Indian Metals & Ferro Alloys: Covering the Entire Value Chain

“With a market valuation of over INR1,500 crores, the company operates in the metal and mining industry business space. With 190 MVAs installed in its capacity and 204.5 megawatt captive power generating capacity, that includes 4.55 Mw solar power, and enormous chrome ore mining tracks, IMFA is India’s foremost fully integrated manufacturer of quality ferrochrome. The company’s business portfolio includes the manufacturing chain, the mining of chrome ore, the production of electricity and smelting of ferroalloys”

– In Q4FY23 Results ConCall

Stock Data
Ticker	IMFA
Exchange	NSE
Industry	METALS

Price Performance
Last 5 Days	+4.04%
YTD	+24.17%
Last 12 Months	+19.31%

*As of 11.07.2023

Company Description:

Indian Metals & Ferro Alloys Ltd. (IMFA) is a leading Indian company engaged in the production of ferroalloys, power, and mining operations. Founded in 1961, IMFA has grown to become one of the largest integrated producers of ferrochrome in India.

Ferroalloys Production: IMFA operates state-of-the-art facilities for the production of high-quality ferroalloys. The company’s production facilities include electric arc furnaces, submerged arc furnaces, and captive power plants. IMFA has a significant production capacity for ferrochrome and produces other ferroalloys such as ferrosilicon, ferromanganese, and ferrovanadium.

Mining Operations: To secure a consistent supply of chromite ore, IMFA operates chromite mines in Odisha. The company holds mining leases for chromite reserves, ensuring a reliable source of raw material for its ferrochrome production. IMFA’s mining operations adhere to strict environmental and safety standards.

Power Generation: IMFA operates captive power plants with a combined capacity of several megawatts. The company utilizes waste heat generated during the ferrochrome production process to generate electricity. This integrated approach reduces energy costs and enhances operational efficiency.

Financial Results:

Indian Metals & Ferro Alloys Ltd reported Revenues for Q4FY23 of ₹637.00 Crores down from ₹757.00 Crore year on year, a fall of 15.85%.

Total Expenses for Q4FY23 of ₹536.00 Crores down from ₹619.00 Crores year on year, a fall of 13.41%.

Consolidated Net Profit of ₹64.00 Crores down 55.24% from  ₹143.00 Crores in the same quarter of the previous year.

The Earnings per Share is ₹11.87, down 55.09% from ₹26.43 in the same quarter of the previous year.

Key Strengths:

• Integrated Operations: IMFA benefits from its vertically integrated operations, encompassing mining, ferroalloys production, and power generation. By owning and operating chromite mines, the company ensures a reliable and cost-effective supply of raw materials for its ferroalloys production. This integration helps in reducing dependency on external suppliers and ensures greater control over the supply chain.

• Strong Market Position: IMFA is one of the largest integrated producers of ferrochrome in India, which provides it with a significant market presence and bargaining power. The company has established long-standing relationships with customers, both domestically and internationally, due to its consistent product quality and timely deliveries.

• Technological Expertise: IMFA employs advanced technologies and processes in its ferroalloys production, resulting in high-quality products and operational efficiency. The company’s modern facilities, including electric arc furnaces and submerged arc furnaces, enable it to achieve economies of scale and maintain a competitive edge in the market.

• Captive Power Plants: IMFA operates captive power plants, utilizing waste heat generated during the ferrochrome production process to generate electricity. This enables the company to reduce its energy costs and enhance operational efficiency. The captive power plants also provide a reliable and uninterrupted power supply, reducing dependence on external sources.

• Strategic Location: IMFA’s strategic location in Odisha, India, provides proximity to abundant chromite reserves, facilitating cost-effective mining operations. The region also offers access to transportation infrastructure, such as ports and rail networks, enabling efficient distribution of products to domestic and international markets.

Key Challenges:

• Fluctuating demand: The demand for ferro alloys is cyclical, which means that it can fluctuate significantly from year to year. This can make it difficult for IMFA to plan its production and sales.
  
• Competition from China: China is a major producer of ferro alloys, and it has been accused of dumping ferro alloys in the global market. This has put downward pressure on prices and made it difficult for IMFA to compete.
  
• Environmental regulations: The ferro alloys industry is a major polluter, and there are increasing environmental regulations in place. These regulations could increase the cost of production for IMFA and make it more difficult to compete.
  
• Rising cost of raw materials: The cost of raw materials, such as chromium ore and manganese ore, has been rising in recent years. This has put pressure on IMFA’s margins.