Apar Industries Limited
2,992words
27turns
0analyst exchanges
1executives
Management on call
Ramesh Iyer
CFO, APAR INDUSTRIES
Key numbers — 2 extracted
rs,
30%
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Guidance — 6 items
Abhijeet
opening
“And how should we look at it going forward?”
Ramesh Iyer
opening
“If you go back, let's say one or two years before, it will be much lower than that.”
Ramesh Iyer
opening
“So, over a 12 month period is where you kind of get the trend and based on that you will be able to see how the numbers kind of go from there.”
Ramesh Iyer
opening
“So, in terms of targets, well, we don't have a target there, but we really focus on all these premium products as far as possible to kind of get into our pipeline, both from a premium product point of view as well as from tapping the export potential.”
Ramesh Iyer
opening
“And the more the spends are there on these fronts from the Government of India, these kinds of business will be more for us.”
Prasheel
opening
“So, what are we doing there, kind of incentivizing again, because the main target would not be a typical customer, but a mechanic or someone like that.”
Risks & concerns — 9 flagged
But from what I recall, when I used to track the company is, we used to have a very volatile EBITDA margin based on the raw material prices.
— Abhijeet
So, volatility Abhijeet is there mainly because the raw material that gets into our products are volatile.
— Ramesh Iyer
And then if you look at conductors, we have aluminum and copper, which again, it's so volatile that it actually changes by the hour.
— Ramesh Iyer
And therefore, we use this hedging as a very strong risk management tool within our company, to hedge the raw metal that are possible to hedge.
— Ramesh Iyer
That's actually been difficult, because there is a multiple kind of conductors that are prevailing and it caters to different product formulation, different designs.
— Ramesh Iyer
So, very difficult to get that kind of spread between the two, the only thing you can get is a direction.
— Ramesh Iyer
That can be difficult, as I said, because it depends on a lot of moving parts.
— Ramesh Iyer
So, it's very difficult to kind of put a kind of number into this differential margin.
— Ramesh Iyer
Because it would be some key person, so is there some key person risk on the R&D side of things?
— Prasheel
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Speaking time
12
11
2
1
1
Opening remarks
Abhijeet
Good morning this is Abhijeet from Lucky Investment Managers, pardon my ignorance, I haven't tracked the company for the last couple of quarters. But from what I recall, when I used to track the company is, we used to have a very volatile EBITDA margin based on the raw material prices. So, if you can just throw some light on what steps you have taken to reduce the volatility across the segments? And how should we look at it going forward?
Ramesh Iyer
So, volatility Abhijeet is there mainly because the raw material that gets into our products are volatile. If you look at oil, base oil, which actually gets extracted from the crude oil and that gets into the raw materials. And then if you look at conductors, we have aluminum and copper, which again, it's so volatile that it actually changes by the hour. And also for our cable business, a large part of the raw material is from aluminum and copper. So, basically, the volatility would remain in the system. And therefore, the EBITDA, if you look at it as a percentage it will keep on changing, because it is a function of your bottom-line as compared to your top-line wherein the top line can change depending on our raw material pricing there. So, what we do is that we kind of hedge our raw material purchasing wherever it is possible, say, for example, the aluminum and copper, it is possible to hedge that thing. So, the moment we get an order we immediately back to back hedge the same for th
Hitesh
Thank you, Abhijeet. So, in the interest of time Prasheel do you have any more questions to continue?
Prasheel
Yes, I have a few. Taking questions from our previous participant, so basically, our EBITA per ton, if I were to look, since we are targeting some post interest level so this is why our EBITDA per ton is increasing. So, going ahead with commodity prices falling and interest costs are rising. So, how would our EBITDA per ton would typically look like.
Ramesh Iyer
This EBITDA per ton, especially when it comes to post interest, it's a function of many items like interest itself is a combination of multiple items, for example one is the interest rate itself you know SOFR rates kind of increasing will have an impact there. Then also the exchange rate increases, that also has an impact on interest, because now, from an accounting perspective, you can actually put a part of the exchange difference as part of our interest cost. Then you have your the value of the purchase itself, if you look at aluminum, and copper, the price either goes up or goes down, and therefore your absolute value of purchases actually go up or down. And therefore the interest costs will also go up to that extreme. So, there are really a multiple elements in interest. And also these behave differently for different businesses. And depending on the situation that prevails at that point of time the interest can go up or come down, say for instance, this particular quarter your in
Prasheel
So, if we are to look at this EBDTA number so that would be largely stable, is my understanding correct over a long time.
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