ELECTCASTNSEQ1 FY 202320 August 2022

Electrosteel Castings Limited

6,051words
156turns
11analyst exchanges
1executives
Management on call
Anuj Sonpal from Valorem Advisors. Thank you and over to you sir. Anuj Sonpal
Good afternoon, everyone and a very warm welcome to you all. My name id Anuj Sonpal from
Key numbers — 40 extracted
Rs. 1751 crore
ormance for Q1 FY 2023 of our company on a standalone basis. The total income for the quarter was Rs. 1751 crores an increase of about 72% year-on-year. EBITDA report was Rs. 226 crores a growth o
72%
ne basis. The total income for the quarter was Rs. 1751 crores an increase of about 72% year-on-year. EBITDA report was Rs. 226 crores a growth of about 48% year-on-year and the EBITDA
Rs. 226 crore
uarter was Rs. 1751 crores an increase of about 72% year-on-year. EBITDA report was Rs. 226 crores a growth of about 48% year-on-year and the EBITDA margin stood 12.88% for the quarter. Net profi
48%
rease of about 72% year-on-year. EBITDA report was Rs. 226 crores a growth of about 48% year-on-year and the EBITDA margin stood 12.88% for the quarter. Net profit after tax reported Rs
12.88%
. EBITDA report was Rs. 226 crores a growth of about 48% year-on-year and the EBITDA margin stood 12.88% for the quarter. Net profit after tax reported Rs.104 crores, an increase of approximately 95% ye
Rs.104 crore
8% year-on-year and the EBITDA margin stood 12.88% for the quarter. Net profit after tax reported Rs.104 crores, an increase of approximately 95% year-on-year while the PAT margin stood at 5.93%. The total
95%
12.88% for the quarter. Net profit after tax reported Rs.104 crores, an increase of approximately 95% year-on-year while the PAT margin stood at 5.93%. The total DIP production in Q1 FY 2023 was 164,
5.93%
ported Rs.104 crores, an increase of approximately 95% year-on-year while the PAT margin stood at 5.93%. The total DIP production in Q1 FY 2023 was 164,000 metric ton as against 131,450 metric ton in Q
Rs.225 crore
e with the EBITDA per ton number for this quarter, sir? Management: Overall EBITDA, we reported Rs.225 crores in Q1. Saket Kapoor: Yes, I am looking for per EBITDA and the comparable number for the March
Rs.153 crore
is the total EBITDA we have generated and previous quarter, that is previous year, we did EBITDA Rs.153 crores Saket Kapoor: Sir, could you throw some more light firstly on the business environment current
100%
and from the demand side, we feel that there is lot of demand and we have been operating at 100% capacity or say near to 100% capacity. So, this is it. Saket Kapoor: So how will this fluctua
rs,
DI pipe industry are operating on same raw material, everything is same, There are about few players, any price increase for one player will also have an impact on others so all us. We will be affecte
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Guidance — 20 items
Management
qa
“Going forward demand from the demand side, we feel that there is lot of demand and we have been operating at 100% capacity or say near to 100% capacity.”
Saket Kapoor
qa
“So that we can maintain our EBITDA per ton going forward.”
Management
qa
“We will be affected by the price rise and the suppliers have to give the price hike because nobody can supply at loss.”
Management
qa
“We do not anticipate great problem in getting a price revision in case if the price of raw material go up.”
Saket Kapoor
qa
“These orders will be executable over a period of four months.”
Management
qa
“We have placed orders, we have opened the LC which are required for equipment and the process is happening and we expect to complete the capacity enhancement by March 2024.”
Management
qa
“Saket, these minute figures we will not have conference call but on a ballpark figure we can but then it will be very difficult which I will tell later.”
N M Modi
qa
“And sir this quarter are we selling the pig iron, this current quarter regards the prices have gone up now per guidance.”
Management
qa
“95%-100% and for this current financial year also we are confident that we will be able to achieve the number.”
Darshan Jhaveri
qa
“And sir, do we see any other reduction in our debt or something other than stated do we want to reduce our debt any further or could we assume the debt to be stable along for this year and next year considering we have some capex coming in.”
Risks & concerns — 8 flagged
In terms of raw material prices, raw material prices were volatile during the previous financial year more towards coking coal prices which are imported.
— Management
So raw material prices have been volatile because of which the margins have been fluctuating.
— Management
Though, we are trying to pass on the higher cost but as the prices have come down, so we feel that it will not be very difficult in coming quarters to pass on the cost.
— Management
Saket, these minute figures we will not have conference call but on a ballpark figure we can but then it will be very difficult which I will tell later.
— Management
That will be a bit difficult because it not a stagnant kind of number, it keeps varying from quarter to quarter but ultimately it is higher than what we make in domestic market.
— Management
Tenders, we may not know because that is purely marketing and it is a confidential classified information which we cannot share but as far as the order book is concern.
— Management
So, there is no doubt for orders as far as the future things are concern which contract where, what tender and all.
— Management
We at our operational level difficult and all this we cannot also tell but as I told you.
— Management
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Q&A — 11 exchanges
Q
Sir, you mentioned the volume for current quarter at 164,000 tons and sales at 158,000 tons and what was the number for March quarter, the previous quarter?
Management
March quarter production was 178,000 and sales also was close to 178,000. 178,000, right. Can you help me with the EBITDA per ton number for this quarter, sir? Overall EBITDA, we reported Rs.225 crores in Q1. Yes, I am looking for per EBITDA and the comparable number for the March quarter. You calculate the blended EBITDA, Saketji. So, this is the total EBITDA we have generated and previous quarter, that is previous year, we did EBITDA Rs.153 crores Sir, could you throw some more light firstly on the business environment currently for the five sectors. The key highlights, if you could throw so
Q
Generally, you used give this investor presentation and press release along with the result but this time it was not been given sir.
Management
Good afternoon Modiji. Yes, this time it was not given. We will try to do it next time. And sir this quarter are we selling the pig iron, this current quarter regards the prices have gone up now per guidance. Yes, we have sold some quantity. Okay, no I am asking about this current quarter, July to September, are you selling now. The quantity, the volume has come down but yes we are selling the surplus. And sir, our this Alloy plant, and are running okay, we are able to produce the alloy for our capex use. You mean Ferro plant is it? Yes sir. Yes, it is running well.
Q
I just wanted to ask, we are running at near 100% capacity, right?
Management
Right. I think our total capacity is around 7 lakh tons if I am not mistaken. So what kind of volume numbers can we assume for the full year. Is there some seasonality play which is why there was some lower volume compared to Q4 in Q1. In this industry, Q3 and Q4 are robust quarters because the demand is coming from the state and center side. Q1 and Q2 are generally a bit slower than the second half and so from the past history, we have been able operate at around 95% capacity. 95%-100% and for this current financial year also we are confident that we will be able to achieve the number. Okay i
Q
Sir, you mentioned our sales during the quarter was some 1.58 lakh tons, so how much of this volume was exports for Q1 if you can help me with the export volume and in value wise.
Management
33,000 tons was from exports around 21% Okay and how much sales from 33,000 tons. This is sales. And what is the sales in crores. I am trying to understand the realization for exports. Realization of exports was higher than domestic. Export value I can come back to you, export value would be around Rs.250 to Rs.260 crores. Okay and usually sir, the export realization is higher by 10% to our domestic realization roughly that is what we should assume going forward as well or can it shade. No, you are right so generally it is higher by 10%-15% but having said that does mean that the margins also
Q
Sir what constitutes the other income components sir and as mentioned by Gauravji that we have higher better realizations for exports but when we take consolidation of our accounts. The profitability is lower than the standalone numbers are. So, if you could explain these two factors.
Management
Saketji, see in case of consolidation when you are comparing with standalone because of Ind AS requirement some unrealized profit gets knocked out. Ultimately, the overseas subsidiaries that we have their marketing norms which are operating in stock and sale basis. So, because of this reason some part of the profit gets knocked off on the unrealized inventory. Coming to the other income, so it is more of interest income that we have received export incentive that we get and we have also received dividend from subsidiary during the quarter because of which the other income is around 22 tons. We
Q
Sir, we will certainly take your advice we will present it to the top management but this is something to be decided at the top level at strategic level and we will certainly carry your suggestion to our top managements. Rajesh K. The second question was regarding claims lying with government of India it getting undue time for so many years and there are other companies also. Those iron ore mines or coal mines have been constipated I understand that they raised their claims. So why not some group of companies that of operation is formed among themselves and government of India is now a days.
Management
That is what I am telling sir, all what you are suggesting are strategic decisions to be the taken by the board and we at our operational cannot say anything on this. We will certainly take it to the top management and we will present it to them. Rajesh K. Government is resting on as of doing a business, so genuine demands should be sorted out at the earliest, is not it. Certainly, we really appreciate your idea and we will certainly take it to our top management.
Q
Sir recently one of your peers indicated that Central Government has issued advisory to states regarding inclusion of price escalation clauses in DI pipe contracts so has that become effective and are we expecting any benefit going forward from that.
Management
Sorry we do not have any such information. So we will not be able to comment on that.
Q
If you can just throw some light on the exiting order book at a Pan India level what are the tender in pipeline at present?
Management
Tenders, we may not know because that is purely marketing and it is a confidential classified information which we cannot share but as far as the order book is concern. We have order book of around four months and we generally sell to EPC contractors. So, we are not directly participating into tenders. EPC contractors they participate in tenders. But because under current journals some 9 crore households are connected and another 10 crores households remaining. So we were just trying to understand what will be the upcoming opportunities given these 10 crores households are there and then. Yes
Q
Sir, I have two questions, one is what is the percentage of government orders and the other is private and the export orders.
Management
See all the orders are coming from government only ultimately because all these projects are government projects but for us, the customers are mainly EPC contractors. So 80%-90%, 90% of our sales are happening to EPC contractors and some 10% happens to government directly and 20%-25% comes from exports. My second question is regarding the debt. Right now the term debt is 1050. So where do you see the debt coming down in coming years or like for the capex. We will continue holding this kind of debt? Long term debt has a payment schedule and gradually it will come down. Yes, but for future capex
Q
Yes sir, Mr. Gaurav, you were explaining to us about the 2-3 years the projection at SriKalahasti the capacity being increased to 5.5. So pleased continue and complete that part please.
Management
What projection? You were explaining to us about Srikalahasti capacity moving up to 5.5 lakh but the answer was not completed. No, in Srikalahasti, the four-lakh ton capacity is already put in and we are achieving 100% of capacity as of now. So as far as the present capacity from 4 lakh-5.5 lakhs we are increasing. it is done in every month something and it will be completed in March 2024 as the factory will be producing all the piled-up lakh ton by April 2024. This is the Srikalahasti position. And sir in the fitting business what should be the contribution for this quarter? We do not have se
Q
Thank you all for actively participating in this conference call and wish you all safe and well and I thank Valorem and Chorus for organizing this call. Thank you all.
Management
Speaking time
Management
75
Saket Kapoor
31
Chetan Phalke
22
Moderator
13
N M Modi
5
Darshan Jhaveri
5
Praveen Yadav
3
Anuj Sonpal
1
Anurag Patil
1
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Opening remarks
Anuj Sonpal
Good afternoon, everyone and a very warm welcome to you all. My name id Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Electrosteel Castings Limited. On behalf of the company, I would like to thank you all for participating in the Company’s Earnings Conference call for the first quarter of financial year 2023. Before we begin let me mention a short cautionary statements. Some of the statements made in today’s Earnings Call may be forward-looking in nature. Such forward looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s belief as well as assumption made by an information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements making any investment. The purpose of today’s Earnings Call is only to educate and bring awareness about the Company’s fundamental business and financial
Management
Good evening, everybody. It is a pleasure to welcome you to this Earnings Conference Call of the quarter of financial year 2023. Firstly, I hope that everyone is keeping safe and well. Let me first take you through the financial performance for Q1 FY 2023 of our company on a standalone basis. The total income for the quarter was Rs. 1751 crores an increase of about 72% year-on-year. EBITDA report was Rs. 226 crores a growth of about 48% year-on-year and the EBITDA margin stood 12.88% for the quarter. Net profit after tax reported Rs.104 crores, an increase of approximately 95% year-on-year while the PAT margin stood at 5.93%. The total DIP production in Q1 FY 2023 was 164,000 metric ton as against 131,450 metric ton in Q1 FY 2022 while the total DIP sales in Q1 FY 2023 was 158,000 metric ton as against 128,000 metric ton in Q1 FY 2022 with this we can open the floor for the question and answer session.
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