Investor Presentaiton

8 furtisments HVH-LYEL GMDC Ltd. HDFC securities 20 Click. Invest. Grow. YEARS Capex and new projects GMDC plans to invest Rs 670 crores in FY23. It looks to invest Rs 200 crores towards setting up beneficiation plants, with the remaining being land acquisition costs (including compensation) for new and old mining projects. The management said around Rs 270 crores will be spent towards the land acquisition cost for new mining projects, while another Rs 200 crores will be for existing or ongoing projects. The company is in the process of setting up a Fluorspar Beneficiation plant at Kadipani, (a JV with Gujarat Fluorochemicals and Navin Fluorine International) having a capacity will be 40,000 tons per annum. Two bauxite beneficiation plants are expected, too, with an investment between Rs 15 crores and Rs 45 crores. Coal beneficiation plants are expected to come up in Bhavnagar and Kutch of Gujarat, each with an expected investment of Rs. 25-30 crores. Coal beneficiation plants will ensure a better price for its lignite offerings, especially considering the mineral is expected to witness an increased demand in the coming days. Beneficiation will lead to lesser clogging in furnaces and so it can easily command a better price at the auction. Better quality lignite also ensures higher customer retention. The management highlighted that most of the investments are going to be from internal accruals and the company aims to remain debt free. Tenders for the beneficiation plants are already in the process. For the Bhavnagar coal beneficiation plant, the Eol is live, while for the Kutch one, it is expected to go live soon. Investments would also be made to ensure increased production of lignite from its Bhavnagar mines. During FY22, lignite production at Bhavnagar was 16.37 lakh tons, an increase of 11.45 lakh tons, as against 4.92 lakh tons in FY21. Net-debt free company GMDC is a net-debt free with cash and investments worth Rs 668 crores at the end of Mar'22. Key risks & concerns: Competition from coal - local and imported: GMDC faces competition from local and imported coal which puts pressure on lignite price. Also, increase in supply of cheaper Russian coal can have significant downward pressure on lignite prices. Lignite has lower calorific value and hence could face demand reduction when coal prices fall significantly. Regulatory risk: Changes in royalty, DMF and NMET regulations could affect the comparable cost efficiency of lignite vis-à-vis other competing fuels. Environmental concerns: Lignite has high ash and sulphur content. ESG concerns can reduce lignite usage over the medium term. Land acquisition delays and impediments: Delay in land acquisition and impediments by the state government can affect the operations of the company. FRETAILRES RETAILRESEARCH

View entire presentation