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Rajesh Gupta, MD, Lloyds Steel Industries Ltd.
Lloyds Steel Industries Ltd. is part of the US$850mn Lloyds group
that has over the years, expanded and diversified into core business
areas of manufacturing steel and related products. Lloyds Steel
Industries is engaged into manufacturing a range of Hot Rolled, Cold
Rolled and Galvanized Products. It has a state-of-the-art plant to manufacture steel products at
Wardha, Maharashtra. Lloyds Steel is accredited with ISO 9001:2000 certification by SGS, UK. Its
workshop is approved by international consultants.
Mr. Rajesh Gupta, Managing Director, Lloyds Steel Industries Ltd. aged 46
years has more than 20 years of experience in the steel industry. Under his
leadership, Lloyds Steel Industries Ltd. has implemented several projects. At
present, he is the Managing Director of the Company. He has also held
directorship since inception. He was appointed as Joint MD w.e.f. January 1990
and is working as MD since January 1995. He is responsible for the day to day
affairs and management of the Company. He is also Director on the Board of
Lloyds Metals & Engineers Ltd. and Vidarbha Power Ltd. He is a promoter director.
In an exclusive interaction with Hemant P. Maradia of IIFL, Mr. Rajesh Gupta
says, “We are trying to achieve stability in operation and raw material security.”
Could you brief us on the current status at Lloyds Steel?
We have been gradually coming out of our various problems. We are ensuring that our future is secure
by undertaking de-bottlenecking, etc. We are putting in place a plan to resolve all the long-term
issues.
The problem of very high raw material prices is hurting all the players in the Indian steel industry.
Cheaper imports are the other cause for concern. These problems still persist.
We are trying to achieve stability in operation and raw material security; raw material not in terms of
mining resources but metal inputs.
Right now we are buying a lot of metal inputs from the market. One of the steps we have taken is to
buy hot metal from a furnace close to our operation. The hot metal is in liquid form to ensure we use
less energy.
What is the near-term outlook?
I believe the January to March quarter will be a good one financially. Prices too have been better in this
quarter compared to the preceding one.
What is happening is that capacity utilisation level in the world is at the highest level right now. The
calendar year 2010 production will be the highest in recorded history.
Earlier what happened was capacity rose in line with an increase in steel prices. At present, capacity
utilisation is already very high. So, the production is more supportive of prices.
We have been operating at a much higher level of capacity utilisation. This quarter we will achieve
180,000 tons of production, which will be the highest ever. Fiscal year 2011 will also see the highest
ever production by Lloyds Steel.
What led to the drop on bottomline in Q3?
The PAT in Q3 FY11 was down due to higher raw material prices and lower-than-expected demand.
Are you still under BIFR purview?
Lloyds Steel has not yet come out of the BIFR purview. Our group company, Lloyds Metals came out of
BIFR last year. Lloyds Steel should come out of the BIFR by the end of FY12.
With this, our prices of finished goods will be among the lowest in the industry partly because over the
years, we have kept our overheads under control. So, costs are more or less stable now. The market
for steel products is also looking up, with 11-12% growth in flat products.
We are still buying a lot of metals but at prices that are close to their costs. We have entered into
various long-term relationships, and that is where we have managed to reduce our costs.
We are buying hot metal from a neighbouring plant set up by Uttam Steel. By sourcing the hot metal
from outside, we have managed to cut our energy costs sharply. We have also started using natural
gas. All these steps have helped us lower the cost burden.
We are buying roughly 50% of our hot metal requirement from outside. The balance is accounted by
scrap and DRI that we buy from the market or our sister concern – Lloyds Metals.
We are consuming the entire production of Lloyds Metal. The power is being exported to the grid. Lloyd
Metals’ plant is close to a coal mines.
What led you to BIFR?
We started production in 1994, the duties were 150%. Now they are 5%. We could not start our mines
as well as our DRI operation. With all these issues, our project got struck.
But, we kept the plant running. It was never shut down despite us going to the BIFR. From the longterm
perspective it was a good decision.
But, now we are coming out of all these issues, including loan repayments. Most of the renegotiations
on loan repayment have been finalised.
Lloyds Metal was also in the BIFR but came out of it last year.
What is the total capacity? Are you planning new capex?
Our total installed capacity is around one million tons per annum. We have ramped up production and
intend to achieve output of 800,000 tons in the coming financial year.
We should do about around 550,000-600,000 tons in FY11.
As of now we are not planning any new capacity addition, as we still have to resolve all the financial
issues and come out of the BIFR.
What will be the capacity utilisation going forward?
The capacity utilisation for the next year would be 75-80%.
What is the net outstanding debt? What is the debt-equity ratio?
The total debt as on 31st March 2011 would be Rs. 5.75bn and the debt-equity ratio would be 0.38:1.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Rajesh Gupta, MD, Lloyds Steel Industries Ltd.
Lloyds Steel Industries Ltd. is part of the US$850mn Lloyds group
that has over the years, expanded and diversified into core business
areas of manufacturing steel and related products. Lloyds Steel
Industries is engaged into manufacturing a range of Hot Rolled, Cold
Rolled and Galvanized Products. It has a state-of-the-art plant to manufacture steel products at
Wardha, Maharashtra. Lloyds Steel is accredited with ISO 9001:2000 certification by SGS, UK. Its
workshop is approved by international consultants.
Mr. Rajesh Gupta, Managing Director, Lloyds Steel Industries Ltd. aged 46
years has more than 20 years of experience in the steel industry. Under his
leadership, Lloyds Steel Industries Ltd. has implemented several projects. At
present, he is the Managing Director of the Company. He has also held
directorship since inception. He was appointed as Joint MD w.e.f. January 1990
and is working as MD since January 1995. He is responsible for the day to day
affairs and management of the Company. He is also Director on the Board of
Lloyds Metals & Engineers Ltd. and Vidarbha Power Ltd. He is a promoter director.
In an exclusive interaction with Hemant P. Maradia of IIFL, Mr. Rajesh Gupta
says, “We are trying to achieve stability in operation and raw material security.”
Could you brief us on the current status at Lloyds Steel?
We have been gradually coming out of our various problems. We are ensuring that our future is secure
by undertaking de-bottlenecking, etc. We are putting in place a plan to resolve all the long-term
issues.
The problem of very high raw material prices is hurting all the players in the Indian steel industry.
Cheaper imports are the other cause for concern. These problems still persist.
We are trying to achieve stability in operation and raw material security; raw material not in terms of
mining resources but metal inputs.
Right now we are buying a lot of metal inputs from the market. One of the steps we have taken is to
buy hot metal from a furnace close to our operation. The hot metal is in liquid form to ensure we use
less energy.
What is the near-term outlook?
I believe the January to March quarter will be a good one financially. Prices too have been better in this
quarter compared to the preceding one.
What is happening is that capacity utilisation level in the world is at the highest level right now. The
calendar year 2010 production will be the highest in recorded history.
Earlier what happened was capacity rose in line with an increase in steel prices. At present, capacity
utilisation is already very high. So, the production is more supportive of prices.
We have been operating at a much higher level of capacity utilisation. This quarter we will achieve
180,000 tons of production, which will be the highest ever. Fiscal year 2011 will also see the highest
ever production by Lloyds Steel.
What led to the drop on bottomline in Q3?
The PAT in Q3 FY11 was down due to higher raw material prices and lower-than-expected demand.
Are you still under BIFR purview?
Lloyds Steel has not yet come out of the BIFR purview. Our group company, Lloyds Metals came out of
BIFR last year. Lloyds Steel should come out of the BIFR by the end of FY12.
With this, our prices of finished goods will be among the lowest in the industry partly because over the
years, we have kept our overheads under control. So, costs are more or less stable now. The market
for steel products is also looking up, with 11-12% growth in flat products.
We are still buying a lot of metals but at prices that are close to their costs. We have entered into
various long-term relationships, and that is where we have managed to reduce our costs.
We are buying hot metal from a neighbouring plant set up by Uttam Steel. By sourcing the hot metal
from outside, we have managed to cut our energy costs sharply. We have also started using natural
gas. All these steps have helped us lower the cost burden.
We are buying roughly 50% of our hot metal requirement from outside. The balance is accounted by
scrap and DRI that we buy from the market or our sister concern – Lloyds Metals.
We are consuming the entire production of Lloyds Metal. The power is being exported to the grid. Lloyd
Metals’ plant is close to a coal mines.
What led you to BIFR?
We started production in 1994, the duties were 150%. Now they are 5%. We could not start our mines
as well as our DRI operation. With all these issues, our project got struck.
But, we kept the plant running. It was never shut down despite us going to the BIFR. From the longterm
perspective it was a good decision.
But, now we are coming out of all these issues, including loan repayments. Most of the renegotiations
on loan repayment have been finalised.
Lloyds Metal was also in the BIFR but came out of it last year.
What is the total capacity? Are you planning new capex?
Our total installed capacity is around one million tons per annum. We have ramped up production and
intend to achieve output of 800,000 tons in the coming financial year.
We should do about around 550,000-600,000 tons in FY11.
As of now we are not planning any new capacity addition, as we still have to resolve all the financial
issues and come out of the BIFR.
What will be the capacity utilisation going forward?
The capacity utilisation for the next year would be 75-80%.
What is the net outstanding debt? What is the debt-equity ratio?
The total debt as on 31st March 2011 would be Rs. 5.75bn and the debt-equity ratio would be 0.38:1.
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