
Pankaj Sarda
S[Foreign Speech]
Rajesh Bhandari
But it has a better selling value than
Pankaj Sarda
Pardon, better selling the sale price. Sale price is good or sale price is good.
Rajesh Bhandari
Yeah. Sir,, do you say thermal power plant, the hydro power plant give you the current any chance?
Pankaj Sarda
[Foreign Speech]
Rajesh Bhandari
[Foreign Speech]
Pankaj Sarda
[Foreign Speech]
Rajesh Bhandari
Thank you. Right, sir.
Operator
Thank you. Thank you. Thank you. A reminder to all participants, you may press char and want to ask questions as there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. Over to you, yeah.
Pankaj Sarda
Thank you. To summarize, while the steel segment faced pricing and margin pressure, SKS Power’s operational performance improved and hydropower generation saw year-on-year growth. Backed by sound balance sheet, low leveraging and strong liquidity, the company has been reinvesting surplus funds in a number of diverse projects for consistent growth. In the next financial year, 25 megawatt hydropower plant, mineral wool project, 50 megawatt solar power plant and 4×5 will also contribute to the profitability. The diversification strategy of the company has paid-off to have consistently sustainable cash flows, insulating us against cyclicality of the steel industry. Please feel free-to reach-out to us for our IR team for any further questions. Thank you all the participants.
Operator
Thank you. On behalf of Energy and Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.