GR Exclusive: IMFA CFO Prem Khandelwal Discusses Indian Ferrochrome Market, AI, And More

Indian Metals & Ferro Alloys Ltd (IMFA) announced its financial results for the quarter and nine months ended on December 31, 2024. IMFA declared its Q3 FY24 net profit at Rs 107.87 crore, up 934.23% year-on-year (YoY) as compared to Rs 10.43 crore declared in the corresponding quarter of last year.

The revenue for Q3 FY24 arrived at Rs 685.27 crore YoY as against Rs 623.62 crore in the similar quarter of last year. EBITDA of the company declared at Rs 167.87 crore for Q3 FY24 from Rs 67.02 crore reported in the similar quarter of last year.

In an exclusive interview with Goodreturns, IMFA Chief Financial Officer, Prem Khandelwal, provided insights into growth, changes, challenges in Indian ferrochrome sector, and how much Indian ferrochrome market is expected to increase over the next few years, and more.

Que 1: What is the size of the Indian ferrochrome market today, and how much it is likley to grow over the next few years?

Ans: Presently, India's production is 1.3 MT, of which 50% is consumed domestically and the remaining 50% is exported. In the coming years, consumption is to rise by about 6 to 7% year over year. The future use of stainless steel is anticipated to rise in tandem with GDP growth. India's infrastructure sector is set to become the biggest driver for the country's economic growth, which will increase demand for stainless steel and, in turn, expand the ferro chrome market.

Que 2: Which sectors are the main users of ferrochrome in India? What are the main factors driving this material's demand there?

Ans: Stainless steel is the main consumer. India currently produces between 3.7 and 3.8 MT of stainless steel per annum and this is expected to rise especially in ABC (building, architecture, and construction) sector.

Que 3. What actions are being taken to boost production capacity, and how is the Indian ferrochrome sector responding to the growing domestic demand?

Ans: Going ahead, we can expect to see consolidation in the ferrochrome industry where few producers with access to resources will produce significant quantities to meet the growing need.

Increasing production of stainless steel: India is witnessing a notable increase in the manufacture of stainless steel. This is brought on by increased disposable incomes, the expansion of the infrastructure, and the increasing demand from industries like building, railroads, and autos.

Reorienting export focus: India exports a significant amount, however, going ahead with a vision of self-reliant India, and supporting initiatives such as Make In India, we can expect the ferro chrome exports to go down.

Capacity expansion: Ferrochrome manufacturers are preparing to realize the future markets potential. IMFA, for instance, is setting up a new greenfield smelter in Odisha.
Technological developments: The industry is also looking towards adopting newer technologies for cleaner and more efficient ferrochrome production. This includes exploring options like submerged arc furnaces and alternative energy sources to reduce environmental impact and improve production efficiency.

Que 4. What are the main issues that Indian ferrochrome sector is experiencing?

Ans: India's dependence on imported low-density ash and low-fusion metcoke (a key component) for ferrochrome production is a significant concern for the industry. Additionally, from a production standpoint, both the cost of power and the price of chrome ore are high in the domestic market. However, given that IMFA is a fully integrated operation, these factors have a lesser impact on us.

Que 5. What are the main trends and opportunities in worldwide ferrochrome market, and how does the Indian ferrochrome sector stacks up against them?

Ans: India is the fourth-largest ferrochrome producer, and occasionally the third. Around 15 million tonnes (MT) of ferro chrome are produced worldwide, of which 7 MT are produced in China, 4-5 MT in South Africa, 1.7 MT in Kazakhstan, 1.2 MT in India, and 0.7-0.8 MT in Turkey. Currently the Ferro Chrome consumption in India is around 2kgs per capita, whereas it is around 10 kg per capita in China and over 15kg per capita in developed countries. It indicates a room for growth.

Que 6: When do you expect India to become the 3rd largest economy?

Ans: It is million-dollar questions and it will be difficult to answer the exact time period. But, at the pace things are moving presently, it will be very soon in the near future.

Que 7: Do you think AI may pose a threat to jobs in India?
Ans: No, I don't think so that the emergence of AI will pose any challenge to jobs in India. In fact, employees in India will be using AI technology to make things smooth and hassle-free for them.