Indian Metals Q3 net dips 55% to Rs 13 cr

Leading ferro chrome producer Indian Metals and Ferro Alloys (IMFA) today reported an over 55% decline in net profit to Rs 13.16 crore for the quarter ended December 31, 2011.

The company had reported a net profit of Rs 29.41 crore for the corresponding quarter of 2010-11.

Net sales of the company, however, rose 28.82% to Rs 294.27 crore during the quarter under review from Rs 228.43 crore in the October-December quarter of FY11, the company said in a filing to the Bombay Stock Exchange (BSE).

In a statement issued later, the company said over 80% of net sales were contributed by exports of ferro chrome and due to rupee depreciation, its margins improved during the quarter, although it did not give details. Ferro chrome is a raw material used in production of stainless steel.

The statement added that company's profit was affected by higher input costs, particularly higher prices of thermal coal.

During Q3, the company's expenditure on raw materials increased by over 28% to Rs 159.04 crore from Rs 123.94 crore in the same period last year.

"Higher input costs, primarily of thermal coal, continued to put pressure during the quarter, although being an integrated producer with access to captive chrome ore and electricity helped control the erosion in margins," IMFA Managing Director Subhrakant Panda said.

Talking about the outlook for the current and coming quarters, he said higher ferro chrome prices are expected in the short to medium-term as the Eurozone economies are likely to move toward stability, while economic activity in other countries is likely to improve.

The Odisha-based company has the capacity to produce 2,75,000 tonnes per annum of ferro chrome and 138 MW of captive power. The company expects to add 120 MW of additional capacity by the first quarter next fiscal for captive consumption.

Shares of the company settled at Rs 306 apiece on the BSE today, up 6.62% from their previous close.