Indsil Hydro Power & Manganese Ltd Management Discussions

[Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company is a part of the ferro alloy industry. Ferro alloys refer to a range of compounds that find application in producing steel and stainless steel. Manganese, chrome and silicon alloys form a majority of the bulk of ferro alloys produced. While chromium alloys are used in the production of stainless steel, manganese alloys are used in the production of steel and some specialized grades of manganese alloys are used in specific grades of stainless-steel making.

Your Company on a standalone basis produces high carbon silico manganese.

B. OPPORTUNITIES AND THREATS

The Company now operates 2 silico manganese smelters viz., in Palakkad, Kerala and Vizianagaram, Andhra Pradesh. The Company also operates a 21 MW captive hydro electric power plant in Idukki District, Kerala.

The hydroelectric power plant has been built on a 30 year build own operate and transfer (BOOT basis) and according to the terms of agreement, the Company has to handover the hydroelectric power project to KSEBL on a free of cost basis at the end of the 30 year period. The BOOT period approximately ends around July 2030. The manganese smelter is completely dependent on power from the hydroelectric power operations to remain profitable. At the end of the hydroelectric BOOT period, the ability of the Companys manganese smelting plant located in Palakkad to run independently without captive power from its hydro electric power plant will come under question.

In this context, it is pertinent to note that the land on which the smelting complex located is developing as a residential locality with rapid urbanisation in the outskirts of Palakkad. The Company shall analyse and introspect the prospects of monetising the said freehold lands by venturing into any real estate developments at the end of the hydro electric plant BOOT period.

As far as the immediate forthcoming year is concerned, markets remain stable helping the core operations and strong monsoons augurs well for the hydroelectric power plant. Further, with the stable power prices in Andhra Pradesh, overall EBIDTA levels for the smelting part of the business is expected to remain healthy in the coming financial year.

After sale of its entire stake of 50% in Al-Tamman Indsil Ferro Chrome LLC, a joint venture (JV) in the Sultanate of Oman in the previous calendar year, your Company has now become 100% debt free. Cash accruals from operations and JV stake sale is helping in creation of significant cash reserves, which can be deployed for investments in related activities at its Vizianagaram location or enhance dividends to shareholders. In this context, it would be pertinent to note that your Company recently invested in expansion of its Metal Recovery Plant (MRP) at the Palakkad location.

Apart from the above, your Company is in the process of evaluating other business opportunities and required investments for the same. Depending on such investment decisions, the management will take appropriate decisions from time to time on distribution of any surplus cash accruals. Complete repayment of debt and stable cashflow generation from the business is set to help the company become a regular dividend paying company going forward.

Threats

Given the fact that the industry is more or less stable, the only possible threat for the Company in terms of margins is the possibility of a poor monsoon performance, which at this stage, looks quite unlikely. On a macro level, as long as the steel industry is adequately protected from dumping, we expect demand conditions to remain strong and favourable.

C. SEGMENT WISE PERFORMANCE - SMELTER DIVISION

The table given below gives the operational details of the two segments of your Company viz., ferro alloy segment and power segment.

Particulars	Ferro Alloy	Hydro Power
Production (MT) / (Units)	17894	44.20 Million Units
Sales (MT) / (Units)	17816	44.20 Million Units
Revenue in Lakhs	12755	2139
PBDIT in Lakhs	7667	2072

Your Company earned EBITDA of 97.39 Crores during the year 2024-2025..

POWER DIVISION

As far as the Hydro Power Station is concerned, the power generation was 44.20 million units and as compared to the previous year 36.61 million units and as compared to average generation of 41.19 Million Units per year.

D. OUTLOOK

Already dealt with.

E. RISKS AND CONCERNS

Already dealt with under threat.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

i) COST CONTROL

Every single cost item goes through a thorough internal audit and in several stages as well. As part of the cost control system, every single aspect of costs goes through stringent pre-expenditure checks and audits as well.

ii) OPERATIONS

Process and deliverables pass through stringent control systems on a continuous basis. These systems are highly adequate and infact play a vital role in productivity, growth, efficiency, improvement etc.,

G. CAUTIONARY FORWARD-LOOKING STATEMENTS

The Company makes forward-looking statements that are subject to risks and uncertainties. All statements that address expectations or projections about the future, including, but not limited to, statements about the Companys strategy for growth, market position and financial results are forward-looking statements.

For those statements the Company cautions that numerous important factors could affect the Companys actual results and could cause its results to differ materially from those expressed in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events.

H. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Particulars	31st March 2021	31st March 2022	31st March 2023	31st March 2024	31st March 2025
I. OPERATING RESULTS:
1. Sales	6,103	20,843	17,682	11,661	12,755
2. Operating Profit (PBIDT)	1,457	4,613	1,925	693	9,739*
3. Interest	1,950	1,572	1,358	1,179	326
4. Depreciation	692	509	421	344	297
5. Taxes	(353)	(730)	670	65	1,508
6. Net Income (PAT)	(3,744)	3,263	(524)	(896)	7,607
7. Dividend Percentage	-	-	-	-	5.00%
Dividend Amount	-	-	-	-	138.96
8. Production
Ferro Alloys (MT)	8,688	19,990	20,480	16,531	17,894
Power (Lakh KWH)	473.1	603.10	639.24	366.10	442

* Includes profit from sale of stake in Joint Venture

II. PERFORMANCE PARAMETERS

Particulars	31st March 2021	31st March 2022	31st March 2023	31st March 2024	31st March 2025
1. Share Capital	4,279	4,279	4,279	4,279	2,779
2. Reserves & Surplus	6,922	10,037	9,423	8,438	15,682
3. Secured Loans	13,967	10,658	10,499	9,474	-
4. Deferred Liabilities / (Asset)	(146)	(877)	(933)	(868)	(623)
5. Fixed Assets (Gross Block)	21,774	15,976	15,993	13,454	13,466
6. Accumulated Depreciation	(12,885)	(9,478)	(9,885)	(8,320)	(8,538)
7. Investments	4,044	3,997	3,996	3,971	1,757
8. Net Current Assets	2,523	5,919	3,880	8,580	10,895

 

Particulars	31st March 2021	31st March 2022	31st March 2023	31st March 2024	31st March 2025
III. RATIOS
1. Profit after tax / sales (%)	(61.36)	15.65	(2.96)	(7.68)	59.65
2. Return on Net Worth (%)	(33.43)	22.79	(3.82)	(7.04)	41.21
3. Earnings per Share ( )	(13.47)	11.74	(1.88)	(3.22)	27.38
4. Cash Earnings per share ( )	(10.98)	13.57	(0.37)	(1.98)	28.44
5. Debt Equity Ratio	1.25	0.74	0.77	0.74	Nil
6. Book Value Per Share ( )	40.30	51.51	49.30	45.76	66.43

I. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Number of people employed - 199

Your Company has always endeavoured to retain quality manpower talent. Conscious efforts are on to develop a Human Resource (HR) policy, accordingly, giving thrust for effective participation of potential human resources at all levels in the activities of the Company.

The HR policy has been designed so as to give thrust on a transparent and performance-driven work culture which ensures challenges and opportunities for the deserving.

The Company in fact, adopts intensive selection process to ensure that best talents with great attitude are recruited so that the culture of teamwork and dedication remain intact.

J. FINANCIAL RATIOS

The Key Financial ratios of the Company are given below with explanation in case of significant changes

Financial Ratio	FY 2024-25	FY 2023-24	% Change in FY 2024-25 compared to FY 2023-24	Reason for change
Debtors Turnover (Days)	3	8.24	(63.60)	The change was on account of sale of stake in Al-Tamman Indsil Ferro Chrome LLC, a joint venture in the Sultanate of Oman which yielded substantial profits
Inventory Turnover (Days)	318	354	(10.17)
Interest Coverage (Ratio)	29	(30)	196.6
Current Ratio	5.37	2.18	146.3
Debt Equity Ratio	-	0.74	NA
Operating Profit Margin (%) (EBIDTA after OCI and exceptional item / Total Revenue)	0.77	0.06	1183.33
Net Profit Margin (%)	0.60	(7.42)	108
Return on Net Worth (%) (PAT after OCI / Net Worth)	0.42	(6.80)	106