India: Godawari lowers pellet production guidance for FY'25

Godawari Power and Ispat Limited (GPIL), Central India's leading steelmaker, recently announced its first quarter of financial year 2025 (Q1FY'25) results.

Quarterly performance highlights:

• Iron ore production in Q1FY'25 was at 590,488 tonnes (t), an increase of 3% y-o-y as compared to 572,523 t in Q1FY'24.
  
  
• The company's pellet production stood at 651,700 t in the quarter under review, up by 24% y-o-y compared to 523,950 t of production volume in Q1FY'24.
  
  
• Total pellet sales in Q1FY'25 stood at 442,102 t, a significant rise of 49% y-o-y as compared to 297,656 t in the year-ago period.
  
  
• Total steel billet output for the quarter stood at 113,480 t, a y-o-y increase of 13% compared to 100,535 t in Q1FY'24.
  
  

Investors' call highlights:

Financial performance:

• EBIDTA up y-o-y: The company's standalone EBITDA was recorded at INR 391 crore (cr) in Q1FY'25, a y-o-y rise of 30% as against INR 302 cr in the same period last year.
  
  
• PAT rises y-o-y: GPIL's profit after tax (PAT) rose by 23% y-o-y to INR 275 cr in Q1FY'25 from INR 224 cr in Q1FY'24. Profitability improved despite fall in sales volume and realisation of finished products mainly due to cost reduction benefits accrued as de-bottlenecking capex done last year.
  
  

Sales and production guidance:

• FY'25 pellet output guidance drops: The company lowered its production guidance for pellet to 2.44 mnt for FY'25 from 2.6 mnt in FY'24 considering the scheduled annual maintenance shutdown.
  
  
• Average pellet sales realisation rises: GPIL's average sales realisation stood at INR 10,503/t in Q1FY'25, a marginal increase of 3% y-o-y from INR10,200/t in Q1FY'24. The company's main focus continues to remain the domestic market amid better realisations against export market.
  
  
• High-low grade pellets ratio increases: GPIL's sales ratio for high-grade vs normal grade pellets is around 67:33, currently with no plans to enter in exports market.
  
  
• Commencement of structural steel in rolling mill: The company has successfully completed modification of rolling mill for manufacturing of structural steel (214,000 mtpa capacity) with the onset of production of the same and receiving raw material (steel billet) from their integrated steel plant. The structural steel will be partially used captively for manufacture of galvanised fabricated products for supply to government agencies like Indian Railways, power grid and state discoms, etc.
  
  

Upcoming capacities and projects:

• Capacity expansion plan of key units: Godawari is planning to enhance its capacity of pellet by 2 mnt taking the total capacity to 4.7 mnt by Q1FY'26. Meanwhile, the pellet maker also plans to set up a crushing and beneficiation plant with a capacity of around 6 mnt whose commissioning is expected by 15 months from environment approval.
  
  
• GPIL's FY'25 modernisation plans: The company is also in the process of adding a separate line in the said rolling for manufacture of strips, the construction work for which is in progress and expected to be completed by September, 2024. Upon commencement of production of strips, the same will be captively used for manufacture of ERW pipes. It may be mentioned that the company has a capacity of 60,000 mtpa for the manufacture of ERW pipes.
  
  
• Upcoming solar power projects: The 20 MW captive solar plant, for electric power requirement of said rolling mill and fabrication cum galvanising plant, has also been synchronised. Formal communication from the concerned authority is awaited. Meanwhile, land required for 70 MW solar project proposed to be set up for additional capacity of 2 mnt pellet plant is under acquisition.
  
  
• No near-term plans to enter in longs market: The pellet maker aims to focus only in production of flat steel segments (HR coils of 12-15 mm) via its integrated steel plant required majorly by automobile sector and pipe manufacturers. However, GPIL is open to explore the downward stream steel products, i.e., CRC in the future.