As per my understanding, the margins, earnings are cyclical, linked to steel industry. Currently, steel prices are depressed due to imported steel being cheaper, so while India is producing lots of steel, prices are dictated by imported steel which is lower than Indian prices.
The costs (i.e raw materials, power costs, etc.) cannot be passed on to the customers, because the customers dont get the prices (for steel) they want. Also there is overcapacity in ferro alloys segment. So no pricing power.
The company bought IMPEX as a distressed sale, but soon shut down the plant as it was unviable to continue the operations. The company is also planning a greenfield capacity, which I believe is going slow, and they have decided to halve the capacity from what was originally planned.
The company has lots of cash/investments on its books, and they refuse to give that to the shareholders citing needs for acquisition. sometime ago they said they will take a decision in 12 months, but I guess those 12 months are long gone.
In the 3 quarters of this FY, their other income is more than the core operating profit. With nil debt and such a low depreciation, it looks like a steal with the Other Income and the investment/cash on books.
I also got interested in the company and was very keen to invest, but havent.
Disc: invested very small amount.
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