Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Indian Metals & Ferro Alloys Ltd (BOM:533047, Financial) reported a 42% increase in PAT due to improved realization and lower costs.
- The company received several honors from the Directorate General of Mines Safety, highlighting its strong safety measures.
- Market valuation crossed INR4,000 crore, reflecting a 900% increase over the past five years.
- The company has a fully integrated business model, including chrome ore mining, electricity production, and chrome ore smelting.
- Ferrochrome prices are holding firm above INR1 lakh, with expectations of better Q2 results due to higher volumes.
Negative Points
- Turnover decreased by 5% due to lower production and sales volume.
- Uncertainty regarding the impact of the recent Supreme Court judgment on mineral rights tax.
- The demand for ferrochrome may be lower in the next quarter due to seasonal factors like the monsoon season and summer vacations in Europe.
- Operational costs are influenced by fluctuating coal prices and transportation rates.
- There is a delay in the expansion plans at Kalinganagar due to land acquisition issues and government processes.
Q & A Highlights
Q: What will be the impact of the recent Supreme Court judgment on states levying tax on mineral rights on your operations?
A: It's difficult to quantify the impact at the moment as the judgment is not fully pronounced. Whether it will be retrospective or prospective and the actions of state or central government are still unknown. β Prem Khandelwal, CFO
Q: How do you see the pricing and demand environment for ferrochrome given the subdued steel prices due to Chinese imports?
A: The next quarter is typically weak due to climatic reasons and lower demand in Europe. However, most of our sales are on long-term contracts, so we do not see any significant impact. β M. Venkatesh, Head Sales and Marketing
Q: What are the main levers for the reduction in costs from Q4 to Q1?
A: The cost reduction is mainly due to lower variable power costs, which decreased from INR4.37 in Q4 to INR3.76, primarily due to lower-priced coal and improved transportation logistics. β Prem Khandelwal, CFO
Q: Can you provide an update on the specific consumption of ore, power, and fuel compared to Q4?
A: The specific consumption per ton of ferrochrome remains almost the same: chrome ore at 2.34 tons, coke at 0.48 tons, and power at 4,009 units. β Prem Khandelwal, CFO
Q: What factors will lead to better profitability in Q2 despite it being a monsoon quarter?
A: Mainly higher volumes; we expect to sell around 67,000 tons of ferrochrome in Q2 compared to 63,000 tons in Q1, with prices remaining stable or slightly lower. β Prem Khandelwal, CFO
Q: How has the power situation in South Africa affected ferrochrome production?
A: The power situation has improved significantly with no blackouts since March 2024. However, unpaid municipality bills remain a challenge. Any reduction in South African production is typically offset by increased production in China. β M. Venkatesh, Head Sales and Marketing
Q: Do you get better realizations in the export market or the local market?
A: Different markets offer different realizations. In some markets, we get higher realizations than domestic, while in others, it is similar. β M. Venkatesh, Head Sales and Marketing
Q: What are your CapEx plans for Q2 and Q3?
A: The CapEx is mainly planned for running maintenance and mines development. β Bijayananda Mohapatra, COO
Q: What is the expected start date for Phase 1 and Phase 2 of the Kalinganagar expansion?
A: There is a slight delay due to land acquisition issues. We now forecast the first unit to start by mid-2026, with the second unit following within three months. β Bijayananda Mohapatra, COO
Q: What was the net sales realization for Q1 and the comparative number for the preceding quarter?
A: The net sales realization for Q1 was INR1,03,755 compared to INR1,01,771 in Q4 of the previous year. β Prem Khandelwal, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
