Pricol Limited
5,863words
90turns
10analyst exchanges
1executives
Management on call
Vikram Mohan
Managing Director, Mr. P M Ganesh – Chief Executi
Key numbers — 40 extracted
4.7%
d into so far are helping move us in that direction. Having said so, we continue to invest nearly 4.7% of our sales on both product and process technology and about 60% of our while collar cost contin
60%
, we continue to invest nearly 4.7% of our sales on both product and process technology and about 60% of our while collar cost continues to be spent on product and process technology which will help
65 crore
ou would be interested in. We have at a consolidated level reduced our borrowing significantly to 65 crores compared to the same time last year as of 30th June excluding ECLGS borrowings, the long-term bo
11.8%
t of this cost are being observed by the company which has resulted in an EBITDA margin of only 11.8% on a standalone basis and 13.06% on a consolidated basis. These problems will continu
13.06%
ved by the company which has resulted in an EBITDA margin of only 11.8% on a standalone basis and 13.06% on a consolidated basis. These problems will continue to occur for another two to thr
41.61%
perations on a quarter-to-quarter comparison between Quarter 1 FY22 and Quarter 1 FY23 has seen a 41.61% increase. This is also on account of Quarter 1 in FY22 having the second wave of COVID and result
48.63%
for the period has increased again on a quarter-on-quarter comparison between FY22 and FY23 by 48.63%. Profit before tax has increased substantially and so has profit after tax. On a consolidated bas
138 crore
er for a standalone basis stands at 11.8% and our total borrowing including working capital is at 138 crores of which 65 crores are long term borrowings. We have further reduced these long-term borrowings
40 crore
h 65 crores are long term borrowings. We have further reduced these long-term borrowings by about 40 crores in July. So, our long-term borrowings as of today stands at 25 crores and the management team is
25 crore
ng-term borrowings by about 40 crores in July. So, our long-term borrowings as of today stands at 25 crores and the management team is very confident of extinguishing the same in the next few months the c
13%
s the cash generated from operation. On a consolidated basis we have generated an EBITDA of about 13% and borrowings continue to be on a similar note. We do not have any borrowings at any of our subs
430 crore
e speak the demand has been quite robust and you can see the results in Q1 we have done more than 430 crores. Vikram Mohan: I would like to further supplement what my colleague Ganesh has said I hope I a
Guidance — 20 items
“I believe we will be producing 10% less than what the demand were seen in Quarter 1 those demand is higher purely because of these headwinds faced by our ultimate customers which is our OEMs as well as ourselves and these headwinds are expected to ease off in between 6 to 9 months for industry exports.”
“I would also like to understand the recent partnerships that we have got with BMI and Sibros when can we expect products in partnership with them to come into production, can you just throw some more light on these partnerships?”
“With regard to the growth the first set of joint product will be ready this month and from next month we will start the road show with the customers.”
“The Center of Excellence launched with ESG and we have one more Center of Excellence with another engineering institution of repute in the angle which will be allowed shortly.”
“So, sir this actuation control and fluid management system mostly will be in IC engine right?”
“So, sir can you comment on the CAPEX required for your recent partnerships, what is the scalability and means what type of margin we can seek from this products competitive intensity then it will be really very helpful sir?”
“We have estimated a CAPEX of about 350 crores to 400 crores over the next 34 to 30 months in order to meet our FY26 goals or vision 2025 as we progress within the company which will take care of all our new product launches and alliances.”
“So regarding this battery management system tie-up, so what exactly we will be supplying, we will be supplying battery pack or we will be supplying components means I am little confuse so please clarify?”
“So, this BMS will be selling to two wheelers, four wheelers or we will be selling to all vehicle manufacturers and what type of content per vehicle we can expect?”
“So, in BMS what type of content per vehicle we can expect from this business once it becomes fully operational?”
Risks & concerns — 4 flagged
Such forward looking statements are subject to risk and uncertainties which could cause actual results to differ from those anticipated.
— Anuj Sonpal
These problems will continue to occur for another two to three quarters as per expert opinions till supply chain come back to normal and demand come back to normal until which the EBITDA improvement where the team is working on is going to be a little difficult.
— Vikram Mohan
See it is difficult to say what was the order book as such because OEM does not work that way.
— P M Ganesh
The headwinds that we are facing in the industry which is the supply chain headwinds and logistic headwind will continue to hamper our optimal output not just from us and OEMs.
— Vikram Mohan
Q&A — 10 exchanges
Q
I just had couple of questions regarding our order book and a utilization levels?
P M Ganesh
Jinesh actually what we do is the capacity is created based on the customer requirement, how we generally work is on a two-year horizon in terms of capacity planning. So, what customer gives us is the indication for on a rolling basis for 24 months. Based on that capacity is planned, capacity is based on the final assembly operations is what we do. In terms of backward integration because it is a very largely backward integrated company depending on certain fluctuations in demand if the demand is going to be high during the festival season then we can contract it outside to our suppliers. And
Q
So, my question is what percentage of our turnover comes from driver information and connected vehicle solution segment and actuation control and fluid management systems?
Vikram Mohan
55% of our turnover comes from driver information system 50% to 55% based on the product mix and above 30% from the actuation and fluid control systems. Ganesh correct me if I am wrong. Yes Vikram I think that is the right number. So, sir this actuation control and fluid management system mostly will be in IC engine right? Yes it is in IC engine, but we are focusing more on the off-road vehicle, construction equipment heavy duty engines which are not going to be disrupted by EV vehicles and exports. We do have a portfolio of about 130 crores which are to the two-wheeler IC engines in the fluid
Q
So, sir can you comment on the CAPEX required for your recent partnerships, what is the scalability and means what type of margin we can seek from this products competitive intensity then it will be really very helpful sir?
Vikram Mohan
We have estimated a CAPEX of about 350 crores to 400 crores over the next 34 to 30 months in order to meet our FY26 goals or vision 2025 as we progress within the company which will take care of all our new product launches and alliances. In terms of margins, we believe normalized margins for our business for this family or product should be between 14.5% EBITDA as against 11.5% that we are seeing today. The erosion in EBITDA will continue to be there for another year or at least 9 months before it improves and as the new technology products also kick in the margins improve. So, that answers y
Q
My question was regarding the CAPEX plan you mentioned that you are going for a CAPEX of 350 to 400 crore in the next three years as a company has been shortlisted in the PLI scheme that is offered by the government, so is the entire CAPEX be classified as PLI CAPEX or how does it work out?
Vikram Mohan
I will request my colleague our Directory Strategy and Head of Project Siddharth to take that question because he handles that function? Vishal as part of the PLI application yes we have been approved and the 300 crores of CAPEX what our Managing Director mentioned will be staggered over the years and depending on the product maturity as well and many of this product is already applied as part of the PLI application will be qualifying for the PLI scheme, but we will not be able to quantify the exact values as we stand. Sir we have been doing a PAT on roll over basis of around 2, so we will con
Q
You mentioned that you have a term loan of 65 crore and working capital loan of 74 crores on the consolidation basis, you also report the cash balance you know during half yearly number, so can I know what is the cash balance so we know what is the net debt in the books?
Vikram Mohan
Mr. Mehta actually as we stand today as I mentioned earlier the term loan is not 65 because the retired term loan in the month of July also stands at 25 crores. Now it is 25 crores? It is 25 crores as on today because we have further retired term loans. The cash balances on the books I do not have to figure today I will request my colleagues Vidya to come to this call to answer that question. As far as cash balance on books on consolidated levels it will be net off long term borrowing will be nil. We will be having a positive cash reserves on a consolidated basis, but as regards the working ca
Q
I have two questions one is that we have research technology center at Coimbatore?
Vikram Mohan
We are unable to hear you can I request you to be a little louder. We have a research center at Coimbatore were around 300 engineers are working and they are spending almost 5% of our revenue size, so I just wanted to understand from you how this research center is contributing towards an operational material efficiency as well as how this research center will contribute to expand our presence in field other than two and three wheelers? Let me correct you on that it is engineering and technology center for product and process development and the exact number of people working there are 380 peo
Q
Sir I want a clarification like back in Quarter 3 when you disclose about your technical tie up with Hydrus technology, so at that time you said your CAPEX plan would be somewhere around 600 crores that would be funded through a mix of getting equity, so I just wanted an update or any clarification whether there is any change of plan with respect to the same?
Vikram Mohan
There has been no change of plan Mr. Goyal, but 350 crore to 400 crore is on a standalone. We are working on two joint ventures if that culminate then that will also entail in the renewals, but we are not still discussing what is going to be the partnership, what is going to be the investment, what is going to be the contribution by the joint venture partner. We are now talking of 350 crores to 400 crores in the next 24 months to 30 months which will be spent by Pricol outside of these joint ventures that are being envisaged because that is still not compromised.
Q
Sir we are already manufacturing driver information systems. So, what value this Sibros partnership will add, so can you elaborate?
Vikram Mohan
I would request you to go into the presentation and read a little bit more about what the Sibros partnership because it is very clearly mentioned in the investor presentation and since you have asked for a personal meeting my team can explain more clearly because I do not want to get this into a technology product. Four or five lines have been written, but still, I could not understand that question if you want I can take it offline also? Because if we could get into heavily into technology basically we are an hardware and they are in software and power of both are considered better to develop
Q
Sir, would it be possible for you to give some light on the kind of order book which you have currently?
Vikram Mohan
I think this was answered ma’am by CEO and Executive Director, but nicely said so we are capable of producing about 2,200 crores of business right now and we are in little profitable right now and we are creating capacity to go to about 3,500 crores over the next two and half years and this is based on future LOI and pipelines as I think indicated by our customers I think definitely with regard to the order book the CEO had answered the question earlier, how these pipelines work and how order book work in automobile industries.
Q
May I request our Director Strategy to close this conference call please.
Siddharth Manoharan
Thank you. On behalf of the management we would like to thank all the investors and the analyst who has joined in today’s call. We look forward to connect with you and in the future and any queries if you have please reach out to us directly or to our investor relation partner Valorem Advisors for any clarifications. Thank you once again for joining the call today.
Opening remarks
Anuj Sonpal
Thank you. Good afternoon everyone and very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Pricol Limited. On behalf of the company I would like to thank you all for participating in the company’s earnings call for the first quarter of financial year 2023. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings call maybe forward looking in nature. Such forward looking statements are subject to risk and uncertainties which could cause actual results to differ from those anticipated. Such statements are based on management’s belief as well as assumptions made by an information currently available to management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decisions. The purpose of today’s earnings call is purely to educate and bring awareness about the company’s fundamental business and financial quar
Vikram Mohan
Thank Anuj for the introduction and very good afternoon to our investors participating in this call today. We apologize for the slight delay in starting the call because of some technical issues and thank you for your patience. I would like to once again introduce my colleagues on the call today we have with us our colleagues Ganesh who is our CEO and Executive Director and Member of the board. We have Siddharth Manoharan who is our Director of Strategy and Head of special projects and Vidya Venkatachalam our Financial Controller, our CFO who could not make the call today as he has had grievement in his immediate family and is busy with the ceremony. I do hope all of you have had an opportunity to look at the presentation that has already been uploaded. I will go straight into some of the key parts of the presentation which I would like to develop on. From industry partnership that we have entered into in the last few months has been with Sibros a company that is based in the silicon v