Kirloskar Ferrous Industries Ltd (KIRLFER) Q2FY27 Concall Transcript - Sep-2026 Qtr
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Moderator (Antique Stock Broking Limited): Ladies and gentlemen, good day and welcome to the Kirloskar Ferrous Industries Limited Q2 FY '27 earnings conference call, hosted by Antique Stock Broking Limited. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing "*" then "0" on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pallav Agarwal from Antique Stock Broking. Thank you and over to you, sir.
Pallav Agarwal (Antique Stock Broking Limited): Yeah. Thank you, Ikra, and good afternoon, everyone. Warm welcome to the Kirloskar Ferrous Industries 2Q FY '27 earnings call. We have the senior management of the company represented by Mr. R.V. Gomasthe, the Managing Director; Mr. Ajay Patil, the Joint Managing Director; and Mr. R.S. Srivatsan, the Executive Director, Finance and the CFO. So now I would like to hand over the call to Mr. Gomasthe for his opening comments. Over to you, sir.
R. V. Gumaste (Kirloskar Ferrous Industries Ltd): Yeah. Thank you, Pallav. First of all, let me welcome all the investors call respondents. Thank you very much for joining this conference call. Let me briefly touch upon the quarter's performance and then we will keep it open for question answers. The quarter two this year, we completed the quarter with topline of 2,057 crores against last year same quarter 1,755 crores, a topline growth of 16%. And the bottom line, PBT is 138 crores growing up from 120 crores last quarter, last year this quarter. And going to little bit details on the volume term and let me first of all go on to the sales volume. For the value of sales coming from different sectors, we had a growth of 20% on the pig iron,
R. V. Gumaste (Kirloskar Ferrous Industries Ltd): from 581 crores in this quarter against 483.9 crores, 20% on that. And castings have grown from 487.8 crores to 633, almost 30% growth on that, whereas steel and tube, we faced the big challenges in Q1 and Q2. Also, it's recovered, but still growth is 0.5%. Whereas steel has done well against last year, 139 crores, we have done 206 crores, a growth of 48% external sales on our steel. Pig iron production is going well with all the three furnaces running, except maintenance stoppages what we have seen in the earlier months. And we are running all the three furnaces as of now. And we are at pig iron hot metal production for the six months at 3,31,896 metric ton against 3,22,000. We are productivity improvement of 3% over the last year. Whereas casting has moved to 93,000 metric ton of production from 78,000, which is 20% growth. Whereas we have been down 7.5% in tubes and up almost 14% in steel. We have produced 1,33,000 against 1,17,000 last year. And more specifically to this quarter, I would say that we have an external sales of pig iron of 1,34,000 against 1,28,000, increase of 3.5%. I think casting gross sales for the first time we crossed 50,000. Net sales is 47,888 against 39,980, which is about 20% more than the last year second quarter. Whereas on the tubes, this year, we did 48,547 against 49,588, which is down about 2%. Coming to the sales realisations, I think there has been a positive movement. As all of you know that we had to face the challenges of higher Coke, coal prices, coking coal prices and also Rupee Dollar exchange rate was adverse for us all along these last three, four quarters. But we could pass on some of the cost increases because of this to customers. Last year, pig iron price ex-works average realisation was Rs. 38,000. We are moved to 43,054, which is 12.4% improvement in the pig iron prices, whereas casting prices have also moved up almost by 6.8% compared to last year. We are at 1,30,000 Rs. Per ton against Rs. 1,21,000 last year. Whereas the recovery in tube has been slower. We are at Rs. 1,16,953 against last year's Rs. 1,13,000, 1.6%. Whereas steel has moved from 70,700 to 77,500, which is an improvement of 7.6%. So it looks like we have come out of the low commodity cycle gradually going up. We will naturally face some challenges in case of value-added product, whereas the basic product will get some advantage. Demand for the castings from all sectors was going on very well in Q1 and subsequently in Q2. The demand for castings was good from tractors, automotive and also the earthmoving and stationary engine market. As all of you know, some talk on the slowness coming into the tractor, but our foundries across all the three locations were fully loaded in Q2 as well as October.
R. V. Gumaste (Kirloskar Ferrous Industries Ltd): to be carefully watching there can be small corrections in demand coming from the tractor industry. Whereas auto and earthmoving equipments continue a strong demand for castings Whereas pig iron, I think there was interesting development during last quarter is that the international prices were good and many of the pig iron manufacturers went in for exports. We also exported one cargo of 31,000 metric ton and as we realized better in export than domestic. We continue to focus on domestic market with better realization and we will be keen to make export as the prices internationally are better than the domestic. With this comments and opening comments, I would request for the questions and be happy to answer them. Thank you very much.
Moderator: Thank you very much. Ladies and gentlemen, we'll now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Pratik Kothari from Unique PMS. Please go ahead.
Pratik Kothari (Unique PMS): Yes, hi. Good afternoon, sir. Sir, first on the projects, one we see that you seem to have announced this phase two of our Solapur, the large casting. So, one is the phase one kind of sold out. I mean do we have visibility there and hence this phase two or this is just in line of phase one getting done. And two, we still don't see the Jejuri steel timelines there. So, we were to start that project but we are yet to decide, so where are we on that?
R. V. Gumaste (Kirloskar Ferrous Industries Ltd): Yeah. First of all let me take up the casting related question first. First of all we are almost done with phase one and phase two of second foundry line in Solapur. What we are working on is ramping up the production and output and increasing the sales. That is the process in which we are there. And currently we have come to a level of 5,200 metric ton of sale and production and sale. And more than 15,000 every quarter. And our effort is to take it further higher so that capacity utilization from both the foundries at least crosses 6,000 metric ton per month or 18,000 metric ton per quarter. And with respect to you know the Rajpura Foundry, we had already I had told earlier also that capacity is sold out. But by year end, financial year end, which is March, 31st March, we will bring up the phase two of the Rajpura project so that our capacity can go to close to 4,000 metric ton per month. And accordingly all steps are being taken to increase the capacity there and clearance is there and we can look for another 24,000 to come from Rajpura with phase two implementation. We feel that we should be ready with that at least by quarter one of next year so that we have the capacity to serve our north customers. With respect to steel and projects, I would like to say that yes there have been some delays because of looking at the market as well as technology finalization related challenges. We are ready with going ahead with rolling mill capacity expansion in Jejuri. As well as the expander mill project in Baramati and also setting up of small piercing mills in Nagar so that we improve on our product portfolio as well as capacities coming for smaller tubes as well as the large tubes which go into oil and gas. So, we are continuing
R. V. Gumaste (Kirloskar Ferrous Industries Ltd): with our commitment for the projects and we have already entered the execution stage, and you will see more updates coming in coming quarters. Thank you.
Pratik Kothari (Unique PMS): Okay, sir, just one clarification, sorry. I actually meant the Koppal the alloy steel plant that we intended to build out over two years.
R. V. Gumaste (Kirloskar Ferrous Industries Ltd): Yes, yes. So, there were a few challenges, one relating to local issues, second relating to ourselves being clear with respect to many technology challenges. I think we are more or less done with all that, and we have already ordered for the technology design partners. We have already tied up with them. Now, we are come to a stage of a commercial negotiation and ordering the equipment. We expect that we should next two to three months take up that project full blast, and then we should expect around 20 months for project execution and implementation. Thank you very much, Kothari, for that clarification.
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