Ador Welding Limited

A.T. Malkani

MANAGING DIRECTOR

Vinayak Bhide

HEAD - HUMAN RESOURCES, COMPANY SECRETARY, LEGAL AND ADMINISTRATION

Surya Kant Sethia

CHIEF FINANCIAL OFFICER

rs,

loyed. Again, without exceptional items, with exceptional items, tracking over the last 4 or 5 years, as have been the question by most of our shareholders is what we're looking at. And that data has

Rs. 120 crore

wing sometime in October of 2020 or November of 2020, it had gone all the way up to approximately Rs. 120 crore. We managed to bring that down to 0 by March '22. We will, of course, have a little bit of debt m

Rs. 27 crore

. So, we started that exercise 1.5 years ago. And just to give you an overview, last year, we did Rs. 27 crore at pretty much almost a breakeven, whereas if you look at the previous year sales, even though th

96%

ze as welding, cutting and complementary businesses that have a lot of synergies is approximately 96% of Ador Welding's business and approximately 84% of Ador Fontech's business. So, that g

84%

ve a lot of synergies is approximately 96% of Ador Welding's business and approximately 84% of Ador Fontech's business. So, that goes to show how much synergy there can be if done correctly

15%

sumable side. Till December '20, we were roughly doing EBIT margins in Consumer segment of around 15%. And post that, it's been around 8% to 9%, 10%, 11%. So, in what timeframe do we expect to be bac

8%

ere roughly doing EBIT margins in Consumer segment of around 15%. And post that, it's been around 8% to 9%, 10%, 11%. So, in what timeframe do we expect to be back to around 15% margins in the consu

9%

ughly doing EBIT margins in Consumer segment of around 15%. And post that, it's been around 8% to 9%, 10%, 11%. So, in what timeframe do we expect to be back to around 15% margins in the consumer

10%

y doing EBIT margins in Consumer segment of around 15%. And post that, it's been around 8% to 9%, 10%, 11%. So, in what timeframe do we expect to be back to around 15% margins in the consumer secto

11%

EBIT margins in Consumer segment of around 15%. And post that, it's been around 8% to 9%, 10%, 11%. So, in what timeframe do we expect to be back to around 15% margins in the consumer sector? That

Rs. 33 crore

g, we will get there. Exports is a very big growth driver. I think last year, we closed export at Rs. 33 crore. We've made the changes we have and the talent we've got, everything like that has come in only o

35%

come in only on 1st April. I expect them to grow the business very significantly in the region of 35%, 40% year-on- year for a few years. In fact, over time, and the multiple factor over the next 3 or

“The FPED, which is, if you remember, this is called the project engineering business division, and we had lots of issues with past projects in Kuwait and stuff like that, we rechanged the entire way we work.”

“Going forward, we are expecting this to get stronger and stronger.”

“And I think that's also an area that we have to be smart about how we handle going forward.”

“We will be taking most of the Ador Fontech stuff during the analyst call, Thursday.”

“The wear products on the Ador Fontech side as well as the flares & process equipment on the Ador Welding side in which they have limited role and they have limited overlap benefits, but they will still stand on its own going forward.”

“Our value creation, a fairly standard slide of what we aim to do for the shareholders to enhance the brand and market value of the company through a broader sales and deeper market sales and service network, distributor and customers being utilized more effectively, more optimal use of manufacturing and logistics and creating the best experience in terms of providing support into the network are all things that will be part of bringing this value creation going forward.”

“So, in what timeframe do we expect to be back to around 15% margins in the consumer sector?”

“I expect them to grow the business very significantly in the region of 35%, 40% year-on- year for a few years.”

“It will be a tremendous growth driver not only in the Middle East.”

“All in all, I think demand will be good.”

A.T. Malkani

77

Moderator

17

Participant

12

Management

8

Pritesh

6

Kaushik Mitra

6

Aditya Chheda

6

Amar Singhania

6

Samar Singh

6

Amit Melwani

5

A.T. Malkani

We will start the presentation now? Hi. Good evening, everyone. We have a short presentation, which just gives a bit of an overview about the business for last year, talks a little bit about us and the market and the amalgamation stuff that has happened last week. I'll try and run through the presentation very quickly and then leave it open for questions after that. This is a disclaimer standard. Ador Group overview for those who are attending for the first time and are not aware, we do this every time during the investor presentation. Started 1908, J.B. Advani & Co. And then these are all the different group companies that exist, that encompass the group, and the different things that comprise our business activities. Most of this is available at www.adorgroup.com. An overview of the performance of last year. As you can see, the main buckets of business are the welding consumables, welding equipment and automation and the flares and process equipment division. Numbers are part of our

Rahul Jain

Thanks for call and thanks for the commentary. So, firstly, on the consumable side, sir. With regards to our margins, it's almost more than now about 15, 18 months since you have joined and you have been working on various initiatives with regards to improvement in our margins. So, the observation is on the consumable side. Till December '20, we were roughly doing EBIT margins in Consumer segment of around 15%. And post that, it's been around 8% to 9%, 10%, 11%. So, in what timeframe do we expect to be back to around 15% margins in the consumer sector? That is my first question, sir.

A.T. Malkani

Ask next question. Finish your questions, sir, then I'll reply to each one of them one by one. Go ahead.

Rahul Jain

Sure. And then with regards to exports in our previous interactions, you've been always talking about exports as being a big growth driver going ahead. So, with regards to the FY '22 numbers on Ador Welding, what kind of export numbers we have ended with, and how do we look at the export segment for the coming FY '23 and FY '24? This is the second one. And last one, if you could just dwell upon the overall demand scenario, how is it looking today. Big sectors are doing well for us and which are the sectors where you see potential and thereby, how do we see growth going ahead?

A.T. Malkani

Thanks, Mr. Jain. Okay. Let's go. Consumer's margins is something that is a nonstop, something we discuss almost every day. And it's not been easy from a learning curve perspective because of the volatility we've seen in steel prices because of certain great contracts we had. All of that, the ability to pass through, when to pass through, how to pass through, see the demand cycle. I mean, if you were to just look it up for me, just for Jan, Feb, March, April and May, just these 5 months have their own learning curve to it. And it's taking a little bit of time. We are improving. It has good product mix, and it has to do with reading of the market correctly. And my simple answer to you here is month-on-month, we are trying to make small improvements, and I think you will see, the volatility doesn't help, but it is very much a part of what we want to do. I can't give you a date by when we want to get back to 15%, but I can rest assure you that, that is very much the plan that we are worki

Pritesh

Just wanted to check one thing. On the steel price, now with the steel price correcting a lot, this lag effect in your margin, when should it start being visible based on the stocking, et cetera, that you would have done? What is the capacity utilization of your factories? You have put out a certain investment plan in automation, in IT system upgrades. So, what will be your CAPEX, and this dividend payout that we see of 30%. Can it be sustainable? And my last question is, where are we in terms of the consolidation of the factories? And this margin gap with ESAB of about 300 to 400 basis points based on year-to-year, let's say, this year your number and ESAB's number, where and how can this be bridged?