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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the NMDC Limited Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Amit Dixit. Thank you, and over to you, sir.
Thanks...
I'm sorry to interrupt you, Mr. Dixit. Sir, your voice is breaking up.
That's what I wanted to tell him. Your voice is breaking.
Is it better now?
Yes, sir. Please...
Yes, now it's audible.
Yes. So thanks, Seema. Good afternoon, everyone. At the outset, I would like to thank the management of NMDC for giving us an opportunity to host this call. From the management side, we have Mr. Amitava Mukherjee, Chairman and Manging Director of Existing Chair and Director of Finance. We would start the call with our opening remarks from the presentation on the performance of the company and the outlook. After which we will open the forum for Q&A.
Without any ado, I will hand over the call to Mr. Mukherjee. Over to you, sir.
Thank you very much. And my apologies for being delayed by a couple of minutes -- by some time. Q4 has been, as you know, you've seen the numbers have been extraordinary for us. It's almost the best Q4 ever and both in terms of production and in terms of sales.
The margins, we could hold the prices in Q4 despite a lot of headwinds in pricing. Naturally, because of the Q4 performance, our overall performance over the financial year has also improved. And with a net profit of INR 5,500, I think that's reasonably satisfactory. That is of course, we have been held by 2 extraordinary items.
One was the sale of NINL where we made around INR 280 crores, and the interim relief given by the Supreme Court for around INR 950 crores. So these 2 did help. But going forward, we look to better these figures, both in terms of production, we can see FY '24 to be anywhere between 46 million to 49 million, 50 million tonnes of production and sales and net profit of more than INR 5,500 that we did this year, of course, not touch the FY '22 figures that was all-time high.
But given the volume guidance that we have taken for the current fiscal and the pricing outlook, which might be a little challenge in the first 2 quarters. But going forward in the third and fourth quarters, let us see how it pans out, but the increased volume would actually sustain us through a greater bottom line than it is available. This then it was done in this year.
We can now take the questions.
[Operator Instructions] We take our first question from the line of Mr. Ashish Kejriwal from Nuvama Institutional Equities.
Sir, 3 questions from my side. One is on steel plant. We have spent around INR 2,500 crores and we have shown this as a noncurrent assets and receivable from these steel plant. So first question is why we have not -- why we have given it to -- while at the time of demerger, not to steel plant. And if it is not happening, then when the plant gets sold, will we get back in that time only? Or will it linger longer? And associated with that, when we are expecting this plant to be commissioned?
This plant will be commissioned in June end. But for sure because all the ancillary plants now have been commissioned, both the coke-oven batteries the center plant, the Power Blowing Station, the oxygen plant, all of them have been commissioned and are already producing. We are already producing and selling coke. And blast furnace refurbishment is on. I think that we should be able to blow in around 15th of June. And we should be able to go get process the hot metal into steel in the SMS and then roll it to get the hot-rolled coils by end of June. So we have a clear visibility now. And we are confident that by end of June, we'll be able to roll out the coils.
So far as the CapEx is concerned, yes, as you know, that since the plant has not been commissioned, even all the OpEx is being right now booked into the Capital Work-in Progress. and whatever coal we are buying, of course, is to run the -- coke-oven plant is also being booked into Capital Work-in Progress. As the sale of coal is being credited to the Capital Work-in Progress, it is reducing the also work in progress. It will get commissioned within the next 1 month. And the CapEx till date, I think, is around INR 22,935 crores, so approximately INR 23,000 crores as of date, which includes the amount of coke that we have bought less amount of coal that we have bought and less the amount of coke that we have sold.
My question was -- first question was that when NMDC spent INR 2,500 crore on NMDC steel plant still showing under our books as noncurrent assets. So why we have not...
It is showing as 200-odd, [Foreign Language] I think...
INR 2,500 crores, INR 2,540 crores.
That is intercorporate outstanding. That is intercorporate outstanding. Why? Because you see from the appointed date is 1/4/21 and the actual demerger took place on 13/10/2022. In this intervening period, whatever I have spent for the steel plant we are supposed to get back. So that's why it has been shown as...
Are we charging any interest?
No this can't -- this is not a loan. This is an intercorporate outstanding. It is obviously the noninterest bearing. Had it been a loan, of course, intercorporate loan is now guided by Section 196. That's a different ballgame all together. But this is -- this represents all the amount that is due for the expenditures that we made in the intervening period of 1/4/21 to 13/10/22.
So sir, are we still spending on this? And once the plant gets sold, will we get back at the same time or...
Yes, yes. Even if the plant doesn't get back sold, once it stops commissioning -- once it gets commissioned and starts earning, this will be paid back to us. Even if it is not sold, even if it is sold later, even if -- of course, if it is sold, then I will be credited -- I will sit as a creditor in their books. And even if it is not sold and once the revenue starts coming in, we are creditors in their books, and that should be all this money will come back to us.
Sure. That's clear, sir. And sir, second question is on the CapEx. Now we are in the middle of doing some study pipeline and other production enhancing projects. So is it possible to update what could be the probable CapEx in FY '24 and '25 and what are on those?
FY '24, we should be doing around INR 2,000 crores at least on the ongoing projects, if not more. And we are in the process of getting a lot of capacity enhancement work sanctioned. Most of them are on drawing board now, but all the sanctions we plan to complete between 6 to 9 months. So once those sanctions are here or there, so in FY '23 -- FY '25, there will be the tendering. And going forward, I think we will utilize most of our cash balances for capacity enhancement for periods that we have. And we intend to spend in the journey to about 100 million tonne capacity of both production and dispatch, INR 3,000 crores a year going forward in the next few years?
So 3,000 crores per year. Yes.
Because we already have the major projects -- some of the major projects are going on. The pellet plant is around INR 1,200 crores, in slurry pipeline laying itself is around INR 1,100 crores. The beneficiation plant is around INR 900 crores. The SP3 or the screening plant 3 in Kirandul is around INR 3,000 crores. The recently sanctioned work for increasing capacity of Deposit 14 and Deposit 11C in Kirandul is around INR 1,100 crores. The SP2, which is already sanctioned and most of the clearance has been received, now it is at the tendering stage at SP2 at Karnataka it's around INR 1,000 crores. So we have a major projects have already been sanctioned some of them are in execution. Some of them are in tendering stage. And some of them are at the approval stage.
We take the next question from the line of Mr. Mohamad Paruk from Pearl Capital.
I have been following up on the monthly production figures of NMDC for the past 26 months. So I noticed that your production is directly related to your monthly sales. And 80% or more of your sales come from 4 clients: RINL, JSW has more than 50% share.
And you mentioned in your last meeting that you're interested in export opportunities also. But your exports are 0. Even last year, when the iron ore price were above $180 for more than 3 months, you did not export. So can you please let us know that the NMDC is really interested in exports? Or what is one of your major clients for whatsoever reason, reduced by from NMDC, what's your plan B? Then -- yes, tell me. One is about the export -- yes.
You see exports depends whether it makes an economic [ case ] or not. As of now, even at $180, it did not make any economic case because our domestic realization would have been more than the net export realization, because you must realize that at around the export duty on iron ore is 30%. So if you work back and see at the ultimate after the logistic cost -- accounting for the logistics cost, the export duties and other things, if it is more profitable for us to export than we do export it. But the current prices and even at $180, when the prices were $180, of course, our domestic prices are also higher. So we always keep a tap whether it is more profitable for us to export on the net realization basis that we might had or it is more profitable for us to sell at the domestic market.
So as of now, the math always works out in favor of the domestic market because our net sales realization in the domestic market appear to be higher, when we compare -- consolidate to the year. So that is why unless there is a severe downturn of demand, and we are compelled to export, which is a less profitable option for us, we would not export. But yes, as you said, plan B, the export is always the plan B because if some of our major customers, for some reason, their offtake is severely curtailed, then, of course, just to maintain the volumes we'll have to export, even at a relative disadvantage of it is. But we don't see that happening in the near future. Most of our major customers have major, major expansion plans. And if you see the offtake of JSW -- major plants like JSW and AMNS, that has increased in the last financial year as compared to the year prior to that.
Okay, sir. One more thing sir, last month, last year, me was not that good because of the export ban and also weather continues. So what about this year? Do you really see a good improvement over last year in the month of May?
In the month of May?
Yes, for the current month, production and sales...
In the current month, yes, yes, yes, of course, you see March, we did an historic figure of 5.5 million in 1 month, which has never happened in NMDC. April, we have continued the momentum. Our April was the biggest April ever. And May also our numbers have -- of course, I cannot reveal the numbers because that has not been declared in the stock exchange as well. But as far our progress in May has been much more satisfactory as compared to any of the previous periods. So Q1 also, we expect that we would end up as one of the highest Q1s in the history of NMDC.
Current Q1 will be the best one, sir? That's what you're expecting?
Look, the current April was definitely better. The momentum is continuing in May as well. And naturally, we are very optimistic about the Q1 scenario in terms of volume, not in terms of prices.
Okay, sir. Sir, one last question, sir. What about any new clients that you're adding, we see only JSW, RINL and ArcelorMittal, and one more is Kudremukh. These 4 clients, 90% is their steels. Any major client that you're going to add in the current year or next year?
You see because of logistics in India, you must understand that the iron ore market is geographically segregated. So -- but where your mines are -- so Orissa obviously will cater to the plants that are easier to and cheaper to transport from there. Naturally, our clientele in terms of geographical base has been more or less stable because that is how the markets within the country is also geographically segregated. So unless these new plants come in, in the geographical areas that we serve, which is the East Coast and the Karnataka sector and the West Coast also, where we serve unless we plant to run capacity expansions coming there, so naturally our -- thankfully, most of our main clients have major capacity expansion plans and some of them have already executed a major part of their expansion plans.
So accordingly, we are very optimistic about the offtake from our existing clients. Chhattisgarh is again another place, where we have a very deep interest in. But the real game changer would be when we get the slurry pipeline to Vizag and we are planning at least on the drawing board -- at the drawing board level, we are planning to take pipeline, the branch of it towards Raipur. These 2 would be a major game changer.
When that will happen, sir?
It will take another 3 years, 3 to 4 years time.
Okay. Sir, last one, when is our new Chairman taking over, sir?
I have no idea. It's way beyond me. Chairman is appointed by the SEC, so I have no idea.
[Operator Instructions] The next question is from the line of Mr. Satyadeep Jain from AMBIT Capital.
A couple of questions. One on the -- all the expansion plans, obviously, in Kirandul, in Chhattisgarh. When we look at all these expansion plans, just want to get an update on the evacuation also. Where are we on the completion of KK line? Are there certain patches which are still pending? And if there is any patch that is still pending, what is causing the delay and when do you expect the entire KK line to be completed?
The KK line is 131-kilometer line up to and that has been doubled up to Nagarnar. Major part of it out of 131 kilometers, about 150 kilometers, about more than about 110 has already been done, and the rest are in progress. And the capacity of that line is supposed to increase from 28 million tonne to around 40 million tonne. And railways has also undertaken a lot of doubling themselves beyond Nagarnar up to Vizag, they are doing it in patches. But you must realize that in railways, obviously, whatever is done and is commissioned doubling, the benefits of that keep on coming. So it is not like a steel plant, where the last mile has to be completed for getting the benefit of the entire project. We are already reaping the benefits of the patch doubling about 110 kilometers that has been done.
The rest of the 20, 50 kilometers that is left over is basically leftover in the last phase that is between -- that as that is near our mine head. Hopefully, what our interaction with railways is that by the end of 2024, the entire stretch would have been completed. And the capacity of the line would be substantially increased.
But the issue is not here line capacity. That has never been unconstrained. The issue is rake availability. So March -- last quarter and especially in March, the Railways were able to provide us with adequate number of rakes. And as a result, the dispatches and consequently, the production could be maintained. So the -- if the Railways are able to provide us with adequate amount of rakes, the dispatches and production can be enhanced substantially.
You know we have very limited capacity of storage because we mine at the hilltop and we store at the valley, and there is always a very limited capacity of storage. So naturally, unless we are able to dispatch, we are -- it affects our production also. So -- and that made the effects -- is affected by the rake availability. And once the slurry pipeline in, and then that would be a greater game changer.
These slurry pipeline would connect to the steel plant or when would that be completed?
Yes. As of now -- this is the -- work is in progress by I think '25 when we should be able to commission the verification part, which is at the head end the slurry pipeline progress is already out of 131 kilometers, I think the pipeline for 24 kilometers have already been laid. Another 24 kilometers, they have been aligned for laying. Another 24 kilometers of pipes have already arrived, which has not been aligned and only 24 kilometers of pipes are due to arrive. So work is progressing and there are certain challenges. Sometimes there are always sight challenges in progress of work. The [ parent ] part is also being made. So I think the entire system will be ready for use by FY '25.
Okay. And second question on the offtake by different consumers in different states. We're seeing a lot of iron-ore blocks being auctioned in Gachibowli, in Maharashtra. There's a lot of interest there. Obviously, JSW also own some mine there. Do you see some risk, especially if you look at Western regions the offtake from some of these Western players particularly gets limited and you have to find other alternative buyers there?
We are very keenly watching all our main customers. We always interact with them almost on a very, very regular basis, a lot of daily and weekly basis. We are aware of their expansion plans. We are aware how their expansion plans is going. And we are very hopeful that given the -- our approach that they are having towards their capacity expansion that our relationship with our main customers would always be deepened. And obviously, we expect that -- it is more of a symbiotic relationship that we'd be able to service side of your major class even more because we are also in the process of improving our capacity substantially. So I think that would be a win-win situation for both our customers and us.
Just second, please one quick question on the INR 2,500 crores, that is outstanding. Just a follow-up to Ashish question, I just want to clarify that amount will come back to NMDC within FY '24?
It should, of course, it should. Depending on how the plant is performing, [indiscernible] something that would be coming back, not in one shot, -- but on a regular basis, that will come back to us.
[Operator Instructions] We take the next question from the line of Mr. Sumangal Nevatia from Kotak Securities.
I joined the call late so please excuse if this is already discussed. First is I wanted to know, sir, what is our CapEx guidance. This year, this has been somewhere around INR 1,400-odd crores. So for '24 and '25 annually, how much are we looking to spend?
Just as I mentioned, for '24, I think we should be able to do at least [ INR 2,000 crores. ] '25, of course -- from '25 onwards with the additional sanction of work because we are now once the steel plant is commissioned, our total focus would be towards capacity expansion programs, and wait for the overcapacity enhancement of the production side or the dispatch side, the dispatch infrastructure.
So going forward, unless we do INR 3,000 crores, it will be difficult for us to reach the 100 million tonne, and we are committed to the 100 million tonne target. And accordingly, we are focusing on getting these projects that are being executed to be completed and the projects that are already sanctioned to be tendered out and executed and sanction of a lot of new projects towards the 100 million tonne goal.
Got it. sir, this quarter, we've tried recovering the receivable from monitoring committee. So if you could just highlight, I mean, what is the outstanding receivable as on date? And what is the time line we're expecting the future recovery?
See, we have been petitioning the Supreme Court for last quite a few years, last 6, 7 years, that 10% that the monitoring committee that [indiscernible] refunded to us. And the Supreme Court has kindly -- has been kind enough to grant us some interim relief that whatever 10% was recovered between one 2019 and '20 and 31/3/2022 to be refunded to us.
Accordingly, we got about INR 950 crores. We are now approaching the Supreme Court to refund. We are also approaching the Supreme Court to refund the entire amount from 2012 onwards '19. And that outstanding as of date is around INR 1,900 crores, after realization of this INR 950 crores via interim relief that we have got from the Supreme Court. After that, we have -- thereafter, we have around INR 1,900 crores of outstanding to be recovered on the same account. And we hope that the Supreme Court would be kind enough to sort of entity our position, which has been there for long.
Okay. So sir, INR 1,900 crores, which is outstanding, which is before this '19... Have we accrued anything after that? I mean, from '22 say, in FY '23.
There was some. Because of mid-2022, mid-last-year, what happened is that we have been -- since the monetary committee was disbanded. So thereafter, we are into direct sales. And of course, we are depositing 20%, now 10% was earlier and 10% under protest. But now that deposit has also been stopped. We did it for a couple of months. But now that Supreme Court has given us the order that 20% only, 10% is to be recovered from NMDC as is being done for the other miners in Karnataka as well. So naturally, there is no current accrual to the old outstanding of...
Okay. And sir, this is a net amount.
Sorry to interrupt you, Mr. Sumangal. Sir, may we please request you to join...
Net amount, yes, it is a net amount in the sense, fees.
We have written-off something, right?
No, we used to write-off this entire 20% as per IndAS in our books as expected credit loss and SPV charges, right? Now obviously, that is why when we get back this INR 950 crores, it was not taxed. It is not a taxable income because the entire previous years, we have already recognized this as expenditure. And accordingly, the accounts are made, of course, while the tax -- when the tax was made, these expansions were disallowed. And that should be added back while assessing the tax liability. And accordingly, now that we are getting the refund, this is completely tax -- without any taxes.
[Operator Instructions] We take the next question from the line of Mr. Kunal Kothari from Centrum Broking.
Sir, similar question on the monitoring committee expense. So as you mentioned that from May 2022, it has been dissolved. And from now on, there will be no cost that we'll be booking in our accounting statements. So if I believe the yearly cost that we used to book is around INR 500 crores to INR 600 crores. So from next year onwards, like FY '24, this cost will not be incurred. Is my reading right?
It will be incurred half because you see 20% was being recovered by the monitoring committee. 10% on account of SPV and 10% on account of R&R. Of this 10% has been directed by the court that you should not recover and whatever you have recovered from 1/1/'19 should be refunded back to NMDC, which has now already been done, right? What we are fighting is the case of this extra 10% between the inception that was around 2013 to now to 2019.
In Karnataka, all the other mines were only getting -- only 10% was being deposited by them. And NMDC was doing 20%. So 10% will still continue to be paid to the state government towards the R&R charges.
Sorry, towards the SPV charges. So that -- so if -- I had earlier booked around INR 500 crores, now it will be INR 250 crores. [indiscernible] But that will be partially offset by the additional 22.5% that we have to now [ pay our ] Kumaraswamy, because Kumaraswamy, if you remember, was recently renewed. So that has in October '22. So from October '22, there is an additional 22% of sales from -- on sales from Kumaraswamy. So to that extent, yes, there are different items. But if you see the overall impact, we'll have to -- you can check that 10% of sales, and this is 20.5% of sales on, 50% of the production, it's the math, it needs to be done overall, but these are unrelated items, obviously.
Okay. Got it. Sir, apart from the guidance you provided in FY '24 volume guidance, what volume guidance that we can see in FY '25 as well?
See once -- you see, we have broken the 40 million tonnes barrier last year, we did more than 40 million. Going forward, in FY '24, we expect to do anything between 46 million to 50 million tonne, depending on 2 or 3 things. One is, of course, the enhanced efficiency that we have in all the projects now that will account for some. You see in March, you see in April and we are into a major efficiency upgrade. The second is, of course, Chhattisgarh monsoons. If it behaves normally then, of course, we get a greater type of mining, and it really helps us that -- that actually affects the monsoons projects affected, then the production to the extent of almost around 1.5 million to 2 million tonnes is effected. But if the monsoons are normal, so that we can do.
And the third thing we are depending very strongly on is the upgradation of the Kumaraswamy mine from 7 million tonne to 10 million tonne. So for that, for the requisite regulatory authorities are being followed up, and we have done a lot of formalities in this regard. And hopefully, somewhere around the mid of this financial year, we should be able to get that enhanced capacity put to use. So considering all these 3 factors, I think anything between 40 to -- sorry, 46 to 50 would be imminently doable.
We take the next question from the line Mr. Kirtan Mehta from BOB Capital Markets.
Just to sort of understand the -- we are targeting [ 6 million to 10 million tonne increase...
We are targeting?
6 million to 10 million tonne increase into the production next year, and you just mentioned that 1.5 million tonne, assuming the half year operation for the Kumaraswamy can add, which are the other mines where this additional production would come through?
You see, the journey from 60 to -- sorry, current 40 to -- from 67 or 70 is up to 100 in 2030 is basically divided into 2 parts. One is, of course, the generic increase on our existing mines, in capacity for which a few mines like Deposit 14 and Deposit 11C. The projects have already been sanctioned. But apart from that, we will need the operationalization of deposits for which is under NCL, that is NMDC CMDC. Deposit 13, which is also under NMDC CMDC. And we have to sort of around -- source something from Orrisa if possible. We are looking at various possibilities. And some of it will have to come from overseas also because we have a subsidiary company in Australia, and that some amount of would be offshore also.
So overall, I think it is possible to reach a figure of 100 million tonnes in, let's say, 6 to 7 years' time, that's a [ relevantly ] doable thing. In the immediate term, of course, we are looking at 46 to 50. And we have what we call is whatever call that is required, whether we should work 24x7x365 and increasing the production capacity of our existing plant, for example, Bacheli plant, we are screening plant we are increasing our existing capacity by around 2.5 million tonnes. So all these, I think, will account for whatever we are aspiring for.
And corresponding to this production guidance of 46 million to 50 million tonne, what would be the sales guidance? Also, we have seen sort of the inventory buildup of around 2.8 million tonne in the second half of the last financial year. Would that be sort of also considered sort of getting a release during the FY '24?
If you're going forward, FY '24, I think we should be doing 46 as I said, right? Hello? Can you hear me?
Yes, I can hear you. What you're saying is production guidance between 46 million to 50 million tonne. I was asking what was the corresponding...
Guidance has to be in tandem with the production because, as you know, that we produce in the hills, and we have very limited stocking capacity and which is almost now full. So unless you sell, we are not able to produce. So as I said, earlier is the question that in March, we did -- we could do 5.5 million tonnes simply because our dispatches are supported -- very well supported by the Railways. So unless we dispatch the naturally availability of rigs, which is a challenge we are working closely with the Railways. We are building the slurry pipeline. So the dispatches capacity has to be created in tandem. And we have already created a mine at -- sorry, a storage yard at Kumarmaranga, which is near Jagdalpur, which is about 100 kilometers from our mines. So we are looking at all options so that dispatch does not become a constraint towards our production. Because as of now, unless we are able to dispatch, we are not able to produce.
Right. Understood. Just in terms of...
I'm sorry to interrupt, sir, maybe just request you to join the question queue as we have several participants waiting for their turn.
Sure.
We take the next question from the line of Mr. Pallav Agarwal from Antique Stockbroking Limited.
So I have a question on the coal blocks, Tokisud and Rohne coal block. So any status update on that, sir?
Yes, Tokisud, in fact, we have a meeting with the mines -- sorry, the coal secretary tomorrow and day after. We are pursuing the case. There are issues regarding land acquisition there. And that now we have decided to go through the Coal Bearing Act of land acquisition. But since [indiscernible] these are not virgin blocks, these were deallocated and then reallocated with us. So there are some complications regarding land acquisition. Once that is solved, we should be able to do mining in a very quick time frame.
Of course, Rohne is a little later, we should be able to go start mining around 2025, because the approvals are under process. There also some land acquisition issues are there, but those are being solved and most of it is in forest land. So we have to go through the some compensatory [ files ].
So a lot of activities are being simultaneously pursued in Rohne also. But Rohne is a little later, it should come around 2025. And Tokisud, if you are able to get the necessary approvals in terms of [indiscernible] and other things on the land acquisition, we should be good to go around next financial year or even the later part of this financial year.
Sure, sir. So although just on this, the exception income that we booked this quarter, so this money is actually been -- already been received, right? So it's reflecting on a cash balance.
Yes, it has been received in April, yes. I don't think, long time back. It was -- and the monitoring committee money has been received in the month of April. It wasn't received in March. March, I think the orders came in March. [indiscernible] It came on February 22nd of -- 23rd of February something like that. And the cash was received in the month of April.
Okay. So the March cash balance...
It's all realized. It's all realized. It's all realized.
Right. Sir, just because now we almost have almost close to INR 7,000 crores of cash, so -- and our last buyback was some time back. So is there any plan to probably from buyback at some stage?
Personally, I would like to invest all of this into CapEx because if we can double our CapEx because if we are going towards that $100 million target that we have, we need some massive CapEx to be done, because without that CapEx, it is not going to grow. So CapEx is right now our first priority for the enhancement of the year.
[Operator Instructions] We take the next question from the line of Mr. Chirag Singhal from First Water Capital.
Sir, my first question was on the exports. So the current international price is around $103. I wanted to know at what price it becomes viable for us to export?
There's no particular number to that. It also depends on at what point of time the -- at that point of time, what is the domestic prices. You see how the economic cases may end up. We take the international prices. Then from that, there is a 30% export duty. And then from that, there is a logistics cost from here to the port, which is around $20 to Vizag. The port handling charges and other things itself become $4 to $5. So when we account for all of these and the royalty and other things that we -- and then you account and then see what is the net export realization, if you are making an export. And generally, the trend is that you see that the net realization from domestic sales actually become higher than the net realization from the export sales.
So as an economic case, it is difficult, even we have seen that at $200, our prices were around INR 6,000 then actually economic case was not made out. Now there is the second case is whether it is there you have a problem regarding your dispatches. So if some of your major clients, there is an offtake issue, then that has to act as a sort of a plan B that you do it to maintain volumes even if the relative realization in the export is a little lower than domestic one.
So we have not come to that stage as yet. But yes, if you cannot rule out export, you'll have to create the infrastructure and keep export potential ready because as somebody pointed out and very correctly so that more than 70%, 80% of our sales are to a few select customers. And if something were to sort of may be affected between this -- in one of the major customers, then, of course, just to maintain the volume you'll have to export even if at a relatively slightly lower margin than the domestic. But as of now, the domestic demand is adequate for us to dispatch whatever we produce, whatever we are able to produce.
So if I look at the current domestic price, so our filings price that you have declared is close to INR 4,000. Would it be the right understanding that at the current domestic price, if the international prices are, let's say, around $120, it becomes viable for us to export at the current domestic prices?
At the current domestic prices, I think it will be more than $130 would be comparable.
$130.
The 30% is export, about $20 is the logistic cost, ports costs. And then there is a 15% -- 15%, sorry, around 19.8% on royalty and other things that also go from our pocket in case of exports, because that is an all-inclusive money I get. So when you work back, it is not -- it doesn't make an economic case for itself. At the current, I think it could be even more than $130 at the current level of prices. I haven't done the math, but it can be done easily.
Got it. Sir, my next question was on this...
Sorry to interrupt you Mr. Chirag, may we request you to return to question queue so we have several participants waiting for their turn. We take the next question from the line of Mr. Rahul Jain from Systematics.
So firstly, on pricing, we have seen a good deceleration in Chinese price. But we haven't really had any meaningful cut. So are we seeing a situation, the demand supply dynamics in India have turned quite favorable for the miners and then the price correlation may not really hold you like it has held in the past?
Beg your pardon, could you repeat your question, please?
Yes. In a sense, we've seen a good price cut in China. I know around almost like a $30 cut, whereas we have just seen INR 100 per tonne in fines that we have done. So over the last 3, 4 years, you haven't...
Yes, I have been saying that we are facing -- I have been saying that we are facing headwinds in terms of pricing. Obviously, we've been able to hold on as of now. But there are several pricing pressures and there are several headwinds. There's no doubts about that. But even at $100 under that current prices, we are at around at least 30% discount in the East Coast. Of course, at the West Coast, the margins -- the spread between domestic prices and the international prices on landed cost basis would be much lower, it should be around at the current price is around $10 only -- 10% only. But in the East Coast, I think it is hovering in the range of 25%...
Sir, on the...
The import duty is only 2.5%.
Right, right, right. Sir, on NMDC steel, so where is the due diligence process? And also on whenever the deal concludes, you will have to purchase 10% will be at the price at which the purchase is done or at any different price? How will that work out?
No, I don't understand about what the due diligence process because we are not driving the process. This investment is being driven by the government of India, by the Department of -- by the Ministry Finance. So we don't have exact visibility about this stage at which it has. So we are not in a position to either confirm or deny or enlightening with the details of the process or the stage of the process.
Now regarding the 10%, of course, the government holds around 60-point-some percent of the holding, and it has decided to sell around 50% to its strategic partner. Now the rest percent whether it continues to hold in its own name or whether it transfers it to NMDC, we don't have a visibility on that because no formal decision has been communicated to us. And if the decision is taken that it is to be held government of India shares that we transferred to NMDC. At what prices can only be speculative because we have absolutely no visibility on either things as of now.
[Operator Instructions] The next question is from the line of Mr. Saket Kapoor from Kapoor & Company.
I put forward my questions. Firstly, for the slurry pipeline, sir, what is the total CapEx that has been envisaged, how much have we spent in the current Capital Work-in Progress, sir, an amount of INR 1,991 is being reflected as on 31st March 2023. So how much is on account of the coal that lies because of the NMDC steel part?
And thirdly, sir, about the factor -- 3 factors, which you mentioned for our production rising from 40 million to 49 million, I find that the 2 factors are not controllable by us. So how confident are you about -- firstly about this monsoon part playing up, stand in our way. So when we are giving this guidance from 46 to 49, the factors must have -- we must have the control over the factors. These are my questions.
So I'll take the 3 questions separately. First is your question about slurry pipeline. The sanction cost of the slurry pipeline is around INR 2,900 crores. So it is going to go up to around INR 3,500 crores. We have spent till date INR 1,240 crores, till date, right? And key major works are progressing and progressing reasonably well.
One is pellet plant that is being done by L&T. That's around INR 1,200 crores. The other is the laying of the slurry pipeline, which is again being done by L&T which is around INR 1,200 crores. And the third is the headway, we have a beneficiation plant of around INR 900 crores. So that is being done by KPT. And so all these major contracts has been progressing. So we expect that this year there will be a substantially increase in the slurry pipeline expenditures.
Apart from that, we are also in the drawing board stage of making 2 more slurry pipelines. One would be from Nagarnar towards Vizag. And we are also thinking about the technology -- economic feasibility of having another pipeline from Nagarnar towards Raipur, if that is possible. But this is a small pipeline joining, of course, Kirandul to Bacheli. So these are the -- I think the Phase II, Phase III should cost at least INR 7,000 crores, INR 8,000 crores each because this 131 kilometers is going to cost us about [ INR 3,500 crores ]. So actually that being almost a double the length. It would be at least INR 7, 000 crores to INR 8,000 crores at produced prices. That's number one. Number two, you asked about the steel plant is it?
Yes, sir, about the Capital Work-in Progress amount of INR 2,000 crores.
Capital Work-in Progress is today is totaled into INR 935 crores. Of course, as you know, that the batteries of coke oven has been commissioned, 1 battery has commissioned around 5, 6 months back. The other commission that has been commissioned about 1.5 months back. So this coke oven -- we have operationalized. We are buying coal from Australia and also selling coke here.
So naturally, because this plant has not been commissioned as per the accounting standard, these are all booked as plus CWIP or minus CWIP. The sales are booked as CWIP. And the EA is the purchase of coal and other raw materials are booked as plus CWIP, including all the cumulative expenditure up to May '23 is around 1,200 -- is '22, nothing INR 935 crores. That's around INR 23,000 crores, of which if you see the net coal impact is around about INR 1,000 crores, about more than INR 1,000 crores. That is what the coal we have bought minus the coke we have send. Because we have to keep around 1 lakh, 1.5 lakh coke ready for our blast furnace to be blowed in. And now that is almost ready, and we will be blowing in the blast furnace around 15th of June and doing the mill and the steel making [indiscernible] by end of June. So there we have a clear visibility out there.
The third portion of your guidance is, of course, you said some of our is uncontrollable factors like monsoon. That's completely beyond our control. But the approvals are partly under our control, and we are actually expediting that following it up. Whatever compliances are required. For example, in Kumaraswamy, we are doing it in double the speed. And so it is partially under our control. And the visibility that looks from us today that we should be able to get all the clearances by middle of this financial year. And accordingly, we can -- and naturally, that we are giving a band of taking the optimistic and the negative -- and the pessimistic scenario that around 46 to 50 would be the guidance. There is a spread there because we really don't know exactly when the approvals will come. But we are following it up and we are fairly optimistic that they should come in the middle of the year, and we should be able to take a substantial advantage of that advanced 3 million capacity at Kumaraswamy. And monsoon, of course, as you know, it's not in your hand, but we have had 2 major monsoon. So let us hope that this years three monsoons will not be -- we don't mind an intense monsoon, but we mind an extended monsoon. Whether it rains 30 millimeters a day or 50-millimeter a day because it's an [indiscernible] extended that really costs us.
Sir, our losses in the pellet other businesses services sector are still continuing, sir. We lost around INR 154 crores for FY '23. So what steps are we taking as we chose to mitigate the same. If it's a diamond mines heavy loss is there...
The pellet plant otherwise is structurally okay and things are okay, but we must realize that the pellet plant was designed for processing 85% slimes. And now because of regulatory issues, we are not being able to use our own slimes, which is lying at 300 meters away from the pellet plant. It's not even 300 meters. I think it is around 100 meters from the pellet plant, it is on the edge of the pellet plant. But because of the regulatory reasons first, the renewal of the [indiscernible] mine itself was delayed than it was -- when it was delayed, then there is a dispute regarding the tailing point itself.
Now we are obviously pursuing with both the Ministry of Forest and the government of Karnataka to give us permission to use the -- our own tailings. So hopefully, that should take another 4 to 6 months. And once we get those tailings, we can run the pellet plant.
The other loss-making unit was major loss-making unit was obviously Panna, which is the diamond mine. The good news is that Supreme Court has allowed us that we should be doing the mining, has allowed us to do the mining and necessary approvals are being processed. The internal time lines and we are pretty confident that we should be able to do it. We should be able to start mining in 1st of October or 1st of October, we should be able to start Panna mining. But the good thing about Panna mining is that we have now an additional source of income there, whatever the black was there, which was lying as waste around 5 million to 7 million tonnes are there.
Now finally, the forest authorities and the environment authorities have allowed us to sell it in a limited way. But that would also contribute to the -- and we expect Panna to breakeven -- more than breakeven and turn in profits after a long time by next year because it will be October. So maybe this year, it will be just the losses will be minimized or maybe we'll -- that's about breakeven. But going forward, with the mining of diamonds in Panna, and also the sale of black -- which was otherwise a waste material, we should be able to change the color of the profitable loss from red to black.
And if you could give the breakup also...
I'm sorry to interrupt you, sir. Mr. Kapoor...
Yes, I'll join the queue. Yes. Yes.
We take the next question from the line of Mr. Nilesh Doshi from Prosper of Invest Limited.
Sir, do we have any agreement with the NMDC steel plant to supply the iron ore? And if there is any agreement, then how much the sales volume can be increased?
Yes, we have a long-term agreement with NMDC Steel Limited. And actually, NMDC it will be viable for NMDC Steel Limited to buy from us only because of logistics cost and because of the geographical location of it. And a 3 million tonne plant at 1.8 tonnes of iron ore per tonne of steel, we should be selling around 5 million tonnes of -- around 4.5 million to 5 million tonnes of iron ore per annum, when the plant is only in full capacity.
Because this will be the additional to the -- our earlier sales because the plant is not yet...
These are how we are looking at the 100 million tonne road map because it's not only a question of production, it's a question of sales also. And NMDC Steel Limited is going to be one of our permanent and major customers going forward.
Okay. Sir, you have mentioned the export duty of 30%. But is there any import duty? And if there is an import duty, what is the rate of import duty?
It is only 2.5%. It is only 2.5% the import duty. And that is why the Indian miners, like us, do we face the brunt of lower international prices, because then the steelmakers have the option of buying from India or from -- or their imported iron ore. But we are unable to take the advantage of high international prices because when you discount it by 30% and then discount it by further 20% for royalty, et cetera, and then discount it by another $20 for -- for $25 for the logistic cost. So we are unable to take the advantage of high prices in the international market. But the disadvantages of lower prices in the international market affect us directly because the import duty is only 2.5%.
But -- so there is any import quota has...
It's a pre import...
So every month, we announced the price of the fines on iron ore. So that, that price and the taxes, the composition of the ultimate price is the 50-50 because we announced price without the royalty and other duty, so additional royalty. So what is the ultimate price to the buyer?
It is around -- 20% is around taxes and duties, 15% is, of course, what you call -- 15% is royalty. 30% on royalty is your DMS and 2% on royalty in your [indiscernible] so all this add up 19.8% of our decline prices. And on a landed cost basis, then you'll have to factor in where your customer is because logistic cost is also are very substantial. From here to Vizag itself, it's around $20. And then if you're taking to the West Coast, then there's ports -- port handling charges and then there is sea freight, et cetera. It depends on where you are.
Okay, sir. If you permit I ask the only last question. That you said that you believe in the massive CapEx to improve our profitability in the future. But already, we have a INR 7,000 crore on the balance sheet. And we are generating that enough cash from our current operations. Is it not wise to distribute that amount to the shareholder in the form of either dividend or buyback?
This year, we have already -- you see, if you see the history of NMDC, we have been distributing in either form around 45% of our net profits every year. Every year, that's -- this year, we have distributed a little less because our profits were a little less and we have some CapEx plans as well. So we have distributed overall INR 6.6 per share, which translate into approximately 35%, 36% of our net profit. So we have been very generous in terms of payouts to the shareholders. And as you know, that our dividend yield is also one of the highest in the country, which most of the public sectors out there.
Because I'm asking -- because even in the opening remarks you said...
Mr. Doshi...
Sorry, Sorry, Madam, I remain in queue.
[Operator Instructions] Ladies and gentlemen due to time constraint, that was the last question for the day. I would now like to hand the conference over to Mr. Amit Dixit for closing comments. Thank you, and over to you, sir.
Yes. Hi. Thanks, everyone, for joining the call and participating in the discussion this afternoon. I would sincerely thank Mr. Mukherjee for very patiently answering all the questions. I would now like to hand the call over to you, sir, for any closing comments.
Well, I wish to thank all the participants for taking the time out and also we'll be very happy to have more questions offline. And if you have any queries, do please contact my office, and we'll be happy to obviously give you all of the clarifications. I believe that going forward, NMDC has bright future essentially because now that the steel plant has been demerged and it will be commissioned. I think the focus now will be completely on enhancement of the mining business.
Which because of the steel plant was both in terms of human resources and in terms of financial resources, it was -- that was a very resource-consuming effort that we had. But now that it is getting not only -- it has been emerged and formed into a new company, and we are going to commission it. Now the focus would, of course, be on the mining business and the projects-related to mining business. And we -- going forward, I think the growth trajectory of NMDC will completely change. From that I think the graph would -- the growth graph would be much more steeper and much more sharp than it has ever been in the past 8 to 10 years. So I think NMDC is a story to stay invest again. Thank you so much.
On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you.