In Q3FY11, Godawari's (GPIL) revenue grew 10% YoY to Rs2.2bn due to improved realisation (up 22% YoY) and higher sales volume, mainly pellets. EBITDA at Rs513mn grew by meager 3% YoY as OPM contracted by 160bps due to lower power tariff. However, PAT declined by 35% YoY to Rs210mn on higher interest and tax outgo.

Backward integration benefits: Captive iron ore output from Ari Dongari at 111kt declined 15% YoY due to extended monsoon. However, captive consumption of ~85kt of pellets (103kt output less
18kt merchant sales) aided in meeting shortfall & expanding margin.

Merchant power sales declined to 19mn units (60MU in Q3FY10) due to low tariff at Rs2.9/unit. Blended cost of power generation increased to Rs2.24/unit due to higher coal cost and contribution from costlier recently-commissioned 20MW biomass power plant.

Focus shifts to steel production: Billet output increased (31kt vs 4kt in Q3FY10, 15kt in Q2FY11) as power tariff was subdued.

Balance Sheet: GPIL has debt of Rs4.6bn, cash of Rs1.2bn.

Project updates: 20MW biomass power plant commissioned on 1st Nov’10; 0.6mntpa pellet plant in GPIL's 75% subsidiary Ardent Steel stabilised, to contribute from Q4FY11 onwards. GPIL has been awarded 50MW solar-based power project under JN National solar mission. (See pg3 for status on amalgamation of group cos.).