LLOYDSMENSEQ3 FY25January 29, 2025

Lloyds Metals And Energy Limited

6,937words

160turns

16analyst exchanges

3executives

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Management on call

Rajesh Gupta

MANAGING DIRECTOR – LLOYDS METALS AND ENERGY LIMITED

Riyaz Shaikh

CHIEF FINANCIAL OFFICER – LLOYDS METALS AND ENERGY LIMITED

Prateek Singh

DAM CAPITAL

Key numbers — 40 extracted

7.8 million

optimum capacity utilization. In regard to our iron ore segment, the 9-month dispatches stood at 7.8 million tons and for Q3, it was 2.4 million tons. We are fully mobilized to mine and dispatch 25 million

2.4 million

gard to our iron ore segment, the 9-month dispatches stood at 7.8 million tons and for Q3, it was 2.4 million tons. We are fully mobilized to mine and dispatch 25 million tons with the expectation that the E

25 million

7.8 million tons and for Q3, it was 2.4 million tons. We are fully mobilized to mine and dispatch 25 million tons with the expectation that the EC shall be received in time by the end of this current quarte

66%

the pilot plant has been ready for the last 8 months and has consistently delivered Fe content of 66% and beyond and a yield of 37% to 40%, which is better than our original expectation. Primary engi

37%

for the last 8 months and has consistently delivered Fe content of 66% and beyond and a yield of 37% to 40%, which is better than our original expectation. Primary engineering is complete, and the e

40%

e last 8 months and has consistently delivered Fe content of 66% and beyond and a yield of 37% to 40%, which is better than our original expectation. Primary engineering is complete, and the equipmen

11%

s quarter. Let us delve into the financial performance for 9 months FY '25. Our revenue grew by 11% year-on-year, supported by robust iron ore and sponge iron volume. What's particularly encouragin

31%

trajectory, further strengthening our revenue base. On the EBITDA front, we witnessed a robust 31% year-on-year growth, mirroring our revenue performance. The strong momentum was primarily led by

ore business continued to be a key driver of our overall growth. Realizations per ton improved by 8% year- on-year in quarter 3 FY '25 to INR5,894 and by 10% year-on-year for 9 months FY '25 to INR

INR5,894

er of our overall growth. Realizations per ton improved by 8% year- on-year in quarter 3 FY '25 to INR5,894 and by 10% year-on-year for 9 months FY '25 to INR5,718. Our EBITDA per ton for quarter 3 FY '25 w

10%

l growth. Realizations per ton improved by 8% year- on-year in quarter 3 FY '25 to INR5,894 and by 10% year-on-year for 9 months FY '25 to INR5,718. Our EBITDA per ton for quarter 3 FY '25 was INR2,02

INR5,718

8% year- on-year in quarter 3 FY '25 to INR5,894 and by 10% year-on-year for 9 months FY '25 to INR5,718. Our EBITDA per ton for quarter 3 FY '25 was INR2,021, marking a 21% year-on- year increase. While

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Guidance — 20 items

Rajesh Gupta

opening

“Now let me give you some other project updates.”

Rajesh Gupta

opening

“Commissioning and testing has started and should be operational latest by this quarter end or maybe early next quarter.”

Rajesh Gupta

opening

“In summary, our project execution is progressing smoothly, and we remain confident of completing it well in time of our original schedules.”

Parthiv Jhonsa

“And by when can we expect the EC to come in?”

Rajesh Gupta

“It will go to the Centre from there, and then there will be a final EC committee meeting.The whole process, should take 60 to 70 days, to complete.”

Parthiv Jhonsa

“So, can you give the guidance for remaining part?”

Parthiv Jhonsa

“Like it will be completely 10 million ton, so about 2.2 million ton in the fourth quarter.”

Riyaz Shaikh

“So, the business, as we have already mentioned that the MDO business will be coming in from 1st of April.”

Riyaz Shaikh

“So, it will be for the next financial year.”

Riyaz Shaikh

“Since it will be under the same umbrella, it was a consolidated figure.”

Risks & concerns — 4 flagged

While market conditions for sponge iron continue to be volatile, our operational efficiency and captive raw material source have provided a strong cushion against price fluctuations.

— Riyaz Shaikh

So that 2 million tons of excavation and loading onto trucks doesn't seem very difficult.

— Rajesh Gupta

Very difficult to define it as a precise figure.

— Rajesh Gupta

If we get it before March, on a pro rata basis, we can but that looks difficult.

— Riyaz Shaikh

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Q&A — 16 exchanges

So, I have got actually a couple of questions. Sir, the first question pertains to the mine's EC. I believe there was a public hearing which was there yesterday on 28th. Is it possible to know the status? And what is the progress on it? And by when can we expect the EC to come in? And once the EC comes in, how long it takes for the expansion to actually kick in? That's my first question, sir.

Rajesh Gupta

The public hearing was held yesterday in Gadchiroli under the aegis of the Government of Maharashtra, the collector, etc. And it went off well. The usual questions were asked, some queries were there relating to environment and employment, , which were expected, and they have been addressed and now we await the outcome from the district administration. It will go to the Centre from there, and then there will be a final EC committee meeting.The whole process, should take 60 to 70 days, to complete. So, in 60 to 70 days, you mean the EC should come in? Or it is another couple of months after tha

Sir, just wanted to understand, once the EC is in place, how long will it take to ramp it up to the previously desired guidance levels of that 15 million, 20 million or even 25 million tons? So, if you could give us some timeline over there.

Rajesh Gupta

So, there are two aspects to the physical execution. One is the physical mining and excavation, and one is the evacuation. As far as the mining is concerned, we have machinery in place through Thriveni to do the mining. And at peak times, we have done 1.8 million tons also in a month. So, 2.2 million tons roughly, in the first 1.5, 2 years, we would be not going in for any beneficiation. It will be a current process of direct sales zone. So that 2 million tons of excavation and loading onto trucks doesn't seem very difficult. Regarding the evacuation, like I mentioned earlier, our pipeline of

So, I just had a couple of questions. So, I wanted to firstly understand we acquired the MDO business of Thriveni Earthmovers, but they are also into in the pellet trading business, which Lloyds is also going to continue going forward. So, I just wanted to understand if there's any plans to acquire the pellet trading side of it as well? Or are we just going to stick to the MDO business?

Rajesh Gupta

what we have taken over is the MDO business. The other businesses like equity in BRPL and in MRPL –remains with them and does not come to us at all.. We are supplying raw materials, and we have an understanding with Mandovi for supplying iron ore to them and off taking some pellets from them. Okay, sir. So that partnership is going to continue... We would be starting off with our own pellet plant. So, there is no question of trading does not allow that. So, sir, the partnership with Mandovi is then going to end once that pellet plant starts? No, it's a 10-year agreement. Okay, sir. And then, s

It's Ficom Family Office. So, sir, my first question is one of our customers recently signed an MoU with the Maharashtra government of investing around INR3 lakh crores in Gadchiroli district. So, I wanted to understand, will there be an impact on Lloyds Metals on this investment?

Rajesh Gupta

If you're talking about the JSW MoU? Yes, sir. So, we're not fully privy to what the MoU is about. We know that in the past, they have signed a composite mining license with the Indian Government for one of the mines in Surjagarh. The exact details of what the MoU they have signed, we are not aware. Not only one, I think other MoUs have also been signed by Viraj Steel, So 3 or 4 MoUs are there now envisaged for 3 or 4 steel plants in Gadchiroli. Like the Prime Minister and the CM has said that it is the next steel city, and we are proud to have laid the foundation to that city. And with the ir

Yes. Can you provide with the timeline for the beneficiation plant, when the phase 1 will be operational then phase 2 and phase 3?

Rajesh Gupta

For the beneficiation plant, before we come into the physical phases, we have the technical phases and the approval phases. The technical phase of clearing the process route is final and our pilot plant is up and running. And we are now in the phase of testing that output, number one. Number two, the permissions required, including getting the land, etcetera, are already in place -- I mean, are already applied for and in place. And physically, we feel '27 the first phase would be completed. By '27, only first phase will be operational, right? We're doing it in 3 modules, it will be 15 million

Sir, in the opening remarks, you mentioned the capex number. I actually missed that. Is it possible to repeat the same for Q3 and 9 months?

Riyaz Shaikh

I didn't get you. Can you just repeat? Yes, the capex for Q3 and 9 months, sir. Is it possible to get the number, you had said in the opening remarks? In the 9 months, it is INR2,700 crores, and we've done totally around INR4,400 crores till now. Okay. Okay. Sir, also just one question to harp on the ex-mine cost when compared to, say, someone who is a merchant miner, right? Considering we have allotted mine. And what will be the cost differential there? For example, if someone is mining, considering the MDO cost and everything, what would be the cost differential with us compared to a merchan

So first, just on the EC approval, broadly that we are expected to get the EC approval in the next 60 to 90 days. FY '26 should be a year where we have the full EC, and we should be mining 25 million tons?

Rajesh Gupta

Yes, Siddharth. Okay. Sir, secondly, on our BHQ, have we started ordering the equipment? Or what is the status on that? The engineering is all in full swing. Some of the very long-lead items, I think we have just ordered or about to order. Our teams have gone to Australia and to China to inspect new and better technologies also. I think we'll be in the position to order those equipment in the next 10 days or so, we'll be placing the biggest orders. We have got the big grinder in place, with the gyratory crusher, which would be getting installed shortly. Sir, secondly, then broadly, we should b

I just had one question. I just wanted to ask what is the closing iron ore inventory volume figure as on Q3?

Rajesh Gupta

We'll come back. We will just come back in a minute for that. Any other questions? The closing inventory is 0.4 million tons.

The answer is 0.4 million tons.

Management

Congratulation on a good set of numbers. Just wanted to understand what capex are we looking for this entity over the next 3 years or so? And how are we looking at this entity on a longer- term basis in terms of a business plan or how are we seeing that?

Riyaz Shaikh

Can you just repeat? So just a question is, how are we looking at capex over the next 3 years on a consolidated level across divisions? And how are we looking at this company over the next 3 to 5 years in terms business plan because we have now got the clearances, we are trying new opportunities, so how should one look at it? Yes. See, as we've informed you that we should be getting into this 25 million tons of EC, and so we should be doing that much of production in the next financial year. So going forward, it should be 25 million tons of iron ore. In the next 2 years, as I just mentioned, w

A few quarters back in the con call, we showcased the desire to achieve a revenue of around INR40,000 crores by '28 to '29. So, the recent acquisition of MDO business we did and the revenue we'll be earning from this, is it considered in that target? Or will it be over and above our desired revenue target of INR40,000 crores by FY '28 or '29?

Rajesh Gupta

I think your question got lost. Your voice was a little echoing. Can you repeat the whole question? Sir, a few quarters back, we showcased a desire to achieve a revenue of around INR40,000 crores by FY '28 or '29. So, the recent acquisition of MDO business and the revenue will be earning from this, is it considered in the target itself? Or will it be over and above the desired revenue target of INR40,000 crores by FY '28 or '29Rajesh Gupta: It'll be over and above.

So, any price cuts that we have taken in December and January? And how do you see it moving in February?

Rajesh Gupta

Price cut. We haven't taken any price cut. Most of our material is sold for this year of 10 million tons. So, we don't see any price cut on the anvil. And sir, the realization for DRI has come off. What would be the reason for that? And can you explain what's the linkage with, let's say, iron ore realization in terms of what's the flow-through or linkage with iron ore? The DRI realization has come down. You're talking about in January or in... For the quarter, sir? So, our realization has come down for the quarter, not up. The DRI is more linked to the secondary steel market and the scrap mark

I just wanted to ask how much will be the total iron ore mining for this financial year?

Riyaz Shaikh

We are expecting the EC e by this financial year-- total mining or mining cost? No, no, only mining. Iron ore mining. How much million tons? 10 million tons. So, it won't be above that, sir, if we get environmental clearance before March? If we get it before March, on a pro rata basis, we can but that looks difficult. But yes, we can drive a little bit more than 10 million tons. Okay. But right now, we are calculating only 10 million for this financial year? Yes.

Actually, I joined a little bit late, so if my question is already answered, then please ignore it. I will read the transcript. So, my question is like what is the company's plan for achieving the 100- megawatt of renewable energies for captive consumption?

Rajesh Gupta

We have tied up with 2 companies, Hinduja and Amplus. We are about to sign the final contracts with them. We've been buying power from them and also becoming an equity holder of 26% in those two special subsidies for that power. Okay. And my second question is like, could you provide a detailed projection on how this cost reduction will translate into the pricing competitiveness in the market and enable a company to maintain its profitability? So, the landed cost of this power is around INR4.50- INR4.75 per unit. And the landing cost of MSEDCL cost is around INR8.50, number one. Number two, an

Thank you, sir. As usual, it has been a very informative and helpful discussion. And these questions always help us to think of our management strategy also going forward. Thank you, everybody, for the interest in our company.

Management

Thank you.

Riyaz Shaikh

Thank you very much.

Speaking time

Rajesh Gupta

Riyaz Shaikh

Moderator

Parthiv Jhonsa

Divya Agarwal

Prince Choudhary

Vikash Singh

Rahul Agarwal

Siddharth Gadekar

Dhananjai Bagrodia

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Opening remarks

Prateek Singh

Thanks, Manav. Good evening, everybody, and thank you for joining us today. We, at DAM Capital, are pleased to host Lloyds Metals and Energy's Third Quarter and 9-month FY '25 Results Conference Call. We have with us today from the management, Mr. Rajesh Gupta, Managing Director; Mr. Riyaz Shaikh, CFO. Without further ado, now I would like to invite Mr. Rajesh Gupta to initiate the proceedings for the call. Thanks, and over to you, sir.

Rajesh Gupta

Good evening, everyone, and thanks, Prateek, for taking this call. Thank you all for taking the time to join our conference call here. Connecting with the investor community and sharing updates on our business is always a great pleasure. I will first give a brief update on our operations and the status of our ongoing projects. After that, Riyaz, our CFO, will take you through the financials. Let us begin with our 9 months FY '25 performance overview, which has been more than satisfactory, I would say. Our sponge iron division recorded highest ever production during the 9-month period at both the plants and are operating at optimum capacity utilization. In regard to our iron ore segment, the 9-month dispatches stood at 7.8 million tons and for Q3, it was 2.4 million tons. We are fully mobilized to mine and dispatch 25 million tons with the expectation that the EC shall be received in time by the end of this current quarter. Now let me give you some other project updates. Execution has b

Riyaz Shaikh

Thank you, Rajeshji. Good evening, everyone. It's a pleasure to be here today to share our financial and operational performance for 9 months FY '25 and quarter 3 FY '25. Despite a dynamic and challenging market environment, we are pleased to report that we have delivered strong growth across key segments, driven by higher volumes in iron ore and sponge iron. Our ability to navigate market fluctuations, optimize resources and maintain cost efficiency has helped us achieve a resilient performance this quarter. Let us delve into the financial performance for 9 months FY '25. Our revenue grew by 11% year-on-year, supported by robust iron ore and sponge iron volume. What's particularly encouraging is that our iron ore segment saw higher sales and improved realization. Sponge iron volumes also remained on an upward trajectory, further strengthening our revenue base. On the EBITDA front, we witnessed a robust 31% year-on-year growth, mirroring our revenue performance. The strong momentum was

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