LLOYDSME — earnings call

The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.

Prepared remarks

Moderator · Conference Operator

MR. PRATEEK SINGH – DAM CAPITAL Lloyds Metals and Energy Limited January 29, 2025

Ladies and gentlemen, good day, and welcome to Lloyds Metal and Energy Limited Q3 FY '25

We have our first question from the line of Parthiv Jhonsa from Anand Rathi.

Parthiv Jhonsa

So, I have got actually a couple of questions.

Sir, the first question pertains to the mine's EC.

I believe there was a public hearing which was there yesterday on 28th.

Is it possible to know the status?

And what is the progress on it?

And by when can we expect the EC to come in?

And once the EC comes in, how long it takes for the expansion to actually kick in?

That's my first question, sir.

Rajesh Gupta

The public hearing was held yesterday in Gadchiroli under the aegis of the Government of Maharashtra, the collector, etc. And it went off well.

The usual questions were asked, some queries were there relating to environment and employment, , which were expected, and they have been addressed and now we await the outcome from the district administration.

It will go to the Centre from there, and then there will be a final EC committee meeting.The whole process, should take 60 to 70 days, to complete.

Parthiv Jhonsa

So, in 60 to 70 days, you mean the EC should come in?

Or it is another couple of months after that?

Rajesh Gupta

Yes, our worst case expectation.

Parthiv Jhonsa

Okay.

Sir, my second question was that you have done, I think, about 7.8 million, 7.9 million ton kind of sales of iron ore in the first 9 months, right?

So, can you give the guidance for remaining part?

Like it will be completely 10 million ton, so about 2.2 million ton in the fourth quarter.

Is my reading correct?

Rajesh Gupta

Yes, that's pretty correct.

Parthiv Jhonsa

Okay.

And sir, one place in the presentation you had mentioned that once the MDO business integration is completed, there'll be almost about, INR400 to INR500 of cost saving in the iron ore side of the business.

So, can you throw some light on it that when can this come and when can these savings play out?

What is the timeline for the same?

Riyaz Shaikh

See, the NCLT process is going on.

The company has to first go on through the NCLT for the demerger.

So, the business, as we have already mentioned that the MDO business will be coming in from 1st of April.

So, all the effect would be coming in from 1st of April 2025 post the NCLT order is received.

So, the entire business comes into this company from 1st April 2025.

So, it will be for the next financial year.

Parthiv Jhonsa

Okay.

So basically, my question was will this benefit kick in from the day one itself?

Lloyds Metals and Energy Limited January 29, 2025

Riyaz Shaikh

Yes.

Since it will be under the same umbrella, it was a consolidated figure.

So, it will be kicking in from the immediate basis, with the increased EC limits.

Rajesh Gupta

With the effective date being 1st of April 2025.

Moderator · Conference Operator

We have our next question from the line of Vikash Singh from PhillipCapital.

Vikash Singh

Sir, just wanted to understand, once the EC is in place, how long will it take to ramp it up to the previously desired guidance levels of that 15 million, 20 million or even 25 million tons?

So, if you could give us some timeline over there.

Rajesh Gupta

So, there are two aspects to the physical execution.

One is the physical mining and excavation, and one is the evacuation.

As far as the mining is concerned, we have machinery in place through Thriveni to do the mining.

And at peak times, we have done 1.8 million tons also in a month.

So, 2.2 million tons roughly, in the first 1.5, 2 years, we would be not going in for any beneficiation.

It will be a current process of direct sales zone.

So that 2 million tons of excavation and loading onto trucks doesn't seem very difficult.

Regarding the evacuation, like I mentioned earlier, our pipeline of 10 million tons is in place.

By the time the grinding plant and the pellet plant is ready, the 5 million tons will be transported through that and pro rata 15 million, 20 million tons would be dispatched through the normal route.

So, we would have, therefore, a big support of the pipeline in helping us in evacuation.

And therefore, we see that there will be not major worries in achieving the evacuation either.

The day the EC happens, and the other legal formalities happen, we hope to be ready with the mining from day 1 within the first 30 days.

Vikash Singh

Understood.

And sir, just one clarification.

Until the beneficiation project comes in, we can actually go up to 25 million ton in the high-grade ore or we will cap our high-grade ore at a certain capacity and that 25 million ton, like you previously said, is a mix of 15 million-ton of low-grade beneficiated and 10 million ton of high grade, but then until that comes which is 27...

Rajesh Gupta

Yes.

In the year FY '28, the mix would be 10 million tons of DSO and 15 million tons of beneficiated ore.

Prior to that, step-by-step, we will be achieving 25 million tons total.

So, in the first year, it will be 25 million tons of DSO directly.

Vikash Singh

Understood.

But then my second question comes that DSO reserves seems to be pretty limited.

So once if we utilize that 15 million and 25 million tons, if I'm not correct, we will be left with only with 45 million, 50 million ton of DSO, which is not sufficient, more than 4 to 5 years of high-grade ore.

So just wanted to understand about the -- how we should look at the mine life of DSO versus the low grade going forward?

Rajesh Gupta

The reserves of DSO are 157 million, 160 million tons as per the Tata report, which has been certified by JORC.

So, I don't know where you have observed the figure of 70 million tons, it's 157 million tons of DSO and around 700 million tons of BHQ.

So, by the third year, we'll go down to 10 million tons of DSO to preserve the ratio for the next 35 years.

Lloyds Metals and Energy Limited January 29, 2025

Vikash Singh

Understood, sir.

And sir, just one last question, basically, on this environmental clearance.

Once we get the clearance, from state, we need only the consent to operate, right?

There is not much formalities on the state level left?

Rajesh Gupta

Yes, I believe that's the only formality that's left.

There are other formalities, obviously.

Like I mentioned, the public hearings is under the aegis of the state.

The state has always been very supportive and continues to be supportive.

And so all those regular formalities will be completed well in time.

Vikash Singh

Understood.

And sir, just sorry to squeeze in one more question.

In terms of parity, how do we stand versus Karnataka or Odisha material and imported material-wise?

How the prices are ranging in Maharashtra or rather in Karnataka because recently, there's ordinance, Karnataka government is trying to pass a new mining bill.

So, in case if Karnataka mining goes a little bit low, and we could supply there also since we are going to have a very large capacity, how does it sits including the logistic cost?

Is that opportunity is also available with us?

Rajesh Gupta

So currently, some of our material is already going to Karnataka to various customers and we'll continue doing so irrespective of the fact of the taxation announced by the Karnataka government.

And that taxation is actually a cost, not related to the selling price.

So, the cost might go up, but the selling price would be ruled by the market.

And since we are already competitive in that market, , we hope to be competitive later also.

As such, today, we are supplying our materials in literally all four corners of the country.

And we hope to continue doing so through various logistics, means like rake, truck and now pipeline as well.

Vikash Singh

So, on the rate parity, Karnataka versus Maharashtra, the gap would be, if you could give me this tax figure?

Rajesh Gupta

I could not understand your figure.

Vikash Singh

So basically, Karnataka material price versus Maharashtra material price ex of logistics, so what would be the gap?

Rajesh Gupta

So, there are some price differentiation between various destination ex the mine, there will be some differentiation.

And those are commercial information, which I cannot easily pass on, but let me put it this way that, that's why we are doing a door-to-door delivery, which you might have seen in our presentation, and many places we are giving ex our siding where the customer takes care of the transport.

And I mean, it's a logistic-oriented business.

And that is part of the reason why we have tried to have an understanding of equity with Thriveni.

So that all that income also remains in-house.

But having said that, rate parity changes from time to time, location to location and product to product.

Very difficult to define it as a precise figure.

Moderator · Conference Operator

We have our next question from the line of Rahul Agarwal from Aventus Capital.

Rahul Agarwal

So, I just had a couple of questions.

So, I wanted to firstly understand we acquired the MDO business of Thriveni Earthmovers, but they are also into in the pellet trading business, which Lloyds Metals and Energy Limited January 29, 2025 Lloyds is also going to continue going forward.

So, I just wanted to understand if there's any plans to acquire the pellet trading side of it as well?

Or are we just going to stick to the MDO business?

Rajesh Gupta

what we have taken over is the MDO business.

The other businesses like equity in BRPL and in MRPL –remains with them and does not come to us at all..

We are supplying raw materials, and we have an understanding with Mandovi for supplying iron ore to them and off taking some pellets from them.

Rahul Agarwal

Okay, sir.

So that partnership is going to continue...

Riyaz Shaikh

We would be starting off with our own pellet plant.

So, there is no question of trading does not allow that.

Rahul Agarwal

So, sir, the partnership with Mandovi is then going to end once that pellet plant starts?

Rajesh Gupta

No, it's a 10-year agreement.

Rahul Agarwal

Okay, sir.

And then, sir, I just wanted to ask, so Thriveni Earthmovers and Infra Limited, the new entity that is being formed, is projected to have around INR5,500 crores of revenue in FY '25.

Could you just tell us -- could you just aggregate that in terms of what Lloyds will be contributing?

And what will be coming from all the other mining projects that you will be able to acquire which has, I think, other companies whose mines are also controlled by Thriveni?

Riyaz Shaikh

Currently, they're doing around 71 million tons of capacity.

They're operating 71 million tons, which should increase to 125 million tons with Lloyds Metals' EC increase.

The revenue is around INR5,500 crores.

It should increase to around INR8,000 crores in the next financial year with the increase in the EC, so from Lloyds Metals, it should be around INR2,500-odd crores.

Rahul Agarwal

All right, sir.

And finally, just one more thing.

So, sir, we were actually trying to look for the financials of Thriveni Earthmovers for the financial year '24, but we were unable to find that.

If you could just give me any guidance on how we could go about doing that?

Riyaz Shaikh

Available with the ROC sites.

And if you need it, you get in touch with us, we will be able to provide it.

Rahul Agarwal

All right.

So, anybody I can contact in particular?

Rajesh Gupta

Yes, Mr. Chintan Mehta in our office.

Moderator · Conference Operator

The next question is from the line of Divya Agarwal from Ficom Family Office.

Divya Agarwal

It's Ficom Family Office.

So, sir, my first question is one of our customers recently signed an MoU with the Maharashtra government of investing around INR3 lakh crores in Gadchiroli district.

So, I wanted to understand, will there be an impact on Lloyds Metals on this investment?

Rajesh Gupta

If you're talking about the JSW MoU?

Lloyds Metals and Energy Limited January 29, 2025

Divya Agarwal

Yes, sir.

Rajesh Gupta

So, we're not fully privy to what the MoU is about.

We know that in the past, they have signed a composite mining license with the Indian Government for one of the mines in Surjagarh.

The exact details of what the MoU they have signed, we are not aware.

Not only one, I think other MoUs have also been signed by Viraj Steel, So 3 or 4 MoUs are there now envisaged for 3 or 4 steel plants in Gadchiroli.

Like the Prime Minister and the CM has said that it is the next steel city, and we are proud to have laid the foundation to that city.

And with the iron ore reserves being very huge, I'm sure that a lot of steel companies will come, and the infrastructure overall would be developed in a better way once more companies come in.

More taxes and royalties are received by the government, so they would invest more money in the district.

So, we feel positive about all this.

Divya Agarwal

And just a follow-up on that, do we have better cost structure in those mines...

Rajesh Gupta

I'm sorry.

Divya Agarwal

Just a follow-up on that.

Do you have a better cost structure as compared to those mines which these guys are having?

Rajesh Gupta

We would not be aware of their physical cost structure.

But as far as I'm aware that the 6 mines have been auctioned at a premium of around 110% of the revenue.

So, if I'm selling at around INR4,000 average, their cost would be around INR4,000 into 1.1x extra over and above mine, which I do not have to pay.

Divya Agarwal

Right.

Fair enough.

Got it, sir.

And secondly, on the gross margin front, sir, our overall sales volume if we've seen quarter 3 FY '25 is like slightly higher and the raw material cost as a percentage of sales was 21% in Q3 FY '24 versus it is 8% in Q3 FY '25.

So, can you throw some light on that?

Why is it so low in Q3 FY '25?

Riyaz Shaikh

In the second quarter, there were 2, 3 factors because of which the cost structure was on a higher side.

It was on the sponge iron front where production in this quarter has been lower.

There was a physical verification of these stocks.

So, there was some mismatch in that, so we had to provide for that, as well as there was a change in the consumption norms of coal, what we have done in this year to reduce the imported coal consumption.

All these things have resulted in this mismatch in the numbers.

Divya Agarwal

Okay.

So, can we expect the similar range going forward?

Riyaz Shaikh

Yes.

Rajesh Gupta

AsI have mentioned earlier, we are always cognizant of the market.

Once the market of the sponge iron and the steel industry gets a little softer, we instead of focusing on volume alone in the DRI sector, focus on cost as well.

And by using local coal, cost has come down,and little production has come down because of that.

And that's the advantage that we are seeing.

Lloyds Metals and Energy Limited January 29, 2025

Divya Agarwal

Right.

Got it.

And the next question is on the DRI segment.

So, if we see the sales is very little in this quarter as compared to the last quarter, while the volume has fallen by 8%, but the sales, if you see in absolute terms, it's down by like 48% quarter-on-quarter.

So, what is the reason for that?

Rajesh Gupta

Sales in terms of quantity?

Divya Agarwal

No, the volume is down by 8%, but if you see the total DRI sales, it's down by 48%.

And you said in the investor presentation, the...

Riyaz Shaikh

In the last quarter, there was an industrial promotion subsidy, which we received. because of that, the -- if you see that the volumes -- the difference in the volume is coming in.

Around INR70 crores is what we received in the form of IPS last quarter.

Divya Agarwal

Yes.

Got it.

And on the IPS front, did we receive anything in this quarter?

Rajesh Gupta

That will continue now. sorry, this was a onetime.

The IPS was one time for the prior period.

Now once the pellet plant starts, we will apply and get for the new projects, that is both the DRI and the new pellet plant, we will start getting after some time.

That income is not recognized in this quarter.

Divya Agarwal

Sure, sir.

And just last question.

In the last con call, you said we'll be selling around 3 million tons of BHQ, but are you planning to sell it in this financial or will it be in the next financial year?

Rajesh Gupta

No, we won't sell 3 million tons of BHQ.

Riyaz Shaikh

Maximum BHQ what we will be doing is 15 million tons of output.

And that will be on a stepped- up manner.

We start with DSO, and then we keep on reducing the DSO as and when the BHQ capacities get added.

Rajesh Gupta

BHQ is not a tradable product.

Moderator · Conference Operator

The next question is from the line of Prince Choudhary from PINC Wealth.

Prince Choudhary

Yes.

Can you provide with the timeline for the beneficiation plant, when the phase 1 will be operational then phase 2 and phase 3?

Rajesh Gupta

For the beneficiation plant, before we come into the physical phases, we have the technical phases and the approval phases.

The technical phase of clearing the process route is final and our pilot plant is up and running.

And we are now in the phase of testing that output, number one.

Number two, the permissions required, including getting the land, etcetera, are already in place -- I mean, are already applied for and in place.

And physically, we feel '27 the first phase would be completed.

Prince Choudhary

By '27, only first phase will be operational, right?

Lloyds Metals and Energy Limited January 29, 2025

Riyaz Shaikh

We're doing it in 3 modules, it will be 15 million tons per module.

So, the first module of 15 million tons will be done in that time.

Prince Choudhary

Okay.

And other 2 phases?

Riyaz Shaikh

Other 2 would be in the next each financial year.

Rajesh Gupta

every financial year after that.

Prince Choudhary

Okay.

And what will be the royalty for that BHQ one?

Rajesh Gupta

So, the royalty currently is less than INR55 as it is not recognized as iron ore by the country.

The royalty is around INR65 for Maharashtra for this product, which is what we would be paying in the worst case scenario.

Prince Choudhary

Okay, like INR65 per ton, right?

Rajesh Gupta

INR65 per ton of BHQ.

Prince Choudhary

Okay.

And if we sell it for other third party, if I'm doing beneficiation of the iron ore and selling it to third party, is there any other charges on that?

Or is it only the royalty which we have to pay?

Riyaz Shaikh

Royalty is the cost.

Rajesh Gupta

No. Like I mentioned earlier, there is no buyer for BHQ, and we have no plan to sell any BHQ.

There are no other costs except the mining cost, obviously, and the royalty.

Prince Choudhary

Okay.

And the mining cost would be more than what we do for the DSO, iron ore, if I'm not wrong around then?

Or it will be the same?

Rajesh Gupta

It will be lesser per ton of BHQ, but when we beneficiated, we have to use 2.5x -3x of the material So, from that angle, the ratio will be a little higher, but the grade is also higher.

Prince Choudhary

Yes, from that concept only, like I have to mine, for example, 2.9 or 3 tons is required for 1 ton of DSO.

So, for that, in percentage terms, our cost would be more right, if I'm correct?

Rajesh Gupta

Mr. Prince, you asked me question of if I sell BHQ.

So, for BHQ, the mining cost is lower.

After beneficiating the BHQ, the finished iron ore cost would be around 2.5x of the BHQ mining, which is much lower than iron ore mining and 2.5x of the royalty.

So, if that answers your question.

Prince Choudhary

Yes, sir.

Understood.

Rajesh Gupta

Assuming around 40% yield.

Moderator · Conference Operator

We have our next question from the line of Parthiv Jhonsa from Anand Rathi.

Lloyds Metals and Energy Limited January 29, 2025

Parthiv Jhonsa

Sir, in the opening remarks, you mentioned the capex number.

I actually missed that.

Is it possible to repeat the same for Q3 and 9 months?

Riyaz Shaikh

I didn't get you.

Can you just repeat?

Parthiv Jhonsa

Yes, the capex for Q3 and 9 months, sir.

Is it possible to get the number, you had said in the opening remarks?

Rajesh Gupta

In the 9 months, it is INR2,700 crores, and we've done totally around INR4,400 crores till now.

Parthiv Jhonsa

Okay.

Sir, also just one question to harp on the ex-mine cost when compared to, say, someone who is a merchant miner, right?

Considering we have allotted mine.

And what will be the cost differential there?

For example, if someone is mining, considering the MDO cost and everything, what would be the cost differential with us compared to a merchant miner as on date?

Rajesh Gupta

I'm not privy to other miners in Gadchiroli.

A, there are no mining going on right now.

I'm not privy to the physical costs.

On the premium cost, I already mentioned that, and I think it's in the range of 110%, so that is around INR4,400 higher approximately.

Parthiv Jhonsa

No, I believe, sir, there are no other merchant miners mine.

I just wanted to understand with miners, say, from Karnataka or Odisha if they are doing on MDO, what would be the cost differential just to get a comparison?

Rajesh Gupta

I think I don't track my competitors so closely.

I think the easiest way to track it would be NMDC was a pure mining play or maybe Tata Steel.

I'll have to have a look at that.

We believe we are quite competitive in the overall mining cost.

And with the advent of Thriveni coming into our fold, it will be much lower because the profit of the MDO would be consolidated in our books as well.

Parthiv Jhonsa

Okay, sir.

Sir, and just on the...

Rajesh Gupta

And one more point is that being newly established in Gadchiroli 2 years compared to NMDC being 20 years or 30 years and Tata Steel being 100 years plus, their cost may be different.

I would have to ask, and I'll ask my IR people to work out the costing and give me a better understanding as well.

Thank you for the question.

Parthiv Jhonsa

No problem, sir, I'll get in touch with Chintan on this, absolutely fine.

Sir, the last question is, is it possible to possible to give a heads-up on what will be the kind of a conversion cost there?

Or it's too preliminary right now?

Rajesh Gupta

We have the cost with us.

We believe that the overall cost ex mine or ex beneficiated plant would not be very different from the current DSO cost given the lower royalty at INR65.

We are trying to understand the laws a little bit more of whether INR65 can be reduced or not.

And so it would be in the same range, maybe a little bit plus/minus but the grade is better, the silica, alumina is much, much lesser.

So, for the end user, there's a much, much bigger benefit.

Whether we make Lloyds Metals and Energy Limited January 29, 2025 pellets or we sell steel or my consumers makes steel, it will be a much better benefit.

Beneficiated ore based pallet are around $45 to $50 premium for that grade.

Moderator · Conference Operator

We have our next question from the line of Siddharth Gadekar from Equirus.

Siddharth Gadekar

So first, just on the EC approval, broadly that we are expected to get the EC approval in the next 60 to 90 days.

FY '26 should be a year where we have the full EC, and we should be mining 25 million tons?

Rajesh Gupta

Yes, Siddharth.

Siddharth Gadekar

Okay.

Sir, secondly, on our BHQ, have we started ordering the equipment?

Or what is the status on that?

Rajesh Gupta

The engineering is all in full swing.

Some of the very long-lead items, I think we have just ordered or about to order.

Our teams have gone to Australia and to China to inspect new and better technologies also.

I think we'll be in the position to order those equipment in the next 10 days or so, we'll be placing the biggest orders.

We have got the big grinder in place, with the gyratory crusher, which would be getting installed shortly.

Siddharth Gadekar

Sir, secondly, then broadly, we should be on our original timeline in terms of commissioning the BHQ plant -- the first BHQ plant.

Is that fair understanding?

Rajesh Gupta

Yes.

We continue to maintain.

That would be maintained.

Siddharth Gadekar

Okay.

Sir, secondly, on the second slurry pipeline, when do we expect that to commission?

Rajesh Gupta

So, the way we have done our scheduling, which I mentioned to you earlier, is we are asking the cash flows to take care of that.

And so, once the two pellet plants are ready and the first BHQ plant is ready, then we'll work on the second BHQ plant and this pipeline and the pellet plant.

Siddharth Gadekar

Okay.

Got it.

But...

Rajesh Gupta

The first pellet plant in Chandrapur.

Siddharth Gadekar

So broadly by FY '28 end, we should have 2 beneficiation plants and at least 8 million tons of pellet which would be online, right?

Rajesh Gupta

And 1.2 million tons of steel at Chandrapur.

Moderator · Conference Operator

We have our next question from the line of Abhishek Mehra from DAM Capital Advisors.

Abhishek Mehra

I just had one question.

I just wanted to ask what is the closing iron ore inventory volume figure as on Q3?

Rajesh Gupta

We'll come back.

We will just come back in a minute for that.

Any other questions?

Riyaz Shaikh

The closing inventory is 0.4 million tons.

Lloyds Metals and Energy Limited January 29, 2025

Moderator · Conference Operator

I think the line got disconnected.

Rajesh Gupta

The answer is 0.4 million tons.

Moderator · Conference Operator

We'll move on to the next question from the line of Dhananjai Bagrodia from ASK Investor.

Dhananjai Bagrodia

Congratulation on a good set of numbers.

Just wanted to understand what capex are we looking for this entity over the next 3 years or so?

And how are we looking at this entity on a longer- term basis in terms of a business plan or how are we seeing that?

Riyaz Shaikh

Can you just repeat?

Dhananjai Bagrodia

So just a question is, how are we looking at capex over the next 3 years on a consolidated level across divisions?

And how are we looking at this company over the next 3 to 5 years in terms business plan because we have now got the clearances, we are trying new opportunities, so how should one look at it?

Riyaz Shaikh

Yes.

See, as we've informed you that we should be getting into this 25 million tons of EC, and so we should be doing that much of production in the next financial year.

So going forward, it should be 25 million tons of iron ore.

In the next 2 years, as I just mentioned, we should be done with the 4 million ton of pellet plant, we should be around 7 lakh tons of DRI production and 1.2 million tons of wire rod plant, that is steel plant and an equivalent of 125 megawatts of power along with it.

In terms of capex, we should be doing around INR5,000 crores by this year's end.

That has to be done around INR4,400 crores, so we should be reaching around INR5,000 crores by this year end.

And going forward in the next 2 years, yes, we should be doing more than that at around INR6,000 crores to INR6,500 crores every year of capex to achieve all these projects of ours.

Dhananjai Bagrodia

Okay.

And just to understand, is our vision to focus on which part of the chain going ahead?

Obviously, the first leg, what you mentioned, but over longer term, this company wants to be known as a mining company, processing company.

What about that?

How are we looking at that?

Rajesh Gupta

So, our long-term vision is to be a cyclical-free steel industry.

At the same -- how we will achieve that is, , by very, very low debt, if any, number one.

Number two, we'll have a part of the iron ore that we mine will be sold as either iron ore or as pellets and part will be sold as steel.

So out of 25 million, around 10 million will be sold.

Balance will be converted into steel and selling around 4.5 million tons of steel and rest will be semi-products, and around 15 million tons will be sold as pellets or iron ore, mostly pellets.

Dhananjai Bagrodia

Okay.

Fantastic.

Congratulations, sir.

And any other funds raise we're going to do after this?

Or is it just going to be no more funds required?

Rajesh Gupta

All these plants that we mentioned are for Lloyds Metals.

We have yet to sit with management of Thriveni to understand their capex plans and their requirements and overall things.

There would be some fundraises in both the companies.

Lloyds Metals and Energy Limited January 29, 2025

Moderator · Conference Operator

We have our next question from the line of Kartik Khandelwal from Hem Securities.

Kartik Khandelwal

A few quarters back in the con call, we showcased the desire to achieve a revenue of around INR40,000 crores by '28 to '29.

So, the recent acquisition of MDO business we did and the revenue we'll be earning from this, is it considered in that target?

Or will it be over and above our desired revenue target of INR40,000 crores by FY '28 or '29?

Rajesh Gupta

I think your question got lost.

Your voice was a little echoing.

Can you repeat the whole question?

Kartik Khandelwal

Sir, a few quarters back, we showcased a desire to achieve a revenue of around INR40,000 crores by FY '28 or '29.

So, the recent acquisition of MDO business and the revenue will be earning from this, is it considered in the target itself?

Or will it be over and above the desired revenue target of INR40,000 crores by FY '28 or '29Rajesh Gupta: It'll be over and above.

Moderator · Conference Operator

We have our next question from the line of Aman from Seven Rivers.

Aman

So, any price cuts that we have taken in December and January?

And how do you see it moving in February?

Rajesh Gupta

Price cut.

We haven't taken any price cut.

Most of our material is sold for this year of 10 million tons.

So, we don't see any price cut on the anvil.

Aman

And sir, the realization for DRI has come off.

What would be the reason for that?

And can you explain what's the linkage with, let's say, iron ore realization in terms of what's the flow-through or linkage with iron ore?

Rajesh Gupta

The DRI realization has come down.

You're talking about in January or in...

Aman

For the quarter, sir?

Rajesh Gupta

So, our realization has come down for the quarter, not up.

The DRI is more linked to the secondary steel market and the scrap market, lesser to the iron ore market.

And also, as far as our raw material is concerned, we've got two raw materials, iron ore and coal.

So, both of those are part of the equation that people have.

And ultimately, the supply and demand and the steel sector has been a little soft on the demand side.

I think oversupply is there.

The demand is still 7%, 8%, 9% growth.

Moderator · Conference Operator

We have our next question from the line of Kishor Udasi, an Individual Investor.

Kishor Udasi

I just wanted to ask how much will be the total iron ore mining for this financial year?

Riyaz Shaikh

We are expecting the EC e by this financial year-- total mining or mining cost?

Kishor Udasi

No, no, only mining.

Iron ore mining.

How much million tons?

Rajesh Gupta

10 million tons.

Lloyds Metals and Energy Limited January 29, 2025

Kishor Udasi

So, it won't be above that, sir, if we get environmental clearance before March?

Riyaz Shaikh

If we get it before March, on a pro rata basis, we can but that looks difficult.

But yes, we can drive a little bit more than 10 million tons.

Kishor Udasi

Okay.

But right now, we are calculating only 10 million for this financial year?

Riyaz Shaikh

Yes.

Moderator · Conference Operator

We have our next question from the line of [Vimogh Shah from GoyamLabdhee Fintec.

Vimogh Shah

Actually, I joined a little bit late, so if my question is already answered, then please ignore it.

I will read the transcript.

So, my question is like what is the company's plan for achieving the 100- megawatt of renewable energies for captive consumption?

Rajesh Gupta

We have tied up with 2 companies, Hinduja and Amplus.

We are about to sign the final contracts with them.

We've been buying power from them and also becoming an equity holder of 26% in those two special subsidies for that power.

Vimogh Shah

Okay.

And my second question is like, could you provide a detailed projection on how this cost reduction will translate into the pricing competitiveness in the market and enable a company to maintain its profitability?

Rajesh Gupta

So, the landed cost of this power is around INR4.50- INR4.75 per unit.

And the landing cost of MSEDCL cost is around INR8.50, number one.

Number two, and of course, this is green power, so that is also very important for us in our business strategy.

So, with those two benefits, I think it's very easy to calculate the cost benefit to the product.

Moderator · Conference Operator

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to the management for closing comments.

Over to you, sir.

Rajesh Gupta

Thank you, sir.

As usual, it has been a very informative and helpful discussion.

And these questions always help us to think of our management strategy also going forward.

Thank you, everybody, for the interest in our company.

Moderator · Conference Operator

Thank you.

On behalf of DAM Capital Advisors, that concludes this conference.

Thank you for joining us, and you may now disconnect your lines.

Rajesh Gupta

Thank you.

Riyaz Shaikh

Thank you very much.

Questions and answers

18:05:16 +05'30' · Research Analyst

“Lloyds Metals and Energy Limited