MOIL targets manganese production at 12 lakh tonne for FY12

In an interview with CNBC-TV18, KJ Singh, the chairman and managing director of MOIL said the company has achieved its targeted production for the second quarter of FY12.

For the second half of FY12, he said they are targeting production of 6 lakh tonne. “Hence, for the year, the production should stand at around 12 lakh tonne,” he added.

Below is an edited transcript. for more.

Q: We have seen a very sharp decline in the global prices of Manganese Ore. What is the outlook with respect to the prices and what realisations might MOIL see in the second half now?

A: Our second quarter production is very good. We have achieved production target of 230,000 tonne which is as per the expectations of the MoU that we signed with the Government of India. Our sales turnover is Rs 250 crore. Our Profit Before Tax (PBT) is at Rs 151 crore and PAT is Rs 100 crore.

For the six monthly performance our production is 470,000 tonne. In terms of production and sales it is at 493,000 tonne. The sales turnover is Rs 458 crore, the PBT is Rs 314 crore and the PAT is Rs 208 crore.

Q: Your employee cost on a year on year basis is up 30%. On a sequential basis also it’s up by 11%. Is that something that will continue into the next quarter?

A: Now it will come down because the production of any mining company increases during the last six months. So, the production cost will go down further.

Q: What can we see by way of volumes or production for H2 and with realisations? Given that prices have come down so much are we likely to see a decline in realisations?

A: The production will be more than 6 lakh tonne and the total production for the year will be around 12 lakh tonne. Because there is a reduction in the prices of Manganese Ore by almost 40%, we are still hopeful that we will be able to achieve our sales realisation target of Rs 935 crore which will be hardly 25-20% less than the last year’s sales turnover. Although the prices have gone down by 40% our realisation will hardly be 20% less than the last financial year.

Q: When might we see a possible pricing recovery?

A: At this stage it is difficult to tell as there is no further reduction in prices. It depends upon steel prices. If steel prices increase, naturally the price of Manganese Ore will also go up. This is because 90% is dependent on steel.

Q: You were allotted some 800 plus hectares of land in Maharashtra for a greenfield mining project. Give us an update on that?

A: Yes, it’s very positive. Out of 814 hectares, 645 hectares has already been cleared by Maharashtra government for prospecting license (PL). Now it will go to the Centre for clearance. As soon as it comes from the Centre we will start exploration in that area. The Maharashtra government has moved fast in this area.