Capitaline

Analyst Meet / AGM 15-Feb-16

Conference Call

Indian metals and ferro alloys

Ferro Chrome realizations are under pressure

Indian Metals & Ferro Alloys (IMFA) held a conference call to discuss its performance for the quarter ended December 2015. Senior management of the company addressed the Concall.
Highlights of the Concall

Total income from operations rose 13% on a YoY basis in Q3FY'16 to Rs 329 crore while operating profit fell 12% to Rs 37 crore. Bottomline of the company reported a profit of Rs 1.1 crore compared to loss of Rs 3.74 crore in Q3FY'15.

On a QoQ basis Total income from operations rose 1% but operating profit was down 17%.

Exports increased by 17% to Rs 266 crore in Q3FY'16 compared to Rs 227 crore in Q3FY'15

Operating profit margin of the company was 11.1% in Q3FY'16 compared to 14.2% in Q3FY'15 and 13.5% in Q2FY'16

Ferro Chrome production of 52,217 tonne for Q3 FY16 was higher by 7% as compared to corresponding quarter.

Power generation of 236 million units for Q3 FY16 was higher by 4% as compared to corresponding quarter.

As per management the commodity space is markedly weak and ferro chrome is no exception with prices at levels last seen during the 2008 economic meltdown. The demand supply imbalance will continue for at least a couple of quarters but radical production cutbacks are likely as current prices are not sustainable.

Ferro Chrome realization during the quarter fell to Rs 62000 per tone from Rs 67000 per tonne in Q3FY'15 and Rs 68300 per tonne in Q2FY'16.

Ferro Chrome realizations are under pressure mainly due to unrealistic prices in China where prices have been announced upto lunar year holidays but no significant transacations are taking place and sharp depreciation of South African currency Rand vs US Dollar.

Ferro chrome variable production cost stood at Rs 51000 per tonne in Q3FY'16 compared to Rs 53800 per tonne in Q3FY'15.

Power variable production cost stood at Rs 3.73 per unit in Q3FY'16 compared to Rs 3.95 per unit in Q3FY'15.

The company has been facing a lockout in its Therubali unit since 21^st November last year necessitated due to a illegal strike called out by a section of workers. The company is looking towards to resolve the deadlock in a manner that does not harm its long term interest.

The company has first stove blasting at Mahagiri in early January 2016. This is the first time that underground mining operations has taken place in Sukinda valley. This shall help ramp up under ground output in next fiscal year.

The company has got consent to operate both its mining operations for years

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