Release Date: August 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Successful merger of ISMT into Kirloskar Ferrous Industries Ltd completed within three years.
- Achieved a 4% growth in top-line revenue compared to the previous year's first quarter.
- Commissioned 35 megawatts of a planned 70-megawatt solar power plant, with full commissioning expected by October.
- Plans to increase solar power capacity to 100 megawatts by the end of the financial year, aiding in decarbonization and reducing power costs.
- Strong customer interest and support in the casting business, with plans to ramp up production and expand capacity.
Negative Points
- Market conditions in the steel and tube business were subdued, impacting overall performance.
- ERP system implementation caused some disruptions in sales and dispatches.
- Margins in the iron and steel industry remain under pressure.
- Slow ramp-up in various segments compared to expectations, particularly in the seamless tube segment.
- Challenges in the export market due to dumping from China, affecting margins and volumes.
Q & A Highlights
Q: What is the update on NSE listing and segmental EBITDA per ton reporting?
A: The NSE listing will be taken up after the merger of ISMT into KFIL. We will also align with best practices for segmental EBITDA per ton reporting. (Ravindranath Gumaste, Managing Director)
Q: Why has the ramp-up for all segments been slow compared to expectations?
A: Contributing factors include market conditions and ERP system issues. However, we are committed to growth from Q2 onwards and have created quality capacity to achieve this. (Ravindranath Gumaste, Managing Director)
Q: What is the status of the solar power plant and future plans?
A: We have commissioned 35 megawatts out of 70 megawatts and expect to complete the entire 70 megawatts by October. We plan to reach 100 megawatts by the end of this financial year. (Ravindranath Gumaste, Managing Director)
Q: What are the strategies for iron ore sourcing and the impact of coking coal prices?
A: We are committed to sourcing domestically for iron ore and managing costs with imported coal. The effect of reduced coal prices will reflect in Q3. (Ravindranath Gumaste, Managing Director)
Q: How is the company addressing the impact of dumping in the seamless tube segment?
A: The domestic market is not significantly affected, but exports are. We are in contact with the government to protect against unfair competition and expect demand conditions to revive. (Ravindranath Gumaste, Managing Director)
Q: What are the plans for capacity ramp-up in castings and machining?
A: We are expanding our installed capacity to 250,000 metric tons and expect to reach 20,000 metric tons per month within the next one or two years. (Ravindranath Gumaste, Managing Director)
Q: What is the status of the environmental clearance for the steel plant?
A: The public hearing was conducted successfully, and we expect to receive the environmental clearance within the next two to three months. (Ravindranath Gumaste, Managing Director)
Q: What are the current net debt levels and CapEx guidance post-merger?
A: Our total debt is in the range of INR 800 crores to INR 1,000 crores. We are investing in ongoing projects like solar and wind power and the steel project, but we aim to maintain or reduce debt levels. (Ravindranath Gumaste, Managing Director)
Q: What are the operational issues in the steel and tube segments, and how are they being addressed?
A: We are focusing on stable expanded business volumes, improving efficiencies, and reducing costs. We are also working on de-bottlenecking projects to enhance productivity. (Ravindranath Gumaste, Managing Director)
Q: What are the plans for the wind energy project?
A: We plan to add 11 to 12 megawatts of wind energy, which will be commissioned next year. We also plan to add another 70 megawatts of solar power. (Ravindranath Gumaste, Managing Director)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
