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Ladies and gentlemen, -- good day, and welcome to the Q1 FY '24 Earnings Conference Call of NMDC hosted by ICICI Securities. [Operator Instructions]. Please note that conference is being recorded. I now hand the conference over to Mr. Amit Dixit from ICICI Securities. Thank you, and over to you, Mr. Dixit.
Thanks, Michele, and good morning, everyone. On behalf of ICICI Securities, I welcome all of you for NMDC's Q1 FY '24 Earnings Call. At the outset, I would like to thank the management for giving us an opportunity to host this call. We will begin this call with brief opening remarks from the management, post which we will open for an interactive Q&A. Thanks and over to you, sir .
Good morning, everybody. So can I speak now? Khalil.
Yes, sir please proceed.
Good morning, everybody. So thank you for connecting, and this has been the best quarter ever Q1 ever since inception for NMDC -- and not only Q1, it has been the best Q1, Q2, Q3. So if you leave aside the Q4, which is, of course, always the star quarter, if you leave out that quarter. So -- this has been the best ever quarter except from Q4. Good thing is that April, May and June, they individually have also been the best, both in terms of production and sales since inception. So that's a remarkable achievement that we've been able to [ log ] and this absolutely [ dovetails ] with our annual plan of anything between [ 47 to 49 ] and god willing even up to 50%. So to that extent, as per the annual plan, we are on the right track. The most happening aspect is that at this time, our sales has been uptill at least July, about 1 million tonne extra -- 1 million tonne milestone over our production. So that's really happening. That gives us great leverage. And also as the production goes up, our cost of production per tonne comes down. And despite the margin pressures that we have, as you know, that we have taken price exit for the couple of days. So despite those small hicups in prices because of the increase in volume and the consequential reduction in prices sorry, cost per tonne, I am confident that we'll be able to maintain our overall EBITDA margin of 40%, 41% on an annual basis. So overall, I think what has been has been good and what we are looking at is also very encouraging. So I think we can now sort of be have a firm footing where we can make this quantum leap to 100 million tonnes in the next 5 to 6 years for which our plans are right now. Some of them are already being executed -- and some of them are driving more stage and we hope that we'll be able to do that by 2030. We already have a new NMDC logo for NMDC 2.0 -- it speaks about our commitment. It speaks about our aspirations. It speaks about our [ tried past ]. So going forward, we are very hopeful and very, very optimistic on the future. So thank you. We can have the questions now.
Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions]. The first question is from the line of Alok Deora from Motilal Oswal.
Good Morning sir and congratulations on pretty decent numbers.
Sorry your voice is cracking. You voice is cracking.
Yes Good Morning sir can you hear now?
Its very disturbed. Something needs to do about the line. .
Mr Deora please proceed that your question.
Yes, yes. Sir, just wanted to understand this price now, which we give, including royalty, DMF and MET. So if we just want to calculate it as against the previous [indiscernible] to give excluding that, then what would be the typical differential between that. So just if you could indicate? How much is the difference now in -- for these 3 items?
Normal loading is around 21% because of the royalty and royalty issue. But that's not the only thing we have [ while cooling farm ] integrated pricing internally, we have seen the corelation that is there because between our prices and the IBM prices. Is generally 0.996 in [indiscernible] 0.92 in Karnataka -- so we've had a relation and we've checked out. So we've had a factor of utilizing that as well. So it will not be a straight to straight -- the last time we declared in July. So it's not a straight sort of 21% loading. So it was an internal mechanism that we sort of where we hedge the risk for the first time against the IBM prices that could be fluctuating. So after hedging then we declared our prices. So if you ask a straight correlation. I don't think it will be arrived at, but it will be around 21%, 22% around that percentage. And going forward, after 3 months and things settle down, I think the that would come to around 21.4%. 01 But we cannot have a 1:1 correlation.
Sure, sir. And sir, any update on the NMDC steel plant? Or any update on that?
Yes, yes we have commissioned the blast furnace.
Yes, 2 days, I think 2 days back only.
On 12th, we highlighted it now, hot metal is coming out. And I think in another 2, 3 days, hopefully, the Silica will come down to less than 1%, and then we can take it to the [indiscernible] and then roll it. So I'm looking at somewhere around anything between [ 21st to 23rd sorry 20th to 23rd ] that this plant will be fully committed because we have already produced about what 3,000 tonnes per day right now, output. The output will go up and silica will start to come down. We have already started the pick casting machine. So it's taking that. So touch would like after the commission with the blast furance. Another 7 days, I think we should be done and dusted.
Yes. Sure. I was asking actually from the time any news on this investment, any update on that?
That process being run by [indiscernible] -- so as we know that the UI has been called for, and this is a state-of-the-art plant. So obviously, there is a lot of interest. Exact numbers, I cannot say whether it is 5 or 8 people have put it, but I'm told that a lot of we are not privy to the names who are not participated. But there has been more than adequate interest in that. So which is really obvious because it's a state-of-the-art plant. And absolutely, we plant was actually -- there has been more than adequate interest. Now that the commissioning will be done, I understand that the pace will pick up because a lot of things where people are looking at commissioning to happen first. So now that's done, I think the pace will pick up. But it's not being run by us. It's being run by the company that we have [indiscernible].
Got it. Just last question. So just some status update on the CapEx plans, which we have been undertaking. What's the status on that? Is it progressing as per the plan -- and you've seen this?
As you know, that we did including Nagarnar last year around INR 3500, INR 3600 crores -- this year, excluding Nagarnar, I think also we are targeting at around INR 1600 crores, INR 1700 crores. But I think we should be doing around INR 2,000 crores. Now we have got major [indiscernible] -- so -- going forward, I think the normal would be at around -- if I am to go to 100 million tonnes in the next 5 to 6 years, and the total investment per year has to be more than INR 5,000, INR 6,000 crores. I think somewhere rather the result when we get all of extra sanction somewhere in the vicinity of INR 7,000 crores to INR 8,000 crores going forward 3 years from now? Once we get all the project sanctions. Our existing projects for the next 2 years should be, I think, more than [ INR 2,500 crores ] for the years.
We'll take the next question from the line of Mohamad Paruk from Paul Investments. Mr. Paruk kindly proceed with your question. As the current participant is not answering we'll move onto the next question which is from the line of Pallav Agarwal from Antique Stockbroking Limited.
I just -- I just want to know any updates on the coal blocks and so when are we planning to commision what production targets are there?
As you know, there are 2 that we have. One is Tokisud to the other is Rohne. So Tokisud, we are in the land acquisition phase, of course, now we are going for both this coal was under the coal-bearing area act ,which is the CBA Act, which is -- we have applied to the Ministry of Coal for the relevant notifications. And that would expedite. Hopefully, as you know, Tokisud we've already appointed an MDO. So once the clearances are there, it should take about on the year-end somewhere around early exponential year or closing series of this financial year, we hope to do some money in Tokisud. Rohne of course, more than a year away. The approvals have been sought for Rohne would take us some around FY '25 mid or somewhere around that. But that's the bigger block. So the main thing is now that we need the notification from the -- the CBI. Coal Bearing [indiscernible] Act. CBI Act.
Sure, sir. Sir, also, sir, any update on the SPV amount at 50% bands that we were to receive. So -- is it possible to receive that in this FY '24? .
That will depend on we have petitioned the top of sports. So we are waiting for a decision. We are confirmed that will come in our favor. But of course, we can offset. Our I hope that we'll get rid this financial year. I hope that we.
And sir, currently on whatever we are selling in Karnataka. Are we paying you that 20% or you're paying only 10% right now?
It's only 10% now we won that case -- we won the case. So we [indiscernible] 10% now. They refunded us around 90-odd crores [indiscernible] . So its only 10%.
Okay. Sir, lastly, sir, I think we had this , we've got this clearance to expand the mining capacity. I'm sorry, at Karnataka. So will we see. So will we see some incremental volume?
Yeah we hope to operational [indiscernible], we've got the EC environment clearance we have got it for 10 million tonne. Now will more clearance from the monetary committee has required because Karnataka itself is fully capped. So that cap needs to be re-adjusted at our -- of that 35 million tonnes or 40 million-tonne cap of that area. And that has to be distributed only that is up. So hopefully, if we get it soon, our target to operationalize that is around first of October, the additional. And if that comes through, I think we should be getting at least 3 out of the 2 extra [indiscernible] 2 out of the 3-- and that is why the current guidance, as I said in my opening remarks, is around 47% to 49% and hopefully, 50%. It all depends on how soon we can operationalize these things.
We'll take the next question from the line of Sumangal Nevatia from Kotak Securities.
First question is, sir, your comment on CapEx, it's not very clear to me. So this year, you are saying INR 2,000 crores is roughly the ballpark we're looking at. And based on existing projects, which are already approved, per year, INR 2,000 crores is the number to kind of work with for future year also?
Next year i think we should be doing much more than that. I think INR 2,500 crore would be minimum next year, if not more. We are trying to literally drive the CapEx because we believe that going to 300 million tonne, not only the existing project needs to be uprated fast, but a lot more needs to be sanctioned. So CapEx is something that we will really have to look at -- this year, I think we'll do INR 2000 crores, although our budgeted target is around INR 1,600 crores only, the official number is INR 1600 crores.
And what is the 1Q CapEx? Sir, what -- how much did you spent in 1Q?
Q1, I think we've already spent -- CapEx till date is already we have touched around INR 606 crores for NMDC up to August. Q1 figure, I'll have to actually go back and see how much CapEx have done. But to August INR 600 crores we've already reached. And I remember, around 40% of the CapEx comes in the Q4 only -- so we are in line to do around that number. Q1, of course, I'd love to revert back to you. Just a second. I can it. it was INR 351 crores in Q1, but by now, we have reached INR 606 crores by end of August by actual 15th of August.
Understood. Sir, second, on the volume growth, if you see 2018 to '23, we've been quite range bound 36 million, 38 million tonnes -- so when you're kind of expecting around 10 million tonne addition this year, I just want to understand what would be the breakup? Are we also -- I mean, how much are we expecting to supply to Nagarnar -- and if you could share what is the estimated breakup of this 10 million tonnes from Karnataka and [indiscernible] ethical?
Karnataka as I was telling in the previous question, we have got the EC for additional 3 million tonnes. So this year, if you do it in October, if you operationalize in October, maybe part of more than 2 million tonnes should additionally come. From the production side, we also have a 2 million tonne capacity operation project in Bacheli in Chattisgarh. So that's going to be another 2 million tonnes there, that's going to be commission in September and definitely October. So we are going to get 1.5 million tonnes from there also. And then we are -- hopefully, by January, we will be starting 365 days working. Right now, we have weekly offs. So we are getting additional equipment and manpower to ensure that we have 365 days working. So that should be giving us quite a volume there. And a couple of mines in Chattisgarh, which we're doing 2 shifts, [ 11B and 43 ]. We are planning the third shift there, but it was a increasing material and men, and we'll do the third shift out there as well. So taking all this, I think, it depends on how early we can operationalize all these ores so that is why we are keeping our guidance from 47% to 49%, maybe hopefully, are 50% this year, next time next year, it will be more than 50%.
Okay. Okay. So for this additional 3 million tonnes and 2 million tonne upgradation in Chattisgarh and 3 million capacity in Karnataka. So do we have both the screening plant -- plant equipment in place for additional capacity? And is the evacuation not a constraint?
We have the plants. And evacuation is also?
Infact Bacheli is the screening plant upgradation that we are talking about. So we have the mining capacity, but we had limited screening capacity. So that's a de-bottlenecking, which should give us 2 million tonne.
Okay. And sir, when you say about increasing 1 shift and working 365 days, was it new this year? Or was it also happening in the Jan-March period in the FY '22.
No, no, it was not happening. In fact, it will not happen immediately also the RBS, we can target this in January because i need men and material for that -- men and equipment for that of sourcing they're not available ambition. So we have ordered the equipment once they get delivered the timing we will recruite the people also. But hopefully, we have set ourselves the target of January. We can do it earlier, will be gaining, if we do it later, we'll lose. But [indiscernible]. Operating 6 days a week and 1 day off or some. [indiscernible].
Okay. And sir, how much are you applying to Nagarnar? What is the estimate for this year and, say, next year?
Nagarnar would consume at the peak around 4.5 to 5 million tonnes.
And this is entirely from our existing mines, right?
Yes. Yes. all from mines.
Okay. Got it. Got it. And just one last question, sir. So the news report that we are having partners which are mining in Australia and also some early exploration work in India. If you can just share what exactly is happening in Australia, what is our interest stake there?
Australia, we have a legacy and we are going to do the Gold mining in about a month's time -- a month, 1.5 months, we'll start our own gold mine there. All the approvals are there, except for one, which is expected by just [indiscernible]. Once we get that, we'll take about a month to tie up before the logistics have started mining around the end of September for sure, that will be our own Gold mine. And we can use the proceeds to go into further exposition. Regarding the other things that we have a very big term there around 7,400 hectares where we have -- which was jointly owned by NMDC and Hankook. So now we have a third partner, which is the Atlas there Atlas, as you know, is the biggest mining companies you were then. So we've tied up with them for the magnesite exploration, which is at the [indiscernible], almost the final stages of the PFS preminal fuseable studies. The intial results are very encouraging. So that's -- if that certifies it can go up to a 15 million tonne magnatide-iron ore mine, in the next 5 to 6 years? And also, that tenement has some potential for lithium and other minerals. So again, the tie-up is with Hankook so that we can explore those material minerals also in that.
Okay. Sir, legacy has been a loss-making entity since years, sir, what sort of profitability are we expecting this is gold mining start is there any visibility on our earnings [indiscernible]?
Initially, we don't expect it to have bumper profit. The reason is the first mine that we are doing is essentially are not a very big mine. But whatever we earn from there, I think we expect to earn around $15 million to $20 million. What we expect to do there with that is to plow that back to the other 4 to 5 adjoining [indiscernible] that we have for gold, which is very promising and see the results there. I think the results are encouraging that we can go in for big-time gold mining. And that would be at scale. This is more sort of experimental in the saying that we have not mined in Australia. We want -- our first-time experience. We are not going have the money part right now. We're looking at enough so that we can plow it back to invest in other gold [indiscernible] that we have and also to gain experience. So the next phase would be the one -- that will be the. One in scale. This is a smaller.
Will take the next question from the line of Ruchika Dhanuka from Phillip Capital.
This is Vikash Singh from Phillip Capital. Sir, I wanted to understand our realization. If I look at our realization, which has gone up on a sequential basis -- but we have started getting up price cuts on the June itself. So just wanted to understand.
I didn't understand your question.
Sir, I would request you to increase your volume.
Is it better? So just wanted to understand our realizations, which have increased on a sequential basis, but we -- on a monthly basis, they have started to cut down prices from the April onwards. So just wanted to understand how much lag we are expecting? Or is there any mix change which would have resulted in a better-than-expected realization?
The mix change will be evening to better realization, I think we have some -- sometimes far from that right now, we need the infrastructure to do the branding and et cetra. Yes, I believe you're talking about iron ore prices. They have -- I believe you are talking about iron ore prices, right?
Yes.
So yes. So that -- there has been severe pressure on the prices, as you know, since this entire financial where we have hardly not to be able to take any price increase, in fact, we have had to sort of reduced it quite a few times, including the 1 a couple of days back where we had to make a marginal adjustment -- but I hope we have bottomed up and the prices would go up. The good thing about saying is that since the volumes have gone up, and this is a fixed cost industry, so your cost per tonne has come down. So that really compensates for the loss of pricing leverage. So to that extent, yes, the margins we will be go to the same -- but hopefully, let's see what happens after the Moonsoon -- demand picks up and the -- as of now, there is no visibility of something great happening on the price front. So I think we just have to survive this pricing pressure as of now, and that's what we are seeing.
Sir, actually, I was just referring to our -- so 1Q price increase over 4Q levels, while our average realization was on a continued declining trend since April. So I just wanted to understand the reason for that particular.
Q1 prices just -- it was just marginal. We had taken one I think around March, we had taken some price increase at that point of time. So thereafter, it has been completely down south because -- the Q4 prices were around INR [ 466 ] and Q1 prices average domestic realization was [ 48 ] -- was only a marginal ease of 4%. We tried to sustain that in April and then thereafter, we could not see all of the market dynamics. So even after Q4, it has not been very encouraging to us.
I'll take that one, sir. Sir, my second question pertains to our evacuation plans of railway doubling as well as the study [indiscernible], if you could update us the state of completion they are right now? .
Yes. Out of the 50 kilometers of railway line upgradation, I think more than 100 kilometers has already been done commissioned and trains are running there -- the last stretch, which is around 25, 30 kilometer stretch is being under construction. We are told that the phase rise by end of this financial year, they will be able to deliver. But -- the problem is not of light capacity as of now. The problem is availability of guidance. We -- even before the doubling the capacity was 38 million tonnes, and now the capacity is around 40 million tonnes. So it's not a capacity constraint is the non-availability of wagons that is the problem. Because we are producing around 30 million tonnes from Bailadila approximately 8 million tonne, 7 million to 8 million tonne goes through the conveyor of Archnal Mital. 2 million tonne goes to road. So we are able to -- our requirement as our rail transportation is only 20 million tonnes. But if the rigs are available, then we can really upscale our dispatches through rate. So it's not a capacity constraint issue in terms of land capacity. It's more of availability of trains and rigs that is the issue. And the railway has been helping us a lot in Q4, we earned an average of 18, 19 rigs, which we need to do annually. Rather than the 13, 14 rigs that we are now.
Understood, sir. Sir, in terms of NMDC team, what are our FY '24 and '25 production targets?
This year, we'll have the entire almost entire H2 to us. So for production. So we should be touching about 1 million tonne in the H2. We have a constraint of nonavailability of live and dollar because the plant has not yet come up really. And despite reusing purchase [indiscernible] down for making steel. We should be able to do Avastibout 1 million tonne this year and more than -- plant would be full capacity next year. Because these are modern plants, you really don't need too much of a problem in ramping production once the availability of.
Understood, sir. Sir, just last question, what is our net cash balance as of 1Q end? .
Net cash was 7,000 -- at the end of Q1, I think it was around INR 1700 crores or I just want to refer to that particular figure -- and I think it would be there in the presentation, not just being near -- how much? I mean are we -- what was the Q1 total sorry, INR 11,200 crores.
We'll take the next question from the line of Kamlesh Bagmar from Lotus Asset Managers
With regard to [indiscernible] operations on legacy mine, like it has been in our belt for last 10, 12 years, and we haven't been even able to like extract iron ore from there. And even for this lithium mining. Yes. Yes, I'm talking about the Australian operations or Australians subsidy. So like around 10 to 12 years, and we haven't been able to mine even the iron ore there. And apart from that, like for this lithium as well, we would be left with around 29-odd percent stake. After like this arrangement which have been done with Hankook. So like what potential could be there in terms of earnings because we would be hardly back with now around 29-odd percent stake, which we used to had around like 80-odd percent earlier prior to this deal. So if, say, the -- this entire prospecting and all those activities go on. So how many years would it take like say, 5, 7 years? And after that, what commercial arrangements would be there? Like would it be around all trading operations, how that would proceed if the feasibility these are in positive format.
Right. Number one, first, you must understand the Legacy is essentially an exploration company. It is a [indiscernible] mine company. So its main business of exploration. And naturally, as you know, in mining, all explorations do not lead to success. So the success rate is rather low, especially -- most of its exploration was in terms of [indiscernible] where the success rate is as good as going towards casino and winning a jackpot. So it's not quite different. So to have an expectation of mining from our junior mining company straight away? or a [indiscernible] decent mining plan? I think that expectation is something wrong because that's not the way the legacy was -- the good that we are able to -- we were successful in one of the tenements to get Gold. And we just got lucky there. And we have a few more elements which are promising so far as Gold is concerned. Now so far as the big tenements of Mt [indiscernible] is concerned, Where we have entered into a agreement with Hankook. You must realize that Legacy did not own 100% of that. Legacy used to hold 60% of that and 40% was owned by another company called [indiscernible] which are the original owners of that. So we were only owning 60% of that. Now we are actually getting down to 30% of that. And it's a street car deal in a sense, we have 0 risk -- so we are not spending the PFS is costing around more than INR 200 million, right, where we are not spending a dime on that. In fact, we got around $10 million to sign that agreement. So we are not spending a dime on that. And if we get we get 30%. Of course, if the iron ore is available that we get 30% of that. So our subject to, of course, are willing us to invest up to that level. So if a [indiscernible] hard deal, we don't have any downside on all the possible upside. So similarly, since we are doing the lithium exploration in the same tenemant. So the terms and condition of the lithium exploration is also very, very similar. And both of these are [indiscernible] deals. And in the Retail exploration, we have another clause that we have 75% of stake rates. So that's adding sugar to the sweetener. So that's a real sweet heart deal. So nothing could be better so far as the Legacy is concerned from that deal. Yes, even if the iron ore PFS comes out to be successful operationalizing that mine should take at least 5 years, 4 to 5 years, that's how the Australian mines all the approvals, construction. So we are looking at 5 million around 5 years for that. And of course, if lithium is found, the PFS its going to take around 18 months. And if the PFS got then will take another 3 years to sort of come to a mine. But it all depends upon what the PFS results are.
Great. Great, sir. Thanks for the very excellent answer. So -- and on the gold mine, sir, there also we have a 60% economic interest?
No all mines are 100% owned by us. All the segments are 100% on by us. Except this big tenement, which we call [ Mount Beven ]. It was -- we had 60% ownership. And with the other company, [indiscernible] had a 40% ownership. And we could not invest in that year because [indiscernible] would have got a free ride. So there was no direction clause in that agreement, which was at the 10 years back. So I could not invest and if I had invested unilaterally and [indiscernible] would not have -- they would have got a free ride. So now that the investment is being done by a third party, which is very, very reputed -- it has a huge 55 million tonnes, 60 million tonne mines in Australia. So they are a real big brother to be within the Australian mining area. it is a sweet heart deal that we bought.
Sir, 5-odd years away from sorry.
Yes, the initial PFS results, cyclical results are all fine in the iron ore. They're all very, very encouraging, the initial PFS results. But we'll have to wait for the entire thing about water and about [indiscernible] and all those things have been worked out to -- so we're keeping our fingers crossed, but we are optimistic. We can't have a definite sort of a.
And lastly, on the lithium reserves in India, anything you are hearing from the government?
No, we have not been offered -- obviously, we are not going to bid. I don't think that's going to be because we don't have a pad we don't back to better than tester. We -- if it is offered to us on the reservation, we'll take a look at that.
We'll take the next question from the line of Sukwinder Singh BD from EON Investments.
So congratulations on a production and sales numbers for the quarter. So sir, you've given a long-term forecast of 100 million tonnes over the next 5, 7 years, What are the indicative kind of figures for FY '24, '25, '26? Because we'll have a greater handle on that, I guess, at this point in time? .
We have an EC of [ 54 ] that is -- this year, we'll say anything would be [ 40, 45 ]. And if we can prepone our things that we said, so it could well reach 50, but that's something more aspirational than 47% to 49% should be for this year. Next year, of course, that will cross 50%. So because by time, we would have operationalized all 4 of these things -- so we will definitely go above 50%. We will try and touch our EC capacity of 54%. So that would be our plan. So we are working on that.
Okay. And the current projects that are current under execution at this point what do we take our capacity to the slurry pipeline, beneficial plant, [indiscernible] so on and so forth, okay?
You have to look at the project in two different -- one is the dispatch and marketing and sales-related projects, which has [indiscernible] things and the one is the production related projects, which is the screening plants, et cetera, et cetera. So the screening part in Kirandul, for example, is 12 million tonnes. The ones that we have tendered out last week at Karnataka is 7 million tonne upgradable to 10 million tonne. We've just entered it out last week. Right? And the [indiscernible] compare that we are tendering in the next week would be the [indiscernible] conveyor the [indiscernible] Systemation 43%, et cetera, is another 10 million tonne. So -- these are the ball parking on the production side, again, we need to get these done. The other mines also need to upgrade, and we need to make this investment in the next 2, 3 years so that we reach at least 60 million tonnes from Bailadila itself, the current is around 30 million tonnes. So we'll try to be around 50-plus -- and by that time, NMDC also come that's deposit 4 and deposit 13. Deposit 4 would be operational next year. Deposit 13 might take a little bit longer. So we should have another 7 to 8 million tonne will have come from NMDC. So that's the outlook. Now you come to the dispatch side, of course, as you know, that we are upgrading the railway life. From 28 million tonne capacity to 40 million tonne capacity. And what the railways are doing, in fact, it will be effectively 55 million, 60 million tonne capacity evaluation to rail itself. And I've told that the number of [indiscernible] that the railways have ordered -- but the availability of wagon in the Q4 and going forward in the other financial years would not be a problem. So we have a fair bit of evacuation capacity out there and around 15 million tonnes of spare slurry pipeline we are already building -- so that's evacuation plans on there. We'll have to take a serious look at the Karnataka dispatch also once the upgradation [indiscernible] we need to take more on that.
And we recently saw an EUI inviting expressions of interest for exports, okay? So any update on that? Export. Export of iron ore, okay? So any progress on your export of iron ore plan?
No, not as of now. We have asked for the -- we are exploring this market. As of now, at this current prices, our domestic net on a netback weather, our domestic realization is more than export realization because of, as you know, the 30% export duty that is there. But yes, going forward, and there is more than adequate domestic demand for our products. But we must keep that export window open because if tomorrow, there's a slight slack in demand or the prices go down and people start porting then we need to sort of -- just to keep ourself afloat when -- when you are ramping up to 50 and from 50 to 70 and 70 to 100. So unless we keep that window open, it would be a major challenge. So we have decided that we should be off the block as soon as possible. Have some do some -- keep the window and the market open so that people interact the [indiscernible]. But -- that's more of a sort of a long-term plan for which no short-term things need to be done. So that's a good.
Right, sir. And so finally, sir, is the largest cost head is actually the royalty and the additional royalty and the various fees and [indiscernible]. So is this application of the same would help. So earlier, we used to pay an additional royalty of 22.5% out of our basic price. Now there's no basic price per se. Now we have a list price, which includes the royalty of 15% with DMC and the NMDC. So how does it change? So how is now the?
Don't worry it doesn't change. You've seen the math. Even if you see the IBM prices [indiscernible] including all right? We have just aligned our prices to the IBM prices. So when our basic prices were, let's say, INR 4,000, the IBM price including all those -- not INR 6,000, it was around INR 5,000. Okay by including all those levels. So IBM should require INR 5,000 and we had a basic price of INR 4,000 -- we have now just aligned our prices with the IBM method calculation, which was being done by all the misses OMC was doing it all the private are doing it expect we are not -- so just aligning the method -- but our liability was will remain on the less back meter. So they'll deduct the royalty you cannot have 22.5% of royalty again. So taxation taxes. That can't be done. So that liability towards additional royalty of 22.5% will remain on the led-back method. So there also -- so there's not going to be any change in that or.
To help us model the potential revenue. So if 100 per hour is price now as per our new pricing mechanism, then what will be the royalty component out of that? So if INR 100 is our list price now What is the royalty?
INR 100 let us say, 121.4%.
And our realization will be 77.5?
What would you -- you divide 100 by 121.4 and then multiply -- but there is other correlation factor that we have factored in for the July pricing. Just to insulate us from the vagaries of IBM pricing, -- so it will not be a straight calculation. I guess, out of 100, I think the it should come around 78% or 78.9% of the things.
So what we are saying is that effectively, our sales price scale price is 121.5%, excluding the [indiscernible] permit fee transit fee and the environmental set, then our net realization will be 78 there. out of 121.4?
121.4 it will be a 100. [indiscernible]
No, sir.
It will be around if you take that this will be around I [indiscernible] to some calculation on that.
The additional royalty will have to be still paid. Because 121.
Additional royalties a part of my cost. It's not a past -- it's not a pass-through item. It is not a pass thought it.
But net of our royalties in our line item okay. So the net of royalties, we will realize a net 77.57?
Yes, around that.
We'll take the next question from the line of Mohamad Paruk Faruk from Paul Investments.
And over the past 3 years, I have been consistently participate in the end of this conference call, where we have been presented with a range of positive news, including achievements like record production an ambitious target of 50 million tonnes this year or next in 5 years, 100 million tonnes in a substantial investment in CapEx and venturing to gold mine, lithium production, substantial cash results in new logos and solar power gen so many things. Despite all the positive factors -- there appears to be a lot of investor confidence in the management. The market offers is unresponsive to the positive news.
For instance, during the export ban, investors lost 50%. But when the export ban was lifted, we saw only a 5% takeup. Could you please shed light on how NMDC management is addressing this perceived low investor confidence?
We, of course, put all our absolution in the public domain were regularly interact. So I don't think it is a investor confidence or rather, as you say, lack of confidence is due to lack of communication from the corporate. I think we are a very transparent company. Our numbers are there and relation of our future plans, et cetera, is there. Obviously, because I think that most of the [indiscernible] stocks are taken as a dividend yield stock rather than our capital acquisition stock. So when I -- my personal perception is that where you have a portfolio of around INR 40 stock you sort of categorize that as some of them which gives you a standard dividend deal some of them which -- where you expect a capital acquisition fortunately or unfortunately, we fall under the sort of our dividend yield category of investments. So naturally, people -- I think that the perception because they are government owned and some amount of our dividend yield is one of the highest in the country and in the world around -- so I think the investors are more sort of in sort of looking at us as more of a steady income rather than the capital appreciation stock. Of course, whatever that I see from the different angles like a lot of people who are attending today's call. They've all been very kind to sort of always keep us in the by category rather than the hold or sell category. As a company, even if you see our performance parameters internationally, if you compare us with Vale and Rio Tinto and BHP and FMG and we have the lowest C1 cost. Our risk ratings are much lower than Vale or many of the international or Indian companies, including Vedanta and we have a much more lower risk rating. Our parameters other things like GHG or you take any parameter as a company is...
Your cash reserve is 33% that's our market cap currently, INR 11,000 crores? Yes. Still.
Dividend around INR 3000 crores of dividend. But yes, now we are ramping up CapEx, another 2 years, we would be substantial investment in CapEx because other that, without investment in CapEx, substantially the quantum German CapEx, we cannot hope to reach 100 million tonnes. So some of them are already to some of them are active.
My next question is, in the previous conference, I highlighted about the inland basis top line, like RIGS, [indiscernible] and given that any reduction in purchase by 1 of this client could substantial impact in NMDC operation? The reason is sent with JSW purchases being 50% below each in July, has severely impacted on production and sales of NMDC it was unexpected for NMDC to witness 50% drop in purchases of JSW within a month. Now the good news is you have export UI okay with the expo with the global export market accounting for more than 1 billion tonnes, I'm curious to know if NMDC has a specific target monthly targeted, perhaps a range of 1 million tonnes or whether the company is more relying on buyer demand to determine the export target.
So, that's a good question. So let me take the part one segment first. So yes, you know that 70% of our sales go to 3 million buyers, which is a businesses, right, by a standard. We are aware of that. And accordingly, our plan is to diversify our customer base. So the first step has already been taken. We have an intermediate stockyard at Kumarmaranga. And going forward, we need much many more such intermediate stockyards and from where we can dispatch to where -- from where we can cater to markets like Raigarh and western [indiscernible] and other places. So we need to 40 million tonne of production and sale and 100 million-tonne production sales are two different ball games altogether. They are completely in terms of your marketing philosophy and everything, it's a major paradigm shift.
So we are aware that we need to increase our customer base and according the we are making out plans to sort of increase our customer base. And one of that is having intermediate stock and blending yard. So but the will take 3 to 4 years to come, of course. Yes, the buyers when the mega buyers that we have, 3 of them account for 70% of our sales. So naturally, there is dependence of them right now, which we need to get out of. Regarding export, yes, as you know that as of now, the numbers don't make sense because your netback in realization in domestic is greater than the best back in realization in exports because in exports, we ought to pay [ 70% ] duty. You have to be this rate, and you have to pay the royalty on your account. Right. So if you calculate the netback, economically, it doesn't make sense to export today. But as I was saying to the previous caller's question, that we need to keep that window open for the volumes -- so even if I were to do around a 10% less realization in export, I should have that window open to give me the volumes that I need to do. So as a result, having a monthly target today would not make business sense. But going forward, when we really ramp up our production, and we are to the distribution sector, yes, then as the business has said for a net lower debt realization doesn't make too much of our businesses. But we need to keep that to a window open for strategic reasons. And as a result, having 1 million tonnes or 0.5 million tonne export target for a month-to-month basis. As of now, wouldn't make great business going forward, it does when we post production also to sustain the domestic prices there.
Okay. Could you please update on the latest export UI that was like a month back.
Yes. Export UI is a month back, I really have not seen up to month because that's more of an explorative nature. So I'd love to get back to you on that one.
Okay. So what is the projected Q2 target for production and sales? And I think.
Last year, Q2 -- Q2 the last -- this year the dispatches will be very substantial because we had a lot of stock and we've been able to service our customers very well. So July, we have done more than that. So Q2 last year, I think we did around 7 million tonnes in production I think this year, we have already done by July, I think 2-point something. So I think we should be doing around 8 million tonnes in Q2, while I think last year, instead of 7, I think we should be able to do 8 million tonne. And in terms of dispatch last year, Q2 was around million tonnes, I think we should be slightly increasing that to around should be marginally above that as well.
Also the participant has left the queue. Ladies and gentlemen, due to time constraints, that was the last question. I would now like to turn the conference over to Mr. Amit Dixit for closing comments. Over to you, Mr. Dixit.
Yes. I am [indiscernible] for very patiently answering all the question. On behalf of ICIC Securities, I would like to thank all the participants for [indiscernible] the call I would like to turn it over to Amitava for the final comment. Over to you.
Amit, it's has been a nice quarter for us. But going forward, I think we'll have to build upon this momentum and at this moment time goes. And we are not only looking at the next few quarters, but we are looking at the next few years where a quantum lease needs to be taken, and we have to pay our sensor both in terms of investment physically and as well as in terms of corporate culture and all infrastructure. So we hope to see NMDC 2.0 in a completely more efficient as at a much, much big bigger scale than we are at present. We are capable of doing that. And I think we hold to the nation and the investors and the industry. to realize our potential. And I think we'll -- going forward, you see a completely different NMDC. We are proud of our past achievements. But then what we intend to do in the next 5 years, what we have done in the last 6.
So that's the challenge to squeeze in 60 years of achievement or experience to next 5 years of performance. So that is what we are preparing for. Thank you so much.
Thank you, members of the management. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. We thank you for joining us, and you may now disconnect line. Thank you.