Kirloskar Ferrous Industries · tone and specificity signals across the available quarters.
Language signals
I am a firm believer that 15% EBITDA plus minus 1% is a right level to operate at on castings. Castings could go up now because of the demand and because of capacity constraints. We can look for better pricing and better margins in casting.
Whatever capacity we have built we are well within the limits say instead of getting 100 crore benefit in a year we may get 80 crore benefit in a year payback rate from 3 years may go to 3.6 or 3.7 years. There is a negative impact but we continue to progress because still there is benefit.
We have all the government clearances in place and we have made the preliminary working everything ready. Project timeline, technology partners we have to press the button and we have to clear the land because it happens to be within the present factory premises. So I think within next 2-3 months we go to the next stage and make it ready to get commissioned within 2 years.
We have to resolve some issues in Solapur and move to higher volumes next year. The new product development and ramp up of newly developed castings is taking longer because we are dealing with complex cylinder heads and cylinder blocks for auto applications.
I can say that bottom is over. We have some improvement in pig iron prices and we have covered with the cooking coal required up to for the next 4 months from January.
Unlike pig iron, casting pricing is long-term fixation with some linkage to raw material. We cannot increase prices like pig iron—any change requires long-term negotiation. Operating leverage from volume growth is more important for casting margins.