“Manganese ore is not that volatile in prices, the prices will continue the same and so will be the financial results of the company,” he further added. He also sees performance of FY10-11 to be better than FY09-10.
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Q: Take us through how you are seeing revenue growth in the current and next year. You have some expansions kicking in; you are going to ramp up your production from 1.1 million tonne to 1.5 million tonne per annum. So how are you looking at this production expansion and what it does to revenues this year and the next?
A: There is about 30% increase in the revenues of the company compared to the corresponding period last year in April-December. There is about 30% increase in the revenues of the company, so it will have a direct impact on profits. We are expecting the performance to continue in the balance period of the current year on the same line. So the performance of 2010-11 will be better than the performance of the company in the year 2009-10.
Q: How good can the performance be? There are some people who are expecting 45% revenue growth, some people little more and little less. What would be good expectations to go with?
A: The volumes have increased by 30%, so it will definitely increase the gross margin and the profit a bit more than 30%. On a conservative estimate it will be around 40%.
Next year we are going to increase the production as told during the time of the issue commencement. A large number of capital projects have been taken up, two of our projects— deepening of shaft in Beldongri and Balaghat have been completed. They are going to be operational and it will add to the production. Similarly, in the case of Dongri Buzurg, our major opencast mine, there also have taken the development on a very large basis. It is going to increase the production from the Dongri Buzurg mine and over a period of time we want to increase capacity from the present 3 million tonne to 5 million tonne. It will gradually come in stage wise and we expect next year the reserves should come because the development this year has taken more importance in the case of Dongri Buzurg.
Q: Coming to margins for the past two years, half your revenues are profits, 50% that’s an outstanding and superb margin. Should we take that your profits will be half of your revenues even in the forthcoming years, FY12-FY13?
A: For the first six months, more or less the same pattern has continued and it will continue in the same manner.
Q: Even in FY12-13-14 you can continue with that kind of a margin?
A: Manganese ore is not that volatile in prices, so, you can expect the prices will continue the same trend and so also the financial results of the company.
Q: You have Rs 1,760 crore on your books now. How are you planning to use this money? What kind of expansions have you laid out?
A: The company has taken projects of nearly Rs 780 crore for expansion of the mines and another Rs 200 crore is going for the joint ventures. Beside these two, the company is trying to acquire mines both within India as well as outside. For this these funds can be utilized. Government of Maharashtra has allotted 814 hectare, in that also we are going to take up the exploration activity. The activity for exploration has already been initiated and once we start investing further it will add to the existing investment.
Therefore, Rs 1,700 crore is sufficient - reasonably large quantum of the reserves and we are also having plans of other expansions. We are going to further add some more expenditure within our mines for a faster expansion so that the production is 1-1.5 million tonne by 2015.
Q: You have your joint ventures lined up with RINL as well as SAIL. You are speaking about the mines you are acquiring in Maharashtra and global mines, therefore what you can tell us about the period beyond FY12? Will you be able to maintain this kind of growth in revenues at about 30% for FY12 and FY13 and FY14 as well? Will all these ventures start kicking in?
A: As far as ventures are concerned they will be sorting sometime in the second half of 2012 and then the revenues through this company will directly go to the balance sheet. MOIL has just 50% share; in fact, the purpose of going for joint venture is to have an assured supply to SAIL and RNIL. MOIL will have direct interaction with the customer which will be helps us to take appropriate decision. As far as the mining operations are concerned, production of 1.1-1.5 million is definitely going to add the revenues.
Q: Most investors and brokerages have assumed 40% to 45% growth in revenues in FY11. By the time we come to FY12 and FY13 the estimated revenue growth falls to 70%. Would you think you will do better?
A: I expect company will definitely do better than the expected 7%.
Q: It would be what, 10%. What are you pencilling?
A: To give specific figure at this time is futuristic but definitely the company is increasing the production. The prices are going to be stable and the company’s increase in production will add to the volume and expenditure being almost constant that point. We have stretched during the time of launching the issue also. Major cost of MOIL is labour cost and it is almost going to be stable. Therefore, definitely the volume will increase and in-turn profit will increase
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