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 specialised varieties of Manganese Alloys, regular Manganese Alloys and Ferro Chrome.

ATIFC generated EBIDTA of USD 67,22,267 which amounted to Rs. 52.29 Crores during the year 2018. Also your Companys standalone EBIDTA was Rs. 31.14 Crores during the year 2018-19. Top line on a consolidated basis was Rs. 665 Crores.

B. OPPORTUNITIES AND THREATS

The biggest threat is the ongoing US-CHINA trade war that is taking a toll on all metal related commodities.

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 Thermal Power Total
Production (MT) / (Units) 25503 53.49 Million Units Nil 53.49 Million Units
Sales (MT) / (Units) 25811 54.32 Million Units Nil 54.32 Million Units
Revenue in Rs. Lakhs 22364 2412 Nil 24776
PBDIT in Rs. Lakhs 893 2261 (-39) 3115

Your Company earned EBITDA of Rs. 83.46 Crores on a Consolidated basis.

The smelter division struggled to maintain adequate operating margins on account of the global recession in the industry.

POWER DIVISION

As far as the Hydro Power Station is concerned, the power generation was 53.49 Million Units and as compared to the previous year 29.46 Million Units and as compared to average generation of 34.97 Million Units per year.

D. OUTLOOK

The industry scenario looks bleak. The domestic economy is weak and the US-CHINA trade war has made the global metals economy also extremely weak. In such challenging times, it is very difficult to predict a medium or a long term outlook.

E. RISKS AND CONCERNS

Markets for manganese have been volatile recently. It has now become a very difficult task to predict a sustained movement of the markets on the upside or downside. However, the Company has gradually been reducing its dependence on fortunes linked to the manganese industry in India.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

a) 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.

b) 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. FUTURE PROSPECTS

Already explained under "Opportunities and Threats".

H. CAUTIONARY FORWARD-LOOKING STATEMENTS

The Company makes forward-looking statements that are subject to risks and uncertainities. 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.

I. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Rs. in Lakhs

Particulars 30th June, 2015 30th June, 2016 30th June, 2017 31st March, 2018 31st March, 2019
(9 months)
I. OPERATING RESULTS:
1. Sales 11,112 6,527 11,560 29258 22365
2. Operating Profit (PBIDT) 2,433 1,165 1,395 3794 3113
3. Interest 505 381 726 1820 2138
4. Depreciation 427 326 439 615 699
5. Taxes 286 60 (7.02) 177 272
6. Net Income (PAT) 1,215 399 236 1182 4
7. Dividend Percentage 12% 6% 8% 7% -
Dividend Amount 191 95 127 194.38 -
Dividend Tax - - - - -
8. Production
Ferro Alloys (MT) 11,173 8,107 15,685 37421 25503
Power (Lakh KWH) 505 269 118 549.30 534.90

Rs. in Lakhs

Particulars 30th June, 2015 30th June, 2016 31st March, 2017 31st March, 2018 31st March, 2019
(9 months)
II. PERFORMANCE PARAMETERS
1. Share Capital 1,589 1,589 1,589 4,277 4,277
2. Reserves & Surplus 7,926 8,230 8,339 16,270 13,036
3. Secured Loans 2,633 3,503 2,844 13,685 12,875
4. Deferred Liabilities 1,491 1,462 165.51 630 313
5. Fixed Assets (Gross Block) 9,577 9,620 9,813 18,644 20,954
6. Accumulated Depreciation (5,817) (6,142) (6,581) (10,897) (12,182)
7. Investments 2,192 2,192 2,226 4,687 4,048
8. Net Current Assets 4,099 5,494 5,975 10,509 5,643

 

Particulars 30th June, 2015 30th June, 2016 31st March, 2017 31st March, 2018 31st March, 2019
(9 months)
III. RATIOS
1. Profit after tax / sales (%) 10.93 6.12 2.05 4.04 0.01
2. Return on Net Worth (%) 12.77 4.07 2.39 5.76 0.03
3. Earnings per Share (Rs.) 7.65 2.51 1.49 7.44 0.02
4. Cash Earnings per share (Rs.) 10.33 4.67 4.25 11.31 2.53
5. Debt Equity Ratio 0.23 0.31 0.29 0.67 0.65
6. Book Value Per Share (Rs.) 59.89 61.80 62.49 73.99 62.35

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

Number of people employed – 275

Your Company has always endeavoured to retain quality man power talent. Conscious efforts are on to develop a 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 team work and dedication remain intact.

K. FINANCIAL RATIOS

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

Financial Ratio FY 2018-19 FY 2017-18 % Change in FY 2018-19 compared to FY 2017-18 Reason for change
Debtors Turnover (Days) 42 32 9
Inventory Turnover (Days) 244 166 78
Interest Coverage (Days) 412 637 (225.28)
Current Ratio 1.36 1.75 (0.39)
Debt Equity Ratio 0.65 0.67 (0.02) The smelter division struggled for operating margins due to global recession coupled with stoppage of Unit III of the Company at Raipur
Operating Profit Margin (%)(EBIDTA aftee OCI and exceptional item / Total Revenue) 0.13 0.12 0.01
Net Profit Margin (%) 0.00 0.04 (0.04)
(PAT after OCI / Total Revenue) - - -
Return on Net Worth (%) (PAT after OCI / Net Worth) 0.00 0.06 (0.06)

 

For and on behalf of the Board
VINOD NARSIMAN S N VARADARAJAN
Place : Coimbatore Managing Director Vice-Chairman
Date : 19th November, 2019 DIN:00035746 DIN:00035693