Godawari Power & Ispat Limited (GPIL) has announced ambitious expansion plans totaling INR 1,600 crore, as the company reported steady financial performance for the first quarter. The steel and power major is set to diversify into new energy sectors while maintaining its core focus on steel production.

Expansion Plans

GPIL's Board of Directors has approved two significant projects:

1. Cold Rolling Mill Complex: A INR 900 crore investment to establish a 0.7 million ton capacity cold rolling mill complex. This facility will produce value-added steel products, including color-coated steel, zinc-aluminum-magnesium steel, and galvalume products.

2. Battery Energy Storage System (BESS): A INR 700 crore project to set up a 10-gigawatt battery energy storage system in Maharashtra. This venture into the renewable energy sector marks a strategic diversification for the company.

Q1 Financial Performance

Despite challenges, GPIL maintained a robust financial position in Q1:

• EBITDA Margin: 24.00%
• PAT Margin: 15.00%

The company's performance remained largely stable on a quarter-on-quarter basis, despite a fall in iron ore mining production due to delays in mining plan approval for the Boria Tibu mines.

Operational Highlights

• Ferro alloys production and sales volume increased by about 15.00% and 13.00% year-on-year and quarter-on-quarter, respectively.
• The company has already achieved 20-25% of its volume guidance.
• GPIL received approval from Power Grid Corporation of India Limited (PGCIL) to supply steel billets for transmission projects, opening up new market opportunities.

Future Outlook

GPIL expects to receive all necessary approvals for Ari Dongri mining capacity expansion from 2.35 million to 6 million tons by Q3. The company's 2 million ton pellet expansion project is on schedule, with commissioning expected in October.

The management expressed confidence in achieving the volume guidance provided at the beginning of the year. They anticipate a busy season ahead, with steel prices already showing an upward trend.

Market Dynamics

• Iron ore pellet prices are expected to remain in the range of INR 8,500 to INR 10,000 per ton in the Raipur market.
• The company sees a current shortage of pellets in the Raipur market due to increased DRI capacity in the region.
• GPIL's landed cost of imported coal stands at approximately INR 11,500 per ton, with similar levels expected for Q2 and Q3.

As Godawari Power & Ispat Limited embarks on its expansion journey, the company aims to capitalize on emerging opportunities in both the steel and renewable energy sectors, while maintaining its strong position in its core business segments.

Godawari Power & ISPAT , a leading integrated steel manufacturer, has announced significant strategic moves and its Q1 financial results, showcasing the company's commitment to growth and operational efficiency.

Strategic Developments

The Board of Directors has approved several key initiatives:

1. Merger with Wholly-Owned Subsidiary: The company will amalgamate its wholly-owned subsidiary, Godawari Energy Limited (GEL), with itself. This move is expected to streamline operations and improve overall efficiency.

2. Cold Rolling Mill Project: A 0.7 MTPA Cold Rolling Mill (CRM) Project for manufacturing heavy structural steel will be set up at Sarora, Tilda, Chhattisgarh. The estimated project cost is Rs 900.00 crore, to be funded through a mix of debt (Rs 600.00 crore) and equity (Rs 300.00 crore).

3. Battery Energy Storage System Plant: Through its wholly-owned subsidiary Godawari New Energy Pvt Ltd (GNEPL), the company will establish a 10 GWh Battery Energy Storage System Plant. The project, estimated at Rs 700.00 crore, will be funded by 60% debt raised by GNEPL and 40% equity infusion from Godawari Power & ISPAT.

4. Investment in Education: An investment of Rs 7.94 crore in Godawari Education and Research Foundation was approved to maintain the company's 81% stake in the subsidiary.

5. Leadership Continuity: The Board has re-appointed Bajrang Lal Agrawal as Chairman-cum Managing Director for a further five-year term, subject to shareholder approval.

Q1 Financial Performance

Godawari Power & ISPAT reported consolidated financial results:

The company attributed the decline in revenue and profitability primarily to a drop in realizations. However, it maintained robust operational performance, supporting strong margins despite market challenges.

Operational Highlights

• Iron ore mining production faced delays due to pending mining plan renewal approvals.
• Production volumes of pellets and value-added steel products remained largely stable.
• Ferro alloys production and sales volumes increased by 15% quarter-on-quarter and 13% year-on-year.
• Operations at Boria Tibu mines resumed after receiving approval for an updated 5-year mining plan.
• The company secured approval from PGCIL for supplying steel billets to manufacturers of galvanized steel structures for transmission projects.

Future Outlook

With its strategic expansion plans and focus on diversification into energy storage solutions, Godawari Power & ISPAT is positioning itself for sustainable growth. The company's strong net cash position and ongoing investments in mining and pellet capacity expansion further reinforce its growth trajectory.

The 26th Annual General Meeting is scheduled for September 20, where shareholders will have the opportunity to approve these strategic initiatives.

As the company continues to navigate market challenges, its focus on operational efficiency, strategic expansions, and diversification into new energy sectors demonstrates its commitment to long-term value creation for stakeholders.