Indian long steelmaker Kamdhenu Limited’s Q2 franchise sales volumes rose by 39pc to 569,000mt from the prior quarter and lagged by 4.09pc from the prior year Q2 as domestic steel demand improved with a sharp bounce in the business activities in the quarter. The company is operating at 80pc capacity utilization across units and is ramping up production steadily, according to the company’s results release. In H1, franchisee sales volumes dropped by 19.5pc to 978,000mt from the prior year period.
The company’s management opined that the domestic economy is gradually recovering and construction activity and other infra projects have gained momentum. India’s steel market has started recovering and amid the festive season, the demand for white goods and the auto sector is expected to boost steel demand. The company has pinned its hope on rapid development in India’s affordable housing projects which is a major consumer of construction steel.
India’s affordable housing market is expected to reach Rs6.25 trillion by 2022 and to cater to this increased demand from the housing sector, Kamdhenu aims to expand its annual TMT (rebar) production capacity to 50,00,000mt by 2022. Currently, the company’s manufacturing capacities at franchises for rebars is 33,00,000mt and 5,00,000mt structural steel per annum. Kamdhenu has also expanded its own manufacturing capacity at Bhiwadi plant to 156,000mt per annum in 2019.
Kamdhenu has registered revenues of Rs972mn in Q2 from its steel business, while profit before tax from the steel segment was Rs 93mn. Steel sales contributed 66pc to the company’s overall Q2 revenues, while the rest was from its paint business. In Q2, the company’s standalone net profit fell by 61.5pc to Rs25mn, while for H1, profit dropped by 68pc from the prior year.