FIEMINDNSEQ4/FY22June 01, 2022

Fiem Industries Limited

5,221words

131turns

11analyst exchanges

6executives

Download PDF ↗FIEMIND stock page →

Management on call

J.K Jain

CHAIRMAN AND MANAGING DIRECTOR

Rahul Jain

DIRECTOR

O.P Gupta

CHIEF FINANCIAL OFFICER

Arvind Chauhan

COMPANY SECRETARY OTHER FINANCE TEAM MEMBERS

Sahil Sanghvi

MONARCH NETWORTH CAPITAL LIMITED

J.K. Jain

- Chairman and M.D. of the company. Over to you, Jain sir.

Key numbers — 40 extracted

Rs.1,575 crore

m sure that you all have gone through. Your company has recorded its highest ever total income of Rs.1,575 crores this year and has thus not only surpassed pre-COVID levels, but received the highest revenue rec

Rs.95 crore

ived the highest revenue recorded in its history. Profits have doubled to touch an all-time high, Rs.95 crores. This has been achieved against the significant headwinds that two-wheeler industries faces. For

3.5%

o-wheeler industries faces. For the full year FY'22, the overall two-wheeler industry declined by 3.5%. The decline in the industry has impacted our key customers like HMSI and others. However, we hav

29%

rs like HMSI and others. However, we have been able to outperform the industry and our sales grew 29% year-on-year basis. The LED share of the auto lighting segment has increased to 44% for the year

44%

ur sales grew 29% year-on-year basis. The LED share of the auto lighting segment has increased to 44% for the year as against 40% in the previous year. This outperformance we have always maintained i

40%

ar basis. The LED share of the auto lighting segment has increased to 44% for the year as against 40% in the previous year. This outperformance we have always maintained is due to our superior produc

89%

driven by the export market. We have added significant new products and our business has grown by 89% for the year. We expect the momentum to continue this year, driven by the new products and geogra

464%

rent year. Let me turn my attention to the EV segment. The two-wheeler EV segment saw a 464% increase in the volume during FY'22. While this is on small base, the trend points towards heal

Rs.483.52 crore

ll cover the full year FY'22 results. The company has registered its highest quarterly sales of Rs.483.52 crores in Q4 FY'22, representing a growth of 16.52% over same quarter last year. EBITDA was Rs.62.78 cr

16.52%

registered its highest quarterly sales of Rs.483.52 crores in Q4 FY'22, representing a growth of 16.52% over same quarter last year. EBITDA was Rs.62.78 crores, translating into an EBITDA margin of 12.

Rs.62.78 crore

83.52 crores in Q4 FY'22, representing a growth of 16.52% over same quarter last year. EBITDA was Rs.62.78 crores, translating into an EBITDA margin of 12.98% as compared to Rs.53.33 crores and EBITDA margin of

12.98%

52% over same quarter last year. EBITDA was Rs.62.78 crores, translating into an EBITDA margin of 12.98% as compared to Rs.53.33 crores and EBITDA margin of 12.85%. In line with higher sales, PAT of t

Advertisement

Guidance — 20 items

J.K. Jain

opening

“I am also pleased to inform you that the progress with the Hero MotoCorp is going very well, and we expect three new models to roll out in FY'24.”

J.K. Jain

opening

“We expect the momentum to continue this year, driven by the new products and geographies like Japan, Europe, and Thailand.”

J.K. Jain

opening

“We expect to grow significantly in this segment during the year.”

J.K. Jain

opening

“Overall, I believe that the worst is behind the two-wheeler industry and I expect the industry to get back on its growth path.”

O.P. Gupta

opening

“During the FY'21-22, the company has paid Rs.31 crores of debt and balance Rs.20 crores will be paid by September in the current financial year.”

Finance Team Member

“That would be the big one for the year, others will be the regular CAPEX.”

Pritesh Chheda

“When we look at FY'23, will this mix-led growth continue because your mix-led growth will be higher and your volume growth will add, right.”

Pritesh Chheda

“So, if the mix-led growth is so strong this year with 4% increase in LED share, will the share increase by another 3%, 4% next year?”

Pritesh Chheda

“If that’s the case then can we look at a 25% top line growth this year because volume didn't do so well this year if the two-wheeler volume do next year well so can eye towards 25% top-line growth?”

Jyoti Singh

“So, can we expect more margin in FY'23-24?”

Risks & concerns — 5 flagged

The decline in the industry has impacted our key customers like HMSI and others.

— J.K. Jain

Your company has demonstrated strength in this difficult time with the improving environment and our product mix and the customer positioning, we are well poised for the next level of the growth.

— J.K. Jain

So, this is very difficult to disclose actually, but very good numbers, because you can understand how Yamaha business is growing over the years.

— Arvind Chauhan

But even the customer-specific it is very difficult because some customers –

— Arvind Chauhan

If at all there is an impact of increase in working capital, it is because of increase in some amount of stock, which company is majorly holding because of this electronic components.

— Finance Team Member

Advertisement

Q&A — 11 exchanges

Congrats on great performance, best ever sales, EBITDA despite the industry is down almost like 30% versus the peak. So, firstly, if I look at your revenue and break up, other customers that have almost like grown up by 70%, 80% in this year versus FY'21, so are these mainly the new age related to the OEMs which are contributing or there something else as well over here?

Finance Team Member

This is predominantly the new customers that we've been added over the last couple of years. They have contributed to this growth. This is mainly electric 2W OEMs or are there some other customers as well in this? So, it's a combination, there is very EV segment volumes as well and then there are the other smaller segments also which have grown, but EV is a large part of it as well. Secondly, Yamaha was probably the biggest contributor to our performance over last two, three years. So, I think it is Rs.290 crores sales last year to them. How do you see this revenue ramp up over next two, three

Sir, in your light growth, what is the mix-led growth because of this rise in share from 39% to 44% in LED? What is the volume growth if you could just give that bifurcation?

Arvind Chauhan

Regarding your first question, how this reached from 39% to 44% of the LED, all new products which are under development in last six months or so, most of them are LED. So, the percentage is increasing. LED is at least 2x of conventional, it is higher rather in most of the…. In our 35% top line growth, how much will mix-led growth, will it be 10% or more than that, I just want to know the volume, price-led growth, and the mix-led growth bifurcation? This is more about the value growth. It is a mix of volume and value but it's more about the value. When we look at FY'23, will this mix-led growt

Sir, my question on the other expense side. So, as we saw the rise on QoQ basis, almost 50%, so, is company doing any cost control and also on the margin side, we are continuously maintaining in the range of 11% to 12%, as you have guided 12%-12.5%. So, can we expect more margin in FY'23-24? Third question on the PLI side. If you can comment on the PLI approved products?

Arvind Chauhan

Let me answer your last question first about the PLI. Actually, our products are not part of the PLI. So, we are not availing that scheme. Can you repeat your first question? This is not clear. There was some disturbance. My first question on the other expense side. As we saw the rise in the other expense QoQ basis, so is company doing any cost control? The cost control and all these internal efficiencies is very much part of our good management and this is the reason you can see the higher EBITDA margin. But as far as other expenses you're asking, it is nothing specific about this. Finance Te

I had a couple of questions from the EV side of the business. The first question really, it would you be helpful to understand what percent of your revenues came from EVs in the fourth quarter and what was the percent in the third quarter? Where would you model the revenue contribution from EVs for the full year FY'23 and FY'24?

Arvind Chauhan

So, regarding this EV question, you know better EV has just started. So, we are having very big customers and very big in our revenue contribution. And as two-wheeler sales increase, our shares will be increased, because we are working with all the major new age OEM customers. So, put together last year was around Rs.40 crores. Third quarter - We are not giving on quarterly basis. Last year figure was Rs.40 crores for all EVs new age put together. Where would you model this contribution from the EVs for FY'23, FY'24 full year? If you look at it right now, we are probably at 3%, 30-odd crores.

Sir, what is the current capacity utilization level?

Finance Team Member

Capacity utilization, there is no one specific number because it is dependent on product mix, as the LED share increases, again, we could probably do more sales with it, but we think it is probably close to 78% to 80%. We've already answered that, given the CAPEX that we are planning we mentioned about Hosur should take care of future growth requirements.

So, I have a few questions. Firstly, is related to this capacity utilization. So, when you say that our two plants are working at a full capacity and we intend to incur maybe Rs.30, 40 crores CAPEX. So, can you tell me after making this expense, how much will be our capacity addition?

Finance Team Member

Capacity utilization is probably a deceptive number. If you go into detail, you cut it on product wise, segment wise and I think the real key to look at is that from hereon if we have to achieve our growth targets what we can see over the next two years, how much CAPEX do we need. For example, if we add the Hosur plant, the way we are thinking, then that adds significant amount to our capacity, because we could just add a few lines and it would sort of ensure that we have sufficient capacity to go up. So, while as I mentioned 80%, we think Rs.2,000 crores, Rs2,200 crore even on the current mix

Sir, just a couple of questions from my end. Just when will the LED luminaries receivable come?

Finance Team Member

LED luminaries most of the receivables have come. It is only left Rs.9 crores which is fully recoverable and we are recovering regularly. Last year, we have recovered more than Rs.7 crores from EESL. Finance Team Member: As on March '22, it is nothing but Rs.9 crores only. Maruti is setting up a capacity in Sonipat. Any plans of having the four-wheeler revenues? We will try our best and we hope to get the business. How many projects are we executing right now for Yamaha, Piaggio and Harley? We have about more than 80 projects all put together. We are working on for next two, three years. Any i

What is the progress on Hero MotoCorp account?

J.K. Jain

We have already told you that the development is going on and we expect three models to come out in '2024 and we are working very closely with them. This Rs.50 crores CAPEX that we are doing, where are we spending and which areas, does it lead to capacity expansion? basically, Land building and machineries. Is it a new plant? New land adjacent to the existing plant. How much capacity or asset turn will it come at? We are expecting around Rs.300-400 crores capacity. Rs.300 crores is 6x asset turn? Yes. Because we are buying the land, basically depend on the business expansion. So, we can add on

My question is on the fact that you have this LED manufacturing capacity because you are planning to come on consumer side the LED Luminaire side. Now does this backward integration give you any advantage compared to some of the other pure lighting players, the source is from outside?

Finance Team Member

I think LED Luminaire segment that you are talking about is not a focus area. It is actually in a mode where we are kind of winding it down. So, that is a project whatever assets we had that side, that is being utilized for the normal automotive segment now. So, it is in that wind down mode. So, I don't think this is an area that – Rest of the machines, we are in the process of selling it down. I understand that you are in the process of winding that business down. What I was saying that, you had entered into kind of manufacturing. It seems to me at least, correct me if I am wrong, that you ha

Just a very basic question I wanted to understand. Like you have guided for a new facility, what could be the turnover from the existing facilities? What could be the maximum revenue and turnover that we can expect?

J.K. Jain

Basically, as we told earlier, it purely depends on the product mix. Currently, with the capacity, we can go to Rs. 2000-2200 crores. Depend on the more LED, the more sale will be different. But our order book is very strong and we are very strong and we hope that we will do very well in coming years. You said Rs.2,000 crores, right. How much did you say? Basically, it depends on product mix, if it has more LED, then it can go to Rs.2,000, Rs.2,200 crores. This is all approximate. Is it possible for you to share the wallet share that we have in our different customers? I am sharing the wallet

Thank you, everyone for participating in this concall. I hope we have been able to reply all your queries adequately. We are available for any additional questions you may have. Thanks, and good day.

Management

Speaking time

J.K. Jain

Arvind Chauhan

Finance Team Member

Pritesh Chheda

Moderator

Ashutosh Tiwari

Sahil Sanghvi

Mayur Patwa

Bijal Shah

Saurav Datta

Advertisement

Opening remarks

Sahil Sanghvi

Good evening, everyone. On behalf of Monarch Networth Capital, I welcome you all to the Q4 & FY'22 Conference Call of Fiem Industries Limited. We will start the call with the initial comments about the results and the future outlook of the company and then we'll open the floor for question and answer. So, without much delay, now, I hand over the call to Mr. J.K. Jain -- Chairman and M.D. of the company. Over to you, Jain sir.

J.K. Jain

Thank you. Good afternoon, everyone. I welcome you all to the FY'22 Earning Call of Fiem Industries Limited. Along with me I have on the call today, Mr. Rahul Jain – Director; Mr. O.P. Gupta – CFO; Mr. Arvind Chauhan -- Company Secretary and other members of the finance team. The “Results” and the “Investor Presentation” have been uploaded on the stock exchange and the company website, which I'm sure that you all have gone through. Your company has recorded its highest ever total income of Rs.1,575 crores this year and has thus not only surpassed pre-COVID levels, but received the highest revenue recorded in its history. Profits have doubled to touch an all-time high, Rs.95 crores. This has been achieved against the significant headwinds that two-wheeler industries faces. For the full year FY'22, the overall two-wheeler industry declined by 3.5%. The decline in the industry has impacted our key customers like HMSI and others. However, we have been able to outperform the industry and ou

O.P. Gupta

Thank you, sir. Good afternoon to everyone. I will present the Q4 results, after which I will cover the full year FY'22 results. The company has registered its highest quarterly sales of Rs.483.52 crores in Q4 FY'22, representing a growth of 16.52% over same quarter last year. EBITDA was Rs.62.78 crores, translating into an EBITDA margin of 12.98% as compared to Rs.53.33 crores and EBITDA margin of 12.85%. In line with higher sales, PAT of the company increased to Rs.32 crores as compared to Rs.25.49 crores in Q4 of FY'21, representing an increase of 25.54%. Now, I will briefly cover the numbers for full financial year '21-22. During FY'22, the company has achieved highest ever sales of Rs.1,558 crores as compared to Rs.1,207 crores in FY'21, representing a growth of 29%. EBITDA stood at Rs.193.45 crores being 12.42% as compared to Rs.130.6 crores being 10.82% during FY'21. This is a jump of over 48% driven by higher sales. PAT of the company has more than doubled to Rs.95.26 crores as

Advertisement

← All transcripts FIEMIND stock page →

Fiem Industries Limited

Market Movers