Sandur Manganese is in the business of mining manganese and iron ore for eventual use in manufacturing steel. The company reported good growth in revenues and operating profits in the last five years – reporting 140cr of operating profits on revenues of about 350cr in the last financial year. It employed no debt in its operations and had sizeable liquid assets of over 100cr as at 31 st March 2011. This financial position, however, may change significantly over the next few years as a result of management’s expansion plans (see below). The company is expected to incur heavy capital expenditure in the next few years (see below), which will have an impact on future free cash flows for investors. The business operates in an industry that has high power requirements, which causes operational problems in a power-deficit country. The business is exposed to the risks of periodic oversupply of ore in the industry (as currently with manganese ore) where there are few outlets f
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