Indian Metals & Ferro Alloys Ltd

“Indian Metals & Ferro Alloys Limited Q3 FY '26 Earnings Conference Call”

Indian Metals & Ferro Alloys Limited

Indian Metals & Ferro Alloys Limited

First, a word about the performance. I'm quite pleased to report to you about the robust set of numbers that we have reported for the third quarter of FY '26, where our EBITDA and PAT numbers have gone up as we had indicated on account of the improvement in realizations in ferrochrome pricing. Of course, we have had a continued focus on productivity, on making sure that output is on track, focus on efficiency that is our various consumption norms. And by and large, our costing has been stable with a slight increase in the power generation cost on account of coal prices. But other than that, during the quarter under review, the costing has remained stable. And taking the improvement in realization into account, we are reporting these numbers. I will just quickly go through the production and the sales numbers for Q3 FY '26. Ferrochrome production during the quarter has been 67,196 tonnes. Power generation stands at 256.17 million units and chrome ore raising during the quarter is 265,468 tonnes. And if you look at sales of ferrochrome during the quarter, that stood at 64,802 tonnes. On the ongoing expansion and acquisition plans, as far as the greenfield project at Kalinganagar is concerned or KNR 1 as we refer to it, I'm glad to report that the project is on track, and we expect to commission the first furnace in June 2026 and the second furnace shortly thereafter. So, it's at a very advanced stage and on track. Secondly, as far as the strategic acquisition is concerned, which we refer to as KNR 2, we are in the process of obtaining various statutory and other government approvals, and we expect to close out the deal in the ongoing fourth quarter of FY '26, more specifically, I think, within the month of February itself. Now in as much as output from the acquisition is concerned, anything that we get in fourth quarter is going to be a little bit of a bonus, but we really expect volumes to come in, in the true sense of the word in first quarter of FY '27. And this is, of course, something which is going to be immediately value accretive. Finally, in as much as the ethanol project is concerned, that's again at a very advanced stage, and we expect to commission it in March 2026, that is next month. So, there is a slight delay because we were initially targeting the second half of February, but there's been a slight spillover on that, and we are expecting to commission it in March. And this is something after the initial sort of stabilization activity, we expect it to start contributing to the top line in, starting April, so in FY '27. That is where we stand. And I would now like to move on to the Q&A section, and we will do our best to answer your questions and provide further clarity and information about the company's operations. Thank you. Moderator: Thank you. We will now begin the question-and-answer session. The first question comes from the line of Aashav Patel from Molecule Ventures PMS. lfflfa

Indian Metals & Ferro Alloys Limited

Indian Metals & Ferro Alloys Limited

But that's predicated on a couple of things. One, that as we understand that the tariff of USD0.87 covers broadly Eskom's variable cost and some degree of legacy costs, but not their full overheads. So that in itself, to my mind, cast some sort of uncertainty about how practicable this is. And secondly, that NERSA has also said that the difference between the tariff to be paid by these 2 customers and what is actually required by Eskom is to be borne by the government. The question here is that how practical is it for only 2 companies to get a special tariff, but again, that's not in my scope of competence or control. But what we certainly are waiting to see is how sustainable is this tariff. And secondly, we believe that even if these companies start up production, it should lead to some, when ferrochrome production in South Africa had come down sharply, the ore exports to China moved up, I wouldn't say correspondingly, but certainly as a consequence. So now with ferrochrome, if it were to pick up in South Africa, logically, it should lead to some lowering of chrome ore exports to China and therefore, lower ferrochrome production in China. At some level, we think it may turn out to be a zero-sum game. But more than anything else, I wanted to make the point that I'm more concerned about what is in our control and the fact that we have a fully integrated business model, and we are efficient, we are competitive, a lot of focus on productivity and efficiency. I would focus on our capabilities rather than get distracted by the noise around what is happening elsewhere. Aashav Patel: Sure. Got it. Sir, my follow-up is that there is this structural shift which is happening globally in the ferrochrome industry. Now the cost curve for most of the top producing countries is moving significantly upwards. Given your multi-decade experience in the industry, how significant do you see this happening? And how beneficial it is for integrated player like ourselves? Subhrakant Panda: You're absolutely right that there are cost pressures on non-integrated producers because chrome ore prices are moving up. If you look at UG2 prices in South Africa, they are around USD300 a tonne. I haven't kept track of domestic prices in India, but they continue to be elevated. So as a result, there are significant cost pressures. And from that point of view, the fact that we have a fully integrated business model is what adds to our resilience and competitiveness. Now one has to see how this plays out. But one of the reasons ferrochrome prices have moved up is, as I said, there is growth in stainless steel, not tearaway growth, but there is growth in stainless steel, but more importantly, there are cost pressures. If demand improves further on account of stimulus measures in China, on account of some of the geopolitical issues sort of moving towards resolution, etc, if demand were to pick up a little bit more, I definitely see ferrochrome prices moving up. And equally, a lot of non-integrated producers in India have cut back production. There have been cutbacks in production other than in South Africa. We do see a sort of a structural sort of gap between demand and supply persisting over the next 1 to 2 years, which should be supportive of prices. lfflfa

Indian Metals & Ferro Alloys Limited

But then again, I would say this with a caution that this is a general trend that we envisage, but we don't really look at anything beyond the ongoing in the next quarter because experience has taught us not to get ahead of ourselves. But I don't see any curveball coming out from the left field, which significantly alters the market dynamics at this point in time. Aashav Patel: Got it. And sir, impact of Chinese anti-involution is already visible on ground? Subhrakant Panda: No, whatever they have, ferrochrome production in China has picked up significantly in line with South Africa cutting back. And, if they are taking some smaller inefficient furnaces out, they are adding capacity both in ferrochrome and the same exercise is happening in stainless steel. But China is a consumer. As you know, they have a significant export duty on ferrochrome. We don't see increase in Chinese ferrochrome production being a threat in any manner to ferrochrome prices globally. Moderator: The next question comes from the line of Parthiv Jhonsa from Anand Rathi Group. Parthiv Jhonsa: Congratulations on a great set of numbers. Sir, just quickly wanted to again circle back to the entire South Africa tariff scenario. Considering if things work out in their favor, do you expect all the smelters from Glencore and Samancor to come on stream? Or it is only for certain smelters which would be there and a couple of smelters which are actually not operational since some time now, they will not come back on stream? Because if that happens, the supply crunch still persists, if I'm not mistaken. Is the understanding and thinking correct, sir? Subhrakant Panda: Parthiv, thank you for your kind words on IMFA's numbers for the quarter. As far as South Africa is concerned, again, to reiterate, the tariff announced for 2 companies has come down from ZAR0.135 to, I mean, ZAR0.87 from ZAR0.135 to ZAR0.87. And as I mentioned, what we read is that it covers Eskom's variable cost and part of some legacy costs. I think the concerns which have been expressed about how sustainable this is, is on account of the fact that it is for 2 companies, and certainly, it will lead to demands from others is the expectations, whether it is manganese steel, aluminium, etc. And the second that, obviously, covering only variable costs may not be sustainable, and that is where NERSA has very clearly said that the government has to reimburse and the burden shouldn't go on to the common to the average consumer. And the ferrochrome producers on their side are saying that 87 is not good enough, and it needs to be 62. This is a situation which is in flux. It's not something into which, we are seeing it from outside and reading about it, but I don't have any particular insight. But there is a lot of skepticism, which has been expressed about how feasible is this and how sustainable is it going to be. One. And in terms of revival of ferrochrome production, I understand some of the smaller capacity, etc, has, I believe, permanently shut down. lfflfa

Indian Metals & Ferro Alloys Limited

Now if you look at the larger producers, I think their capacity can be divided into the more efficient ones like Glencore's Lion and the rest which are less efficient. As of now, we don't have any concrete information on, although I believe that Glencore might be restarting its Lion facilities in February or March. But then again, as I said, my expectation is that you can't have ore exports to China at exactly the same levels even as ferrochrome prices picks up because, first of all, there is the availability issue. And second, if there has been a distinct increase in Chinese ferrochrome production corresponding or consequential to a reduction in South African output. Now if Chinese output doesn’t come down and South Africa adds its capacity, then logically, ferrochrome prices will fall. And forget about what it does to us. I mean that in itself is going to defeat the whole purpose of giving special tariffs to South African ferrochrome producers. You can't look at one part of the equation and say that tariffs have been brought down and therefore, everything is hunky-dory. I think this is a complex equation, and there are multiple factors at play. And you plug one leak somewhere and it will show up somewhere else. That's our take on the situation. Parthiv Jhonsa: Thank you for such an elaborate answer, especially considering the entire global macro is interlinked to the entire fact. Sir, my second question is pertaining to your EBITDA per tonne. I just wanted to get a sense that EBITDA per tonne has actually surpassed this INR25,000 mark, especially after Q2 of '25. So, after multiple quarters, you have actually surpassed that mark. Just wanted to understand what has changed between Q2 to Q3 that there is a substantial jump in the profitability? And also, how do you plan your Q4? Considering you have given the guidance at for '27 and '28, just wanted to get a sense of ore raising guidance or whatever you can share for Q4 and also for the next few years? Subhrakant Panda: Parthiv, the short answer to what has changed between Q2 and Q3 of FY '26 is ferrochrome prices. Realizations have moved up by roughly by about INR6,000 a tonne. That is what translates through into the improved EBITDA margins. In a single word, it is prices. And as I said, in ongoing Q4, we did see that the INR117,000, INR118,000 come down briefly to about INR106,000 to INR108,000. But again, leading up to the Chinese New Year holidays where there tends to be a little bit of stocking up by Chinese buyers and consequent to over constraints and elevated prices, domestic prices have moved back up to the INR118,000 to INR120,000 a tonne mark. We do expect the current, what the average pricing that we saw in Q3 to more or less translate through into Q4, possibly with a slight upward bias. So, we are reasonably confident about similar EBITDA margins in the fourth quarter as well. lfflfa

Indian Metals & Ferro Alloys Limited

Indian Metals & Ferro Alloys Limited

But the market dynamics are such that there will be some volatility. It's not going to be a steady line or only with an upward bias. But our key commitment is that we have the wherewithal to be more competitive and more resilient than most. So that is one. In terms of cost structure, I mean, independent of this, I believe we have seen the lowest prices in the recent past in metallurgical coke prices, and that's something which is trending upwards a little bit. But then again, it will, all of this will put pressure on bringing cost pressures on the entire value chain and should translate through into perhaps better ferrochrome prices because while we are fairly comfortable with our EBITDA margins, that number doesn't apply to, or that position doesn't apply to all producers. Moderator: The next question comes from the line of Harsh Vasa from SBI Securities. Harsh Vasa: Congrats, sir, on a robust set of results and to the entire team. Sir, my question was that what would be the capex for FY '26, '27, '28, if you could break up? And the capex would be what for, which part like the amount, for example, for the mines and for the greenfield and like that, like the total? Saunak Gupta: On the capex side, in KNR 1, we have almost spent out 60% this year. About 40% will be remaining, which will be around INR300-odd crores and will be spent in the next year. And the other one would be the residual value of the ethanol project, which mostly we'll be spending in this year, and about INR50 odd crores will remain for next year. For the mines, we have around INR200 crores of capital outlay or spend cash outflow next year. Approximately next year, we are expecting somewhere around INR600 crores plus general capex that we'll be spending out. In the following year, it is primarily the expansion of the underground projects will be the majority spent. This is the overall outlay that we have somewhat planned for next 2 years. And it is like INR600 crores next year and another INR400 crores to INR500 crores the year following. So, INR1,000 crores will be spent for the next 2 years. Harsh Vasa: Okay. Sir, what was the capex which you have already incurred in this year? Saunak Gupta: We have already incurred overall INR370 odd crores this year. Harsh Vasa: Okay. And for the next 3 months, any amount, tentative amount? Saunak Gupta: In next 3 months, we have a plan of approximately INR270 crores to INR280 crores of spend. Subhrakant Panda: Thank you, Harsh. I'll just take this opportunity to just provide a little bit more insight. Just to remind everyone that as far as our acquisition is concerned, which is at a base price of INR610 crores plus GST plus net working capital, that's going to be funded entirely out of internal accruals, and in as much as our KNR 1 project is concerned, we do have a loan sanction of about, lfflfa

Indian Metals & Ferro Alloys Limited

INR470 odd crores. And the drawdown of long-term debt as of now is a little short of INR80 crores. We have hardly drawn down. We are focused more on internal accruals to meet our capex requirements thus far. And we expect the strength of the balance sheet to continue even after the payout, etc, we will still have a comfortable cash position. And of course, with expanded capacity, we will have, I mean, enhanced working capital available. The focus is still to have a conservative bent of mind in terms of taking on debt. Moderator: Our next question comes from the line of Kaushal Kedia from Wallfort PMS. Kaushal Kedia: Sir, I have a generic question on the entire space. We heard the Vice President of the United States mentioned critical minerals and they had a conference where they invited their partners. What do you think Chromium is a critical mineral for the U.S. and they are setting up a price floor for it? I just wanted your thoughts on this. What is happening? And what is this price floor that you look at it? Subhrakant Panda: As far as critical minerals are concerned, as all of you are obviously aware that China has an overwhelming position in terms of not just reserves that they are able to extract, but also the processing thereof. And that is where I think the rest of the world is scrambling to get to some degree of self-sufficiency. If I look at it from India's perspective, lots of initiatives announced by the central government, which is the PLI scheme for rare earth permanent magnets, which is outlays for recovering critical minerals from tailings. And as far as the current budget, which was announced a few days ago is concerned, there was a reference to the critical minerals’ corridor comprising Odisha, Andhra and a few other states. Clearly, given the importance of critical minerals and rare earth elements, the fact that they're used from everything from household white goods to fighter aircraft and the sort, it's something that all countries are scrambling. The U.S. has announced this large fund that they are creating to stock up on critical minerals. Secondly, through the other initiatives, they are looking at coordinated action. That's where I think critical minerals stand. And again, I'll take the opportunity to expand the question and respond. It's an area which we have identified as a potential area of interest for us because there is a degree of similarity because it involves mining and processing of minerals. That's something that we are closely evaluating. And when we find the right opportunity, which is value accretive, we will move forward on it. Kaushal Kedia: Sir, I have a few accounting questions. What is the cash and balance sheet as of today? Saunak Gupta: The total amount which we are having, including investments in mutual funds and bonds is close to INR1,100 crores in our balance sheet. Kaushal Kedia: I wanted to understand the payment. lfflfa

Indian Metals & Ferro Alloys Limited

Indian Metals & Ferro Alloys Limited

The real jump, of course, will come from Q1 FY '27 onwards when additional volumes come into play. But not so much trying to gain the market. Obviously, prices increase when there is demand. So, it's not just a question of trying to encash on higher prices but also making sure that our long-term customers with whom we have relationships, we try to meet their requirements in terms of additional tonnages as and when it comes up. Moderator: The next question comes from the line of Joe Shah from 7 Seas. Joe Shah: Congratulations. We are going very well on our growth plan as far as KNR 1 and KNR 2 are concerned. I think by June '26, we'll be quite well on this plant. Now second thing, recently, Government of India has announced that coking coal is notified as a critical mineral. And my understanding is that in India, we do not have low phosphorus coking coal available and mostly we have inferior coking coal. So, what is your take on this coking coal? Subhrakant Panda: You're absolutely right. As far as coking coal is concerned, India doesn't have very large reserves, we have very large reserves of coal, thermal coal, but not large reserves at all of coking coal. And moreover, what is there is a grade that we cannot really use in the ferrochrome industry, which is why, especially given the grade of ferrochrome that we produce, we are entirely dependent upon imported metallurgical coke from Colombia and from other sources. Yes, the declaration of coking coal as a strategic mineral has definite implications for the steel industry. This is a large import win for them and development of coking coal mines domestically will ease some of that pressure. But realistically speaking, no significant impact for the ferrochrome industry. Joe Shah: Okay. Now one more question about Sukinda Chromite Mine signed up by Tata Steel. Looking at the past happening of Hindustan Copper getting copper mine in Madhya Pradesh, we also get excited that IMFA should also get the Sukinda Chromite Mine, whenever it comes on table. So, what is your idea? Subhrakant Panda: They've announced that they would surrender. The process is yet to be completed. It's only when it comes up for auction that we can have a strategy. But my answer would remain the same that as with any other opportunity, we will evaluate anything which is interesting, we will certainly evaluate, and we will move ahead if we see it as being value accretive. Moderator: The next question comes from the line of Sanket Kapoor from Kapoor Company. Sanket Kapoor: Firstly, pertaining to our capex and the underground mining part. So, if you could just outline to us what's the roadmap? How much have we spent? And pertaining to this underground mining, what amount of the capex goes towards the equipment? And whether we will be opting for the MDO route for the ore that will be taken out? Or what is the thought process there? Subhrakant Panda: I'll ask Saunak to share the capex numbers. We also have Sandeep Narade, who is our mining business head on the call. Broadly, the figure for capex for underground mining is roughly INR1,000 crores. lfflfa

Indian Metals & Ferro Alloys Limited

On the overall capex budget of INR1,000 crores, we have till now already ordered approximately INR780 crores. At present, cash outlay is around INR120 crores till now. And as I was saying that in next year, there is higher amount of cash outlay on this, with a mixture of both infrastructure capex payments as well as development costs that we have to incur for building up the whole underground mine. But I'll also ask Sandeep if he can just add a little more on that. Sanket Kapoor: There is a point here, INR780 crores of order tendering are on the equipment part. So, are we importing this equipment? Or are we sourcing them? Subhrakant Panda: No, INR780 crores is not just equipment. It also includes an element of development because the underground, 2 ventilation shafts, the decline and the main shaft are all being developed. There is a significant element of equipment in there like winders and all of that, INR780 crores is not just equipment. Sandeep Narade: Mostly, we are operating on the MDO mode. And out of overall capex, about 25% of amount will be spent by us for major equipment like the shaft winders and fans. Rest will be the service contract with the MDOs. Sanket Kapoor: And sir, are we sourcing this equipment domestically because there are a few players in the country that are developing. In fact, one player only Eimco Elecon that develops, I think, so underground mining equipment and then the Gainwell Group. So, are we in? Sandeep Narade: No, all these equipment are not in our scope. They are in the scope of MDOs, and they are developing in India and also getting from outside. Sanket Kapoor: Okay, sir. And lastly, sir, Pandaji, for the ethanol part of the story, sir, firstly, you have articulated that it was the land that was available to us, and we were, that was unutilized and the availability of, I think so the RM was there in abundance that led to the project. But taking into account the line of interest that we have, what likelihood is going to be the story for ethanol, because INR250 crores, INR300 crores worth of project will also have management bandwidth and will have its own vagaries and nuisances going ahead, depending upon the government policy. Going ahead, how much of this ethanol is going to be a part of IMFA in the foreseeable future? Subhrakant Panda: Slight correction. It was not just available land, but also other infrastructure such as railway sidings and all of that for bulk handling of raw material. That is one. Second, as we scale up our ferrochrome capacity closer to the mines in, I mean in Choudwar of course, there is no further scaling up. But in Kalinganagar, at some point in time, that will lead to a deemphasis on Therubali. Therefore, it is important for us to find alternate users on what we can do there. Second, minor correction. The capex for the 120 KLD unit is INR150 crores, not INR250 crores, I believe, adequately conveyed that this is a small diversification because we do need to see what we can do with, in Therubali. And it is only if we believe that we cracked the code and are able to, this is more aligned given that it's a B2B industrial product, it is more aligned with our philosophy than FMCG, for example, as I've been saying. But it is only, if we believe that we lfflfa

Indian Metals & Ferro Alloys Limited

have cracked the code, and we can make it something value accretive that we will consider further expansions. As of now, no further expansion commitments. We will review how this project plays out and then see what we want to take it forward. But I'll just take this opportunity to reiterate that our primary focus remains the core business, which is ferrochrome. And that is where the maximum time, attention and focus will be. So, I would hope that there isn't any anxiety on that front. Moderator: The next question comes from the line of Manan Vandur from Wallfort PMS. Manan Vandur: Sir, my one question was that what was the average cost of coke per tonne in Q3? And what is the current price also for this current Q4 quarter? Subhrakant Panda: Sureshbabu, who heads our Ferro Alloys business unit can provide the details. Broadly, we are currently consuming coke, which is around USD250 a tonne mark, and we are expecting that to move up a little bit in future procurements. Sureshbabu Chigurupalli: It is around INR28,000 and USD5 are expected to rise in the coming quarter. Manan Vandur: Just a follow-up on this, INR28,000 was average for Q3. As you're saying is this current market price? Sureshbabu Chigurupalli: Yes, the current. Manan Vandur: Okay. Current is INR28,000 and you are saying that around USD5 can increase from here. And what was the average for Q3? Subhrakant Panda: Manan, we have broadly shared the details. I don't want to go into specific products and specific inputs and exact pricing. Broadly, we have shared the numbers that there had been in line with the pricing pressure or ferrochrome realization pressure going back 2, 3 quarters, coke prices had come down noticeably. And we believe it has hit rock bottom. And our current stock, what we are consuming is around the USD250 mark. And Suresh is a little aggressive when he looks at USD5. I would say that there might be a slight bit more upward bias in terms of costing for metallurgical coke. But it is something that will add to our EBITDA cost a little bit, but not something which will be very significant. Moderator: The next question comes from the line of Amit Lodha from Sanmati Consultants. Amit Lodha: Congratulations. Most of my questions have already been answered. I have got only one question, sir, related to shareholders. Actually, in recent times, your stock price has gone to a very good level. And we as an investor when we bought the shares and find very difficult to get the required quantity of the shares from the market and the price has shot up as there is wide fluctuation in the prices coming up and going down. Again, INR1,500, then INR1,100. So, there is a market, of course, that is the market for which the management is nothing to do. But I only have one suggestion. Since all the ferro alloy lfflfa

Indian Metals & Ferro Alloys Limited

companies like Bawa Alloys Limited, Godavari Power & Ispat Limited, then Vedanta, then Hindustan Zinc, all are having the lower denominations sir. They all are having INR1 or INR2 denominations. I would request the management in the overall interest of the shareholder that management should consider this subdivision of the equity in appropriate either INR1 or INR2 , enabled by small shareholder, not only small shareholder plus mutual fund holder also, and they can easily get in the shares, and they get out of the shares when they want. And that will reduce the fluctuation in the market. That is only suggestion from my side. Thank you very much. Subhrakant Panda: Thank you, Amitji, for your suggestion. We will certainly take that under consideration. I know this topic has come up about having adequate floating stock to provide liquidity, but there are pros and cons to everything, but this is certainly, we will certainly take your suggestion on board and always have the interest of shareholders paramount when we look at taking any actions. Moderator: The next question comes from the line of Rita from Kotak Securities. Rita: Congrats to the management for such an excellent result. I'd like to just ask on the question regarding what was the EBITDA margin for the previous quarter and what is expected in the next quarter? Subhrakant Panda: EBITDA margins, we have actually issued that in the press release. So previous quarter as in Q2 was, if I remember correctly, around the 18% to 19% number and EBITDA margin in Q3 FY '26 is a little more than 23%. Rita: And what will be expected for Q4? Subhrakant Panda: Provided prices hold, which is what we expect it to be, we expect it to be sort of similar. Rita: And secondly, sir, in terms of what we say for the coke INR28,000 price, so is it that INR28,000 gets fully accommodated or there is a specific set of consumption of coke, which reduces the coke cost or there is a 1:1 ratio for reduced. Subhrakant Panda: It's roughly 0.65 tonnes of coke per tonne of ferrochrome. Rita: And is it the same case for ore as well that we, how much ore we gave that much? Subhrakant Panda: Roughly 2.5 tonnes of chrome ore per tonne of ferrochrome. Moderator: The next question comes from the line of Vinit Thakur from Plus91 AMC. Vinit Thakur: I would just like to know what would be a sustainable EBITDA post the Tata Steel incorporation of the plant? And when could we see the revenue coming from it as well on our, from that plant itself? Subhrakant Panda: The second question is easier to answer, which is that we expect meaningful contribution to top line and to financial numbers from Q1 FY '27 itself. As I mentioned, we are looking to close the lfflfa

Indian Metals & Ferro Alloys Limited

deal in the ongoing quarter, in fact, possibly in February itself. We might get a little bit of output in March, but we are not really taking that into consideration. If anything comes, that's the bonus. But realistically speaking, from first quarter of FY '27, and as far as sustainable margins are concerned, there are 2 factors. Clearly, there is volatility both in realizations as well as in input costs. We are, in as much as chrome ore is concerned, we are relatively sheltered in terms of any impact. But when it comes to metallurgical coke, when it comes to thermal coal for power generation, etc, obviously, we are exposed to a degree of volatility. But what will, just to reiterate a point I had made earlier in the call, what will be a significant sustainable advantage of the KNR facilities, KNR 1 and 2 is that logistically, it is far friendlier, similar to or perhaps even better than Choudwar. And therefore, we are expecting between INR1,500 to INR2,000 a tonne at least of reduction in weighted average EBITDA costing. Vinit Thakur: I want the capex like we have planned for the near term, what would be our total capex plan? And what would be our peak debt as well? Saunak Gupta: For Kalinganagar project, we have a total capex plan of INR800-odd crores. That we will be spending out by mid next financial year. And for ethanol, we have INR150 crores that already a major chunk will be spent by this year and the residual amount left will be spent next year. On the mine side, we have said we have an overall capex of INR1,000 crores, but it will be spent out in next 4 to 5 years as we go for the developments. These are the 3 key ones. And in Kalinganagar 2, Tata Steel unit that we'll be acquiring, the asset transfer of the unit, with GST is around INR700 crores. This is the overall spend out, which we are doing. Subhrakant Panda: And of course, for the GST, we will get back, we'll get input tax credit. Vinit Thakur: What would be your peak debt? Subhrakant Panda: Broadly, at the moment, our, the long-term debt drawdown against the sanctioned limit is just short of INR80 crores. The sanctioned amount is INR470 crores but depending upon how the ongoing and the next quarters go, we may not even draw down the full debt amount. We'll see how that, but theoretically, the maximum it will go up to is INR450 crores, INR470 crores. And from a debt equity point of view, we are not looking at, I mean, our outer limit is 0.5, but we are not expecting to go beyond 0.3 at most. Moderator: The next question comes from the line of Akshita from SBI Life Insurance. Akshita: Sir, my question is regarding the market. What is the expected market in quarter 4? How is the prices going to react? Subhrakant Panda: As I said, early on in Q4, there was a slight dip in prices. But now primarily on account, I would say, of Chinese demand stocking up before the New Year holidays, domestic prices have moved up to INR118,000 to INR120,000 a tonne, and Chinese prices are at about USD0.96 to USD0.97. lfflfa

Indian Metals & Ferro Alloys Limited

But in our case, we have long-term commitments and therefore, offtake is not an issue at all. And we'll have to see how exactly the price plays out. But at the moment, we are reasonably confident that price realization will stay around the same levels on an average for the entire quarter will stay at the same levels as Q3. And therefore, we can expect similar EBITDA margins. Akshita: Okay. Sir, as of now, what is our export and domestic ratio? Subhrakant Panda: Very heavily skewed towards exports in excess of 90%. Going ahead, in 2 years' time, we are expecting 60-40 still slightly in favor of exports, but certainly more sort of more focus on the domestic market to ensure that demand is properly met. Akshita: Sir, what is our ratio for the LTC and spot mix? Subhrakant Panda: We have primarily long-term contracts, Akshita. The difference between the 2 categories of long-term contracts is where we have binding offtake contracts for 1 year or 5 years as in the case of POSCO. But what we technically categorize as spot sales is repeat sales to the same customers without any monthly or annual commitment. So, we don't really do spot sales where we find new customers and all of that. Now with added tonnage, we will certainly look at certain niche geographies and all of that, plus we have also started producing niche ferrochrome with 015 phosphorus maximum and 1.5% silicon maximum, which has a significant premium of about 25% or so. For that, we are selling now, starting to sell to some specific customers in Japan. But other than that, I mean, you could broadly call our entire marketing strategy as long-term oriented. Akshita: Okay, sir. And can you just tell me what are the major customers, like you mentioned for POSCO 2 to 3 major customers? Subhrakant Panda: We have a joint venture with POSCO alongside a long-term contract. We sell to customers in Taiwan, in Japan, we do have sales in China. We sell small quantities in Europe, which will probably we will look to perhaps increase a little bit when we expand our capacity. Moderator: The next question comes from the line of Pritesh from Lucky Investments. Pritesh: Yes, sir. What is the volume guidance for FY '27, the ferrochrome guidance? Subhrakant Panda: What we have indicated because we have the acquisition coming online and we have the commissioning of our greenfield unit taking place in starting June. So, from the present levels of about 260,000 tonnes, give or take a little bit, we have indicated that we expect production volume in FY '27 to be approximately 400,000 tonnes, and we expect the volume in FY '28 to be between 475,000 to 500,000 tonnes. These are, of course, barring any unexpected developments, but I don't foresee anything of that sort. lfflfa

Indian Metals & Ferro Alloys Limited

Indian Metals & Ferro Alloys Limited

Indian Metals & Ferro Alloys Limited

And even they were saying that they are looking at India also as their market. Obviously, we can have anti-dumping duty for South Africa to protect our market, but still China and other places could be a bit difficult area. So, I would like to have your views. This is, I think, a real challenge coming to IMFA, the South African production and other things, we are quite safe. But the South African is a big worry for us also. So, will you please give me your views, please? Subhrakant Panda: As I've said, and I will reiterate that I wouldn't want to focus on issues which are not in our control. I believe that we have the right business model, thanks to our captive mines and power generation, the ability to be resilient and competitive. And that is all that I would focus on. And we have the marketing relationships and the tie-ups to be able to place this. And I believe that you will not simply see an increase in production of ferrochrome in South Africa without a corresponding impact on ore exports. And not to mention because of scale back production last year, their grid was relatively stable. As I said, this is a complex equation. It is not a simple thing that rates have been brought down, and ferrochrome production will increase, and therefore, there will be an imbalance, which will lead to lower prices. I believe it is a far more complex scenario, and there are various trade-offs involved. So, is it something that we are looking at and observing? Absolutely. But we are confident about our ability to be competitive. And I think in the end, that's what matters. Joe Shah: So, you think that Indian ferrochrome cost of production will be quite competitive as compared to the South African cost of production? Subhrakant Panda: I would not say Indian ferrochrome production cost, but a fully integrated producer in India. Moderator: Ladies and gentlemen, the last question comes from the line of Anand Sinha from Coal India. Anant Sarda: Yes. Just to see that I'm from Chattisgarh Investment Limited. My name is Anant Sarda. Congratulations on the brilliant set of results. I just have a question that, sir, there is 150,000 tonnes of capacity, furnace capacity in the Tata project and about 50,000 tonnes of furnace capacity was incomplete. So, do you have any kind of, like what is the status of that? And when can that be online? Subhrakant Panda: You're right. The unit has 4 16.5 MVA furnaces, which are capable of producing 100,000 tonnes, which are good to go. And there is a 33 MVA furnace, which is partially complete, which can produce another 50,000 tonnes. Our estimate is approximately a year's time and roughly INR50 crores of capex to make that operational. So, when we take control of the unit, our first focus will be on maximizing output from the existing operational furnaces while, of course, evaluating and proceeding with completing the fifth furnace and getting that additional tonnage from there. Anant Sarda: Okay. And sir, like you said that you're going to shift the international to domestic sales from 90-10 to 60-40 in maybe 2 years' time. But immediately, we can see that the ferrochrome prices in domestic market are quite higher, as pointed by one of the fellow investors. Will the Tata lfflfa

Indian Metals & Ferro Alloys Limited

Kalinganagar 2, the Tata acquisition, will that be particularly used for spot market in the next financial year, sir? Subhrakant Panda: In the next financial year, we will also have our greenfield project commissioned. The point is that we will, first and foremost, give priority to, wherever we have contractual commitments, that is what is our topmost priority. We are not going to divert tonnages because of higher realizations elsewhere because I think it is important to be considered a credible and reliable supplier. The second point I have made conceptually is that as the largest producer in India, it is incumbent upon us to make sure that the domestic market is supplied to the best of our ability. So, taking that in mind, we are looking at the 90-10 becoming 60-40 over the course of the next 2 years. But we will obviously retain the flexibility to sell internationally or domestically depending upon market conditions and demand. Anant Sarda: Okay, sir. And last question, sir, what is the road map for critical mineral space? Like where do you want to position yourself maybe in the mining or maybe in processing or both, what kind of strategy are you thinking, sir, for the company? Subhrakant Panda: Anant, it's very early days yet for us to give any concrete guidance on that. We are evaluating opportunities. And as a general practice, I would say that we are open to evaluating all opportunities which come our way. And we will only pull the trigger on investments if we believe it is value accretive, and we have a degree of competence. But having said that, I mean, we, of course, both from a mining and a processing perspective, have the competence, but where exactly the opportunity lies and how we can maximize shareholder value is what will guide us. And it's too early for us to give any specific comments on that. Moderator: Thank you. Ladies and gentlemen, that brings us to the end of the question-and-answer session. I would now like to hand the conference over to Mr. Abhishek Sawant for the closing remarks. Abhishek Savant: Thank you and thank you to everyone who joined us today and participated in the discussion. We appreciate your questions and continued interest in IMFA. As always, we remain committed to transparent communication and delivering long-term value to our stakeholders. In closing, on behalf of the Board of Directors and management, we thank you all for your participation in this call. IMFA remains focused on operational excellence and long-term value creation. Should you have any further questions, please feel free to reach out to us. We look forward to engaging with you again in the near future. Thank you again and have a great evening. Stay safe. Moderator: Thank you, sir. Ladies and gentlemen, on behalf of Veritas Reputation, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. lfflfa