IFBINDNSEJune 30, 2022

IFB Industries Limited

4,062words
61turns
5analyst exchanges
1executives
Management on call
Rajshankar Ray
MD an
Key numbers — 24 extracted
1054.69 Crore
substantially high compared to same quarter last year. The company has reported a total income of 1054.69 Crores which is a growth of 88oZ compared to the same quarter last year; however, last year was affected
38.4 Crore
last year was affected due to coVID. The base was low last year. EBITDA Margin during the year was 38.4 Crores compared to loss of 29.41 Crores for the corresponding quarter ,,llfi xffeAft"3'"'8/.i'Q"slH3'f,'
29.41 Crore
oVID. The base was low last year. EBITDA Margin during the year was 38.4 Crores compared to loss of 29.41 Crores for the corresponding quarter ,,llfi xffeAft"3'"'8/.i'Q"slH3'f,'tf5'!lJ'1$8"?,{"''?Ff#,? *'nn$irg
5%
Rajshankar Ray Rajshankar here. The price hikes taken in the quarter are roughly between 3o/o and 5% depending on the model of the segment and are you talking about percentage of sales in e-commerce M
3%
ales in e-commerce Mr. Chatterjee would you like to answer that please. Prabir Chatterjee: Around l3%. Prasheel Gandhi: So this number is likely to go up for Q2 and Q3 is rny understanding correct?
73%
rrect? Page 2 of l0 ISHlnd$$triss !-irxit*d Rajshankar Ray: It would sort of be in the range of 73%o to 17Yo I think that will be the ratio for Q2 as well. Prasheel Gandhi: One more question I had
4%
for everyone but if you look at the two main players their price change in the market was between 4%o and 60% so there was a significant amount of the material cost percentage which was subsidized or
60%
ryone but if you look at the two main players their price change in the market was between 4%o and 60% so there was a significant amount of the material cost percentage which was subsidized or addresse
4 lakh
quarter obviously that was distorted base we have done extremely well so when you say about 3.5 to 4 lakh units so roughly 1.5 lakhs to 1.75 lakhs will be our own branded sales and the rest would be as an
1.5 lakh
as distorted base we have done extremely well so when you say about 3.5 to 4 lakh units so roughly 1.5 lakhs to 1.75 lakhs will be our own branded sales and the rest would be as an OEM model? Rajshankar Ra
1.75 lakh
base we have done extremely well so when you say about 3.5 to 4 lakh units so roughly 1.5 lakhs to 1.75 lakhs will be our own branded sales and the rest would be as an OEM model? Rajshankar Ray: Our estima
2.5 lakh
branded sales and the rest would be as an OEM model? Rajshankar Ray: Our estimate is that about 2.5 lakhs or 2.3 lakhs is going to be IFB brand sales for this year and the remaining will be the OEM. Man
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Guidance — 16 items
Rajshankar Ray
qa
“It would sort of be in the range of 73%o to 17Yo I think that will be the ratio for Q2 as well.”
Rajshankar Ray
qa
“Now my own personal understanding is that remains as something to be observed, so if you see our price increase it is more or less in line with the raw material increase so going forward when the commodity prices begin to ease from this quarter onwards whether that will be used by the other players to address that segment of material cost which was not addressed or will it be used for fuither aggression in the market we have to wait and see.”
Manoj Gori
qa
“Understood and lastly on the AC side so obviously when you look at versus the base quarter obviously that was distorted base we have done extremely well so when you say about 3.5 to 4 lakh units so roughly 1.5 lakhs to 1.75 lakhs will be our own branded sales and the rest would be as an OEM model?”
Rajshankar Ray
qa
“Our estimate is that about 2.5 lakhs or 2.3 lakhs is going to be IFB brand sales for this year and the remaining will be the OEM.”
Rajshankar Ray
qa
“This is an interesting question because the months of May and June in terms of customer offtake has been subdued The first festival or the start ofthe so called festival season is Onam and ifyou look at the general feeling about how the customer movement will be or the early hends most of the retailers and the market seems to be confident that things will be as estimated.”
Rajshankar Ray
qa
“So personally I do not believe that there will be a problem on the season demand because there is a lull normally before the season so there is nothing unusual per se about this but for us the demand from the normal season trend that getting more growth like we have done for example in Ql by broad basing channel growth we have two agendas both equally important for us.”
Manoj Gori
qa
“Rajshankar Ray For capex per se as of now there is no significant capex required, As far as capex for the large projects for the next year those are being re-evaluated and they will be intemally assessed maybe in this quarter so whatever is decided I think in the next quarter we will be able to let everyone.”
Prabir Chatterjee
qa
“Motor division there is BLDC project with Rs.40 crore as capex.”
Manoj Gori
qa
“On this BLDC how do we see the overall scale, market opportunity, what could be the margin profile because obviously this seems to be the trend going forward like probably for the next two to three years at least there would be larger shift happening from your traditional induction motors to your BLDC motors so any update or outlook over there?”
Prabir Chatterjee
qa
“As of now AC margins is lower than other product & we are working on this to improve t.he margin and we do not give any guidance on margin .”
Risks & concerns — 6 flagged
Lastly on the washing machine sales how is the current environment with regards to consumer demand do you see any slowdown because there have been rnultiple categories where there has been some pressure on the consumer purchases so in July and August what are the early trends that you are picking up and how do you see demand for the upcoming festive season because even ifyou look at last year probably for the category festive season was not so encouraging so that would be my last question Sir?
— Manoj Gori
Rajshankar Ray The issue of the margin profile of the AC business was a very large problem in the previous financial year it has reduced in Ql but it remains the problem so the material cost reduction plan or the new range plan that we made our internal target is that in Q4 of this year we would have finished this issue and this will remain a challenge in Q2 and Q3 but we are working to eliminate this issue of losses but this will be fully fixed in Q4 of this year.
— Prabir Chatterjee
Bhargav Buddhadev: Is currency a risk for us, currency depreciation?
— Rajshankar Ray
The currency depreciation is definitely a risk.
— Rajshankar Ray
If there is a swing of Rs.l here and there it is something that can be managed but should the rupee depreciate to something like 82 or 83 then there is definitely risk sitting there if we are unable to recover that from the market.
— Rajshankar Ray
There is a currency risk definitely sitting.
— Rajshankar Ray
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Q&A — 5 exchanges
Q
Hello thanks for the opportunity. Could you highlight the price hikes that we have taken for the quarter and secondly what was the sale through e-com channels? Rajshankar Ray Rajshankar here. The price hikes taken in the quarter are roughly between 3o/o and 5% depending on the model of the segment and are you talking about percentage of sales in e-commerce Mr. Chatterjee would you like to answer that please. Prabir Chatterjee: Around l3%.
Prasheel Gandhi
So this number is likely to go up for Q2 and Q3 is rny understanding correct? Page 2 of l0 ISHlnd$$triss !-irxit*d It would sort of be in the range of 73%o to 17Yo I think that will be the ratio for Q2 as well. One more question I had regarding the AC could you give like for full year how much would be the AC contribution for FY 22-23 what we are expecting? Rajshankar Ray In volume terms for this year we are expecting between 350000 to 400000 ACs by number and if you look at it in terms ofvalue then the average SKU value you could take it about 30000/- Thank you. So what is the price hike you
Q
In terms of the volume growth for the first quarter if you look at growth percentage over the last year the growth is healthy. If you look at in terms of the competitive intensity then specifically a player like Samsung has been extremely aggressive in terms of pricing in the market over the last two quarters and going forward we would expect this sort of aggressive posturing to remain and that is our understanding, so in tenns of competitive intensity in temrs of number of players it remains the same but one or two players taking a very aggressive posture to gain shares I think that will rern
Manoj Gori
In this case like during the second halfobviously we should be having some RM benefit, so as you are saying like the competitive intensity will continue to stay and is going to stay here so in that case they definitely would be passing on the RM benefit so is that understanding correct and accordingly we also need to follow that? ffiNIT lndustrips *-imited We have to wait and see. If you see what has happened over the last year-and-a-half approximately we all know that the material cost increase was anywhere between 13o/o and 160/o and that was true for everyone but if you look at the two main
Q
Good atternoon team and thank you for the opportunity. My first question is on the gross margin in the AC business is it possible to separately tell us what is the gross margin which we are making in the AC business?
Rajshankar Ray
My suggestion would be that you could speak to Mr. Chatterjee please separately on this. As of now AC margins is lower than other product & we are working on this to improve t.he margin and we do not give any guidance on margin . You can talk to me later on please. ISIt lndrstries l-irnit*d Bhargav Buddhadev In the first quarter if I look at your press release we made a loss of about 21 Crores in the AC business at the PBT level so given that first quarter is typically the best quarter in a year how confident are we that we would be profitable this year in the AC business? Rajshankar Ray The i
Q
Question regarding the B ratings which were implanted from July 1,2022 so what is the cost increase for a portfolio posts these B ratings could you throw some light on that?
Rajshankar Ray
The platfomr that we had was already quite optimized so we have moved into the new range energy certification with not too much of a material cost impact so let us say it would be in the range for midline models of between Rs.300 and Rs.500 per AC the impact for us has been low. That is a part ofwhat is being produced and positioned in terms ofprice and specification from July onwards in any case so that has been factored into the planning for the business. That is very helpful and secondly on the imports what percentage of our raw materials do we import? Rajshankar Ray You are talking about t
Q
The advertising and promotion spend for the last fiscal year was around 6.5o% of revenue is that what we are expecting for the next few years as well? Prabir Chatterjee: Spent on sales promotion during ist qtr. was 1.95% Kuvam Chugh On full fiscal what are we expecting? Prabir Chatterjee: As indicted earlier we do not give any forward guidance on Margin. Rajshankar Ray Yes that is right.
Kuvam Chugh
Finally what would be the breakeven volumes for our AC business what volume would we have to get for plant utilization? ni'ffi lndilstries Llslted If we look at this number with the complete material cost reduction programme implemented then the breakeven volumes would be in the range of around 15000 ACs in a month so let us say 200000 to 225000 kind of number. Just one more question when we do value engineering on our appliances is there a quality method in terms of the finished product going to the customers? Rajshankar Ray No, not at all. Kuvam Chugh Alright thank you.
Speaking time
Rajshankar Ray
22
Prasheel Gandhi
11
Moderator
8
Manoj Gori
8
Prabir Chatterjee
4
Bhargav Buddhadev
4
Kuvam Chugh
3
Prashecl Gandhi
1
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Opening remarks
Prabir Chatterjee
call of IFB Industries. From the management team we have Mr. Prabir Chatterjee, Director and CFO, Mr. Rajshankar Ray - MD and CEO Home Appliances Division, Mr. Arup Das - Head Marketing Engineering Division and Mr. Anand Reddy - CEO Motor Division. I now hand over the call to the management for opening remarks post which we can take for Q&A. Thank you and over to you Sir! Thank you Mr. Gandhi. Good aftemoon everyone. I welcome you all for IFB Industries investors' call for the first quarter FY 22-23, Hope everyone is safe and fine. with me today are Mr. Rajshankar Ray, MD & cEo of Home Appliances Division, Mr. Arup Das, Head of Marketing - Engineering Division and Mr. Anand Reddy - CEO of Motor Division. Growth in revenue during the quarter was substantially high compared to same quarter last year. The company has reported a total income of 1054.69 Crores which is a growth of 88oZ compared to the same quarter last year; however, last year was affected due to coVID. The base was low las
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