India: Godawari Power and Ispat post stronger FY'22 results

Central India's leading steelmaker, Godawari Power and Ispat Limited (GPIL), recently announced its 2021-2022 (FY22) results, highlights of which are given below:

• Total iron ore production in FY22 was at 2.31 million tonnes (mnt), a significant rise of 36% as compared to 1.69 mnt in the previous year.
  
  
• The parent company's (GPIL's) total pellet production stood at 2.39 mnt in FY22, an increase of 6% y-o-y when compared to 2.25 mnt in FY21. Subsidiary Ardent Steel's (ASL's) total pellet output stood at 0.75 mnt in FY22, up by 7% y-o-y against 0.70 mnt in the previous fiscal.
  
  
• Total pellet sales from parent GPIL in FY22 stood at 1.66 mnt, up marginally by 3% y-o-y as compared to 1.60 mnt in the previous fiscal.
  
  
• Total steel billet output for the financial year stood at 0.32 mnt, a y-o-y decrease of 7% when compared to 0.35 mnt in the previous fiscal due to the shutdown of some of the old furnaces.
  
  

Highlights of the investors' call

• Average sales realisation rises: GPIL's average sales realisation stood at INR 12,390/t in FY22, an increase of 44% y-o-y from INR 8,607/t in FY21. Meanwhile, ASL's average sales realisation rose 42% y-o-y to reach 10,601/t against 7,486/t in FY21.
  
  
• EBIDTA up y-o-y: The company's EBIDTA was recorded at INR 18,642 million in FY22, up sharply by 64% y-o-y as against INR 11,370 mn last year (CPLY).
  
  
• Production guidance for FY'23: The company kept its production guidance for iron ore pellets at 2.4 mnt in FY23.
  
  
• Eye on enhancing iron ore EC limit to 9 mnt: GPIL plans to enhance its environmental clearance (EC) limit to 5 mnt over the next 2-3 years followed by 9 mnt in the next 5-7 years, depending on the future growth of the company.
  
  
• Hardly any impact of export duty imposition: The recent imposition of a 45% export duty on iron ore pellets by the Indian government will hardly impact the company, at least in this quarter, as more focus is on supplying high-grade pellets to the domestic market, thereby reducing the share of exports. The high-grade pellets have been fetching sound response in the domestic market, as well as in international markets, with a few deals concluded with Jindal Steel and Power (JSPL) and Tata Steel.
  
  
• HR/CR mill proposal dropped, eye on pig iron unit: GPIL's proposal for the HR/CR mill has been dropped owing to higher capital investment and the focus is on increasing capacities of intermediate products (pellets, pig iron and billets). Moreover, the company aims to set up a 1 mntpa greenfield pig iron plant.
  
  
• Acquisition of Jagdamba power plant: The acquisition of the Jagdamba power plant has been approved by the board of directors and the transaction for the same is likely to be completed by end of June 2022.
  
  
• Solar plants replacing grid power to improve operating margins: GPIL, in Q3FY22, announced setting up three solar power plants with a total capacity of around 155MW with an aim to reduce their grid power requirement.
  
  

The first solar power plant with a capacity of 70MW in Rajnandgaon is ready in all respects except synchronization with the grid. Another 25MW plant will be installed in Rajnandgaon (earlier Bemetara) and the power generated will be supplied to the company's captive iron ore mines with an aim to increase the capacity of iron ore crushing. The land acquisition is in process and commissioning is expected by Q3FY2023.

The third plant with a capacity of 60MW will come up in Hira Ferro Alloys Limited, Bemetara for which the construction activities have started in mid-April 2022 and will commence by Q3FY2023.

The existing 73MW power generation will continue to operate at that level. However, the company now plans to replace old turbines with new high-efficiency ones with a capacity of 48MW which will increase power generation by 11% without any additional fuel and operating cost and that is expected to commence by the end of FY23.