EICL: On path to recovery as losses trim by 84% in FY23

PROBLEM: Losses decreased in FY23 by 84% even though only the Thonnakkal unit of the Company was operational throughout the year at lower capacity utilization due to a shortage of raw-material availability. The Company's two mining leases are presently operational, and raw material (Kaolin) is sourced from these mines. The Veli Unit remains shut down due to a shortage of raw material supplies from the Company's own mines, primarily caused by a delay in the government granting mining approval for other mining areas.

SOLUTION: The support of the Kerala Government is necessary to restore operations and ensure the supply of desired quality raw materials from the Company's own mines, which would enhance the product mix, increase the production of value-added products, and improve profitability. This would also generate employment and save foreign currency by reducing imports.

Regarding the Note on Emphasis of Matters in the Audit Report, the Company has a clear plan outlined in subsequent paragraphs in AR FY23 to obtain the necessary approvals. To mitigate the risk of raw material availability and expand geographically, the Company established a small plant with a capacity of approximately 40,000 MT of refined Kaolin through its wholly-owned subsidiary in Bhuj, Gujarat. Commercial production began in June 2021, and new business initiatives are expected to contribute significant revenue in the future. Efforts are being made by the Company's management to improve operating performance at this level, but the availability of higher quality raw material from its own mines is critical for the continuity and improvement of operations at this unit, leading to better profitability. It is hoped that mining approval for other areas will be available soon, enabling higher capacity utilization.

The Company successfully sold a portion of land in Thiruvananthapuram, Kerala, and Shimoga, Karnataka, resulting in a good profit and improved cash flow position. A profit of ₹11.05 Cr was recorded by the Company during the year from the sale of land (assets held for sale).