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Maithan Alloys plans new subsidiary for greenfield project in Bengal.

November 09, 2019
Shobha Roy Kolkata-based manganese alloy producer Maithan Alloys Ltd. is looking to incorporate a wholly-owned subsidiary for its proposed greenfield project at Bankura, about 206 km from here.

According to Subodh Agarwalla, Whole-Time Director and CEO, Maithan Alloys has received board approval for the new subsidiary, which will manufacture manganese-based ferro alloy products.

The company currently manufactures ferro manganese, silico manganese and ferro silicon at its plants in Kalyaneshwari (West Bengal), Visakhapatnam and Ri-Bhoi (Meghalaya). It has a combined capacity of 2,35,000 tonnes per annum and a capacity utilisation of close to 96 per cent.

“We are working on the finer details of the (greenfield) project to ascertain the kind of capacity we would like to add and the estimated investment required. We hope to firm up the plan in a month,” Agarwalla told BusinessLine. The company expects to commence work on the project within a year from receiving the necessary approvals including environmental clearance.

Ferro alloys serve as intermediary products in steel manufacturing. Maithan claims to hold around 8 per cent share of the total ferro alloys market, which is estimated at 2.5 million tonne per annum.

Demand growth

The demand for ferro alloys has remained fairly intact so far this year despite the slowdown in steel demand. This enabled Maithan to optimally utilise its capacities, said Agarwalla. However, margins were impacted by a market slowdown and subsequent volatility, he added.

For the quarter ended September 30, Maithan’s operating profit margin came down to 12.17 per cent, against 17.27 per cent in the same period last year. Its net profit margin also declined, to 8.91 per cent (12.98).

The company expects its EBITDA margins to be 12-14 per cent by the end of FY20.

Revenue slides

The company posted a 7 per cent drop in Q2 revenue to ₹470 crore (₹507 crore) while net profit dropped 36 per cent to ₹42 crore (₹66 crore).

“Despite the domestic slowdown and a sluggish market environment, we were able to utilise our plant at 100 per cent capacity. Our long-term outlook for the steel industry is positive on the back of rapid economic and infrastructural development in India. With a large basket of ferro alloys product and greenfield expansion, we hope to be able to grow faster than the Industry,” Agarwalla said.

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