The Hindu Business Line : Monnet Ispat Q4 net, sales fall

“Demand in the first quarter has slackened a bit. With the grim power scenario, steel manufacturers are not able to run furnaces at full capacities. There has been a realisation drop of 10-15 per cent in the last month,” said Mr Amitabh Mudgal, Vice-President, Corporate Affairs and Marketing, Monnet Ispat and Energy.

Monnet Ispat reported lower net profit of Rs 50 crore for the fourth quarter of the financial year 2008-09 compared with Rs 57 crore reported in the corresponding quarter of the previous year. Net sales fell to Rs 370 crore (Rs 381 crore).

Net profit for the year ended March 2009 was Rs 216 crore, up nearly 30 per cent from Rs 166 crore reported in the previous financial year. Net sales were Rs 1,549 crore (Rs 1,159 crore), a rise of 34 per cent.

The board of directors informed the Bombay Stock Exchange that it has allotted 90 lakh warrants at Rs 201.50 each to the promoters of the company with the right, on exercise, to apply for 90 lakh equity shares of Rs 10 each at a premium of Rs 191.50 a share and exercisable within 18 months from the date of issue.

Coal mining

The company recently entered into a joint venture partnership with Madhya Pradesh State Mining Corporation Ltd (MPSMC) for coal mining from Morga III block. Under the agreement, MPSMC will have 51 per cent cashless equity in the joint venture, and receive a facilitation fee of 600 per cent of royalty. The reserves at the mine are estimated at over 35 million tonnes.

Monnet Ispat is looking to invest Rs 50-70 crore over two years in this block. According to Mr Mudgal, the final coal will work out to about Rs 2,000 a tonne, allowing for a saving of Rs 500-600 a tonne. While the Government has rated the annual capacity of the mine at 0.5 million tonnes, Monnet expects to ramp it up to 1 million tonnes. The company’s own facility in Chhattisgarh is not far from these mines, and it will use the coal for captive use and could also consider selling it. Monnet Ispat’s 0.8 MTPA sponge iron facility is being expanded in a phased manner to a 1.5 million tonne capacity.

“While the economy has slowed us a little, we will be adding 0.2 MTPA by March 2010, and the remaining by the end of 2010,” said Mr Mudgal.