KAMDHENUNSEQ4 FY22June 01, 2022

Kamdhenu Limited

5,886words
112turns
10analyst exchanges
2executives
Management on call
Satish Agarwal
CHAIRMAN & MANAGING DIRECTOR
Harish Agarwal
CHIEF FINANCIAL OFFICER
Key numbers — 40 extracted
rs,
all. Along with me, I have Mr. Harish Agarwal, Chief Financial Officer and Strategic Growth Advisors, our Investor Relation Advisors. I hope you all are safe and keeping well in these times. We have u
34%
world. Despite the challenging environment, our company has achieved strong top line growth of 34% and PAT growth of 74% on back of increased construction activities and consumer preferences chang
74%
challenging environment, our company has achieved strong top line growth of 34% and PAT growth of 74% on back of increased construction activities and consumer preferences changing towards investing
19%
ss highlights and performance in the paint business. We have achieved a strong top line growth of 19% in FY2022. Our paint plant at Chopanki, Rajasthan has started full-fledged operations during the
8%
material prices and we are no exception to this. During the year, we have taken price increase of 8% to 10%. We have been able to partially pass on the raw material prices increase. The current envi
10%
al prices and we are no exception to this. During the year, we have taken price increase of 8% to 10%. We have been able to partially pass on the raw material prices increase. The current environment
Rs.20 Crore
ave enhanced the brand recall. Our advertising expenses for paint brand and promotions stood at Rs.20 Crores for FY2022 and we expect to spend Rs.32 Crores in FY2023. With reference to the fire incident at
Rs.32 Crore
g expenses for paint brand and promotions stood at Rs.20 Crores for FY2022 and we expect to spend Rs.32 Crores in FY2023. With reference to the fire incident at our paint plant, the company has written off R
Rs.5.83 Crore
es in FY2023. With reference to the fire incident at our paint plant, the company has written off Rs.5.83 Crores as exceptional items during FY2022. As we speak today, we have received a total Rs.25.65 Crore
Rs.25.65 Crore
ff Rs.5.83 Crores as exceptional items during FY2022. As we speak today, we have received a total Rs.25.65 Crores towards the claim. Now I would like to update on a scheme of arrangement for demer
42%
Now I will move on to give key updates on the steel business. We have clocked a revenue growth of 42% year-on-year to Rs.599 Crores in FY2022. Our revenue has grown majority due to increased price of
Rs.599 Crore
o give key updates on the steel business. We have clocked a revenue growth of 42% year-on-year to Rs.599 Crores in FY2022. Our revenue has grown majority due to increased price of steel. Demand for our steel
Advertisement
Guidance — 15 items
Satish Agarwal
opening
“We expect the growth momentum to continue in both the business, steel and paints.”
Satish Agarwal
opening
“Our advertising expenses for paint brand and promotions stood at Rs.20 Crores for FY2022 and we expect to spend Rs.32 Crores in FY2023.”
Satish Agarwal
opening
“With the positive demand situation, we aim to clock brand sales turnover of Rs.22,000 Crores by FY2024.”
Satish Agarwal
opening
“To conclude, we expect with the business environment evolving we expect demand momentum to continue in both paint and steel business.”
Harish Agarwal
qa
“We do not have major capex plan in our own plant however we are increasing our capacity in the steel business through the franchise route and we are increasing our capacity from 38 lakh metric tonne to 50 lakh metric tonne over the next two years and it will be done through the franchise route.”
Harish Agarwal
qa
“Investment will be made by the franchise units.”
Anjana Shah
qa
“Also what do you target for the coming year?”
Anjana Shah
qa
“So what we think on the trend going forward?”
Ananth
qa
“And next two years what is the plan to add the number of dealers in the Kamdhenu brand?”
Harish Agarwal
qa
“This is a continuous process which we are doing and our target for FY2024 is to have brand turnover to Rs.22,000 Crores which is Rs.16,000 Crores at present.”
Risks & concerns — 7 flagged
Have we faced any impact of third wave of COVID?
— Ashay Jain
Yes there was an impact of third wave on the business of steel as well as paint and our current utilization of the paint is around 50%.
— Harish Agarwal
Without increasing the price of peers, nobody can take the risk of increasing the selling price.
— Harish Agarwal
You see as you understand that my existing facilities are situated in Rajasthan majorly so the costing towards the freight for sending the material to the Southern region of India, it is very difficult and very costly affair.
— Satish Agarwal
Once the market is established then we will look for any manufacturing facilities in the southern part of India or central part of India, but it is very difficult to cater to the requirements in paint business especially for the low price items like distemper and primers because the freight cost is too much due to the cost of primary and secondary freight, first from factory to depot and then depot to dealer.
— Satish Agarwal
Demand was good, but there was a price fluctuation, heavy price fluctuation in the Q4 FY2022, So in our own manufacturing Delhi NCR region, we managed but across India there was impact of COVID shutdown.
— Harish Agarwal
It is a very difficult question because this data is not available at any portal or any rating agency, so very difficult question I do not have the data.
— Harish Agarwal
Advertisement
Q&A — 10 exchanges
Q
Good afternoon. Sir I have two questions starting with what are the current utilization levels at both the plants and what was the utilization in the quarter gone by? Have we faced any impact of third wave of COVID?
Harish Agarwal
Yes there was an impact of third wave on the business of steel as well as paint and our current utilization of the paint is around 50%. Okay secondly can you throw some light on any capex plans in our paints as well as steel business for the upcoming year? We do not have major capex plan in our own plant however we are increasing our capacity in the steel business through the franchise route and we are increasing our capacity from 38 lakh metric tonne to 50 lakh metric tonne over the next two years and it will be done through the franchise route. Investment will be made by the franchise units.
Q
Thank you for this opportunity Sir so I had a couple of questions. First if you could share what is the breakup of our branding and promotion expenses for both paint and steel business for FY2022? Also what do you target for the coming year? Any target as a percentage of sales?
Harish Agarwal
During the FY2022, from steel actually overall we have spent around Rs.60 Crores on the branding and the promotion. So out of that, Rs.29 Crores is done by company and Rs.31 Crores is done by franchise unit. So overall Rs.60 Crores was spent on the Kamdhenu brand. Sure. Sir what are the plans of the company to reduce cost and improve efficiencies in the system? You are talking about which cost, reducing in which cost. Overall cost as a whole? Our focus is on increasing the revenue. Increase the royalty income, increase the paint business revenue so we are more of focusing on the revenue side a
Q
Sir thank you for the opportunity. Sir I have a couple of questions. Sir my query is regarding our south market so our company is looking to increase the penetration in the South region for paints business, so any update on the same?
Satish Agarwal
Repeat the question. You are talking about entering the paint business in the Southern market. Yes? You see as you understand that my existing facilities are situated in Rajasthan majorly so the costing towards the freight for sending the material to the Southern region of India, it is very difficult and very costly affair. The steel company is working hard and opening new depot at Vijayawada, Hyderabad and Kurnool apart from that Hubli and Bengaluru. We are trying to penetrate the southern markets. Once the market is established then we will look for any manufacturing facilities in the southe
Q
Good afternoon Sir. Actually I want to understand about the franchise model in the steel business, so generally how much investment the franchise has to make and you mentioned that they do advertising also some amount they are spending and typically one franchise how much investment they make and how much they have to invest in working capital and what is the return on investment for them just want to understand the basic, how it works? Because this kind of franchise model is quite unique, we have not seen in rest companies in the steel business at least?
Harish Agarwal
You have gone through our asset light business model. In this model, I briefly explained you this model. We identify the units which are the existing under productions, selling their product in the market, but they are facing the problem of selling their products, they are under utilization of their capacity, they are not producing quality product, so we take the unit under the umbrella of Kamdhenu and we identify those units which have the potential to manufacture good quality products, their promoters are good, they have good market reputation, they are financially resourceful, but facing th
Q
Thanks for the opportunity. Sir, I have a couple of questions on the paint business. How was the demand for paint in this current quarter from tier-2 and tier-3 cities?
Harish Agarwal
Demand is good and Q1 always have less demand as compared to Q2 and Q3, so highest demand over the four quarters in Q3 followed Q2, Q4 and Q1. But accordingly to the season the demand was good for the fourth quarter? Yes, if you compare with the last year FY2022 Q1, the demand is increased by 20% to 25% in Q1 FY2023. Are there any particular products where we gained market share in the segment for the quarter or for the year itself? We are focusing our increase the market share of the water based product, water based emulsion, in the last year, we sold around 79% water based product, 11% solve
Q
Thank you for giving me an opportunity. My first question is by when will the demerger be completed and listing of Kamdhenu venture will happen?
Harish Agarwal
It will be completed in Q2, because our pleading and hearing has been completed and we are waiting for the order from NCLT and any day it can be announced. Thereafter we will effectuate the demerger process and go to the stock exchange for listing of shares. Okay and my second question is how was the demand scenario for TMT bars in Q4 FY2022? Demand was good, but there was a price fluctuation, heavy price fluctuation in the Q4 FY2022, So in our own manufacturing Delhi NCR region, we managed but across India there was impact of COVID shutdown. There are some regions where the production of stee
Q
Good afternoon Sir. Thanks for the opportunity. I just wanted to know what is the current utilization level in steel business?
Harish Agarwal
In the steel present capacity utilization is around 75% in our own plant. In franchise business? In franchise, in fact this is a continuous process presently we have around 68% to 70% capacity utilization. Thank you so much.
Q
Thank you Sir for the opportunity. I have two questions. Our company has plan to increase the TMT steel capacity through the franchise route, has the company found any other region where franchise capacity can be increased?
Harish Agarwal
You want to know in which region we are increasing our capacity? What is your exact question please repeat it? Our company has plans to increase TMT steel capacity through the franchise route and the company found any other region where franchise capacity can be increased? Yes, because it require investment by the franchise itself, there is no capex on the part of company. Our business model is to create a company as a branding and marketing company that is why we are not investing in the capex and we are investing in the branding and marketing. Okay, Sir what is the current market size of TMT
Q
Thank you so much for the opportunity. I have just two questions. First is, I would like to know why was the royalty income less in Q4 FY2022 as compared to Q4 FY2021 and second question is if you can just throw some light on what is the current price trend in steel segments? That is it.
Harish Agarwal
Due to COVID restrictions and COVID lockdown in some part of the country, we have given a special concession to the franchise units and we have given some discount on the royalty that is why it has been reduced otherwise the quantity was Q4 FY2021 and Q4 FY2022 are almost same, so we have given some discounts and if I would like to share the number then the average realization of the royalty in Q4 FY2022 was Rs.354 as against Rs.381 of Q4 FY2021, so you are seeing Rs.2.5 Crores less in this royalty account, because of the discount given to the franchise unit in view of our long term business r
Q
Thank you all. I take this opportunity. Thanks everyone for joining on the call. I hope we have been able to address all your queries. For any further information kindly get in touch with me or strategy growth advisors, our investor relation advisors. Thank you once again.
Management
Speaking time
Harish Agarwal
34
Satish Agarwal
13
Moderator
12
Atul Kothari
10
Raj Joshi
8
Anjana Shah
7
Ananth
6
Ankit Agarwal
6
Sachin Shah
5
Ashay Jain
4
Advertisement
Opening remarks
Satish Agarwal
Good afternoon and a very warm welcome to everyone present on the call. Along with me, I have Mr. Harish Agarwal, Chief Financial Officer and Strategic Growth Advisors, our Investor Relation Advisors. I hope you all are safe and keeping well in these times. We have uploaded our results and investor presentation for the quarter on the stock exchanges and the company’s website. Hope you had a chance to go through the same. FY2022 was marked by COVID wave, supply side issues and geopolitical tensions across the world. Despite the challenging environment, our company has achieved strong top line growth of 34% and PAT growth of 74% on back of increased construction activities and consumer preferences changing towards investing in refurbishing homes and many of its moving towards hybrid culture. We expect the growth momentum to continue in both the business, steel and paints. Now first to touch upon the business highlights and performance in the paint business. We have achieved a strong top
Harish Agarwal
Thank you Sir. I will take you all through the standalone financials for Q4 and FY2022. First about the paint business, total sales from paint business for Q4 FY2022 stood at Rs.68 Crores as compared to Rs.67 Crores in Q4 FY2021. The paint business contributed 26.9% revenue in Q4 FY2022. Our overall volume from own manufacturing and outsourcing stood at 7,775 KL in Q4 FY2022 as compared to 9,580 KL for Q4 FY2021. Sales volume during the Q4 were impacted on account of demand disruption witnessed in January 2022 due to COVID related lockdowns across the country. Now let me take you all through the full year numbers. Our paint business contributed 28.7% of total revenue in FY2022. For FY2022 total sales stood at Rs.241 Crores as compared to Rs.202 Crores in FY2021 a growth of 19% YoY. For FY2022 our volume stood at 30,358 KL as compared to 30,319 KL in FY2021. Water based products contributed 79%, powder base 11%, and solvent base contributed 10% of the total revenue of financial year FY2
Advertisement
← All transcriptsKAMDHENU stock page →