MOIL August 2024 Concall Highlights: Strong Performance and Growth Outlook
Manganese Ore India Limited (MOIL), a Government of India Enterprise, showcased a strong performance in its latest earnings, achieving record production and sales figures in FY24. The company's investors' and analysts' meet held on August 23, 2024, highlighted MOIL's robust operational performance, expansion plans, and strategic initiatives to capitalize on the growing demand for manganese ore in India and beyond.
a. Financial Performance:
MOIL reported a stellar performance in FY24, with key metrics surpassing previous records. The company achieved its best-ever production of 1.756 lakh tons of manganese ore, representing a 35% year-on-year (YoY) growth. Sales also reached a record high of 15.36 lakh tons, marking a 30% YoY increase. Consequently, MOIL's turnover touched INR1449.42 crore, an 8% YoY growth. Notably, MOIL's capital expenditure (capex) of INR316 crore exceeded its profit after tax for the year, demonstrating the company's commitment to expanding its production capacity and operational efficiency.
The first quarter of FY25 continued this positive trend, with MOIL recording its best-ever quarterly revenue of INR492 crore, a 30% YoY increase. Quarterly sales also reached a record high of 4.53 lakh metric tons, a 15% YoY growth.
b. Operational Updates:
MOIL emphasized its focus on both brownfield and greenfield projects to enhance production and explore new mining opportunities. The company has signed Memoranda of Understanding (MoUs) with Gujarat Mineral Development Corporation (GMDC), Chhattisgarh Mineral Development Corporation, and the Madhya Pradesh government to explore manganese ore deposits in these states. Exploration has commenced in Chhattisgarh and is underway in Madhya Pradesh.
Management highlighted its skilled workforce and experienced leadership team as key assets. The company has been able to achieve a 35% growth in its operations and is targeting a further 14-15% growth in the current financial year. With India's steel production set to reach 300 million tons by 2030, necessitating approximately 11 million tons of manganese ore, MOIL aims to contribute 32% of this requirement by 2030, up from its current share of around 20-21%.
c. Management Insights:
Ajit Kumar Saxena, Chairman and Managing Director of MOIL, outlined the company's vision and strategy. He highlighted the company's 120-year legacy, its leadership position in the Indian manganese ore industry, and its commitment to sustainability through renewable energy sources. Mr. Saxena expressed confidence in MOIL's ability to achieve its growth targets, stating, "We are confident that we will be crossing 2 million tonnes target this year."
Ashwini Das, AGM Finance, provided details on the company's financial performance, growth strategy, and environmental initiatives. He emphasized the company's commitment to value creation, community development, and environmental protection. Mr. Das stated, "In today's presentation, we will cover our current performance, our growth strategy, and the exciting developments in the horizon."
d. Strategic Initiatives and Future Plans:
MOIL's primary strategic focus is on expanding production capacity, achieving ambitious growth targets, and exploring new avenues for growth. The company aims to increase its production by 20% in the current year and achieve a target of 3.5 million tons by 2030. This includes leveraging its existing mines and developing new projects. MOIL is pursuing joint ventures and exploring new mines to realize its growth ambitions.
Management also discussed its commitment to expanding its environmental clearances. By 2030, the company aims to secure clearances for 5 million tons of production. MOIL is actively investing in modernization and mechanization to enhance operational efficiency and reduce its carbon footprint.
e. Q&A Session Highlights:
Growth and Production: Several questions focused on MOIL's ambitious production targets. Management addressed concerns about the timeline for achieving these targets, clarifying that it depends on various factors such as environmental clearances, equipment commissioning, and the exploration of new mines.
Environmental Clearances & EC Expansion: The company provided insights into its plans for expanding its environmental clearance (EC) limits. They outlined a roadmap for applying for incremental ECs over the next few years.
Price Hikes & Realization: Management clarified the reasons behind the difference between announced price hikes and realized blended realization. It was attributed to the variability of grades and demand for different grades of manganese ore.
Cost Optimization & Employee Costs: Several questions delved into the company's cost optimization efforts and employee cost management strategies. Management highlighted the role of operational efficiency improvements and manpower redeployment in controlling costs.
Global Market Conditions & Competition: Questions were asked regarding the impact of the South 32 disruption on global manganese supply and demand and MOIL's strategies to compete in the global market. Management indicated that while disruptions occur, the overall manganese ore market remains relatively stable.
Conclusion:
MOIL's August 2024 concall highlighted the company's strong performance in FY24 and its ambitious growth plans for the coming years. The company is leveraging its leadership position in India's manganese ore industry, strategic initiatives, and a skilled workforce to capitalize on the growing steel industry and drive its expansion. While challenges such as environmental clearances and global market dynamics exist, MOIL's management exuded confidence in achieving its targets and delivering value to its shareholders. The company's strong focus on operational efficiency, sustainability, and exploration positions it well for continued growth in the future.
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