Leading ferro chrome producer Indian Metals and Ferro Alloys has reported an over 55% decline in net profit to INR 13.16 crore for the quarter ended December 31st 2011. The company had reported a net profit of INR 29.41 crore for the corresponding quarter of 2010-11.

However net sales of the company rose by 28.82% to INR 294.27 crore during the quarter under review from INR 228.43 crore in the October to December quarter of FY 2011.

In a statement issued later, the company said that over 80% of net sales were contributed by exports of ferrochrome and due to rupee depreciation, its margins improved during the quarter, although it did not give details. Ferro chrome is a raw material used in production of stainless steel.

The statement added that company's profit was affected by higher input costs, particularly higher prices of thermal coal. During Q3, the company's expenditure on raw materials increased by over 28% to INR 159.04 crore from INR 123.94 crore in the same period last year.

Mr Subhrakant Panda MD of IMFA said that "Higher input costs, primarily of thermal coal, continued to put pressure during the quarter, although being an integrated producer with access to captive chrome ore and electricity helped control the erosion in margins."

Talking about the outlook for the current and coming quarters, he said higher ferrochrome prices are expected in the short to medium term as the euro zone economies are likely to move toward stability, while economic activity in other countries is likely to improve.

The Odisha based company has the capacity to produce 275,000 tonnes per annum of ferrochrome and 138 MW of captive power. The company expects to add 120 MW of additional capacity by the first quarter next fiscal for captive consumption.

(Sourced from www.economictimes.indiatimes.com)