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Financial Results • Q1 Performance: • 5% decrease in turnover due to lower production and sales volume. • 42% increase in profit after tax (PAT) due to improved pricing and reduced costs.
Market Performance • Valuation Growth: Nearly 900% increase in market valuation over five years. • Safety Recognition: Acknowledgment for safety measures at mines.
Key Discussions • Supreme Court Judgment: • Impact on mineral rights taxation discussed; no pending demands from authorities. • Ferroalloy Market Dynamics: • Pricing stability noted; Merafe discontinued price announcements, while Samancor maintained prices. • Operational Cost Reductions: • Lower power costs from improved coal transportation.
Production Metrics • Coal Consumption for Chrome Production: • 2.34 tons of chrome ore, 0.48 tons of coke, and 4,009 units of power per ton of ferrochrome. • Ferrochrome Production Projection: • Expected production of 250,000 to 260,000 tons for the year.
EBITDA and Sales • Q1 EBITDA Cost: • Reported at INR 77,000, down from INR 83,000 in Q4. • Sales Breakdown: • 63 KT sales estimated at 90% domestic and 10% export.
Future Plans • Kalinganagar Expansion Timeline: • First unit expected to start in June 2026, second unit three months later. • Capex Plans: • Focus on maintenance and mine development.
Closing Remarks • Operational Efficiency: • Strong performance despite lower output due to maintenance. • Market Outlook: • Anticipated increase in demand for ferrochrome linked to a projected 6% rise in global stainless steel production. • Business Model: • Emphasis on integrated business model and debt-free balance sheet.
Conclusion • The call concluded with appreciation for participants and a commitment to relay shareholder feedback to the Board.
IMFA Earnings Conference Call Summary (May 24, 2024)
Key Highlights • Record Operational Performance • Strong results in ferrochrome production, power generation, and mining output. • Addressed a one-off item related to Utkal Coal Limited (UCL) involving compensation and investment write-off.
Financial Insights • Coking Coal Prices • Q4 coke cost: INR 15,500 (down from INR 22,000-23,000). • Stable prices expected in Q2, potential decrease in Q3.
• Coal Consumption and Power Costs • Specific coal consumption: 1.01 ARB per megawatt. • Variable power cost for Q4: INR 4.37, with a slight decrease projected for Q1 FY'25.
• Net Sales Realization (NSR) • Forecasted increase of INR 3,000-4,000 from Q4 levels.
Project Updates • Kalinganagar Project • Construction to begin post mid-June due to administrative delays.
• Ethanol Project • Estimated cost: INR 140 crores, pending government clearances. • Expected revenues: INR 200-220 crores at full capacity.
Tax and Employee Benefits • Tax Provisions • Confirmed tax rate of 25% due to higher profitability. • Increased employee benefits from normal increments and higher commissions.
Production and Market Outlook • Production Figures • Q4 production: 65,000 tons; expected Q1 production: 62,000 tons. • Full-year target: 250,000 to 260,000 tons.
• Chinese Market Insights • Stable demand and supply; increasing Chinese ferrochrome production. • Lower Chinese port inventories may lead to price increases.
Capital Expenditure Plans • Upcoming Expenditures • Total capex: INR 1,500 crores, funded through internal accruals over 6-7 years. • Smelter project duration: 18 months.
Regulatory and Market Challenges • Impact of MARAF Changes • South Africa's decision to stop announcing benchmark prices from June noted as significant. • Companies will need to negotiate prices based on alternative indices.
• Federal Reserve Rate Cut • Optimism about growth in stainless steel consumption despite economic challenges in Europe.
Conclusion • Management expressed confidence in IMFA's growth prospects and commitment to rewarding shareholders through increased dividends.
Financial Highlights • Market Valuation: Increased by nearly 103% to approximately INR 3,548 crores. • Sales Growth: Rose 10% from INR 614 crores to INR 675 crores. • Profit Surge: Increased tenfold from INR 10 crores to INR 108 crores due to higher sales realization and reduced costs.
Capital Expenditure and Capacity Plans • Furnace Capacity: Aiming to enhance by 33%. • Mining Capacity: Targeting 6.7 lakh tons for FY'24 and 7.3 lakh tons for FY'25. • Chrome Ore Policy: Preference for stocking or repurposing excess chrome ore instead of selling in the open market.
Revenue Growth and Market Outlook • Stainless Steel Demand: Expected growth of 3.6%, with demand projected to exceed 60 million tons in 2024. • Production Expansion: Plans to install two furnaces to increase capacity by 100,000 tons by FY'26. • Domestic Market Focus: Currently not prioritized but will respond to demand growth.
Cost Management • Ferro Chrome Costs: Q3 FY'24 costs at INR 72,000 per ton; EBITDA costs at INR 79,000. • Power Costs: Decreased year-on-year; stable overall costs expected despite lower Q4 realizations. • Depreciation Method Change: Shift from WDV to SLM, resulting in lower future depreciation costs. • Coal Prices: Trending down, potentially aiding in maintaining variable costs.
Legal and Compensation Matters • Colombian Coke Price Range: Estimated between $350 and $360 per ton for the next six months. • Compensation Amount: INR 390 crores confirmed due to the company. • Ongoing Arbitration: Contesting a reduction of INR 64 crores from a provisional order.
Future Opportunities and Strategies • EBITDA Growth Potential: Kaushal Kedia suggested a potential 33% increase over three years post-capacity expansion. • Market Pricing: Pricing expected to align with global trends. • Renewable Energy Initiatives: Plans to invest INR 100 crores in a hybrid solar and wind energy project.
Conclusion • Capacity Utilization: Operating at nearly full capacity (250,000 to 260,000 tons) out of 284,000 tons. • Commitment to Growth: Management expressed gratitude and reiterated commitment to future growth.
IMFA Earnings Conference Call Summary (November 3, 2023)
Financial Performance • Quarterly Results: • Profit After Tax (PAT) increased from INR 18 crores to nearly INR 90 crores YoY. • EBITDA rose from INR 79 crores to INR 162 crores. • Cost of production decreased from INR 82,115 to INR 72,861 per ton. • Price realization slightly declined from INR 1,15,000 to INR 1,10,000.
• Half-Year Results: • PAT grew to INR 200 crores from INR 151 crores. • Positive trends in production and sales.
Cost Expectations • Costs expected to remain stable with potential reductions in coke costs. • Possible increases in power costs. • Price realizations for the next quarter uncertain due to sales mix.
Utkal C Amalgamation • Funds from Utkal C will first repay a loan to IMFA before distribution to shareholders.
Pricing Insights • Recent increase in metallurgical coke prices. • Variable costs for thermal coal expected to rise in Q3. • Discussion on ferroalloy realizations and the need for like-for-like comparisons.
Production and Projects • 6% to 7% of total ferrochrome production is typically sub-standard. • Greenfield project machinery orders underway; commercial production expected by May/June 2025. • Net cash position reported at INR 449 crores with gross debt of INR 350 crores.
Market Outlook • Awaiting final order on Utkal C compensation to start operations. • Uncertain outlook for the Chinese market; hope for stabilization due to government spending. • Slight increase in benchmark prices for chromium noted.
Ferrochrome Pricing • Current spot prices reported at approximately $0.92-$0.93. • Domestic prices around INR 1.10 lakh. • 35% of sales influenced by spot prices; shift towards domestic demand anticipated.
Dividend and Buyback Discussion • Higher interim dividend of INR 7.50 announced. • Buyback not currently viable as per Prem Khandelwal.
Additional Inquiries • Concerns raised about power issues in South Africa affecting production. • Clarification on EBITDA calculations and employee benefit expenses, including commissions for management.
Conclusion • IMFA management expressed gratitude for engagement and highlighted growth strategies. • Call concluded with wishes for a happy Diwali and a prosperous year ahead.
Financial Performance • Market Valuation: Increased to nearly Rs. 2,000 crores from Rs. 1,500 crores. • CFO Report: • EBITDA: Rs. 183 crores (up from previous quarter). • PAT: Rs. 110 crores (up from previous quarter). • Production and Sales: • Production: 66,261 tonnes. • Sales: 64,695 tonnes. • Ferrochrome Realization: Decreased due to subdued market demand, particularly in China.
Cost Expectations • Coke Consumption Costs: • Q4: Rs. 47,800. • Q1: Rs. 42,500 (expected to decrease by Rs. 1,000 in Q2). • Coal Costs: Rs. 2.80 for Q1, expected to remain stable for Q2.
Market Dynamics • Impact of FACOR's Production Halt: Minimal effect on supply and demand due to FACOR's small domestic output. • Domestic Demand: Decreased; revival in China is crucial for price increases. • Sales Mix: 65% long-term contracts, 35% spot sales.
Long-term Strategy • Focus on Exports: 90% of sales directed internationally. • Domestic Market: Limited growth anticipated due to lack of expansion in the stainless steel sector. • Revenue and Margins: Expected to remain stable compared to FY23.
Expansion Plans • Production Target: Around 250,000 tonnes, similar to FY23. • New Capacities: Expected to come online in 2025, each furnace producing 50,000 tonnes. • Funding for Expansion: Through internal accruals without raising debt.
Financial Position • Debt Status: Company is now debt-free. • Working Capital Requirements: Minimal at present.
Energy Requirements • Kalinga Expansion Project: • Power requirements: 40% from captive thermal plant, 60% from renewable energy.
Conclusion • Optimism for Future Growth: Executives expressed confidence in the company's prospects and invited further inquiries from participants.
Financial Performance • Q4 Net Profit: INR 63 crores, up from INR 10 crores in the previous quarter. • Annual Turnover: Highest recorded at INR 2,640 crores. • Production Figures: • Ferrochrome: 61,200 tons • Mined Chrome Ore: 193,000 tons
Future Plans • Capital Expenditure: Plans to increase ferrochrome capacity by 100,000 tons by FY 2025. • Renewable Energy: 50 MW hybrid solar and wind project planned, requiring INR 100 crores investment.
Market Insights • Raw Material Costs: Significant drop in coal prices from $700 to $380 expected to benefit EBITDA margins. • Ferrochrome Realizations: Projected around INR 120,000, slightly higher than the previous quarter.
Investor Inquiries • Ferrochrome Consumption: Varies by stainless steel grades; series 200 (10-12%) to series 400 (over 25%). • Impact of Electric Vehicles: No significant link to UG2 chrome supply anticipated. • Thermal Coal Costs: Guidance for Q1 deemed conservative; influenced by linkage coal availability.
Inventory and Valuation • Inventory Management: Decrease in working progress and finished goods due to liquidation in the previous quarter. • Utkal Coal Valuation Report: Pending discussions expected in June; potential payment timeline of 15-20 days thereafter.
Production Guidance • Q1 Production: Set at around 64,000 units, with sales expected to match production levels. • Cost Expectations: Q1 costs anticipated to be lower than Q4.
Other Financial Insights • Other Income Increase: Rose from INR 16 crores to INR 24 crores year-on-year, attributed to scrap sales and interest income. • Investment in Utkal Coal: Approximately INR 370 crores invested, with expectations of full recovery.
Conclusion • Management expressed optimism for improved performance in Q1 compared to Q4, contingent on market conditions.
Q3 FY '23 Earnings Conference Call Summary for IMFA
Financial Performance • Ferrochrome Prices: Declined from INR 116,000 to INR 93,000 per ton. • Production Costs: Increased from INR 65,700 to INR 79,900 per ton. • Production Figures: Ferrochrome output decreased to 58,000 tons; chrome ore production increased.
Expansion Plans • Kalinganagar Project: Ongoing expansion to add 100,000 tons of ferrochrome capacity, supported by captive chrome ore. • Debt Management: Expansion plans to proceed without long-term debt, maintaining a debt-to-equity ratio of no more than 0.5:1.
Cost and Pricing Insights • Coke Prices: Estimated between INR 45,000 to 47,000. • Coal Requirements: Approximately 1 million tons annually; 70% from washery rejects, 30% from G12 coal. • Coal Costs: Decreased from INR 3,500 in Q2 FY '23 to an anticipated INR 2,700 in Q4 FY '23.
One-Time Settlement Discussion • Electricity Dispute: Estimated cash outflow of around INR 71 crore. • Total Liability: Clarified to be INR 271 crore with no expected savings from the settlement.
Production and Sales Expectations • Q4 Projections: Sales expected at INR 65,000; production at INR 59,000. • Cost Reductions: Coal costs expected to decrease, but coke prices remain high and unpredictable.
Market Conditions and Future Outlook • Electricity Price Increase: Significant rise in South Africa expected to impact ferrochrome prices. • Stainless Steel Demand: Anticipated to positively influence ferrochrome prices due to capital expenditure in India. • Future Projections: Sales for the fiscal year projected between INR 2,600 crore and INR 2,650 crore, with stable production volumes until FY '26.