About The Company
The company is a part of the Vedanta group and the largest private sector iron ore exporter of India.With the application of the Companies Act 1956, to Goa, it was incorporated under the Act on 25th June 1965, as a Private Limited Company under the name Sesa Goa Pvt. Ltd. It was wholly owned subsidiary of Istututo per la Recostruzion Industriale, an Italian Govt. controlled company.
In April,1979 another wholly owned subsidiary of Finsider S.P.A., Italy was also engaged in the mining and export of iron ore. Mingoa Pvt. Ltd., was amalgamated with the company. As per the Scheme of Amalgamation, 38,500 No. of equity shares of Rs 500 each were allotted to Finsider S.P.A., Italy without payment in cash.
The Company was converted into a public limited company on 25th March 1981.
The company has posted results for the quarter ended 30th September 2008, its consolidated net sales was up 129% at Rs.875.7 crore on YoY. OPM had improved to 48% as against 33% in Q2FY08. PAT was up by a jaw dropping 262% at Rs.336.6 crore. This is a very good performance as traditionally, Q2 is the lean period for the company as monsoon affects volumes. Yet it managed a very good show, indicating that demand was high and the sector was yet to cool off.
During current Q2, iron ore sales were 1,389 million tonnes which was 74% higher than Q2FY08 while saleable ore production was up 39% at257 million tonnes. Metallurgical coke sales price realization increased substantially. Pig iron production was higher but sales volume took a hit due to price volatility. The positive impact of higher volumes and price on profit margins was partly offset by increase in logistics costs and export levy duty.
The sector has now started signs of cooling down and the company is bound to see this reflected in its profit margins in coming quarters. Iron ore prices are falling everyday and the bounty, which the company reaped in the first half will not get repeated in the second half.
About Company Plans of Expansions
Over the next 7-8 years, the company hopes to have a capacity build up of 100 million tonnes but it hopes to build it to 25 million tonnes over the next 2-3 years. Though the company is not expecting major demand contractions in the current fiscal, it’s realizations are sure to come down,so some fall in margins in H2 is expected.
About the Stock
The stock has been available at attractive price and could be accumulated at every fall for medium to long term prospective.
Disclaimer : My clients may have some position in this stock.