Jindal Steel And Power Ltd

NSE:JINDALSTEL

Q1-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day and welcome to the Jindal Steel Limited Q1 FY '26 Earnings Conference Call hosted by Nomura. [Operator Instructions] Please note that this conference is being recorded.

I will now hand the conference over to Mr. Jashandeep Chadha from Nomura. Please go ahead.

[Jashandeep Singh Chadha, analyst]

Thank you, Muskan and good afternoon, everyone and thanks for joining the first quarter call for Jindal Steel Limited. I'll quickly hand over to Mr. Vishal Chandak, the Head IR and Strategic Finance; and he'll take you forward. Over to you, Vishal.

[Vishal Chandak, executive]

Thank you very much, Jashandeep. Good afternoon, good day, ladies and gentlemen. I welcome you all to the Q1 FY '26 earnings briefing of Jindal Steel. I have with me from the senior management team, Mr. Sabyasachi Bandyopadhyay, Whole-Time Director; Mr. Pankaj Malhan, Executive Director and Mr. Sunil Agrawal, Head Finance. Without much ado, I'll hand over the phone -- and Mr. S.K. Pradhan, as well -- sorry. Mr. S.K. Pradhan, Head of Marketing of Flats. Without much ado, I will hand over the floor to Mr. Sunil Agrawal for the opening comments. Over to you, sir.

[Sunil Agrawal, executive]

Thank you, Vishal. So good afternoon, ladies and gentlemen. I welcome you to the Q1 financial year '26 earning briefing of Jindal Steel. Let me quickly brief you on the global economic scenario. IMF in its recent update in July has revised global growth forecast for calendar year '25 to 3% from 20 -- 2.8% in its April forecast, reflecting improved financial conditions and improving certainty to the tariff regime as compared to previous quarter. China continues to grow well over the stated target of around 5%. The IMF forecast for calendar year '25 is 4.8%. This is partly driven by front ending of the exports to the U.S. before the tariffs come into force. However, the tariff related to uncertainty continues to linger on. Global inpatient is tended to gradually decline from 5.6% CY '24 to 4.2% in CY '25.

India's crude steel production grew 1% quarter-on-quarter to 40.6 million tonnes in Q1 FY '26, while demand contracted 5% quarter-on-quarter to 38.3 million tonnes due to seasonal weakness and early onset of monsoon. Steel export declined by 4% quarter-on-quarter to 1.6 million tonnes and import declined 19% quarter-on-quarter to 1.9 million tonnes. India remained net importer of steels in Q1 FY '26 for fifth consecutive quarter with 0.3 million of net imports.

Chinese steel production continues to outpace its weak domestic demand, resulting in elevated export impacting price globally. China is currently running on annualized export of 116 million, highest ever, which has existed in several countries, taking measures to stem the low-cost import from China. Several countries have either imposed or increased safeguards or antidumping duties against Chinese steel imports to shield their domestic industry from unreasonably low price imports. Government of India introduced a provisional 12% safeguard duty on select steel imports, effective April 21, '25. This result has stemmed the flow of imports, the provisional duty will be effect for 200 days.

During the quarter, domestic HRC and TMT price increased on a sequential basis. HRC prices were partly supported by the 12% safeguard duty on most of the flat steel imports effective April 21 but corrected later due to weak domestic demand. TMT price opened on a strong note but dipped down due to the early arrival of monsoon and subsequent inventory in the system.

Now let me start with the key quarterly numbers. Production during the quarter 1 was marginally down by 1% quarter-on-quarter to 2.09 million tonnes, sales volume at 1.9 million tonnes, down 10% quarter-on-quarter basis on account of replacement of inventory after excessive drawdown in Q4 of FY '25. This is the seasonally strong quarter. Consolidated gross revenue fell 8% quarter-on-quarter to INR 14,336 crores on account of lower volume, partly offset by increase in the ASP. During the Q4 earnings call, we guided for savings of around $10 to $15 in our Q1 coking coal consumption. Our actual coking coal cost has reduced by $11 per tonne, in line with our guidance.

Consolidated adjusted EBITDA for the quarter stood at INR 2,984 crores and adjusted EBITDA per tonne stood at INR 15,680 per tonne, which is up by 35% on quarter-on-quarter basis. Consolidated PAT for the quarter stood at INR 1,496 crores, which is 36% higher than the adjusted PAT on quarter-on-quarter basis. The strong financial performance was driven by higher ASP and lower input cost, including reduction in conversion cost. Coming to our debt profile. Our consolidated net as at 30 June was INR 14,400 crores, which has increased by INR 2,443 crores on a sequential basis primarily on account of working capital buildup. Accordingly, net debt-to-EBITDA stood at 1.49x at the end of the quarter. We reached our commitment to kept the net debt to EBITDA at 1.5x, underscoring our position as one of the strongest balance sheet in the industry.

On total CapEx in the quarter stood at INR 2,226 crores. Out of our total announced CapEx of INR 47,043 crores, we have spent INR 28,150 crores till 30 June '25. On mining front, we have won Roida-1 iron ore and manganese block in Odisha. This block has an EC capacity of 3 million tonnes per annum and estimated reserve of approximately 126 million tonnes. The company had already started extraction of iron ore from this mine. We plan to extract around 1.6 million tonnes in FY '26 from this mine. I am pleased to say that we have successfully commissioned our first 0.2 million tonne continuous galvanizing line at Angul. This makes an important milestone in our journey and reinforces our commitment to deliver high-quality value-added steel products to meet the evolving needs of diverse industries.

As informed previously, the commissioning activity of blast furnace 2 have already begun with the lighting of 3 gas stoves in Q4 FY '25. We are on track to deliver the first hot metal from blast furnace 2 in this month. Rest of the project, including BF-2, BOF-2, slurry pipelines, SDPP are progressing well as per scheduled timeline. We expect the slurry pipeline to be commissioned during the current fiscal year.

For Q2 FY '26, we expect the consumption cost of coking coal lower by around $5 per tonne. The iron ore costs are currently flattish on quarter-on-quarter basis. Domestic steel prices are currently lower by 5% to 7% compared to Q1. While prices are soft currently but the early indicators says that the possibility of turnaround. However, it is a little early to talk about how Q2 is setup.

With this, I open the floor for question and answer. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Rajesh Ravi from HDFC Securities.

[Rajesh Ravi, analyst]

Yes. Could you explain the volume -- reasons for volume decline on a year-on-year basis? And given the earlier guidance of 8.5 million to 9 million tonnes, with Q1 volumes sharply down, is the guidance still remains? Or do you look to cut down on the same?

[Sunil Agrawal, executive]

Saby sir?

[Sabyasachi Bandyopadhyay, executive]

Yes. Vishal, I was going to -- Good afternoon. Hello, everybody. Thank you for joining. From our standpoint, production was broadly stable quarter-on-quarter basis in the first quarter. Sales volume was certainly impacted by 10% but that happened because of the early onset of monsoon, also had an inventory buildup, so which certainly will get liquidated over the entire course of the year. As far as guidance towards the production and sales for the balance of the year and for the full financial year, we remain on course and we remain committed to those numbers.

[Rajesh Ravi, analyst]

What was the utilization in this quarter?

[Sabyasachi Bandyopadhyay, executive]

Utilization in terms of?

[Rajesh Ravi, analyst]

Production utilization, which you share every quarter?

[Sabyasachi Bandyopadhyay, executive]

In this quarter, capacity utilization you are asking for?

[Rajesh Ravi, analyst]

Yes, yes. Correct.

[Sabyasachi Bandyopadhyay, executive]

Yes. So we were roughly about, I would say, 90%, 92%.

[Sunil Agrawal, executive]

So can I take this question?

[Sabyasachi Bandyopadhyay, executive]

Yes, Sunilji.

[Sunil Agrawal, executive]

Yes. In our basically [indiscernible] plant, we -- our capacity utilization was 95% and Angul, we are roughly around 83%, 84%. On an average, we can say that's the blended 90%.

[Rajesh Ravi, analyst]

Because March, you had mentioned capacity utilization already 5%. And from there, sequentially, volumes are down 2% -- 1%. So surprising how are we saying utilization is close to 90%?

[Sabyasachi Bandyopadhyay, executive]

So I think basis..

[Vishal Chandak, executive]

Sir, could you please repeat your question. Your audio is not clear. Can you please repeat the question?

[Rajesh Ravi, analyst]

I'm saying in March quarter press release and presentation utilization was mentioned for company at 85%, with production number shared at 2.11 million tonnes, the 2.09 million tonnes it should be lower than 85% because you mentioned it is closer to 90%.

[Sabyasachi Bandyopadhyay, executive]

So if I look at the capacity at this point of time basis, Angul and Raigarh, without the additional capacities that are yet to come in, in Angul, we are broadly at about 90% of our capacity utilization. As Sunilji talked about, Raigarh plant running about 95% and Angul at about 85%, 84%, 85%.

[Sunil Agrawal, executive]

Overall, we can say that last quarter, it was 88% and the current quarter is 87%. 1% production is down from quarter-on-quarter basis.

[Rajesh Ravi, analyst]

Understood.

[Sunil Agrawal, executive]

So Rajesh just to -- yes, yes, just to clarify, the capacity utilization is down by just 1%, production remains stable. The decline is on the volume. Production remains stable.

[Operator]

The next question is from the line of [ Amit Dixit from Goldman Sachs ].

[Unknown Analyst]

Yes. Congratulations for a good set of numbers. A couple of questions from my side. In the presentation deck, while you have mentioned on the Slide 32 about the time line of blast furnace - 2 commissioning which is Q2 FY '26. Is it possible to mention the time line of BOF-2 as well when it is expected to be commissioned? When do we precommission tests, that commissioning time line would be great.

[Pankaj Malhan, executive]

Let me take this question. You rightly said that we are at a very advanced stage in terms of our blast furnace #2 startup. Sunil mentioned a while back, we've all completed our [indiscernible] tryout, furnace tryout. And we're just trying to inch the last leg of commissioning activities. But I see sometime very soon, we would be able to announce BF-2 and BOF-2, if I was to take that, it would be starting almost sometime very close to blast furnace 2 also. So we are at the advanced stage of commissioning at both these units.

[Unknown Analyst]

So is it reasonable to expect that it would also be commissioned by Q2 or max by Q3?

[Pankaj Malhan, executive]

BF-2, we are expecting in quarter 2 of FY '26.

[Unknown Analyst]

Great, sir. That's helpful. The second question is, if I look at the P&L, the raw material cost per tonne has gone down by almost INR 3,500, INR 3,600 per tonne. Now while the coking coal is one factor over there, just wanted to understand what are the other factors that resulted in such a sharp decline in raw material cost per tonne? And is this sustainable -- some of these factors are sustainable going ahead?

[Sunil Agrawal, executive]

So let me take this question, sir. So if you remember, sir, last time, we have announced one-off -- one item of one-off around INR 231 crores that has a effect of INR 336 per tonne. If we net of that, our net improvement is around INR 2,864 -- sorry , INR 336 is our captive commission, if you reduce that. So net commission is INR 2,864 and due to one-off items in the Q4 '25 around INR 1,200 per tonne was the effect. And if we deduct that, so net impact is around INR 1,600 something per tonne, which has come out of coking coal that we have already announced that we have saving of around $11 per tonne during the quarter. So that has resulted in around INR 500 per tonne. And second is the PCI also, we have saved around INR 200 per tonne. And we have the saving in other items as well on scrap and other items that amounts to INR 900 and INR 1,000 per tonne. Hope this clarifies.

[Unknown Analyst]

Yes, sure. It does. I have other questions, I'll come back in the queue.

[Vishal Chandak, executive]

Amit, this is Vishal here. I think the gap which everyone is looking at is, we are missing out the point that in the previous quarter we announced a one-off of INR 331 crores, which was primarily residing in the raw material costs. Adjusting for that balance has all declined in the raw material costs broadly.

[Unknown Analyst]

Yes, sure. I mean the bridge that was explained was quite good.

[Operator]

The next question is from the line of Amit Murarka from Axis Capital.

[Amit Murarka, analyst]

Congrats on a great result. So just on the Angul 2 commissioning, like, would you be able to also provide some guidance volume that we can expect from BF-2 and BOF-2 this year and next year?

[Pankaj Malhan, executive]

Amit, that's a wonderful question and our guidance remains the same, in fact, which Saby also mentioned a while back. So we're committed to the guidance that we've stated at the start of the year, both in terms of production and dispatches and we're very hopeful of hitting those numbers.

[Amit Murarka, analyst]

Okay. Okay. Sure. Also, I was just seeing the presentation like the sectoral split of volumes. So, like, auto seems to be only 3%, whereas flats is 44%. So I believe flats earlier used to be like 20%, 25% range, which is your plates. So where does this increase come from then, if not from auto?

[Sunil Agrawal, executive]

So Pradhanji, if you can -- Mr. Pradhan, you can take that question.

[Sushil Pradhan, executive]

Yes, good afternoon and -- see, we are the -- most of the flats are coming from the new commissioning of hot strip mill which we have done. And auto, the ramp-up takes some time. So we have started supplying to a lot of auto manufacturers, trial lots and all. But major volumes of auto, we are supplying to a lot of value-added segments. So if you have seen our value-added sale has gone up to 72% in this quarter compared to the previous quarter. So a lot of supplies to the very high grades of HR coils and -- HR coils. So that is what has contributed to increase, other than auto, right?

[Amit Murarka, analyst]

Sure. And by when do you think the auto volumes could start [indiscernible]

[Sushil Pradhan, executive]

It has started. Yes, it will start ramping up as we'll move ahead in the quarter-on-quarter.

[Amit Murarka, analyst]

Okay. Got it. And just lastly on Tensa, like did you produce any iron ore from Tensa in the quarter?

[Pankaj Malhan, executive]

Yes, we did produce a bit of that coming from Tensa. But yes, Tensa is towards the end of the mine life. And if I was to just share with you guys, the results, what we've seen is minus Tensa, almost for this quarter. The important part is to have our [indiscernible] done and that's how we've gone ahead with Roida-1 mine. That would be actually compensating for the loss in volumes from Tensa getting into the future quarters. So Tensa did contribute but a very minimal impact of that in this quarter.

[Amit Murarka, analyst]

Sure. And if I could just squeeze in one last question. You seem to be having opening inventory of 0.2 million tonnes. So given that steel price has corrected a lot since the last quarter, could there be any [ NRV ] impact that would come in on this opening inventory?

[Sunil Agrawal, executive]

Yes. So certainly, the effect of price reduction maybe but we are maintaining that inventory from the quarter-on-quarter basis. And it will sequentially will have the effect. Since now the prices are moving upwards, so we'll -- we don't see much effect of that.

[Sabyasachi Bandyopadhyay, executive]

Sunilji, if I may add, in fact, on an aggregate basis, we do not anticipate any major impact at all. It's going to normalize itself and we actually stand with a position of gaining a little bit from the price depression that happened and now gaining back regaining back its ground.

[Operator]

The next question is from the line of Prithvi Jhonsa (sic) [ Parthiv Jhonsa ] from Anand Rathi.

[Parthiv Jhonsa, analyst]

My first question pertains to the net debt position. I believe this is the highest threshold level we have reached post 2021 right? And in the opening remarks sir informed all of us that this is like 1.5x of threshold. So it is fair to assume that this is the peak and from here on going forward over next 2 to 4 quarters, or we should see some debt reduction happening, once your facility comes up [indiscernible]?

[Sunil Agrawal, executive]

Sure, sure. So we are seeing this as a peak because I have spoken that we have built up the inventory in Q1 for around [ INR 2,400 crores ], which is getting liquidated in Q2. So that will facilitate the reduction in the -- that will improve our cash position. And now we are going to start the blast furnace and our BOF-2 that will start contributing and we don't see this 1.5 breaching any more. So we are at the top of our -- the net debt-to-EBITDA limit that we have set.

[Vishal Chandak, executive]

Parthiv, This is Vishal here. Let me reiterate over here. We had an inventory buildup which led to a working capital pile on. We still have contained the net debt to EBITDA at 1.5x. We have an accelerated payout because the facilities are commissioning, cash flows are yet to come in. We have still maintained net debt-to-EBITDA at 1.5x. 1.5x is sacrosanct to us. It's a red line, we will not breach. I reiterate, we will not breach. So and coming quarter 3, the situation will automatically improve. And let me reiterate in Q2, we have already crossed almost half of the Q2, we are still below 1.5x. So I think the stress is beyond us now. We are looking for some good times ahead.

[Parthiv Jhonsa, analyst]

My next question is pertaining to the value-added side of the business, right? I believe the 72% is one of the highest in the industry. Usually, the industry is around 60% to 65%. Now how --#1, how confident are you to now ramp-up from here on, say, 72% going forward? And just a very technical question, like what do you perceive as a value-added product? Is it after a certain conversion, what is termed a value-added? Or how do you foresee a certain product to be value added? Like what quantifies or qualifies it as a value added?

[Sushil Pradhan, executive]

Yes, can I take it, Vishal?

[Sunil Agrawal, executive]

Yes, yes. Pradhanji, please go ahead.

[Sushil Pradhan, executive]

Right, right. So value added in our case, category to category, it's much different. But then whatever has a -- if you take a thumb rule or set a benchmark and anything above 50 MPa strength value added in place. In HR coil, we are most of the high carbon, medium carbon, different grades. So it is the grade which defines whether we feel it is value added or not value added and the jump in realization. These 2 parameters we consider when we are deciding the -- whether the product we will treat it's a value added or not value added and it's consistent.

[Pankaj Malhan, executive]

Can I add to that, Sushil?

[Sushil Pradhan, executive]

Yes, go ahead.

[Pankaj Malhan, executive]

So in plates also what we do is typically we got a heat treated segment, which is absolutely high-grade plates, which is getting into a very specialized sectors like defenses, automobiles, and even high end of construction, which is one of the reasons -- one of the good examples is Chenab bridge that we did. Then of course, the value addition that we give to the customers in terms of the solutions, which is largely coming from the fabricated structures, then some high alloy wire rods, all these and even the large-sized TMTs, we are the only company making 50 mm TMT. So these all falls under value-added offerings from the company.

[Sushil Pradhan, executive]

Yes. And the second part of the question was whether the 72% is sustainable, considering that the industry is operating somewhere around 60% claims. So in this quarter, or what has changed since we are ramping up HR coil facility and we are not at the fully utilized level of HR coil. So our focus is entirely on getting the best out of the asset and that's how the very high volume concentration of value-added products we are making in our hot strip mill.

[Parthiv Jhonsa, analyst]

And sir, if I may just squeeze in a very quick one. Just wanted to get the percentage of longs and flats this particular quarter.

[Sushil Pradhan, executive]

44% is I think our flats and 56% is longs.

[Sabyasachi Bandyopadhyay, executive]

Sushil, if I may quickly add on that, the point that you are making that very regeared and shifted focus even in Raigarh plate mill to produce plates, along with the furnace normalized and the upcoming facility of [ HTC ], which is about the commission here will certainly help us, all of us to not only retain the value-added percentage but also add up.

[Operator]

The next question is from the line of Rahul Kumar from Vaikarya Capital.

[Rahul Kumar, analyst]

Actually, just a question on the industry in general. What has been the trend in the HRC imports from China to India after the input -- BIS norms of the input materials has, let's say, in the month of July and August, how has it fared?

[Sushil Pradhan, executive]

Vishal, I'm taking this question. So Chinese imports has practically stopped now and except for some advanced license import -- against advanced license. Two factors. One is the Chinese prices improved by roughly around $50 in last 1, 1.5 months' time. So that is made the price almost unviable for them. Today, in fact, Chinese imports are at a premium to domestic prices. Okay. So that is one. And also the QCO order in melt and pour, the strict enforcement of that, that has impacted the imports from China. Going forward, we are not seeing China as a major threat directly but indirectly it may have an impact. What you are looking at, India is becoming a net importer for fifth consecutive quarter, right? Our exports are very low. So in the international market, we are not able to compete because of the Chinese factor. And Chinese imports -- exports, it's an all-time high. This year, they're roughly exporting 9 million to 10 million tonnes every month. So that's having a impact globally.

[Rahul Kumar, analyst]

Okay. Okay. So let's say, I mean, theoretically, hypothetically, if the China HRC prices go down, would these BIS norms -- I mean because of the BIS norms, the imports will still be very low?

[Sushil Pradhan, executive]

Yes, it will have an impact. It is having an impact. The low-quality or inferior quality imports, which used to be a big threat to Indian players have started coming down. And government has taken a very, very positive step in that direction.

[Operator]

The next question is from the line of Satyadeep Jain from AMBIT Capital.

[Satyadeep Jain, analyst]

The first question on the projects. While you mentioned BF, BOF and slurry pipeline, just wanted to get an update on some of the other projects like the Q&T line, color-coated galvanized and also -- and the railway rakes that you're looking to acquire. And tied to that would also be that there was a news report earlier, a press release by government that JSPL has been selected for financial assistance incentive on their 2 million tonne coal gasification. Didn't understand, is that a new coal gasification plant because could you already have excess -- it seems like you already have sufficient coal gasification at Angul right now. So just wanted an update on the project and also this coal gasification before I move to the raw material question.

[Pankaj Malhan, executive]

Okay. Let me have this question. You started with the coal rolling mill. We have already commissioned the 200,000 tonnes of galvanizing line. This is the first from the stable of Jindal Steel. We continuous -- we'll continuously be adding a lot of lines getting into this financial year. The next in line, we are expecting our color coating line. which should be there by end of quarter 3 this financial year. And then, of course, 2 more lines which we would be adding, our galvanizing line and color coating line #2. So both should be with us in quarter 4 of FY '26.

Talking about some other projects, ranging from, say, slurry pipeline, we've already given an update. We continue to run fast on our steady speed over there. The major bottlenecks are behind us now and our guidance remains the same, what we've given before in terms of completion of the project.

[Vishal Chandak, executive]

Yes. I think, Satya, you have a very long list of projects for which you would -- are seeking an update. I would like to take this off-line because in the interest of long queue behind us, we can talk about this off-line.

[Satyadeep Jain, analyst]

Sir, second question on raw material cost. You -- just first on Tensa, it seemed like Tensa had some reserves on the boundary, so I was under the impression initially it can sustain to 2028. What is it now, end of life? And also the INR 1,000 per tonne raw material cost saving that came from others, I think you mentioned scrap, some other apart from coking coal. Is that -- what was that? Is that sustainable, the non-coking coal related cost savings that you saw in the quarter?

[Sunil Agrawal, executive]

Yes, the other cost is sustainable. These are on -- basically some -- this -- I always said -- spoken that this was due to one-off around INR 1,200 per tonne in Q4 and other savings that I spoken that we think that is sustainable in future as well. And we are operating at -- on the -- no, Tensa is already -- the effect of Tensa is there in Q1. So we have not taken much from Tensa, only 0.13 million tonnes that we have factored in Q1. So that has hardly any impact on the Q1. So we think that whatever the saving is there, we will sustain that in future as well.

[Vishal Chandak, executive]

So Satyadeep, if you look at our results and the opening remarks in which Mr. Pankaj Malhan also mentioned the minimal amount of intake from Tensa mines. So I don't think even if you discard the effect of Tensa mines, the results have -- are broadly purely operational on that front.

[Pankaj Malhan, executive]

Can I add to that, Vishal? I think we spoke about Tensa. Tensa, of course, got a minimal impact on to our quarter 1 results. Mostly it is backed by some kind of improved value in use items and operational excellence, which has actually led us to cut down our cost. And going forward into quarter 2, of course, we all know this is a seasonal quarter. And of course, there are monsoon challenges with any steel company. But we are very hopeful of getting back to our sustained deposition of these operating excellences getting into the subsequent quarters also.

[Operator]

The next question is from the line of Sumangal from Kotak Securities.

[Sumangal Nevatia, analyst]

Sir, my first question is on thermal coal. Just want to understand what was the mix in 1Q? And how are we benefiting from more and more captive coal? And how is it going forward in the coming quarters?

[Pankaj Malhan, executive]

Let me take this question. Utkal C continues to be performing well for us. Quarter 1, if I was to say, about 90%, 95% of the thermal coal came out of our own mines. We continue to have some [indiscernible], small amount of that with the MCL mines. Getting into the subsequent quarters, we've already announced that Utkal B1 is expected to be on track in this quarter itself. So we should be able to actually meet our coal requirements from our own mines getting into this financial year.

[Sumangal Nevatia, analyst]

Understand. And sir, what would be a delivered cost or at least comparison with linkage coal and e-auction versus captive?

[Pankaj Malhan, executive]

This is a very specific question. I don't want to take that. But yes, there is a delta of around 3%, 4%. That is what I can say as of now in terms of using our own coal versus the bought out coal.

[Sumangal Nevatia, analyst]

Okay. And sir, when do we expect Utkal B1? Any timelines there?

[Pankaj Malhan, executive]

So we are already there. It's being a monsoon season and there are some delays but we are expecting the coal to be with us start of quarter 3.

[Sumangal Nevatia, analyst]

Utkal B2. I guess some approval...

[Pankaj Malhan, executive]

B1. Sorry, I mentioned about B1.

[Sumangal Nevatia, analyst]

Okay. Okay. Sir, any update about B2? When do we expect -- I think that's the last mine in our portfolio, right, where we are awaiting approvals?

[Pankaj Malhan, executive]

B1, we have set our own priorities as of now. We're working on one by one. I think B2, definitely is on our cards but we'll let you know.

[Sumangal Nevatia, analyst]

Understood. And just one last question on commissioning of BOF-3 and DRI-2, where are we on the time lines?

[Pankaj Malhan, executive]

So on DRI-2, of course, that's one project which we've already announced our revised time lines, which is into FY '27. BOF-3, we remain committed to completing this financial year itself, quarter 4 of FY '26.

[Vishal Chandak, executive]

Sumangal, just to add one more point on the coal portfolio. Gare Palma IV/6, Utkal C, Utkal B1, Utkal B2, these are the 4 mines of which we have spoken about. We have recently won Saradhapur Jalatap coal block as well. So that has a geological reserves of about 3.2 billion tonnes. It's a partially explored block. And over the next couple of years, we are going to fully explore it and then announce what is the extractable reserves from there as well as the annual EC limit. Maybe that is something that you would look forward to in our next round of expansion [indiscernible].

[Operator]

The next question is from the line of Pallav Agarwal from Antique Stockbroking.

[Pallav Agarwal, analyst]

So I just want to understand the strategy on captive coal because you mentioned that you're already sourcing 90% to 95% captively. So what are we going to do with the coal from the additional coal blocks? So is there some limit of commercial sale as well or those are for our captive power plants?

[Pankaj Malhan, executive]

These are going to be for our capital power plants. We have almost -- stated that we're starting Unit 1 of our Shribhumi power plant this quarter itself. So as and when we are going to keep adding our power units, we'll continue to ramp up our coal mines.

[Pallav Agarwal, analyst]

Sure, sir. And you also, you provided the breakup of the coal sourcing. So is it possible to share a similar sourcing for iron ore, how much was from captive and external sources?

[Pankaj Malhan, executive]

I think we can take it off-line. Vishal can give you the numbers. Vishal, you can take it offline?

[Vishal Chandak, executive]

Sure, sir.

[Pallav Agarwal, analyst]

Sure. And sir, just lastly, I mean, just to understand your difference between the consol and stand-alone EBITDA. So this would mostly be from Jindal Odisha, I mean I'm assuming the overseas coal mines would not have contributed too much to the EBITDA?

[Pankaj Malhan, executive]

Sunilji?

[Sunil Agrawal, executive]

Yes. So this is mainly -- yes, I will take up, Pankajji. So this is mainly from the Odisha project that we have started, mainly from that.

[Pallav Agarwal, analyst]

Sure, sir. I mean it would help us because this is ramping up. Maybe we could get some separate brief summary of the production and profitability that will help us in our modeling purpose. So just a request.

[Sunil Agrawal, executive]

Certainly. Certainly, going forward, when we'll start the production from this new project, we will give separate, if required.

[Vishal Chandak, executive]

See, Pallav, the way you should look at is Jindal Steel India is a entity that you should model in your models as well. Because if you start modeling between Jindal Steel Odisha and Jindal Steel Limited, there would be a lot of confusion between the transfer of material from one plant to another. So you should avoid that, just build an -- a single model, that would help.

[Pallav Agarwal, analyst]

Yes, that would help. But just the annual -- the financials and the annual report will be for stand-alone sales. So yes, but yes, for modeling purpose, I think we would do that.

[Operator]

The next question is from the line of Prateek Singh from DAM Capital.

[Prateek Singh, analyst]

Just to get a sense on pricing. In the opening remarks, I think sir said that prices right now are around 5% to 10% lower, which I assume we would be talking about the trade prices. So given a very high share of value added products in our mix, is it a possibility like we have seen this earlier also that while the trade prices fell quite a bit but our realization did not fall that much in one of the quarters, I think around 2 years back. So is there a possibility that the fall that we might see this quarter would be much lesser than what we are seeing in the trade markets? Is that something which we can assume?

[Sushil Pradhan, executive]

See what the point which you made about our exposure to trade and our exposure to OEMs is absolutely right. And since we have a very high proportion of value-added steel, value-added sales, the elasticity of value-added prices on value added is much lesser as compared to the nonvalue-added or trade type of steel. So you're absolutely right, the impact will not be that high as it is on the trade level prices. And that has been a strength of Jindal Steel and that as you, what you referred, what happened a few years back, that holds true now itself.

[Prateek Singh, analyst]

Understood. And just a bookkeeping question, otherwise I take it off-line. Maybe can you give us the split of the [ acceptances ], revenue and CapEx?

[Vishal Chandak, executive]

I'll take it off-line.

[Operator]

The next question is from the line of Kamlesh from Lotus Asset Managers.

[Kamlesh Bagmar, analyst]

So if I see this particular quarter, we had a cash profit of roughly around INR 2,100-odd crores. And if I see like this one, we had sold shares from the ESOP trust as well, which I believe would be around INR 500-odd crores. So if we take it together, so INR 2,600 crores of money which we had from the operating cash flows plus our ESOP. And even if we adjust for the CapEx, which we have done in this quarter, so the debt increase is roughly around INR 3,800-odd crores, which looks very significant compared to last quarter. I know that there is an increase in working capital. Even factoring that working capital increase, it seems very high. So what are the nuances in that? Because you have provided the bridge but that bridge really doesn't help because it's just a change in the debt and the ultimate resultant figure is the change in cash and cash equivalents.

[Vishal Chandak, executive]

Kamlesh, can you please repeat the question?

[Kamlesh Bagmar, analyst]

I mean to say that why there has been such a sharp increase in debt quarter-over-quarter of INR 3,800 crores. And given the fact that we had such a strong cash profit generation of INR 2,100 crores in this particular quarter and INR 500 crores of realization from the sale of ESOP trust sales.

[Sunil Agrawal, executive]

Yes. Kamlesh basically, if you see our EBITDA earnings basically booked to working capital, which I have already explained that our working capital movement is around INR 2,900 crores and we have earned that. And whatever the total debt, net debt has increased, that is mainly going to the CapEx side, which is INR 2,226 crores. And balance around INR 700 crores, we have done some prepayments of loan as well during the quarter and we have paid the interest as well of the around INR 500 crores. I think that gives you answer.

[Kamlesh Bagmar, analyst]

No, like even on factoring that so it seems -- it would be better helpful if we can provide some bridge in the, like say, net debt flow, that how much was the operating cash flow and how much was the change in working capital. Just putting that change in cash and cash equivalents, so that anyway we can come onto if you provide net debt for the last quarter and this quarter. And lastly, like on the Tensa, so can we assume 3 million-tonne run rate for the FY '26? Or how should we project it?

[Sunil Agrawal, executive]

So Pankajji, you can take the question.

[Pankaj Malhan, executive]

Sorry, I missed this question. Can you repeat it, please?

[Kamlesh Bagmar, analyst]

No, I mean to say that -- yes.

[Vishal Chandak, executive]

Tensa, we have mentioned that we extracted about 0.13 million tonnes in Q1. It's at the end of life. So I don't think you should build on that high number in your model while looking at overall profitability for the year, okay? Secondly, on the breakup that you asked, I think we can take it off-line.

[Operator]

The next question is from the line of Tushar Chaudhari from Prabhudas Lilladher.

[Tushar Chaudhari, analyst]

Sir, I just wanted to know, you have been -- good update on projects. Just wanted to know the update on pellet plant 2, 6 million tonnes? Is it -- when are you planning? And what is the update on the ramping up of -- we recently commissioned 2, 3 quarters back, 6 million tonnes. So the utilization over there?

[Pankaj Malhan, executive]

So let me start with the utilization of our existing pellet plant. It's going well. If I was to compare Y-o-Y basis, the production has gone now over 50% and more. So yes, the pellet requirement as and when if I was to share some more updates, which is available over there in the updates, we could scale up our DRI production strongly because if our own pellet plant ramp up in -- onwards. So that continues to be going well. And as and when BF-2 is going to come up, we are very hopeful of sweating these efforts very right. From a pellet plant 2 perspective, this pellet plant would be coming up in FY '27. That's where we stand as of now.

[Tushar Chaudhari, analyst]

Okay. And sir, CapEx for next year will be similar to this year, INR 10,000-odd crores?

[Vishal Chandak, executive]

So Tushar, in our capital allocation framework, we have mentioned already that on an annual basis, we'll do a CapEx of INR 7,500 crores to INR 10,000 crores. But for FY '27, it's too early to give any guidance. We'll come back to you during the Q4 results for the next year's guidance.

[Operator]

Next question is from the line of Rajesh Majumdar from B&K Securities.

[Rajesh Majumdar, analyst]

So just a couple of questions from my side. One is that we saw a drop in demand in 1Q due to the early onset of monsoons. So we had some inventory buildup. We are already halfway into 2Q. Are we seeing any signs of the inventory position easing? And are we seeing an early monsoon withdrawal plus festive season being preponed this year, adding to demand factors in 2Q, which will lead to a drawdown in inventories and increase in sales volume. That was the first question.

[Pankaj Malhan, executive]

Sushil?

[Sushil Pradhan, executive]

Yes. So this time, the monsoon has arrived a little early. So the demand -- so demand season started tapering down, the monsoon impact has started somewhere in the month of June. But then we are in the month of August now and we have started -- already started seeing the sign of revival of demand from the construction side. More importantly, there are some lead segments which indicates that how the demand is going to unfold something like yellow goods, something like construction equipment. We are seeing a very, very strong demand coming from this sectors now in this month, which indicates that the coming quarters, the demand will be extremely good and this impact will be completely wiped out and we are looking at good demand quarters ahead.

[Rajesh Majumdar, analyst]

Right. So we can expect some kind of inventory moving in 2Q itself?

[Sushil Pradhan, executive]

Correct. 100%.

[Rajesh Majumdar, analyst]

Okay. Yes. Sir, my second question was on the new blast furnace commissioning. So what -- should we model some kind of losses at least in the first 2 quarters of the blast furnace ramp-up before we reach some kind of stabilization levels and that's somewhere in FY '27. That was my question.

[Pankaj Malhan, executive]

So we just spoke about our quarterly numbers. Most of you guys said they are wonderful numbers. The company remains committed in terms of the operational excellence. And it would be too premature for me or anybody else to speak on this but we are committed to make sure we sustain our numbers getting into the subsequent quarters also.

[Operator]

[Operator Instructions] Ladies and gentlemen, as that was the last question for the day, I would now hand the conference over to the management for the closing comments. Over to you, sir.

[Sunil Agrawal, executive]

Thank you for your -- all of you. As we look ahead financial year '26 is setting up to be the defending chapter for Jindal Steel, with the commissioning of major facility, blast furnace, BF, SDPP and other facilities. Angul is on track to establish itself as one of the world's top single-site steel production hubs. But our journey is not just about expanding capacity. It is about strengthening the entire value chain from mining to logistics to manufacturing to -- and sustainability. This reflects our deeper purpose, namely creating a nation of our dream. We are grateful for the continued trust and support of our stakeholders and we remain fully committed to delivering our promises, responsibility and sustainability. Thank you all for this call.

[Operator]

Thank you. On behalf of Nomura, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.