Analyst Meet / AGM - Analyst Meet
New geography and new products will drive the growth going forward
In interaction with Mr. Rajesh Agarwal Company Secretary
Key Highlights
In FY'15, the company saw a drop in Steel production in US and depreciating Euro, both affected the realization and margins for refractory business. Higher raw material costs and lower realisation had impacted the OPM in FY'15. Management expects the margins to remain flat if the realization drops further in FY'16.
Monocon group reported net sales of 27.5 M Pound with PAT margin of 5.9%. EI Ceramics recorded turnover of about 10.3 M Pound with PAT margin of 8.8% and IFGL Exports recorded turnover of about Rs 44 crore and PAT of about Rs 40 lakh.
EU accounts for about 35% of total sales and UK around 12%, US around 23% and rests is constituted by India and Asia. Depreciating EU is a worry for the company.
As compared to end of Q4 FY'15, where management expected EU to remain stable and the loss in steel prices and production to come back in coming quarters, things are moving slowly and may be it will take some more time before which the production and steel prices come back globally.
While earlier the 2nd level of steel industry was under stress, as per the management, the company is still not seeing any major stress levels for 1st level of steel industry players. The company intends to increase its sale to higher level players by offering higher value added products.
The company has taken steps in terms of cheaper power and alternative raw materials to ensure that the margins come back. However, if worldwide, production of Steel is lower, than lower realization and volume in FY'16, can lead to some loss of the costs benefits. Steel industry worldwide is not in a good position. It's difficult to project growth in FY'16, as the outlook for steel prices and production is uncertain worldwide.
The company completed the expansion in El Ceramics USA in Q4 FY'15. The company Installed new 10,000 pieces p.a. capacity of Clay Graphite Foundry stoppers in USA.
The Phase 1 of Kandla facility will be completed in H2 of FY'16. These will double the capacity from current 80000 pieces to around 1.6 lakh pieces.
The company is focusing on developing newer products and ranges and higher technology and value addition which will drive the future growth. The company intends to grow and reach more geography and penetrate newer markets and products going forward.
Currently, IFGL caters nearly to 50% of world's steel producing countries and the company intends to expand further to many other countries.
The company is in a very strong position as far as debt equity ratio is concerned which stands at around 0.2. Long term debt stands around Rs 30 crore.
Company's EBIDTA margin has been very fluctuating with low of around 9% and high of around 14.5%. The average Ebidta margin for the company is around 12.5% but with value addition and newer geographies and increase in scale, the margins can cross 14.5%.
Going forward, the company through its initiatives of value addition and new markets will make sure that it will sail through if there is any lower steel production or any lower realization issues in FY 2016.
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