IMFANSEQ2 FY23October 28, 2022

Indian Metals & Ferro Alloys Limited

6,933words
204turns
10analyst exchanges
5executives
Management on call
Prem Khandelwal
CHIEF FINANCIAL
Bijayananda Mohapatra
CHIEF OPERATING
Deepak Mohanty
HEAD - FERRO ALLOYS
Binoy Agarwalla
HEAD – POWER BUSINESS
Sandeep B Narade
HEAD – MINES BUSINESS
Key numbers — 40 extracted
Rs. 90,000
ing, which we are observing in the market currently. But in the Q2 our cost per ton reached almost Rs. 90,000 per ton. So I wanted your guidance with respect to the next two quarter, how do you see this trendi
INR 93,000,
ization in Q2. Now going forward, we had observed in the last quarter that ferrochrome fell almost INR 93,000, INR 94,000. So for this quarter and the coming quarter and now it has again spiked up significantly
INR 94,000
2. Now going forward, we had observed in the last quarter that ferrochrome fell almost INR 93,000, INR 94,000. So for this quarter and the coming quarter and now it has again spiked up significantly, increase
INR 10,000
s quarter and the coming quarter and now it has again spiked up significantly, increased more than INR 10,000 per tonne. So for the Q3, do you expect a further average realization drop or it will trend upwards
INR 105,000
last quarter slightly because mostly the spot prices also, it has improved domestically to around INR 105,000 and in China also, it has gone up from $0.84 to $0.85 to $0.92, $0.93. So overall looking at such t
INR 20 crore
sued on the 10th of October to JSPL. So we should be getting back that statutory portion of around INR 20 crore now and thereby indicating by the end of this month, we will be getting that money. And then the v
57.8 million
e bespoke, stainless steel for 2022 calendar is expected to be -- world production would be around 57.8 million which is around 2% less than the last year. And for 2023, it is projected to grow by 3% to somethi
2%
r 2022 calendar is expected to be -- world production would be around 57.8 million which is around 2% less than the last year. And for 2023, it is projected to grow by 3% to something like 59.56 milli
3%
57.8 million which is around 2% less than the last year. And for 2023, it is projected to grow by 3% to something like 59.56 million tons. So there is a positive for the next year. We said already, a
59.56 million
s around 2% less than the last year. And for 2023, it is projected to grow by 3% to something like 59.56 million tons. So there is a positive for the next year. We said already, as you know, in the first half Ch
1 million
xt year. We said already, as you know, in the first half Chinese production has went down by about 1 million tons. Shubham Agarwal: And sir in South Korea also we observed that their production had gone do
rs,
ext quarter-wise, it will start to normalizing. Deepak Mohanty: We are supplying to other customers, I mean Posco may not be taking the tonnage, but we are in a position to sell it to some other custo
Advertisement
Guidance — 20 items
Shubham Agarwal
qa
“So I wanted your guidance with respect to the next two quarter, how do you see this trending in light of the current coal prices and the coke and coal prices?”
Prem Khandelwal
qa
“Likely, it looks like this was the peak of cost and it should come down going forward.”
Shubham Agarwal
qa
“Now going forward, we had observed in the last quarter that ferrochrome fell almost INR 93,000, INR 94,000.”
Shubham Agarwal
qa
“So for the Q3, do you expect a further average realization drop or it will trend upwards from Q2 level?”
Deepak Mohanty
qa
“It will be going down from last quarter slightly because mostly the spot prices also, it has improved domestically to around INR 105,000 and in China also, it has gone up from $0.84 to $0.85 to $0.92, $0.93.”
Prem Khandelwal
qa
“So we should be getting back that statutory portion of around INR 20 crore now and thereby indicating by the end of this month, we will be getting that money.”
Deepak Mohanty
qa
“So there is a positive for the next year.”
Deepak Mohanty
qa
“Next quarter onwards also to stabilize it will take some time, another maybe three months, first quarter may come to the full level.”
Prem Khandelwal
qa
“They have also lot of stock, but next quarter-wise, it will start to normalizing.”
Shubham Agarwal
qa
“But we will be able to maintain close to 60,000?”
Risks & concerns — 8 flagged
So coke -- although some Chinese coke has come down, even that is also volatile.
— Deepak Mohanty
So it's quite volatile, depending on Chinese production.
— Deepak Mohanty
Saket, that would be very difficult for us because so much wallet seen every peak, it won't be proper for us to give you any number.
— Prem Khandelwal
So much especially would be difficult Saket.
— Prem Khandelwal
If on a quarter-on-quarter basis sir, if you could give the impact of the increased coke and coal prices, if you could quantify for us how that has affected because on a Q-on-Q basis it has gone up by INR 20 crores.
— Saket Kapoor
Again Saket, you are asking a specific question and it would be difficult for us to give any number.
— Deepak Mohanty
No, Deepak sir, I'll just -- at the risk of repeating myself are we planning to sell the extra quantity from Posco’s contract in domestic market?
— Yash Chandak
UG2 price for China got up some $245, so that will put pressure on Chinese ferrochrome.
— Joe Shah
Advertisement
Q&A — 10 exchanges
Q
Yeah. Thank you for the opportunity and happy Diwali to the entire team. So the first question was related to the cost of production. So as you mentioned in the opening remarks that the cost has peaked and the prices of ferrochrome has started increasing, which we are observing in the market currently. But in the Q2 our cost per ton reached almost Rs. 90,000 per ton. So I wanted your guidance with respect to the next two quarter, how do you see this trending in light of the current coal prices and the coke and coal prices?
Prem Khandelwal
The two major costs, which is the coal and coke, which are not in our control, coke has gone up to almost $700 and it has come down now to around $450, $500. And similarly coal at the peak, we had bought [inaudible 0:03:53] book at the peak of around 10,000 to 12,000 and it has come down to 7,000. So both these – this should figure in Q3 result because the consumption of these low-cost coal and coke is going to be in Q3. So we should see some dip in Q3 costs. Okay. So this is now the peak of cost cycle in Q2? Likely, it looks like this was the peak of cost and it should come down going forward
Q
Sir firstly, what is the total tonnage on a long-term basis annually, if you could give the tonnage number?
Prem Khandelwal
Deepak, you have that number? Tonnage for projected around 240,000 to 250,000 tonnes production. Long-term tonnage, he is asking? Long term we have around, if you say Korea Posco, it will be 80,000 to 90,000 per annum. And other places, whereas in Japan and China also we have also another 80,000 to 90,000 tonnes on long-term basis. So total we have around 160 to 180? 170 to 180. As to the previous answer, you were mentioning that the uptake from Posco has been lower, so what's the agreement basis on? The basis of this, but if they can, on their availability or on the plant uses, can they lower
Q
Two counts, I said it has gone up. One is, the freight cost has gone up very high because of that. And another -- some CSR expenses were there in this quarter. So for these two counts, it has gone up by almost INR 20 crores.
Saket Kapoor
Okay. So freight will remain the same in the same vicinity going forward also for the same tonnage or freight costs have also declined? In fact the freight cost has gone down very drastically now. It's almost 25% -- I mean come down to 25% level. It's down by 75%. Particularly container freight, which was in the range of $1,000 per container to give a feel about it, has come down to $200 to $250 per container. So that is one measure. But in dread fall also, it has come down but not very much maybe 50% around about 60%, it is at the moment. 50%, 60% is also a bit steady for us. Sir going ahead
Q
Yes. First of all, wish you a very Happy Diwali sir and congratulation on good use of number even in a troubling set of time. Sir I had a few questions majorly on the business aspect. I can see that our power cost per tonne of ferrochrome has gone up. But power cost per unit of power production has gone down. So how have we managed that? Given that coal prices have gone up from Q2 -- in Q2 over Q1, how is our per unit cost of power generation has gone down by almost half a INR 0.50?
Prem Khandelwal
No, I'm not able to get you -- you're comparing from what Q1 to Q2. Q1 to Q2, sir cost of power generation rupees per kilowatt unit, it has gone down sir which I believe, given that our production has gone up for power 274 million units and… Yash, I think I don't know from where you're getting the number, but I'm seeing the number if the power cost has gone up from INR 3.60 paisa to INR 4.11 paisa from Q1 to Q2. Bijayananda Mohapatra: No, no, I’ll make it correction. He is asking about Q1 to Q2 that is INR 6.57. So initially this quarter one, we have got the price of the coal is around 10,000,
Q
Happy new year to all of you. Deepak, I have one question about the Q3 export realization guidance, now you have seen total domestic market export prices going up to INR 1,05,000 in last Q2 realization was 1,02,000, so those improvement in price and so as we discussed, the trade is in the coke and the coal, on the coke side going down. So Q3, do we expect better performance, Deepak?
Deepak Mohanty
Better performance on which front? On the production cost front are you talking about or about the price front? He is talking about price front? Yes, price will be according to the market at the point-in-sale And which is going up, as you have mentioned now it is 105. So our realization for Q3 should be better than Q2, right? Export realization? No, no, no. So overall realization because our major is export and the international price in tonnes of sales per pound is lower than -- it will be lower than the last quarter. So that's why it can't be higher than that. And what about EBITDA because o
Q
Just wanted to get a blended coal cost for the quarter and the previous quarter? Blended coal cost.
Prem Khandelwal
Blended coal cost. Binoy, you have that number? In this quarter Q2, washery reject came at INR 2,447 and spot has come at INR 7,800 and linkage INR 2,900. It is a weighted average rolling rate. So, what is the blended cost? What is the blended cost he is asking for? Blended cost will be around INR 5,200. And what was that for last quarter? In Q1? Yes, Q1. Q1 was much -- a little bit higher than Q2, because spot auction price was high. It was around INR 5,500 crores, INR 5,600 blended cost. And what would be the spot as it currently -- not for Q3 or -- but current what the prices are for the sa
Q
Yes, I'm asking sir, the current prices -- the price is currently for washeries and e-auction and the spot prices?
Deepak Mohanty
It will be remain more or less at par with the Q2, spot auction price will a little bit come down. But otherwise, it will be at par with Q2. So blended, we should get INR 5,000 -- it is around INR 5,000? Yes, yes, yes.
Q
Sir with respect to this compensation amount, the nominated authority must have zeroed in with some numbers at the time of their submission of report. So have they come up with any numbers or the entire thing is still not close?
Prem Khandelwal
No, no. As I said, Saket, they have mentioned a number of INR 176 crore on the website. There is the tentative valuation they have taken. And in that INR 176 crores, there are a lot of things which we need to take a bit within, once we get the final report. INR 176 crores whatever they have indicated, they have also mentioned that this is tentative valuation and the final number would be arrived after getting the valuation report from the manoeuvre. So we are able to get that number. Sir, as the previous participant, the coal costs were was -- the blended coal cost was lower by INR 300 crores,
Q
So sorry for that. Sir, just a few more questions on the coal part, which we are talking like right now we're explaining. Are we going back to get 100% or is this changed temporarily from 100% to 75% per linkage?
Deepak Mohanty
This 75% began from January 2022, now it is also continuing up to 75% of our allocation quantity but when they will change that also unpredictable. Sir second question I had on the business development part, are we evaluating ferromagnet -- other ferro-alloy, silica, manganese or anything or we are going to expand only in chrome sir? It all depends on getting the mines, Yash. If we get some more mines, manganese mines then definitely we can look for converting out ferro plants into ferromanganese. We are looking for some mines, but nothing available in the market at the moment. But we are open
Q
Thank you. Thank you very much.
Deepak Mohanty
Thank you.
Speaking time
Prem Khandelwal
62
Deepak Mohanty
33
Saket Kapoor
31
Yash Chandak
19
Joe Shah
15
Shubham Agarwal
13
Moderator
10
Binoy Agarwalla
10
Dhaval Shah
7
Management
2
Advertisement
Opening remarks
Mamta Samat
Thank you, Mike. Good morning, everyone, and thank you for joining us on IMFA’s Q2 FY 2023 Analyst Conference Call. Today we have with us the senior management represented by; Mr. Prem Khandelwal, CFO and Company Secretary; Mr. Bijayananda Mohapatra, COO; Mr. Deepak Mohanty, Head of Ferro Alloys Business Unit; Mr. Binoy Agarwalla, Head of Power Business Units and Mr. Sandeep Narade, Head, Mines Business Unit. Before we begin, I would like to say that some of the statements that will be made in today's discussion may be forward-looking in nature. We will begin the call with the opening remarks from the management after which we will have the forum open for the interactive Q&A session. I would now request Mr. Prem Khandelwal for the opening remarks. Over to you, sir.
Prem Khandelwal
Thank you, Mamta. Good morning, ladies and gentlemen, and thank you for joining our Q2 FY 2023 earnings call. I hope you had a very cheerful Diwali and festival you’re your friends and family. So happy to Diwali to all of you once again. Coming back to Q2 results, after almost nine quarters of up-streaming ferrochrome price finally they are corrected quite sharply, which is getting reflected in Q2 results. Those who are tracking the metal industry must be knowing that we are at that leg of cycle where the cost is at the peak, but the prices have corrected quite sharply. Now the costs are coming instead down and ferrochrome prices have increased a little bit, it started moving up. [inaudible 0:02:08]. With this now I would like to open the Q&A session. Thank you.
Advertisement
← All transcriptsIMFA stock page →