Robust demand, quality manganese positive for MOIL: CMD

KJ Singh, chairman & managing director, MOIL, says that our revenue realisation for this year is Rs 7515 due to decline in manganese price across the world and the company has adopted international pricing model in domestic market so there was downtrend in the price. 

Now, there is a price and production cut by many large companies all over the world. So, we are expecting very good prices in India. Moreover, we are able to match the quality of international manganese ore so we have very good future.

Below is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video.

Q: What was the average realisation in this quarter? How have they improved in Q4 and how is the international price situation looking at this point?

A: Our revenue realisation for this year is Rs 7515 due to decline in manganese price across the world and the company has adopted international pricing model in domestic market so there was downtrend in the price. There is a price decline from 50% to 40% in 2011-12.

Q: Was there any kind of quarter on quarter improvement over Q3?

A: Our Q4 production is 3,15,000 metric tonne compared to 2,85,000 metric tonne in Q3. Dispatches in Q4 was 336000 tonne whereas in the Q3 it was 2,97,000.

Q: Post price hike, how much the company plans to increase the price and what will be the volume realisation in FY13?

A: In the Q1 of FY12-13 we have increased the price from 5% to 12.5% of different items and we expect the prices will firm up and we will have better performance in FY12-13.

Q How is the current demand situation after taking a price hike? Could it be easily absorbed in the current lackluster situation that we are seeing from steel companies?

A: Production of steel company is also increasing. In the last financial year the production of steel was 67-68 million tonnes whereas in FY12 production went up to 70-71 million tonnes and 95% of our product is used in steel making. So, we have a good future for manganese in coming year.

Q: Last year, the supply outstripping demand and the gap was significant at 12-13 million tonne. Do you think the situation will reverse this year? Do you expect prices to be largely stable but unlikely to move up significantly?

A: Last year, there was excess production but this year the excess production has reduced. Now, there is a price and production cut by many large companies all over the world. So, we are expecting very good prices in India. Moreover, we are able to match the quality of international manganese ore so we have very good future.

Q: What is your guidance on the capex? You approved some new projects recently. How does your cash on books also could be utilized in this capex?

A: The board has approved a further capex of Rs 300 crore on May 25. Our plan is to enhance the production from 1.1 million tonne to 1.5 million tonne by 2016-17 and 2.2 million tonne by 2020 in Balaghat. We will require a capex of Rs 1,200 crore which we will utilise in a phased manner.

Q: Any inorganic acquisition plans at this point?

A:  We are searching for manganese mines overseas and have plans for acquisitions. The company has received clearance for PL for 597 hectare of land from the Maharashtra government which is positive news for the company.