GPILNSEQ4 FY2022May 30, 2022 Godawari Power And Ispat limited
9,228words
148turns
7analyst exchanges
5executives
Management on call
Sana Kapoor
GO INDIA ADVISORS
B L Agrawal
MANAGING DIRECTOR – GODAWARI POWER & ISPAT LIMITED
Abhishek Agrawal
EXECUTIVE DIRECTOR – GODAWARI POWER & ISPAT LIMITED
Siddharth Agrawal
EXECUTIVE
Dinesh Gandhi
EXECUTIVE DIRECTOR – GODAWARI POWER & ISPAT LIMITED
Key numbers — 40 extracted
Rs.5399 Crore
bstantially higher and highest ever revenue EBITDA and PAT. The consolidated revenue increased to Rs.5399 Crores. EBITDA had increased to Rs.1864 Crores which is 36% and 64% higher respectively. The consolidat
Rs.1864 Crore
e EBITDA and PAT. The consolidated revenue increased to Rs.5399 Crores. EBITDA had increased to Rs.1864 Crores which is 36% and 64% higher respectively. The consolidated PAT more than doubled to Rs.1403 Cror
36%
consolidated revenue increased to Rs.5399 Crores. EBITDA had increased to Rs.1864 Crores which is 36% and 64% higher respectively. The consolidated PAT more than doubled to Rs.1403 Crores from Rs.627
64%
ated revenue increased to Rs.5399 Crores. EBITDA had increased to Rs.1864 Crores which is 36% and 64% higher respectively. The consolidated PAT more than doubled to Rs.1403 Crores from Rs.627 Crores
Rs.1403 Crore
s.1864 Crores which is 36% and 64% higher respectively. The consolidated PAT more than doubled to Rs.1403 Crores from Rs.627 Crores an increase of 136% Y-o-Y. Even on quarterly basis, PAT from continuing opera
Rs.627 Crore
is 36% and 64% higher respectively. The consolidated PAT more than doubled to Rs.1403 Crores from Rs.627 Crores an increase of 136% Y-o-Y. Even on quarterly basis, PAT from continuing operations attributable
136%
ively. The consolidated PAT more than doubled to Rs.1403 Crores from Rs.627 Crores an increase of 136% Y-o-Y. Even on quarterly basis, PAT from continuing operations attributable to the owners of the
24%
erly basis, PAT from continuing operations attributable to the owners of the company increased by 24%. The company has achieved net debt free status on standalone balance sheet in Q1 FY2022 on a cons
32%
promoter shareholding was fully extinguished and reduced to zero in April 2022 from the level of 32% at the end of the last financial year. The company has divested the entire 100% shareholding in n
100%
from the level of 32% at the end of the last financial year. The company has divested the entire 100% shareholding in non core business of solar and thermal power housed in Godawari Green Energy and
Rs.98 Crore
business of solar and thermal power housed in Godawari Green Energy and earned a net profit of Rs.98 Crores on investment which is reflected as an exceptional item in our results. The company has started
Rs.1500
anufacturing high grade pellet during the year which commands the higher price in market by about Rs.1500 a tonne over the commercial grade of the pellet. The company has started supplying pellet to large
Guidance — 20 items
“Going forward the company plans to consolidate remaining investment in Hira Ferro and Alok Ferro.”
“This transaction is value accretive as GPIL needs the power and the cost of power on a longer term basis, which will be much competitive as compared to the grid power.”
“The 25 megawatt power project is also critical for value addition business otherwise we cannot move the volume on the grid power alone.”
“With regards to the 70 megawatt Rajnandgaon project of GPIL is fully ready and awaiting synchronization with the grid and expect to start generation very soon may be in a couple of days.”
“We are working on the final product details and will be announced in due course with capital investment required.”
“The company is aiming to set up one million tonnes Greenfield pig iron plant.”
“The final details about the change in plan are being worked out and will be announced with Q1 results.”
“The capex guidance for FY2023 is around Rs.500 Crores.”
“As we have mentioned our capex will be primarily funded through the internal accruals.”
“With regards to the guidance, on the production volume in FY2023, we expect to produce about 2.7 to 2.9 million tonne of iron ore and about 2.4 million tonne of pellets in the FY2023.”
Risks & concerns — 7 flagged
This is likely to definitely put pressure on the domestic iron ore and the pellet prices and also the finished steel prices.
— Dinesh Gandhi
Going forward the price dynamics of iron ore and pellet will depend on the impact of export duty and the demand and supply scenario in both domestic and international prices.
— Dinesh Gandhi
It is very difficult to quantify on the profitability of the company at this stage but definitely this 45% duty wherein India has the export of surplus of the iron ore as well as the iron ore pellet both.
— Dinesh Gandhi
Now this is definitely going to put in the pressure.
— Dinesh Gandhi
Our maximum volume is going to domestic market so this quarter there will not be much impact of the export market.
— Abhishek Agrawal
To be honest it is difficult to give you an exact number but I can say with the current production volume, about 60%-65% is in the high grade pellets and about 30%-35% is low grade pellet, so 65% pellet are totally sold out in the domestic market, for the high grade pellet part of it is consuming in steel making and part of it remaining is showing machine market being export now it is going to be totally domestic till the duty material is around.
— Abhishek Agrawal
When the market is very volatile the prices are going up almost by 20% to 25% on week on week basis so for the next three months we are very well covered which I think is a good decent level, so Q2 will not have a very substantial impact on the coal prices.
— Abhishek Agrawal
Q&A — 7 exchanges
Q
I go your point. Rather with the increase in the volume in the mining the cost should proportionately because of the operating leverage cost should go down. The cost is also at elevated level because with the royalty on India, IBM price and because of whatever announcement in terms of export the government has done which will reduce the iron ore prices and therefore IBM prices will fall so that will also result into some fall in the royalty payment which we are paying on our iron ore mining and of course some reduction has been given in the petrol and diesel prices which should have some minor
Abhishek Agrawal
So since we have the iron ore coming from a mine so there are two costs. One cost is the iron ore cost which is quite low compared to our peers because of our captive iron ore mining. On the operating cost side currently our cost is about Rs.1500 a tonne. The total cost from iron ore plus Rs.1600 Crores. Siddharth Agrawal: So from iron ore mining till you can get pellet production ours is similar about Rs.5500 per tonne? So Rs.6000 Crores you can say on the higher side. It will go down because as Dinesh just said so the royalty portion which are going on in the future there is a reduction in t
Q
Abhishek you will take this.
Abhishek Agrawal
On a dividend payout Dinesh already mentioned we need to strike a balance between the free cash plus the capex and industry will also grow so your point is well taken and we will definitely discuss among our peers and amongst the management and the board and we will take a call accordingly. From the steel side the future expansion has been kept on hold for two primary reasons. One is we are waiting for the sponge iron EC to get clearance because a lot depends on the sponge iron EC because if you expand the capacity and we do not get the permission for sponge iron then we will not have the raw
Q
Thank you very much and congratulations on excellent results. One particular point that you mentioned about the coking coal we will come down because of use of high grade and efficiency of the blast furnace will also go up so the parentage of iron in your pellet is already higher by 2% to 4% compared to the normal grade so does it mean that you get roughly about Rs.2000 per tonne advantage on getting the higher yield and the 5% cooking coal cost come down that is what SAIL and other people have been talking about it so there is huge advantage of using the high grade pallet so can you throw mor
Abhishek Agrawal
Yes government of India has reduced the import duty on cooking coal by 5%. For example if cooking coal prices are hovering around $500 by $25 their import cost will go down which is about you can say about Rs.2000 a ton which is little contribution on cost savings for the import players like the bigger steel mills. On our side we get a better realization because the import in system is less which is basically silicon and with lower alumina the coke rate in the blast furnace goes down so whatever discussion we had in out interim discussion the numbers we have got with our pellet they are saving
Q
Thank you for giving me opportunity again. Sir just wanted to know with Jagdamba Power merger with ourself do we invoice any cost savings also or it would not be coming.
Dinesh Gandhi
Because you know the power which we are getting from Jagdamba currently is cost plus certain margin to Jagdamba so whatever is cost we will continue to get incurred but if I compare this with my grid prices then it is two and half rupee cheaper price on a production volume of about 15 Crores unit annually. And then Vikas Ji the Indian Government rules states that if it is an ITP so then you would not get a credit of GST or the input correct but when you merge with Godawari, Godawari, being the manufacturing so we will save on 5% GST on the input coal side and 18% GST side so there will be addi
Q
Congratulations for a good set of number. Sir my first question is that if you can share some revenue breakup of domestic and export in general percent wise.
Abhishek Agrawal
Dinesh Ji he wants to know the revenue of export versus the domestic supply. I do not have frankly the numbers readily available but export close to about 600,000 tons of pellet at an average price of Rs. 12,000 a ton. Sir you do not have percentage wise break up right now. Right now we do not have the percentage. I can tell you after or you can get in touch with our investor relations. We will provide the data and she will give it to you. Sir my second question in Q4 there is some exceptional gain of 134. Sir can you throw some more light on that. It is 98 Crores not 134 Crores. That as I sai
Q
No it is not related party transaction. Some short term advances have been to certain party and this is on demand.
Shamanth Bhardwaj
Is it secured. Secured in the sense it is unsecured but we have high confidence on the party. Shamanth Bhardwaj: While calculating working capital changes you have included other noncurrent assets and liabilities why is that. In the cash flow statement while calculating working capital changes you have included other non current assets and liabilities. Frankly I have to recheck and then can you tell me or can I separately give you the clarification on this. You know Sana will get in touch with you.
Q
Once again thank you very much on behalf of the management of Godawari Power for joining the Q4 FY2022 earnings call. We will continue to be happy to answer all your queries. You can get in touch with us our investor relations agency for further clarification if any you need on the result or the operations of the company. Thank you and thank you all.
Opening remarks
Sana Kapoor
Thank you Peter. Good morning everybody and welcome to Godawari Power and Ispat Limited Earnings Call to discuss the Q4 FY2022 results. We have on the call Mr. B L Agrawal, Managing Director, Mr. Abhishek Agrawal, Executive Director, Mr. Siddharth Agrawal, Executive Director, and Mr. Dinesh Gandhi, Executive Director. We must remind you that the discussion on today’s call may include certain forward looking statements and must be therefore viewed in conjunction with the risks that the company faces. May I now request Mr. Dinesh Gandhi to takes us through the company’s business outlook and financial highlights subsequent to which we will open the floor for Q&A. Thank you and over to you Sir.
Dinesh Gandhi
Thank you Sana. Good morning ladies and gentleman and thank you for joining us on the earning call today for the Q4 and FY2022. I trust you have had a look at the earning presentation uploaded on the exchanges and the company website. I will briefly discuss the results and other business developments and then we will open the house for Q&A. As you are all aware FY2022 was a landmark year in the history of GPIL. We have achieved many strategic milestones during the year. Just to name GPIL had a record breaking financial performance substantially higher and highest ever revenue EBITDA and PAT. The consolidated revenue increased to Rs.5399 Crores. EBITDA had increased to Rs.1864 Crores which is 36% and 64% higher respectively. The consolidated PAT more than doubled to Rs.1403 Crores from Rs.627 Crores an increase of 136% Y-o-Y. Even on quarterly basis, PAT from continuing operations attributable to the owners of the company increased by 24%. The company has achieved net debt free status o
Moderate
Thank you very much. We will now begin the question and answer session. The first question is from the line of Jatin D from Kotak. Please go ahead.
Jatin D
Good morning Sir and thank you for the opportunity. Just wanted to understand the overall view of the company on this export price because you are one of the larger exporter of pellets and with this duty on export price how do you see to pricing moving in the domestic market and the impact on the overall profit of the company?
Dinesh Gandhi
It is very difficult to quantify on the profitability of the company at this stage but definitely this 45% duty wherein India has the export of surplus of the iron ore as well as the iron ore pellet both. India was exporting close to about 20 million tonne of iron ore and 15 to 20 million tonne of iron ore pellet in the global markets. Now this is definitely going to put in the pressure. As I said in my opening remarks we are watching the situation but we expect the prices for a higher grade pellet we should command better price of Rs.1500 a tonne and not only in export we have reduced the export in the second half of the last financial year and we have started supply the high grade pellet even to the large steel manufacturing companies in India and partially pellet we have captive consumption and partially we sell it in the local market but the pricing trend will be able to come to know only in the next few days because everybody is shocked with the kind of decision which has been tak
Abhishek Agrawal
Just to add what Dinesh just said with the coking coal prices and steel being on very high side so the high grade pellets you produce of 65 with alumina content of 1% so we have been able to tap the domestic market where Tata Steel, JSPL, and all these big buyers who operate the big blast furnace have been using our high grade pellets for the last few months. Tata Steel has been buying from us every month so we are confident with bigger chunk of production being on the high gate side we should be able to utilize some level of price drop because of export ban rather duty on export side. 5