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Company Performance • Date of Call: May 21, 2024 • Hosted by: Nuvama Institutional Equities • Key Speaker: Mr. Praveen Nigam, Executive Director of Finance and Accounts • Economic Context: • Indian economy grew by 7.6% in FY '24 despite global challenges.
Production and Financial Highlights • Physical Performance: • Crude steel production: 19.239 million tonnes (+5%) • Saleable steel production: 18.437 million tonnes (+7%) • Financial Metrics: • Turnover growth: 1% • EBITDA: INR 12,280 crores (+31% YoY) • Profit before tax: INR 3,688 crores • Profit after tax: INR 2,733 crores
Operational Focus • Cost Management: • Decrease in employee costs due to workforce reduction. • Controlled expenditures from lower power and fuel costs. • Production Strategy: • Reduced semi-finished steel production to 8%. • Targeting production exceeding 20 million tons and sales of 90 million tons.
Capital Expenditure and Future Plans • Capex for FY '25: INR 6,300 crores • Capacity Expansion Goals: • Increase crude steel capacity from 20 million tons to 35 million tons by 2030-31. • Debt Management: • Current borrowings: INR 35,000 crores, expected to reduce below INR 30,000 crores by March 2025.
Inventory and Pricing • Inventory Levels: Over 1.6 million tons, with a target reduction of 2.09 lakh tons. • Pricing Adjustments: Provisional pricing for railway billing based on earlier fiscal years.
Operational Performance Insights • Structural Mills Capacity: • Durgapur: 70% • Burnpur: 55-60% • Production Methods: Reliance on Basic Oxygen Furnace (BOF) route.
Market Outlook • Demand Projections: Positive outlook for steel demand driven by government measures and infrastructure spending. • Long Product Prices: Increased due to strong domestic demand and supply constraints.
Conclusion • Economic Forecast: Positive growth in steel demand and infrastructure investment anticipated, positioning SAIL for improved performance and competitiveness.
Overview • Date of Communication: February 19, 2024 • Moderated by: Ashish Kejriwal, Nuvama Wealth Management • Key Speaker: Praveen Nigam, Executive Director of Finance and Accounts, SAIL • Purpose: Discuss Q3 FY '24 earnings and address analyst questions
Economic Context • Global Recovery: Post-COVID-19 recovery noted, with challenges from inflation and geopolitical tensions • Indian Economy Growth: Projected at 7.3% for FY24, outperforming major economies
Company Performance • Steel Production: 9% increase in saleable steel production year-over-year • Sales Volume: 8% rise in sales volume • Profitability: Decline in sales turnover and profitability in Q3 compared to Q2 • Operational Efficiency: Ongoing efforts to improve efficiency and positive demand outlook due to government spending
Q&A Highlights • Sales Volume Expectations: January sales at approximately 1.5 million tons, indicating improved demand • Pricing Trends: Domestic prices align with import prices; ore inventory management discussed • Debt Levels: Slight increase in debt to INR 29,000 crores; capex target of INR 6,000 crores for next year • EBITDA Decline: From INR 4,043 crores in Q2 to INR 2,390 crores in Q3 due to rail price revisions
Expansion Plans • New TMT Mill: Planned in Durgapur with a capacity of 1 million tons, timeline TBD • IISCO Project: Greenfield project focused on Hot Rolled Coil production • Coal Mining Project: Awarded to Power Mech for 1.5 million tons from Tasra mine, production expected next year
Raw Material Security • Coking Coal: Planned imports, with Tasra mine reducing reliance on imports • Railway Payments: Provisional payments timely; final pricing discussions ongoing • Iron Ore Production: Approximately 36 million tons produced
Closing Remarks • Economic Resilience: Projected growth of 6.5% to 7% over the next two years • Steel Demand: Promising forecasts linked to government infrastructure spending • Commitment: Focus on sustainable performance and optimism for investor returns
Conclusion • The call concluded with a thank you from the moderator, emphasizing the positive outlook for SAIL and the Indian economy.
Communication Details • Date of transcript release: November 21, 2023 • Conference call date: November 16, 2023 • Hosted by: Nuvama Wealth Management • Key speaker: Mr. Anil Tulsiani, Director of Finance • Purpose: Compliance with regulatory requirements
Economic and Industry Overview • Global economic challenges: Inflation, geopolitical tensions, supply chain disruptions • Indian economy resilience: GDP growth of 7.2% in FY '23 and 7.8% in Q1 FY '24 • Positive performance in the Indian steel industry: Increased production and consumption
SAIL's Q2 Performance Highlights • Best-ever Q2 results: • Crude steel production: Up 12% to 4.8 million tons • Sales turnover: Up 13% to INR 29,560 crores • Profit before tax: INR 1,696 crores • Focus on operational efficiency and environmental sustainability • Challenges: Rising coking coal prices
Analyst Inquiries and Responses • Coal Supply: • 15% indigenous coal, 3-4% from own operations • Current BCCL price: INR 12,500 • Rail Pricing Impact: • Provisional prices for FY '23 and '24: INR 67,500 per ton • Sales Composition: • Semi-finished products reduced to 8% • Debt and Capex Plans: • FY '23-'24 capex: INR 5,500 crores • Debt reduction target: From INR 29,500 crores to INR 22,000 crores
Capital Expenditure and Future Plans • Maintenance capex focus: INR 4,000 to 5,000 crores annually • Projected cash flows: Around INR 25,000 crores during peak investment years • Peak net saleable capacity: 19 million tons, with potential for 2 million tons improvement • Expansion plans at IISCO Steel Plant
Production Guidance and Market Trends • Estimated capex for IISCO project: INR 15,000 to 20,000 crores over 4-5 years • Production target for the year: 19 million tons • Strong domestic demand with slight stock reduction • Impact of imports on pricing acknowledged
Future Production Expectations • Bhilai caster expected to contribute 1 million tons by FY '25 • Rourkela caster expected to contribute 1 million tons by FY '26 • No significant production increase anticipated in FY '24-'25
Closing Remarks • Commitment to improving operational efficiencies • Optimism for favorable market conditions ahead
Economic Landscape • Global inflation and monetary tightening impacting steel demand. • Global steel output declined by 1.1% in H1 2023. • India’s steel production and consumption grew by 5% and 13%, respectively, in FY 2023.
Q1 FY 2024 Financial Results • Record production: • Hot metal: 5.04 million tonnes (up 7%). • Crude steel: 4.67 million tonnes (up 8%). • Sales volume increased by 23% to 3.88 million tonnes. • Sales turnover: INR 24,093 crores (up 1%). • Profitability challenges due to declining steel prices and rising coking coal costs: • EBITDA: INR 2,090 crores. • Profit before tax (PBT): INR 202 crores. • Profit after tax (PAT): INR 152 crores.
Operational Efficiency and CSR • Ongoing efforts to improve operational efficiency and reduce carbon emissions. • Optimism for improved margins due to stabilized coal prices and price revisions by Indian Railways.
Debt Levels • Increased debt to INR 29,414 crores due to working capital needs. • Quarterly increase of INR 3,000 crores acknowledged, with a decrease in payables. • Anticipated reduction in borrowings by INR 4,000 to INR 5,000 by year-end.
Domestic Steel Demand • Strong local demand confirmed with a 23% sales increase in Q1. • Stability in Net Sales Realization (NSR) expected to improve starting September.
Operational Expenditures • Royalty expenses increased; overall expenditures decreased from INR 7,279 crores to INR 6,814 crores.
Production and Capital Expenditure (Capex) • Target production: 19 million tonnes. • Capex target: INR 6,800 crores, focusing on maintenance and existing schemes. • Plans for future expansions aiming for a capacity increase of 15 million tonnes by 2031-32.
Iron Ore Inventory • Much of the iron ore inventory earmarked for internal use, pending government clearances for upcoming projects.
Coking Coal Prices and NSR • Sequential decline in coking coal prices of INR 800 to INR 1,000. • Anticipated improvements in NSR for flats and longs.
Employee Costs and Inventory Levels • Projected employee costs for the year: INR 11,500 to INR 12,000 crores. • Current inventory at approximately 1.4 million tonnes, with confidence in reduction by March 2024.
Capital Expenditure Breakdown • INR 6,800 crores capex includes INR 1,500 to INR 2,000 crores for maintenance and debottlenecking.
Raw Material Integration • Plans for increased indigenous coal sourcing to enhance raw material integration.
Conclusion • Optimism expressed for improved operational efficiency and market conditions moving forward.
Economic Overview • Challenging economic environment in FY23: • Declining steel prices • Inflation • Global supply chain disruptions
Production and Sales Achievements • Record production and sales: • Hot metal: 19.4 million tons • Crude steel: 18.3 million tons • Saleable steel: 17.2 million tons • Highest sales volume: 16.20 million tons • Domestic sales increased by 7% • Exports fell from 1.4 million tons to 0.4 million tons
Financial Performance • Record turnover: Rs. 1,03,768 crore (FY23) • Profitability decline: • EBITDA down 58% to Rs. 9,379 crore • Profit before tax (PBT): Rs. 2,637 crore • Profit after tax (PAT): Rs. 1,903 crore • Increased borrowings: Rs. 29,270 crore, reduced to Rs. 25,662 crore by Q4
Strategic Focus • Addressing declining steel prices, especially for long products • Anticipating lower imported coal prices to improve profitability • Enhancing operational efficiencies: • Record reduction in coal and coke consumption • Increasing value-added steel share to 52.7% • Commitment to sustainability: • Over 100% waste utilization • Various environmental initiatives
Dividend and Future Projections • Declared dividend: Rs. 3.25 per share for FY23 • Projected sales volume for FY24: 18.7 million tons (15% increase) • Economic outlook: India expected to grow 6-7% driven by infrastructure demand
Employee and Debt Management • Wage revisions expected to decrease by 5% • Overall salary increase projected at 4-5% • Potential debt reduction of Rs. 6,000 crore due to lower coal prices • Projected capital expenditure (CAPEX) for FY24: Rs. 6,500 crore
Sales Guidance and Iron Ore Sales • Sales target: 18.7 million tons, with growth expected in the latter half of FY24 • Optimism about resolving iron ore evacuation issues in Jharkhand • Provisional sales related to rail supplies with backlog in pricing finalization
CAPEX and Expansion Plans • Cumulative CAPEX booking: ₹30,000 crore • Production capacity target: 35 million tons by 2031-32 • Current CAPEX primarily for maintenance and efficiency improvements • Focus on securing raw material supply, sourcing 84-85% of coal internationally
Industry Concerns and Future Outlook • Addressed volatility in the steel industry and expansion risks • Phased expansion strategy to manage funding requirements • Optimism about the Indian economy's recovery and steel industry growth prospects driven by government spending and private investment.
Conference Call Overview • Date: February 15, 2023 • Moderator: Ashish Kejriwal, Nuvama Institutional Equities • Key Speaker: Anil Tulsiani, Director of Finance at SAIL • Format: Presentation followed by Q&A
Company Performance Highlights • Production: Best-ever production figures for nine months; crude steel production up 4% YoY. • Revenue: Increased by 3.6% to INR 75,317 crores. • Profitability: Positive profits in Q3; EBITDA significantly improved despite declining steel prices. • Market Conditions: Volatility in steel market; rising coking coal prices noted.
Future Outlook • Economic Growth: India's economy projected to grow 6-7% despite global challenges. • Capacity Expansion: Plans to increase wagon wheel capacity and crude steel production. • Capex Commitments: Projected INR 5,500 crores for FY 2023; INR 6,500-7,000 crores for FY 2024.
Debt and Financial Management • Net Debt: Increased to INR 29,270 crores due to high coal prices and capex. • Debt Reduction Plans: Aim to reduce debt to INR 24,000-25,000 crores by year-end.
Market and Pricing Dynamics • Coking Coal Costs: High import costs impacting profitability; exploring alternative sources. • Steel Prices: Adjustments dependent on market demand; recent price increases noted.
Analyst Inquiries • Wagon Wheel Capacity: Current capacity at 40,000 wheels/year; plans for increase. • Employee Costs: Decrease due to retirements; future hires at lower salary grades. • Iron Ore Sales: Dependent on favorable prices and government approvals.
Inventory and Sales Expectations • Q4 Targets: Inventory at 1.2 million tons; sales target of approximately 4.8 million tons. • Product Mix Improvement: Progress in production levels and output ramp-up planned.
Conclusion • Government Support: Optimism about infrastructure investments benefiting the steel industry. • Final Remarks: Call concluded with thanks from the moderator.