RICOAUTONSEQ1 FY23August 10, 2022

Rico Auto Industries Limited

7,202words
136turns
9analyst exchanges
9executives
Management on call
Arvind Kapur
CHAIRMAN, CEO & MD
O.P. Aggarwal
CHIEF ADVISOR (FIN & A/CS)
Surendra Singh
PRESIDENT & COO
Rakesh Sharma
CFO
Sandeep Rajpal
VICE PRESIDENT (MARKETING)
B.M. Jhamb
COMPANY SECRETARY
Vijay Gyanchandani
S-ANCIAL TECHNOLOGIES
Vijay Gyanchandani From S
Ancial
O. P. Agarwal
Chief Advisor, Mr. Surendra Singh –
Key numbers — 40 extracted
6%
ll this quarter. We have done better than whatever we had budgeted, I think we are about almost 6%-7% higher what we had budgeted for this quarter and we are hoping that in this second quarter als
7%
this quarter. We have done better than whatever we had budgeted, I think we are about almost 6%-7% higher what we had budgeted for this quarter and we are hoping that in this second quarter also w
rs,
d that was actually stretching us in our finances also but now it is stabilizing. The semiconductors, the availability is better but we feel that it will take at least till the end of 2023, before ava
60%
what is happening around Taiwan that is of concern and as we all know that Taiwan produces almost 60% of the total semiconductors in the world. So, that could become a major issue. It is like the oil
130%
e have started delivering and just the other day, we were given a message that they wanted almost 130% capacity enhancement and we are looking at increasing their capacity without any major investment
30%
It is by improving the efficiencies and also may be some add-on equipment but very little. For 30% to 35% increase the total investment will not be proportional to whatever we had done in the past
35%
by improving the efficiencies and also may be some add-on equipment but very little. For 30% to 35% increase the total investment will not be proportional to whatever we had done in the past. It wo
2crore
not be proportional to whatever we had done in the past. It would be just a couple of crores, 1- 2crores or 5 crores that is what we are estimating. Because the building is in place, the power and ever
5 crore
portional to whatever we had done in the past. It would be just a couple of crores, 1- 2crores or 5 crores that is what we are estimating. Because the building is in place, the power and everything, the
34%
that the two-wheeler industry actually grows this year. But having said, we have grown by almost 34% quarter-on-quarter in the two-wheeler industry in particular. Last year, we were 119 crores in th
119 crore
wn by almost 34% quarter-on-quarter in the two-wheeler industry in particular. Last year, we were 119 crores in the quarter and this year, we are almost 200 crores, 192 crores. So, there is a major growth,
200 crore
dustry in particular. Last year, we were 119 crores in the quarter and this year, we are almost 200 crores, 192 crores. So, there is a major growth, we have done and that is primarily because taking a la
Advertisement
Guidance — 20 items
Arvind Kapur
opening
“We have done better than whatever we had budgeted, I think we are about almost 6%-7% higher what we had budgeted for this quarter and we are hoping that in this second quarter also we will be better than the budget that we had taken up.”
Arvind Kapur
opening
“The semiconductors, the availability is better but we feel that it will take at least till the end of 2023, before availability would be full that would be because of the new plants which are coming up all over the world and new capacity which will be created and we are hoping that at least from the year after there will be not been a problem.”
Arvind Kapur
opening
“So, this is towards our electrifications, this is a major project for us.”
Arvind Kapur
opening
“But in case the two-wheeler industry bounces back, this growth will be even higher than whatever we have been able to do so far.”
Arvind Kapur
opening
“We think that the car industry will grow further.”
Arvind Kapur
opening
“Our debt to equity ratio is less than 0.5 and the CAPEX that we intend doing would be, our depreciation, normally we match the depreciation.”
Arvind Kapur
opening
“So, our target is to keep it under 50 crores because by and large most of the things are in place but this would mainly be on the occupant that is required as balancing occupant in some to the places and replacement occupant that might be required.”
Arvind Kapur
opening
“Our EBITDA, in percentage wise, we are about the same as in last quarter but we will be in the double-digits in this current quarter and our target is to be between 12%-13% as far as EBITDA is concern and which we are very confident of achieving.”
Arvind Kapur
qa
“No, I said we will be double-digit this year, definitely and but our target is to achieve 12%-13%, which we are confident of achieving it if not this year, certainly next year.”
Rishikesh
qa
“So, on what basis exactly are we guiding, are we upgrading our guidance?”
Risks & concerns — 6 flagged
Of course, the geopolitical situation specially what is happening around Taiwan that is of concern and as we all know that Taiwan produces almost 60% of the total semiconductors in the world.
— Arvind Kapur
We do see some signs of stress which are there but having said that the sales of the cars still continue to do well and our customers are doing pretty well.
— Arvind Kapur
So, that is how we have grown and the other thing that has been added is the wheels that we supply, there we have taken a major share also and so we are happy as far as our growth is concern.
— Arvind Kapur
Some of the challenges, one is the sea freight which is a challenge and getting compensated from a customer that is a challenge and the customers do understand and, in some cases, we have already got it and other cases we will get it.
— Arvind Kapur
Our EBITDA, in percentage wise, we are about the same as in last quarter but we will be in the double-digits in this current quarter and our target is to be between 12%-13% as far as EBITDA is concern and which we are very confident of achieving.
— Arvind Kapur
As far as utilization capacity is concern, we make about our specialized the components, like for two-wheelers, we make the complete clutch assemblies and then we automate the aluminum wheel, where at the moment we are running at about 70% capacity utilization.
— Arvind Kapur
Advertisement
Q&A — 9 exchanges
Q
Sir my first question is you mentioned about double-digit margin is in Q2 itself, right?
Arvind Kapur
This year, we will cross double-digit and we might be able to get it in the second quarter, we are all working on that. You mentioned 12%-13%, if I am not wrong. No, I said we will be double-digit this year, definitely and but our target is to achieve 12%-13%, which we are confident of achieving it if not this year, certainly next year. But sir, earlier we used to guide in 10%. So, on what basis exactly are we guiding, are we upgrading our guidance? Based on whatever exercises, we are doing in our plant and if you look at the turnover going up, it is without any major investments which are tak
Q
Sir in this quarter, what will be the break up for export and domestic?
Arvind Kapur
I have the figures for this year, we are growing almost 30% in the export, it is about INR129 crores. INR 129 crores exports? And sir it seems mostly the rise has come from the volume. Is there any price contribution also in this growth? Both it is volume as well as the price and also new component which have gone. Okay, so value price will be around how much sir, if u can give, if it is possible. Value? What you want? I mean the break up of volume and value? I would like to have it a guess but we can share figures later on surely. The commodity price increase is one part, which we get quarter
Q
First of all, I wanted to understand the tax rate, how do we see the tax rate, this year, then next year.?
Management
In case of tax, as of now, we are under MAT we are paying. So, it comes around 18%. But on P&L it is currently 40% plus. There is some deferred tax adjustment would be there. So, that is all. So, that will continue. So, on a reported basis 40% plus tax rate would be fair to assume. On an average, it comes to around 23% in our case but we have under MAT because some accumulated losses but after merger also we benefit on that account of accumulated losses from subsidiaries. So, it will be around 18%-19% Because FY 2022 it was 37%, right? I will have to check that again, some deferred tax adjustm
Q
Sir since you doing projects worth INR 2400 crores turnover by FY 2023. Do you have any project that will take you till FY 2025?
Arvind Kapur
We have all the order books in hand and we have all but I do not have the calculation in front of me but hopefully we should be growing by over 15%-20% year-on-year. That is what our target is. About 15% growth definitely. 15% year-on-year. Yes, 15%-20%
Q
My first question is on the Toyota Chennai expansion that we are doing. So, can you throw some light like what is the CAPEX there and by how much our capacity is growing up and what kind of products we will be manufacturing there etc.
Arvind Kapur
The project cost was INR 135 crores and we have written that and there have been slight delays on delivery of machineries primarily because of our electronics not available to the suppliers or machine. Number 2, also the rewards etc. which were getting delayed by the customer but we were supposed to spend this money last year but it got split up between last year and this year and by the end of the year it would be fully utilized. And the turnover now with the enhanced order that we expecting will be around INR 140 to INR 150 crores that is what we estimate on the Toyota project. This includes
Q
Sir, from our sales volume how much is from two-wheeler and how much from other industry.
Arvind Kapur
Two-wheeler for us is about 32% to 33% and the rest from cars that is about 48 to 49% and the commercial vehicles is about 11% of our total sales other of about 7% to 8%. Sir this two-wheeler which is about 32% does it include IC engine and EV sales also. Till date we were mainly toward IC engine but we have started supplying wheels to EV. So, slowly we will enter into it. We would like to supply more to the EV but at the moment the volume is pretty low. And acceptability was there a lot of excitement when Ola and everybody came in. But when the fire started happening, there is a lot of reacti
Q
Can you please tell me your net debt as of the first quarter?
Management
See, total debt is INR 475 crores. And of that short-term is how much? Short-term is INR 190 crores approximately. This I am talking about standalone basis. Long-term is INR 190 growth you said, right? No, long-term is INR 285 crores around 285. That includes whatever current maturities are there, including that. And the guidance you gave for this year was INR 2400 crores of topline and approximately a 10% EBITDA margin, right? Yes. Can you tell me off that INR 240 crores EBITDA that we expected to how much is expected to convert into operating cash flow? As far as depreciation is concerned, t
Q
Sir, in the 32% volume you get from, two-wheelers how much of it could be converted to EV or and the engine part involved in it.
Arvind Kapur
The wheel is common between electric vehicle and IC engine; the braking system is common between that and that. Of course, every design differs from other. The electric vehicle design is separate but we are making Jacky components and braking systems etc. We make a lot of IC engine also now I think this percentage is going to remain, reason being that we are hoping that we think at least that the two-wheeler industry has hit the lowest and after that improvement should take place and we are hoping that this quarter also because of the season and better monsoons we will see better results. So,
Q
Thank you so much. And we do find a lot of interest in the electric vehicles and your company is also focusing, a lot on electrification and electric vehicles. And in fact, the most of the courts and most of the negotiations that are going on with our customers is on electric vehicle components. And we are all excited about it. But it is mainly for exports in the domestic market. Unfortunately, the growth is slower than as what is happening in Europe and other places. So, the opportunity is obviously, less, but we are we have our ears and eyes open and we are always there to negotiate with our
Management
Speaking time
Arvind Kapur
51
Management
14
Utkarsh Somaiya
14
Mukesh Modi
13
Hiten
12
Moderator
10
Rishikesh
9
Deepak Poddar
7
Ankur Agrawal
5
Vijay Gyanchandani
1
Advertisement
Opening remarks
Vijay Gyanchandani
Thank you. Welcome to Rico Industries Q1 FY23 Earnings Conference Call. From the management we have today. Mr. Arvind Kapur – Chairman, Chief Executive Officer, Managing Director, Mr. O. P. Agarwal – Chief Advisor, Mr. Surendra Singh – President & Chief Operating Officer, Mr Rakesh Sharma – Chief Financial Officer, Mr. Sandeep Rajpal – Vice President (Marketing) and Mr. B. M. Jhamb – Company Secretary. Now I request Mr. Arvind Kapur to take us through the key remark after that we can open the floor for the Q&A session. Thank you. Over to sir.
Arvind Kapur
Good evening. My name is Arvind Kapur, and I am sitting here in the conference room of Rico with my colleagues who are also here to take on any questions that might arise out of this meeting but in general we are happy and the company is doing well this quarter. We have done better than whatever we had budgeted, I think we are about almost 6%-7% higher what we had budgeted for this quarter and we are hoping that in this second quarter also we will be better than the budget that we had taken up. The couple of reasons for this fortunately the GDP is good and the monsoon has been about 6% plus and with the festival season also around. We are hoping that the next couple of months, should be very good and in fact we should be much above the budget that we had done in the beginning of the year. The commodities are showing some signs of stabilizing and we are happy about that because what was happening was that every time there was so much lag impact that the recoveries we had to take from th
Advertisement
← All transcriptsRICOAUTO stock page →