India: Godawari plans to enhance its iron ore, pellet and steel capacity in FY'25

Central India's leading steelmaker, Godawari Power and Ispat Limited (GPIL), recently announced its third quarter of financial year 2024 (Q3FY'24) results.

Performance highlights:

• Iron ore production in Q3FY'24 was at 0.56 million tonnes (mnt), an increase of 9% q-o-q as compared to 0.52 mnt in Q2FY'24.
  
  
• The company's (GPIL's) pellet production stood at 0.65 mnt in the quarter under review, up by marginal 2% compared to production volume in Q2FY'24.
  
  
• Total pellet sales in Q3 stood at 0.37 mnt, a fall of 15% q-o-q as compared to 0.43 mnt in the previous quarter. Sales volume witnessed a decrease because of piling up of stock at the port and the same has been exported in January, 2024.
  
  
• Total steel billets output for the quarter stood at 127,165 tonnes (t), a q-o-q increase of 4% compared to 122,675 t in the previous quarter. Notably, the company recorded highest ever steel billets production in Q3FY'24.
  
  

Investors' call highlights:

• Average pellet sales realisation rises: GPIL's average sales realisation stood at INR 10,505/t in Q3FY'24, an increase of 6% q-o-q from INR 9,955/t in Q2FY'24. Currently, the company's main focus is towards domestic market amid better realisations against export market.
  
  
• EBIDTA down q-o-q: The company's standalone EBITDA was recorded at INR 324 crores (cr) in Q3FY'24, a q-o-q drop of 10% as against INR 361 cr in the previous quarter.
  
  
• PAT falls q-o-q: GPIL's profit after tax (PAT) fell by 11% q-o-q to INR 229 cr in Q3FY'24 from INR 256 cr in Q2FY'24.
  
  
• FY'24 pellet output guidance remains intact: The company kept its iron ore pellets production guidance for FY'24 unchanged at 2.6 mnt. However, sponge iron and steel billet guidance has been increased to 0.59 mnt and 0.475 mnt, respectively on receipt of enhanced "consent to operate".
  
  
• Capacity expansion plan of key units: Godawari plans to enhance its capacity of iron ore mining, pellet and integrated steel plant by 3.65 mnt, 3 mnt (2 mnt now and 1 mnt in the next phase) and 2 mnt, respectively taking the total capacity to 6 mnt, 4.7 mnt and 2.5 mnt, respectively. Meanwhile, the company's steel plant's targeted market is flat segment (HR coils to be specific).
  
  
• LTA plans for high-grade pellets: GPIL's current sales ratio for high-grade vs normal grade pellets is around 65:35 with only normal grade pellets (Fe 63%) being allocated for exports. Notably, export deals of high-grade pellets have not been concluded by the pellet maker as they are planning to undergo long term contracts (LTA) in the coming future for which discussions are underway.
  
  
• Solar plants capacity reduce amid land constraints: Khairagarh's 30 MW solar power plant's capacity has been reduced to 23 MW due to land constraint. The power plant is expected to be commissioned by Q4FY'24. Another 20 MW power plant is expected to be completed by June, 2024 in Khairagarh which will address the captive power requirement of fabrication and galvanizing plant. Out of total 60 MW capacity, 52 MW has been successfully commissioned in the third plant which has been set up at the Hira Ferro Alloys Limited facility in Bemetara. The remaining capacity could not get commissioned because of non-availability of contiguous land. Meanwhile, the company is making efforts to purchase the land for the remaining 8 MW capacity and the same will be installed and commissioned in due course.