keywords :
Similarly, in terms of other income, they were set off of impairment of investment etc. so, broadly the interest recognition and investment impairment etc. cancel each other out. So, these are all accounting entries.
Quarter-on-quarter, there is a slight decline in profitability and that is both on account of ferrochrome prices having cooled off slightly during Q4FY24 and a one off major repairs and maintenance for which two furnaces were shut for a little more than a week. We had to recognise certain expenditure incurred in that regard. Excluding that, we are in a very comfortable zone. We continue to have a strong balance sheet, the net worth of the company has crossed ₹2,000 crore during the financial year under review and we are quite well placed to execute on our expansion plans.
Q: Ferrochrome prices a little subdued and as per our calculations going by the volumes and the sales number, it was approximately ₹1,02,000 to ₹1,03,000 for the past quarter. But we are looking at the global trends and appears that ferrochrome prices have spiked up. So for the next two quarters, that's quarter one and quarter two, what is the average realisation because some of these contracts will get locked in?
A: Our contracts, in some cases, are locked in for a quarter and for the Chinese market, the little tonnage that we sell is priced every month. But broadly, if you look at that for Q4FY24, our average realisation was roughly about ₹1,02,000. For the ongoing quarter, we expect prices to be higher by about ₹3,000 to ₹4,000 a tonne. For the first half of the year, and as we don't really go beyond predicting two quarters at a time, for each of the quarters, I would comfortably predict an EBITDA higher than ₹150 crore. That will see us improve our performance sequentially and the big jump will come a year and a half from now, when we actually are able to commission our expansion projects.
Q: How much of the increase will actually flow through to the EBITDA, what's the kind of EBITDA per tonne target that you have for this year?
A: So, ferrochrome is somewhat cyclical and tends to be volatile. The advantage for us is that we have captive chrome ore which means that we are shielded from the most egregious impact of raw material price increases. That being said, the margins contract or expand basis not just price increases but also where raw material prices stand. From that perspective, we are seeing metallurgical coal prices come down a little bit. We would expect EBITDA margins to be around 20% or a little bit more than that. If you look at FY24, the EBITDA was at about 23%, which is squarely in the middle of our projections.
Q: Are you being conservative? Because as you said, the margins the past year was 23%, I think 20% plus, and ₹150 crore while you have been doing that as well. So for the year, going, by current prices, the way the shortage of chrome ore, I am looking at a couple of producers globally as well some of them are not converting it into ferrochrome, they are selling the ore directly, because that's giving you a better margin, the viability is not there. So what kind of a year could we look at in terms of EBITDA for the past year you have done close to ₹600 crore, now this year will be better at current prices, at current RM cost as well. So you should be working with a number of close to around ₹650 to 700 crore for the year at least?
A: I strongly believe in under-committing and over-performing rather than the other way around. And this is not a forward guidance in the true sense, because you don't know how things can pan out. That is why we quote a number which we are very confident about achieving barring extremely unforeseen circumstances.
The EBITDA for FY24 was ₹650. And in the first half of the ongoing fiscal, we expect to cross ₹300 for sure. Let us see where that takes us. But you are absolutely right that the fundamentals of the ferrochrome industry are such that ferrochrome production is increasingly taking place in China, which is a relatively high cost producer. And that acts as a floor on prices, and a floor at a level which gives us a fairly healthy EBITDA margins. I am quite sanguine about the year ahead. But it is prudent for us to look at the first half of the year, give a number which we are very confident of achieving, and see how much better that we can do beyond that.