Release Date: October 28, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Godawari Power & Ispat Ltd (BOM:532734, Financial) maintained strong margins of 25% EBITDA and 17% PAT despite challenging market conditions.
- The company has a healthy balance sheet with cash reserves of INR 998 Crore and strong cash flow from operations amounting to INR 564 Crore during H1.
- Significant progress in CapEx plans, including doubling mining and pellet capacities and setting up an integrated steel plant, with 50% of construction activities already completed.
- The company has commissioned 165 MW of solar power plants, contributing to cost savings and plans to add an additional 70 MW.
- Godawari Power & Ispat Ltd (BOM:532734) is focused on sustainability, aiming for net-zero carbon emissions by 2050, with ongoing energy efficiency and decarbonization projects.
Negative Points
- The company's quarterly performance was impacted by a shutdown of the pellet plant, resulting in a loss of 150,000 tons of production and a revenue impact of INR 65 Crore.
- There was a decrease in realization of finished products, contributing to a 2% and 5% drop in consolidated EBITDA and PAT, respectively.
- Delays in environmental approvals have pushed back the expansion of iron ore mining capacity, affecting production targets.
- The company had to purchase 25% of its iron ore requirements from the market due to delays in mining capacity expansion.
- The pellet plant shutdown incurred additional maintenance costs of INR 25 Crore, impacting the financials for the quarter.
Q & A Highlights
Q: How have pellet prices been affected in Q2, and what is the expected trajectory for Q3?
A: Abhishek Kumar, CEO, mentioned that pellet prices have remained stable at around ₹10,000 per ton. The expectation is that prices will remain on the higher side in Q3, despite some fluctuations.
Q: What is the current status of iron ore purchases and self-sufficiency in power generation?
A: Abhishek Kumar, CEO, stated that the company buys about 25% of its iron ore from the market. Regarding power, the new 7 MW recovery power plant will help reduce coal usage and carbon emissions, with all power being self-consumed.
Q: Can you provide an update on the environmental clearance for mining expansion and its impact on operations?
A: Abhishek Kumar, CEO, explained that the environmental clearance is expected by Q4 FY25. Once received, mining operations will ramp up, with full production expected by Q1 FY26. This will help reduce reliance on market purchases.
Q: How are domestic and export markets performing, and what is the outlook for Q3?
A: Abhishek Kumar, CEO, noted that the domestic market is strong, and the company has not exported any pellets in the last 10 months. The focus will remain on domestic sales due to favorable pricing and demand.
Q: What are the plans for achieving net-zero emissions, and what role does the CCU unit play?
A: Abhishek Kumar, CEO, mentioned that the company aims for net-zero emissions by 2050. They are working with IIT Bombay on a pilot CCU project, which, if successful, will be scaled up to capture carbon emissions effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
