Mining player MOIL Limited reported a good set of numbers for July-September quarter. Its net sales went up by 7 percent and profits soared by 23 percent. The company’s realisations too inched up by 6.8 percent quarter-on-quarter.
In an interview to CNBC-TV18, GP Kundargi, CMD, MOIL credits the rise in profits to increase in high-grade ore production.
Although oversupply in the market has put pressure on prices, Kundargi is confident of holding margins above 40 percent. Going ahead, he expects margins to breach 45 percent in FY15.
Below is the verbatim transcript of the interview:
Q: If you can just start by taking us through the realisations this quarter and the EBITDA per tonne in the quarter gone by and what has been the change on a year-on-year basis?
A: Average realisation in the last quarter was 7692 per tonne, it has increased to 8174 per tonne. Whereas half yearly it was 8276 per tonne has increased to 8551 per tonne. There is a realisation increase of 3 percent on half-yearly basis. On quarterly basis, we had an increase of 6.8 percent.
Our profit before tax with an improved sales realisation and product mix what we are offering in the market, in spite of depression in minerals and metal market, today lot of imports are happening and there is an oversupply in the market. Still we are able to maintain the profits and our Profit after tax has increased by 7 percent on half-yearly basis.
Operating margin also we are able to maintain as compared to last year half yearly. The PAT has increased by 22 percent when you compare quarter-to-quarter of last year, which is because of the increase in high grade over production. High-grade production has increased by 19 percent in the total mix. Also the sales have improved and average sale relation has improved by almost 18 percent because of the 18 percent higher sales of the Ferro Grade Ore in the product mix during the quarter. So due to that we are able to maintain the sales realisation and hence profit after tax increased by 7 percent.
Q: Your margins came in excess of around 40 percent, are they sustainable at these levels?
A: Yes definitely gross margin is going to be above 40 percent and we are hoping to have more than 45 percent also during the current year, it is sustainable.
Q: When did the company take the last price hike and what is the outlook going ahead?
A: Market is existing right now. In this quarter also, we are doing well but because of the heavy imports from South Africa and Australia, the prices are under pressure and there is a lot of inventory also lying in the Chinese port. But still prices cannot fall down further and it may be almost sustainable till the end of next year first quarter after which the market analysts are hopeful that prices may increase in the next year.
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