Godawari Power & Ispat Temporarily Suspends 2.0 MTPA Iron Ore Pellet Plant Operations

What Happened ?

key details

Reasons for Suspension:

• Curtailment of contracted natural gas supplies by GAIL.
• Withdrawal of the Natural Gas (Supply Regulation) Order, 2026 through Gazette Notification dated 4 July 2026.
• Continuing force majeure situation communicated by upstream gas suppliers.
• Significant increase in natural gas prices effective 9 July 2026.
• Lower iron ore production from Ari Dongri Mines due to the monsoon season.
• Higher market procurement cost for iron ore beyond contracted supplies.

Note:

• The combination of elevated fuel costs and expensive raw material sourcing has temporarily rendered pellet production economically unviable.

Investor Relevance:

• Production and sales volumes of iron ore pellets will decline during the shutdown period.
• The suspension is expected to negatively impact profitability in Q2FY27.
• The affected facility accounts for approximately 5.50% of the company’s turnover.
• Operations will remain suspended until supply and cost conditions improve.

Note:

• Management expects operational conditions to improve after the monsoon season as iron ore production increases and contracted gas supplies normalize.

Recovery Outlook:

• The shutdown is considered temporary.
• Management expects no long-term impact on overall profitability.
• Iron ore production is expected to improve after the rainy season.
• Normalization of gas supplies should support resumption of pellet production.

Note:

• The company believes current challenges are largely cyclical and operational rather than structural.

Risk Analysis

Summary:

• The temporary shutdown creates short-term operational and earnings pressure due to lower production volumes and higher input costs. However, management expects the impact to remain limited to the near term, provided gas availability and raw material supplies normalize after the monsoon.

Key Risks:

• Lower pellet production and sales volumes during Q2FY27.
• Continued high natural gas prices could extend the shutdown period.
• Delays in normalization of contracted gas supplies.
• Extended weakness in iron ore availability could prolong operational disruption.

Worst Case:

• If gas shortages and elevated input costs persist beyond the monsoon season, the temporary suspension could continue longer than anticipated, resulting in prolonged pressure on production, revenues and profitability.

Risk Level: Medium

Company Commentary

• Operations have been temporarily suspended due to higher gas costs, reduced contracted gas supplies and lower iron ore availability.
• Pellet production has become economically unviable under prevailing operating conditions.
• The company expects lower profitability in Q2FY27 because of reduced production and sales volumes.
• Management does not anticipate any long-term impact, expecting recovery after post-monsoon improvement in iron ore production and normalization of gas supplies.