Key Operational Updates

Capacity Expansion Progress

  • KNR-2 (unit acquired from Tata Steel): Started operations from March 2026. Production was initially lower than planned due to transformer parameter issues in two furnaces. In October 2026, reached rated capacity of approximately 84,000 tons per annum. Expected to reach full rated capacity of 100,000 tons per annum by December 2026 after transformer replacements.
  • KNR-1 (greenfield unit): First furnace achieved hot metal tapping on 25th August 2026. Pre-commissioning activities initiated for second furnace, with hot metal tapping expected around 15th November 2026.
  • Q3 FY27 Guidance: Expect to cross 100,000 tons of quarterly output for the first time.

Production Guidance

  • FY27: 380,000 tons of ferrochrome production (slight reduction from previous guidance due to lower output from KNR-1 and slight delay in KNR-2)
  • FY28: Approximately 475,000 tons
  • Seventh Furnace: Partially built furnace at KNR-2 expected to be operational around July 2027

Chrome Ore Operations

  • FY27 Target: 1 million tons of ore raising
  • Current Status: Q2 ore raising was lower due to extended monsoon impacting open cast operations (seasonal pattern)
  • Long-term Target: 1.2 million tons overall (0.6 million tons from Sukinda, 0.6 million tons from Mahagiri underground)

Financial Performance Overview

Q2 FY27 Performance

  • Performance noticeably higher than corresponding periods previous year
  • Driven by significant capacity addition and better prices
  • Q2 EBITDA per ton: Approximately INR 28,000
  • Q1 FY27 EBITDA margin: Close to 30% (exceptional quarter)

Cost Factors

  • Metallurgical coke prices: Increased to approximately INR 375-380 range with upward momentum
  • Chrome ore pricing: Slight upward revision due to more mix from underground mining
  • Royalty outgo: Increased due to elevated chrome ore prices
  • Power and fuel costs: Higher due to increased production, startup costs, and higher coal prices
  • Startup inefficiencies: Expected to continue until December 2026, then normalize

Foreign Exchange Impact

  • Mark-to-market loss: INR 8 crores (embedded in other expenses) due to USD/INR movement from 94.6 (June end) to 95.98 (September end)

Capital Expenditure Approvals

The Board approved INR 375 crores capex for:

1. Mahagiri Underground Mines Expansion: Increase chrome ore raising capacity from 6 lakh tons to 7.5 lakh tons per annum. Will be available in stages in increments of 50,000 tons per annum starting 2029.

2. Low-Carbon Ferrochrome Production: Value-added product to bolster margins and diversify product basket. Expected to be operational by early 2028, producing 20,000 tons of low-carbon ferrochrome.

Market Outlook and Strategy

Pricing Environment

  • Q2 average realization: Approximately INR 1.165 lakhs per ton
  • Expect slight moderation in Q3 prices
  • Margins may tighten slightly due to price moderation and cost increases, but volume increase will compensate

Sales Strategy

  • Current Export Mix: 120,000 tons per annum to China
  • Future Target: 300,000 tons exports, 200,000 tons domestic sales by 2028 (60:40 ratio)
  • Niche Products: Producing 10,000-12,000 tons per annum of low-phosphorus material (0.15% phosphorus max) with 15-20% premium. Recently concluded long-term contract for 2027 for 70% of this output with Japanese customer.

Industry Dynamics

  • South African producers scaling up output due to preferential electricity tariffs
  • Expected corresponding reduction in Chinese ferrochrome production
  • Global chrome unit parity expected to be maintained
  • Indian stainless steel per capita consumption at 3.5kg with significant growth potential

Other Business Updates

Renewable Energy

  • Hybrid energy corridor (GNA-RE corridor) established
  • First branch of 70 megawatts from JSW Energy expected by end of November 2026
  • Currently carrying monthly costs without utilization

Aviation Assets

  • Transferring aviation assets (primarily helicopters) to 100% subsidiary to avoid unnecessary compliances for main operating entity
  • Not entering aviation business

Ethanol Project

  • 120 KLD ethanol project expected commissioning in January 2027 (delayed due to geopolitical and monsoon disruptions)
  • Expected revenue: INR 320 crores annually
  • Expected EBITDA margin: 10%
  • Working capital: 45-60 days
  • Internal IRR: 15%
  • ROCE: 13-15%

Management Commentary

Mr. Subhrakant Panda expressed confidence in:

  • Medium to long-term stainless steel prospects, particularly in India
  • IMFA's resilient and competitive business model
  • Ability to deliver superior performance transparently
  • Expansion into higher value-added products diversifying the product basket