moil ltd share price Management discussions


The Management Discussion and Analysis Report (MDAR) aims to elucidate the developments in the business environment, performance of the company in comparison to last report and the future outlook. MDAR is a part of the Boards Report. The performance of a company is linked with various factors including demand, supply, climatic conditions, economic conditions, political conditions, Government regulations and policies, taxation, pandemic and natural calamities, which are beyond the control of the company and could make a significant difference to the Companys operations. Owing to this, certain statements made in this report pertaining to projections, outlook, expectations, estimates, etc., may eventually differ from actuals.

A. Industry structure and market scenario

Over 95% of the worlds production of manganese is utilized in steel making to increase strength of steel, abrasion resistance, hardenability, etc. The Indian steel industry has entered into a new development stage, post de-regulation, riding high on the resurgent economy and rising demand for steel.

Rapid rise in production has resulted in India becoming the 2nd largest producer of crude steel during last four years (2018-2021), from its 3rd largest status in 2017. The country was also the largest producer of Sponge Iron or DRI in the world and the 2nd largest finished steel consumer of its production in the world after China in 2021 (P), based on rankings released by the World Steel Association.

In a de-regulated, liberalized economic/market scenario like India the Governments role is that of a facilitator which lays down the policy guidelines and establishes the institutional mechanism/ structure for creating conducive environment for improving efficiency and performance of the steel sector.

In this role, the Government has released the National Steel Policy 2017, which has laid down the broad roadmap for encouraging long term growth for the Indian steel industry, both on demand and supply sides, by 2030-31. The Government has also announced a policy for providing preference to domestically manufactured Iron & Steel products in Government procurement.

Opportunities for growth of steel private sector:

The liberalization of industrial policy and other initiatives taken by the Government have given a definite impetus for entry, participation and growth of the private sector in the steel industry. While the existing units are being modernized / expanded, a large number of new steel plants have also come up in different parts of the country based on modern, cost effective, state of-the-art technologies. In the last few years, the rapid and stable growth of the demand side has also prompted domestic entrepreneurs to set up fresh greenfield projects in different states of the country.

As per JPC, Crude steel capacity was 154.23 mt in 2021-22 (P), and India, which was the 2nd largest producer of crude steel in the world in 2021, has to its credit, the capability to produce a variety of grades and that too, of international quality standards.

In 2021, global crude steel production reached 1951 million tonnes, up by about 3.83% compared to 2020. However, China, the largest producer of crude steel, the production dropped from 1064.7 million tonnes in the year 2020 to 1032.8 million tonnes in the year 2021, registered a negative growth of 3%. In the same period India registered a growth of 17.85% from 100.3 million tonnes in the year 2020 to 118.2 million tonnes in the year 2021 in crude steel production, India maintained its position as worlds second largest steel producing country.

Consumption of steel in the country also increased compared to last year. The production of total finished steel at 113.60 million tonnes was higher by 18.09% over corresponding period last year (CPLY). The consumption during FY 21-22 (upto Jan 22) was 86.30 million tonnes and in FY20-21 it was 93.43 million tonnes.

During 2021-22, export of total finished steel from India at 13.49 (P) million tonnes increased by 25.14% while import at 4.67 (P) million tonnes have declined by 1.68% over CPLY. During the year, import of manganese ore was at 6.50 million tonnes in comparison of 3.95 million tonnes in 2020-21, registering an increase of 64.56%

National Steel Policy of India, 2017 seeks to create a globally competitive steel industry in India with 300 MnTPA steelmaking capacity and 158 kg per capita steel consumption by FY 2030-31. This would translate into additional consumption of steel making raw material including iron ore, coking, manganese, coal, lignite etc. Similarly, ferro alloys are one of the important inputs in the manufacture of steel and the growth of the ferro alloy industry is, thus, linked with development of the iron and steel industry. With abundant resources, there is good potential of growth in manganese ore and ferro alloy industry in India. Of-late, import of manganese ore is increasing due to increase in production of steel as well as less availability of high grade of ore in country.

As per available indicators, the Steel Industry in India is expected to continue posting double digit growth in the coming years which will definitely create demand for manganese ore.

B. SWOT analysis

MOILs competitive strengths

• Largest producer of manganese ore with market share of ~45% in the country with large reserves of manganese ore.

• Holding majority of total demonstrated reserves of high / medium grade manganese ore in the country.

• Strong financials with high net worth and zero debt.

• Availability of qualified technically skilled manpower with excellent work culture and peaceful industrial relations.

• Manganese reserves are in Central Indian Manganese belt, with deposits being in general, of regular shape.

• Company has got logistical advantage, as all its mines are well connected with State / National Highways. Most of its mines are located with railway network of South East Central Railway and are provided with railway sidings.

• MOIL continues to be an efficient and environment friendly mining Company.


• Delay in obtaining fresh mine leases resulting delay in commissioning of new mines, affects companys expansion/ investment plans.

• As the Company is largely a single product company, any adverse impact on the manganese ore industry will hit the profitability of the Company.

• MOILs mines have narrow ore body and hence full mechanization is relatively difficult.

• The cost of production will also rise due to increasing depth of deposits, revision in wages of regular employees as well as revision in minimum wages for contractual employees.

• Limited reserves of high grade manganese ore compared to global players

• Major production of MOIL comes from underground mines, where the cost of production is higher than opencast mines and cost is on increasing trend, the major portion of cost being manpower cost. Any increase in the cost of UG mining would adversely impact margins. •

• Delay in projects, particularly high speed shaft at Balaghat and Gumgaon mine, due to Covid-19 Pandemic during last two years.


• The Government is committed to attract investments in Indian steel sector from both domestic and foreign sources and facilitate speedy implementation of investment intentions on board, so as to reach desired crude steel capacity level to meet the domestic demand fully and also to ensure easy availability of vital inputs and necessary infrastructure to achieve a projected production as per National Steel Policy.

• India has set capacity target of 300 million tonnes of crude steel by 2030-31 which will create high demand of manganese ore.

• MOIL being Indias largest manganese ore producer, accounts for ~ 45% of the countrys production. With about 94.94 million tonnes of reserves and resources of manganese ore, it is well positioned to capitalize on Indias steel demand growth, given its dominant position, medium- to high-grade ore, centrally located mines and strong and expanding customer base.

• Large demand supply gap in Indian Manganese Ore market presents an opportunity for import substitution.

• Strong financials, i.e., large cash reserves provide opportunity to go for major investment plans. MOIL has already planned large investments for development of its existing mines which will increase the production and productivity to meet the future requirements of manganese ore.

• All expiring mining leases have been further renewed and new leases have been sanctioned by the Governments.

• In the past, an area of 814.71 Ha. was reserved by Maharashtra Government in favour of MOIL for prospecting in Nagpur and Bhandara districts. Recently, after exploration and completing requisite compliances, environment clearance (EC) has been given in respect of 126.84 Ha area in Kodegaon, which is adjacent to MOILs Gumgaon mine.

• MOIL has signed a MoU with Gujarat Mineral Development Corporation (GMDC) to explore the possibilities of mining of manganese ore in Pani area of Chota Udepur dist, Gujarat state. A tripartite MoU between MOIL, GMDC and MECL is also signed to carryout exploration in Pani village. MECL has carried out exploration and proved reserves/resources of manganese ore around 9.5 million tonnes. Based on the exploration work done at Pani project, draft TEFR has been prepared.

• On the basis of Remote Sensing studies carried out by National Remote Sensing Centre (NRSC), Hyderabad in four districts of Madhya Pradesh, viz Balaghat, Jhabua, Jabalpur and Chhindwara, the Govt. of M.P. has reserved area under sub-rule (1) of Rule 67 of the Mineral (other than Atomic Hydrocarbon Energy) Concession Rule 2016 to carry out exploration work in Chhindwara and Balaghat districts and application for reservation has been done in Jabalpur and Jhabua districts. MOIL has identified few blocks in which exploration will be done in the year 2022-23. Elaborate exploration proposal has been prepared from G-4, G-3 and G-2 level of exploration.

• Manganese ore is the fourth largest consumed metal and is used in a variety of industries; from alloy and steel to batteries and catalysts. Manganese ore is essential to iron and steel production by virtue of its sulfur-fixing, deoxidizing and alloying properties. Recent metallurgical developments indicated that, Mn metal can replace Ni in some of the stainless steels mainly 200 series. Besides, one of the fastest growing application sectors of this metal is Lithium Ion Batteries, where EMM has shown a promising material for development of high storage "Manganese Rich Cathode". These technologies have already been commercialized by leading car manufacturers such as GMs Chevy Volt and Nissans Leaf. Any advance development in steel and battery sector will lead to increased demand for high pure electrolytic Mn metal. In order to develop the EMM product domestically Company has sponsored a pilot scale project to CSIR-NML - Jamshedpur for developing a bench scale process for production of Electrolytic Manganese Metal having 99.70% EMM. Similarly, MOIL has sponsored a project at CMET, Pune for development of nanostructured LiMn2O4 as cathode material for lithium ion batteries (LIB) used in EV batteries.

• MOIL is also exploring possibilities of overseas acquisition of mines in order to have a global presence.


• Being a mining Company, MOIL is subjected to extensive regulations surrounding health and safety of the people and environment. With constant evolution of regulatory standards and community expectations, the Company is exposed to increased compliance cost and unforeseen environmental remedial expenses. New wage/labour code is to be implemented which may lead to higher compliance burden.

• Decline in the import price of manganese ore is the biggest threat as it leads to erosion in the profit margin of the company. The international prices are largely dependent on Chinese demand and availability scenario.

• Chinas deceleration, a slowing global economy, and uncertainty surrounding trade policies and the political situation in many regions suggest a possible moderation in business confidence and investment.

• High dependency on only one sector i.e. steel industry

• Any delay in regulatory approvals, may also impact long term growth of the company.

• Higher availability of inventory of manganese ore at international level. If next wave of Covid-19 pandemic comes, it may further impact companys top line and bottom line performance.

C. Outlook

The demand for manganese ore and ferro alloy products depends on the outlook of the steel industry which in turn is dependent on growth of overall economy. The use of manganese in steel is very less in terms of percentage, however, over 95% of the worlds production of manganese is utilized in steel making to increase strength of steel, abrasion resistance, hardenability, etc. Accordingly, demand for manganese ore and ferro alloys would increase with production of steel going up.

World Steel Association (WSA) in its short range outlook for 2022 and 2023 forecasts that steel demand will grow by 0.4% in 2022 to reach 1,840.2 million tonnes after increasing by 2.7% in 2021. In 2023 steel demand will see further growth of 2.2% to reach 1,881.4 million tonnes. The current forecast is made against the backdrop of the war in Ukraine and is subject to high uncertainty.

In 2021, recovery from the pandemic shock turned out to be stronger than expected in many regions, despite continuing supply chain issues and Covid-19 waves. However, a sharper than anticipated deceleration in China led to lower global steel demand growth in 2021. For 2022 and 2023, the outlook is highly uncertain. The expectation of a continued and stable recovery from the pandemic has been shaken by the war in Ukraine and rising inflation.

The magnitude of the impact of Russia and Ukraine conflict will vary across regions, depending on their direct trade and financial exposure to these countries. There is an immediate devastating effect on Ukraine, consequences for Russia, and major impact on the EU due to its reliance on Russian energy and its geographic proximity to the conflict area. The impact will also be felt globally via higher energy and commodity prices - especially raw materials for steel production - and continued supply chain disruptions, which were troubling the global steel industry even before the war. Furthermore, financial market volatility and heightened uncertainty will undermine investment. All these have resulted in higher inflation globally and posing adverse impact on growth plans.

Such global spillovers from the war in Ukraine, along with low growth in China, point to reduced growth expectations for global steel demand in 2022. There are further downside risks from the continued surge in virus infections in some parts of the world, especially China, and rising interest rates. The expected tightening of US monetary policies will hurt financially vulnerable emerging economies. The outlook for 2022-23 is appears very uncertain.

In order to meet the requirement of manganese ore in future and maintain market leadership, MOIL has drawn a Strategic Management Plan-2030 (SMP-2030). As per the SMP-2030, the Company has planned to enhance its production to 3.00 million tonnes by 2030. In this direction, the company is focusing on development and mechanization of its existing mines, sinking new shafts and also adding new leases so that the targeted production can be achieved.

Further, domestic requirement of manganese ore has increased substantially to meet not only increased domestic production of steel but also for export of manganese based alloys. This has continuously made India a net importer of manganese ore.

With its current resource base of ~ 94.94 million MT of manganese ore, MOIL is very well positioned to contribute to the Indias Steel demand growth given its dominant position, medium to high grade ore reserves, centrally located mines and strong customer ties. In order to meet the requirement of manganese ore in future, MOIL is exploring opportunities to get manganese ore mines in different states of the country besides making all possible efforts to covert PL in ML of already reserved manganese ore bearing areas.

D. Risks and Concerns

Manganese ore industry is linked with steel Industry which is cyclic in nature and has impact on demand of manganese ore. Any slowdown in the demand of steel market and over supply from international market at cheaper rates will adversely affect the Indian steel industry. MOIL is a labour intensive organization. Though the industrial relations have been excellent in the Company, the risk factors associated with labour may always play significant role on its production performance.

E. Segment-wise/product-wise sales performance

During the year 2021-22, net sales of manganese ore increased by 22.01% to Rs. 1436.55 crores against Rs. 1177.37 crores in the previous year. During the year 2021-22, the company sold 12.12 lakh MT of manganese ore in comparison to 12.18 lakh MT in the previous year.

Price as well as demand of ferro manganese in the domestic market was comparatively good in 2021-22. Turnover from manufactured products, i.e., ferro manganese (including slag) and electrolytic manganese di-oxide, during 2021-22 was at Rs. 127.65 crores as against Rs. 102.92 crores in 2020-21 showing an improvement of 24%. Sales quantity of EMD has increased from 918 MT in the year 2020-21 to 996 MT in the year 2021-22 but sales of ferro manganese has decreased from 13,367 MT to 10,781MT.

F. Production

During 2021-22, MOIL has produced 12.31 lakh MT of various grades of manganese ore as against 11.43 lakh MT in previous year. Spread of corona virus and various restrictions imposed due to Covid-19 pandemic has affected the production to some extent. The production of EMD was 1,202 tonnes as against the 1,070 tonnes during the previous year. The production of ferro manganese was 10,245 MT as against the 8,851 MT in the previous year. The wind turbine generators have generated 307.45 lakh KwH units during the year as compared to last years 276.09 lakh KwH units.

G. Internal control systems and their adequacy

MOIL has put in place all the necessary internal controls and they are found to be adequate. The Board of the company has also laid down proper internal financial controls. Company is ensuring internal financial controls through SAP, delegation of responsibilities and powers, SOPs, internal audit, internal checks, vigilance, etc.

H. Discussion on financial and operational performance

Despite adverse impact of second and third wave of Covid-19 affecting the operational activities of the Company for almost two months, FY 2021-22 has been one of the best years of performance in the history of MOIL as its turnover at Rs. 1436.31 crores was the second highest-ever turnover.

• Financial performance

Rs. in crores

Particulars 2021-22 2020-21
Revenue from operations 1436.31 1177.38
Other income 79.26 102.47
Total income 1515.57 1279.85
Total expenditure 894.84 890.57
EBIDTA 620.72 339.28
Profit before tax before exceptional item 516.88 290.11
Operating profit before tax and before exceptional item 438.35 187.64
Exceptional item -6.42 50.00
Profit before tax for the year 523.29 240.11
Profit after tax (PAT) 376.98 176.63
Total Comprehensive income for the period 354.79 187.05
Dividend (including proposed dividend) 122.09 175.62
Transfer to general reserve 250.00 0.00
Balance of profit carried over 67.36 139.90

Your Company has recorded total income of Rs. 1515.57 crore during F.Y. 2021-22 as compared to Rs. 1279.85 crore in previous year. Total turnover of the company in FY 2021-22 at

Rs. 1436.31 crores registered growth of ~22% in comparison to previous years turnover of Rs. 1177.38 crores. Profit before tax (before exceptional item) for the year increased by ~ 78.17% to Rs. 516.88 crore in comparison to previous years PBT of Rs. 290.11 crore. The Company has earned a profit after tax (PAT) of Rs.376.98 crore as against Rs. 176.63 crore in the previous year recorded increase of 113.43%. Despite affecting operations for initial period of two months of the financial year, the operating profit has increased by 133.61 % from Rs. 187.64 crore in the year 2020-21 to Rs. 445.32 crores in the year 2021-22.

EBITDA margin of the company has been at 43.70% during the year in comparison to last years margin of 28.82% due to better realisation. Other income including interest was Rs. 79.26 crore lower than the last year of Rs. 102.47 crore, mainly on account of reduction in average rate of interest and cash out-go in buy-back of shares of the company..

Key financial ratios

Ratios 2021-22 ^2020-21
Debtors turnover (Days) 23 20
Inventory turnover (Days) 25 24
Current ratio (Times) 3.81 4.68
Operating profit margin (%) 31.00 15.94
Net profit margin (%) 26.25 15.00
EBIDTA to sales turnover (%) 43.70 28.82
Return on net worth (%) 15.20 6.33

• Operational performance

During F.Y. 2021-22, MOIL has achieved production of 12.31 lakh MT in FY 2021-22 as against 11.43 lakh MT in last year, an increase of ~ 8%. Spread of corona virus and various restrictions imposed due to Covid-19 pandemic has affected the production to some extent. Despite that, MOIL has recorded best ever high grade ore production of 6.53 lakh

MT and sales of 6.65 lakh MT during the year. F.Y. 2022-23 was excellent in term of sales realisation. During the year, average sales realization was higher by 22.45% at Rs.10,735 per MT as against Rs. 8,767 per MT in previous year. Sales quantity of manganese ore was 12.12 lakh MT in the F.Y. 2021-22 which is almost at the same level of FY 2020-21, i.e., 12.18 lakh MT. EMD production has increased by 12.34% to 1,202 tonnes as against the 1,070 tonnes during the previous year and that of ferro manganese by 15.75% to 10,245 MT as against 8,851 MT in the previous year. The operating profit also has increased by 131.61% from Rs. 187.64 crore in the year 2020-21 to Rs. 445.32 crores in the year 2021-22.

I. Material developments in human resources, industrial relations front, including number of people employed

MOIL employees are very dedicated and loyal to the Company. The employees in general have remained with the Company through thick and thin. On the part of the management, it is ensuring all-round comfort levels to its employees, including the required training at all levels based on the need. During 2021-22 the Ministry of Steel approved the wage revision for the unionised employees of MOIL. Tripartite settlement for implementation of same was signed on 16th November, 2021, in presence of Chief Labour Commissioner (CLC) and the same was also implemented. The Wage settlement will be effective for next 10 years from 1.08.2017 to 31.07.2027. The financial implication of the wage revision is Rs. 90 crores per annum, for which adequate provisions have been made in the books of accounts.

It is worth highlighting that industrial relations have been cordial all along during the year. Issues, if any, are sorted out through bipartite discussions at appropriate forum. The cooperation and support of workmen represented by the employees Unions in this regard is praiseworthy.

As on 31st March 2022, total employee strength is 5789. Details are in the Boards report.