Odisha-based ferro chrome manufacturer Indian Metals & Ferro Alloys Ltd (IMFA) is hopeful of getting land allocation for its proposed ₹550 crore greenfield expansion project at Kalinganagar in Odisha by next month. It plans to commence work on the project in 2022.

According to Subhrakant Panda, Managing Director, IMFA, the company had received the State government’s approval for its one lakh tonne expansion project in 2019. But, the plan was put on hold due to the Covid-19 induced pandemic. IMFA, which has manufacturing complexes in Therubali & Choudwar in Odisha, has a total capacity of 2,84,000 tonnes.

“Though we had received the State government’s approval for the project in 2019, we had to put the plan on backburner due to the pandemic. We are waiting for land allocation from government which is likely to happen by next month. We hope to commence work on the project before the end of calendar year 2022,” Panda told BusinessLine .

The project would be partly funded by internal accruals and partly by debt.

The company expects a surge in sales turnover and profitability during the current fiscal backed by a steady demand and a spike in ferro chrome prices. Ferro chrome is used in the production of stainless steel.

Net profit up

For the quarter ended September 30, 2021, the company witnessed 49 per cent growth with a turnover of ₹ 653 crore, as against ₹438 crore during the same period last year.

It is to be noted that ferro chrome prices, which were ruling around ₹60,000-65,000 a tonne in September last year, increased to as high as ₹ 1,00,000 (one lakh) a tonne in second quarter of this fiscal. While the company’s ferro chrome production has been largely steady at around 64,528 tonnes, the steep increase in prices pushed up both turnover and profitability.

Net profit during the quarter under review grew by nearly 222 per cent at ₹ 145 crore, as against ₹45 crore during the same period last year.

Ferro chrome prices

Ferro chrome prices have been firming up steadily on the back of reduced raw material supply and in anticipation of a pick-up in demand from the stainless steel industry. Production of chrome ore, which goes into making ferro chrome, was impacted due to Covid-induced lockdown, thereby pushing up prices. “We have clear visibility in terms of ferro chrome prices during the ongoing quarter as well as the next quarter. The demand also continues to remain strong so we are bullish about a good growth in both our topline and bottomline this year,” he said.

The company expects to close the current fiscal with a turnover of ₹ 2100-2200 crore.

Also read: Indian Metals & Ferro Alloys bullish on spike in ferro chrome prices

Nearly 90 per cent of its total production is currently exported to the Far East countries including China, Japan and Taiwan. It has long-standing relationships with multi-nationals like POSCO of South Korea, Marubeni Corporation and Nisshin Steel of Japan and leading stainless steel producers in China and Taiwan. “As and when domestic demand grows which we expect would happen soon given the government’s thrust on infrastructure sector, we will reorient ourselves to meet the domestic demand. Our expansion plan will also help us in achieving this,” he said.

The company expects the share of domestic market to increase to around 20-30 per cent, up from the current 10 per cent, backed by an increase in consumption of stainless steel. In India, Jindal Stainless and Shah Alloys are some of its leading customers.

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