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Forging a Path to Profitability: Unleashing the Potential of Ferrochrome with Capex Surge and Enhanced EBITA Margins – An Intriguing Dark Horse Stock Idea”

This is a 60+ year old leading company fully integrated producer of ferro chrome in India as well as one of the largest producer with 190 MVA installed furnace capacity backed up by 204.55 MW captive power facilities and extensive chrome ore mining tracts with it primary output mainly exported to countries such as Korea, China, Japan and Taiwan.

Indian Metals & Ferro Alloys Ltd

Current Market price on the date of publishing this report-: 284 Rs


Established in 1961, as c public limited company by name Indian Metals & Ferro Alloys, company is a fully integrated producer of ferro chrome in India. The Company is India’s largest producer of ferro chrome, with 190 MVA installed furnace capacity, 204.55 MW captive power facilities, and enormous chrome ore mining areas located in the state of Odisha, noted for its natural resources. The majority of the Company’s ferro chrome output is sold to Korea, China, Japan, and Taiwan.

The Company has two manufacturing operations in Odisha, one in Therubali and one in Choudwar, with a combined production capacity of 284,000 TPA and a smelting capacity of 190 MVA. It also has two captive mines with a combined capacity of 6.51 lakh TPA (in Sukinda and Mahargiri). IMFA has 204.55 MW of captive power generating capacity and 4.55 MW of solar power capacity. Both the mines have a long leases, with one expiring in 2049 and the other in 2055.

Despite difficult market circumstances for its products during the year, the company’s turnover reached the Rs.200 crore barrier for the first time in 2000-01.

In 2005-06, the Company completed the Composite Scheme of Arrangement and Amalgamation, which was authorised by the Shareholders and Creditors, as well as by the Hon’ble High Court of Orissa in its Order of October 13, 2006. As a result, ICCL amalgamated with the Company on the appointed date of April 1, 2005.

The 30 MW dual fuel power plant was completed in 2011. In 2011-12, it purchased a 70% share in the Indonesian coal mine Pt Sumber Rahayu Indah through a step-down company registered in Singapore. Utkal Green Energy Limited, a subsidiary of the Company that began operations in 2011-12, has transferred its finished Fly Ash venture.

Brick Plant; a Fly Ash Brick Plant under construction; and a Light Weight Aggregate Plant under construction, along with their respective assets and liabilities, to the Company on a going concern basis. It completed the 3 MW solar power plant in Therubali in June 2017.

During the fiscal year 2018-19, the Hon’ble National Company Law Tribunal, Cuttack Bench issued an Order on March 26, 2019, approving the Scheme of Amalgamation between Indian Metals & Carbide Limited (IMCL), B Panda and Company Private Limited (BPCO), and Indian Metals & Ferro Alloys Limited (the Company), which went into effect on April 30, 2019.

Over the years, the company has established long-term connections with multinational corporations such as POSCO of South Korea, Marubeni Corporation and Nisshin Steel of Japan, as well as prominent stainless steel manufacturers in China and Taiwan. Jindal Stainless and Shah Alloys are the company’s top clients in India.

While we have long-standing relationships with Jindal Stainless, Shah Alloys, and other producers in India, the company has also partnered with POSCO of South Korea (taking the lead in a 76:24 joint venture in India to produce ferro chrome with assured off-take commitment in addition to a long term contract) and Nisshin Steel (long term contract), in addition to supplying many large customers in China and Taiwan on a consistent basis.

The majority of the company’s ferro chrome output is sent to the Far East (China, Japan, and Taiwan) since it is the epicentre of stainless steel manufacturing and also because of the company’s logistical advantage. However, given the predicted rise in stainless steel demand and production in India, there will be a clear move towards catering to the domestic market, for which companyb is well positioned. India’s per capita consumption of stainless steel is about 2 kg, while that of some advance economies is around 15kg representing a huge opportunity, especially given the anticipated focus on infrastructure development, which would contribute to increased demand.

Company’s focus on exporting value added ferro chrome has won many accolades including the 43rd National Awards for Export Excellence from EEPC in 2010-11.

Business Products

The company concept is based on self-reliance. This mindset has prompted the company to go into mining and electricity production, as well as an in-house transportation company that has now been split out, over the years. The production cycle, which includes chrome ore mining, power generation, and ferro alloys smelting, is inextricably linked, especially given the captive position of the company’s mines and power generation.

Ferro Alloys

A pioneer in the production of silicon alloys, the company’s current focus is on ferro chrome, which gives stainless steel a non-corrosive quality. A substantial percentage of the company’s goods is shipped to the Far East (China, Japan, and Taiwan), but it is also projected that local consumption will increase dramatically, and the company is best positioned to meet this need.

What are ferro alloys?

Ferroalloys are crucial additions in the manufacturing of steel and alloys in the iron and steel industry. These alloys are made up of iron mixed with large concentrations of additional metals such as manganese, aluminium, or silicon. They are used to improve the qualities of steel, such as strength, ductility, fatigue resistance, and corrosion resistance. Furthermore, ferroalloys perform a variety of tasks in the steelmaking process, including refining, deoxidation, modification, and control of nonmetallic inclusions and precipitates. As a result, they impart different properties to both steel and cast iron, improving overall performance and utility. Chromium, manganese, and silicon are the most common ferroalloys used in this business.

Ferroalloys considerably contribute to the iron and steel production cycles by leveraging their unique qualities, satisfying the needs of numerous uses in the modern world.

Six furnaces totaling 190 MVA have been installed in Odisha at Therubali (Rayagada District) and Choudwar (Cuttack District), making IMFA the largest merchant producer of ferro chrome in India, capable of producing up to 284,400 tonnes per year. The company is now seeking to increase its smelting capacity in order to fully exploit the increased captive power generation capacity.

There are also several pioneering credits to the company’s name, such as being the first in the Indian private sector to make ferro silicon and the first in the Indian subcontinent to produce silicon metal using indigenous technology. Given its competitive advantages owing to captive chrome ore and power generation, the company’s main concentration is virtually entirely on ferro chrome today.


The company first ventured into mining in the 1960s, when it managed multiple quartz mines to meet the raw material requirements of its silicon alloys manufacturing. The emphasis has now changed to chrome ore mining, and the whole production is utilised in-house in accordance with the company’s value addition concept.

The company’s completely integrated business model is built around ensuring raw material supply from captive chrome ore mines. A combination of open cast and underground mining operations in Odisha’s Jajpur and Keonjhar districts meet the company’s current need for chrome ore, which is around 0.6 million tonnes per year.

Although India contains less than 1% of the world’s chrome ore deposits, the majority of it is found in Odisha. Starting with a modest mine that only met a portion of the company’s needs, the company now has access to 21 million tonnes of deposits. The mining leases in Sukinda and Mahagiri are valid until 2049 and 2055, respectively, with a ‘Right of First Refusal’ in the auction following, according to the MMDR Amendment Act 2015. The Nuasahi Mine is now closed, although an extension is being planned.

Beginning with open cast operations, the company has recently transitioned to underground mining, which is more environmentally friendly and efficient. In reality, IMFA was the first to begin underground mining in Sukinda Valley, with the first stope blasting taking place on January 14, 2016. According to the company’s business goals, overall output would be increased in stages to 1.2 million tonnes to accommodate increased smelting capacity.


Because of the power-intensive nature of the company’s primary operation, the company was first pushed into putting up a captive power plant, which throughout time has kept pace with the times in terms of both capacity increase and technology.

Electricity is a critical component of the company’s integrated business model. Captive power generating capacity is 204.55 MW, which includes a 50 MW coal-based unit, a 30 MW dual-fuel unit that runs on a combination of coal and furnace gas, a 120 MW coal-based unit, and a 4.55 MW solar power unit. While the Power Business Unit largely serves captive needs, some surplus is given to the State Grid. It is worth noting that the company’s proximity to a large load centre contributes to grid stability.

The company’s priority is to run efficient, environmentally friendly operations. The use of furnace gas and CFBC boiler technology in the 30 MW and 120 MW units, as well as an ongoing initiative to convert fly ash to bricks and low density aggregates (a substitute for stone chips), are excellent examples.

Low Density Aggregate (LDA)

The focus of IMFA is on resource efficiency and environmentally responsible operations. The company has also constructed a zero effluent water discharge system and automated units capable of producing 100,000 bricks per day from fly ash and slag. In 2014, IMFA became the first company in India to open a Low Density Aggregate (LDA) or sintered fly ash aggregate factory at Choudwar, Dist-Cuttack, Odisha, with an installed capacity of 1,75,000 MT per year.

LDA is unique among fly ash-based products in that it contains more than 90% fly ash. This is a concrete alternative for natural coarse aggregate (stone chips). This has the added benefit of lowering dead weight in civil buildings.


IMFA intends to increase ferro chrome capacity by 1 lakh tonnes. This is expected to be operational at Kalinga Nagar by FY26, for which the state government has already given land. The additional 1 lakh tonne capacity will cost Rs 550 crore in capital expenditure.

IMFA has also completed plans to gradually boost chrome ore output to 1.2 million tonnes by FY33. Over a seven-year period, the mining outlay will be Rs 1,500 crore. IMFA intends to cover the whole capital expenditure through internal accruals.


For Q4 FY 23

  • Net Sales:
    • March 2023: Rs. 636.90 crore (15.83% decrease from March 2022 – Rs. 756.71 crore)
  • Quarterly Net Profit:
    • March 2023: Rs. 64.02 crore (55.1% decrease from March 2022 – Rs. 142.58 crore)
    • March 2023: Rs. 143.73 crore (25.77% decrease from March 2022 – Rs. 193.64 crore)

Fourth Quarter Highlights:

  • Net Profit: INR 63 crores, a significant increase from INR 10 crores in the previous quarter.
  • Ferrochrome Production: 61,200 tons
  • Chrome Ore Mined: 193,000 tons
  • Ferrochrome Sold: 57,362 tons
  • Price Realization:
    • Fourth Quarter: INR 117,000 per ton
    • Entire Year: INR 116,000 per ton (compared to INR 109,000 per ton in the previous year)

For the Year ended FY 22

  • Revenue from Operations: Reached an all-time high of INR 2,602.95 crores (previous year: INR 1,844.23 crores)
  • Foreign Exchange Earnings: Recorded at INR 2,441.71 crores (previous year: INR 1,705.29 crores)
  • EBIDTA: Stood at INR 828.83 crore (previous year: INR 389.03 crore)
  • Profit after Tax: Amounted to INR 507.87 crores (previous year: INR 166.75 crores)

Production and Operations:

  • Ferrochrome Production: 246,175 tonnes (previous year: 259,942 tonnes)
  • Electricity Generation: 1,085 MUs (including 5.80 MUs from solar) (previous year: 1,014 MUs including 6.51 MUs from solar)
  • Chrome Ore Raising: 559,356 tonnes (previous year: 521,820 tonnes)

Expansion and Projects:

  • Land Allotment: 124.26 acres of land allotted by the State Government for the project, with payment made and possession expected before the end of the year.
  • Captive Ore Raising: Steps taken to increase captive ore raising from Sukinda and Mahagiri Mines to 1.2 million tonnes by FY30 to meet the needs of the Kalinga Nagar project and future expansion.

Debt and Cash Position:

  • Long-term Debt: None as of December 31, 2022.
  • Short-term Debt: INR 360 crore, offset by receivables and inventories.
  • Net Debt: INR 150 crore. With the Utkal coal money coming in, IMFA expects to become net cash-positive.

For the year ended fy 23

  • Turnover: Highest ever at INR 2,640 crores for the entire year.
  • Total Income: Highest ever at INR 2,702 crores for the entire year.
  • Net Sales: INR 2,676 crore, nearly unchanged from March 2022 – INR 2,603 crore.
  • Yearly Net Profit: INR 226 crore, a decrease of around 50% from March 2022 – INR 508 crore.
  • EBITDA: INR 488 crore, a decrease of 39% from March 2022 – INR 810 crore.
  • While the net profit numbers may not be as comparable or as good as the exceptional year of the previous year, the year is still considered creditable and one of the best in the company’s history.
  • The company managed to increase total cash balance/investments while reducing debt.
  • Net debt decreased to INR 341 crores as of March 2023, down about 20% from the previous year.
  • Total investments increased to INR 264 crores as of March 2023, up 70% from FY22.

Management’s comments

  • The management expects EBITDA margins to improve in the future.
  • Instead of raising debt, the company intends to fund its capital expenditure (capex) goals through internal accruals.
  • According to management, the anticipated investment would be more than 2000 crores distributed over a 7-year period.

Going Forward:

  • In the calendar year 2022, stainless steel output reached 55.255 million tons, which was 3 million tons lower than the previous year, 2021.
  • However, predictions indicate that in the current year, 2023, stainless steel production is expected to reach a new record of 60 million tons.
  • As stainless steel production picks up, the demand for ferro chrome is expected to increase correspondingly.

Sectorial outlook

  • India is the world’s second-largest consumer of stainless steel and is considered one of the fastest growing markets. According to projections, the country’s demand for stainless steel would expand at a compound annual growth rate (CAGR) of 6.6% to 7.5% from 2022 to 2025. Notably, India’s per capita stainless steel consumption has more than doubled since 2010, rising from 1.2 kilogrammes in 2010 to 2.5 kilogrammes by fiscal year 2022. The installed capacity for stainless steel in India was anticipated to be approximately 6.6-6.8 million metric tonnes as of March 2022.
  • India has around 2% of the world’s chrome ore deposits, with the vast bulk, 95%, located in Odisha’s Sukinda Valley. Due to low local demand, the Indian ferrochrome sector has traditionally concentrated on exports. However, with India’s emphasis on infrastructure development and the building of industrial corridors, it is expected that local demand for ferrochrome would skyrocket in the future. This estimated increase in demand is due to an increase in per capita stainless steel consumption in India.
  • The metals and alloys market is poised for significant growth in the coming years, buoyed by rapid industrialization, increased construction activity, global infrastructure development, and significant utilisation of these materials in various sectors such as automotive, power, pipes, fittings, valves, industrial machinery, and others.


IMFA a 60+ years old company with decreasing debt and significant capex palnned ahead over the coming years, is operating in the metal and mining industry with a strong market valuation exceeding INR 1,500 crores. It boasts an impressive infrastructure, including 190 MVAs installed capacity, 204.5 megawatt captive power generation capacity (including 4.55 MW solar power), and extensive chrome ore mining tracks. IMFA stands as India’s leading fully integrated manufacturer of high-quality ferrochrome. With the country’s growing demand for stainless steel and the company’s focus on improving EBITDA margins, IMFA is well-positioned to capitalize on the expanding opportunities in the industry. With its favorable valuations and recent management’s commitment to enhancing EBITDA margins, coupled with the projected growth in sales, IMFA emerges as an enticing prospect for long-term exploration. The company’s strategic focus on improving profitability, along with the positive market outlook for the ferrochrome industry, positions IMFA as an attractive investment opportunity with long-term potential.

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