Apar Industries Limited

Kushal Desai

CHAIRMAN, MANAGING DIRECTOR, APAR INDUSTRIES LIMITED

Chaitanya Desai

MANAGING DIRECTOR, APAR INDUSTRIES LIMITED

Ramesh Iyer

CFO, APAR INDUSTRIES LIMITED

Nihar Mehta

S-ANCIAL

Nihar Mehta From S

Ancial Technologies. Thank you, and over to you, sir.

INR 3,093 crore

post which we can open the floor to questions. For Q1 FY'23, the consolidated revenue came in at INR 3,093 crore, up 71% year-on-year driven by both volume growth and price increases from commodity values across

71%

en the floor to questions. For Q1 FY'23, the consolidated revenue came in at INR 3,093 crore, up 71% year-on-year driven by both volume growth and price increases from commodity values across segment

76%

th volume growth and price increases from commodity values across segments. Export revenues is up 76% year-on-year, contributing to 42% versus 41% in the previous year. EBITDA is up 73% year-on- year

42%

ses from commodity values across segments. Export revenues is up 76% year-on-year, contributing to 42% versus 41% in the previous year. EBITDA is up 73% year-on- year to INR 239 crore at a margin of 7.

41%

modity values across segments. Export revenues is up 76% year-on-year, contributing to 42% versus 41% in the previous year. EBITDA is up 73% year-on- year to INR 239 crore at a margin of 7.6%. PAT came

73%

revenues is up 76% year-on-year, contributing to 42% versus 41% in the previous year. EBITDA is up 73% year-on- year to INR 239 crore at a margin of 7.6%. PAT came in at INR 122 crore, up 97% year-on-y

INR 239 crore

ar-on-year, contributing to 42% versus 41% in the previous year. EBITDA is up 73% year-on- year to INR 239 crore at a margin of 7.6%. PAT came in at INR 122 crore, up 97% year-on-year with 4% margin versus 3.4%

7.6%

2% versus 41% in the previous year. EBITDA is up 73% year-on- year to INR 239 crore at a margin of 7.6%. PAT came in at INR 122 crore, up 97% year-on-year with 4% margin versus 3.4% in Q1 of FY'22. All

INR 122 crore

previous year. EBITDA is up 73% year-on- year to INR 239 crore at a margin of 7.6%. PAT came in at INR 122 crore, up 97% year-on-year with 4% margin versus 3.4% in Q1 of FY'22. All 3 divisions contributed to the

97%

TDA is up 73% year-on- year to INR 239 crore at a margin of 7.6%. PAT came in at INR 122 crore, up 97% year-on-year with 4% margin versus 3.4% in Q1 of FY'22. All 3 divisions contributed to the perfor

4%

year to INR 239 crore at a margin of 7.6%. PAT came in at INR 122 crore, up 97% year-on-year with 4% margin versus 3.4% in Q1 of FY'22. All 3 divisions contributed to the performance, which is the h

3.4%

rore at a margin of 7.6%. PAT came in at INR 122 crore, up 97% year-on-year with 4% margin versus 3.4% in Q1 of FY'22. All 3 divisions contributed to the performance, which is the highest reported quar

“As a reminder to all participants line will be in the listen‐only mode, and there will be an opportunity for you to ask questions after the presentation concludes.”

“India is poised to add 27,000 circuit kilometers of interstate power transmission networks by 2024, as it has Apar Industries Limited July 29, 2022 already added 6,500 circuit kilometers or almost 1/4 of the target.”

“lines According to the latest report released by the Central Electric Authority, the overall target for substation transformation capacity addition for FY'23 has been set at 95,659 MVA.”

“This is 17.3% higher than the comparable target of 81,545 MVA for FY'22.”

“In terms of voltage plants, the bulk of the target, 44.5%, will come from 400 KV substations.”

“The 765 KV class will account for 28.2% of the target, while the 220 KV category will make up the remaining 27.3%.”

“There have been supply chain issues with the higher priced base oil deliveries getting delayed by several weeks resulting in lower cost basis in Q1, but will be followed by a very sharp increase in Q2.”

“So the whole target is to actually get a higher wallet share of the mechanic.”

“So our target is to get to INR 500 crore 3 years from today in that product category.”

“The spending that will be there on advertising and promotions, et cetera, we'll pretty much capture that within the margin of the incremental sale that is coming on.”

Kushal Desai

36

Ramesh Iyer

10

Pratiksha Daftari

7

Pawan Nahar

7

Moderator

5

Maulik Patel

5

Chaitanya Desai

4

Pravin Agarwal

2

Gunit Singh

2

Pujan Shah

1

Chaitanya Desai

Ladies and gentlemen, good day, and welcome to the Apar Industries Limited Q1 FY'23 Earnings Conference Call. As a reminder to all participants line will be in the listen‐only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing ‘*’ then ‘0’ on your touchtone phone. Please note that this conference is recorded. I now hand the conference over to Mr. Nihar Mehta from S- Ancial Technologies. Thank you, and over to you, sir. Hi, very good afternoon to everyone. This is Nihar Mehta from S-Ancial Technologies. On behalf of the management of Apar Industries, I would like to thank all of you for participating in the earnings conference call for the first quarter of FY'23 for Apar Industries. To discuss the business performance and outlook, we have from the management side, Mr. Kushal Desai, who is the Chairman and Managing Director; Mr. Chaitanya Desai, who'

Kushal Desai

EBITDA and the high EBITDA generating EBITDA? It's a difference between 1,000 or something like that? Can I assume that? So it's difficult to have a straight answer to this, because it's not one conductor that we have in normal and one conductor that we have for the premium product, because it's mostly a made- to-order business and there are sort of variables that come into the play in order to determine the margins. Also, the price is also influenced with the commodity prices that keeps on changing. And therefore, there's no kind of a thumb-rule that we can establish between a normal and in this conductor. The other reason is that in addition to the commodity prices, we see a huge impact having with the interest cost also. So one of the reasons why we have high EBITDA is, of course, due to high proportion of premium products. But in addition, as the interest cost increases, this gets factored into our customer prices. So your EBITDA, which is your earnings before interest, captures th

Kushal Desai

So automatically, the credit of these points go into the distributors wallet, and the distributor can then encash those points. So in short, the answer is that we are looking at basically improving the whole supply chain and getting a larger portion of the mechanics wallet. Also over a period, if you see some of the lubricant demands could fall as electric vehicles increase. And having access to a range of batteries and wheels, we are agnostic to whether it's an IC engine or electric engine. So that's how we've looked at adding these. The sales team remains pretty much the same. So it's really a leverage in terms of the whole supply So there will not be a much often extra spending cost on developing and spreading this product? But it would be an add- on advantage to Apar, right? That is my understanding. Yes. So there's not a huge amount of product development cost. There is a certain amount of operating costs because we have a warranty program. Again, it's the first digital warranty p

Kushal Desai

established players. One is that it has a much higher current carrying capacity. It can carry 50% more current. And secondly, the insulation is such that it's very highly short circuit resistant. So the short circuiting will not happen quickly. So when you combine these 2 aspects, it really has a technical performance. So most of the investment which we are doing today is in frontline salespeople who are going and demoing the product to various influencers as well as to small builders, projects, et cetera. The spending that will be there on advertising and promotions, et cetera, we'll pretty much capture that within the margin of the incremental sale that is coming on. Okay. And sir, as I read your con call in that you told us that in defense, there is a difficult to get the entry. Once we get the entry, we get a scale up in the business. So I think we have got something like INR 70 crore, INR 80-odd crore of revenue from defense, I think last year also. So are we seeing any traction i

Ramesh Iyer

Pratiksha here. So my first question was with regards to conductors. So we're seeing some dip-in realizations here on Q- o-Q basis. Despite which we've got EBITDA further increasing. So just wanted to understand if there's some amount of inventory gains in this segment as well. Inventory gains are not going out there in conductor as a lot of these back-to-back order based. But as I said, one of the reason is definitely, these premium products and also there are multiple products within the premium products that the mix of it changes and the mix of it can increase the EBITDA. So one of those things has happened in this particular quarter. And the second thing is that, as I was explaining earlier, there is an increase in the interest cost. And therefore, if you look at Q1 itself, the incremental interest cost had also been into EBITDA, but when you look at the earnings post interest, it will be slightly less than the 21,900 number there. If you look at Q4 to Q1, the amount of interest co

Kushal Desai

Okay. And generally with commodity prices increasing, do we expect our realizations to decrease in coming quarters, especially for cables and conductors? The realization will actually depend on the commodity prices. As the commodity prices come down, the realization will come down at the same time and conversely, if the commodity price goes up our sales will go, but it will not impact the bottom line in terms of a per unit level. And therefore, we kind of measure our business also in terms of per unit, because if you look at percentage and there'd be too much wavering depending on how the commodity prices goes here. So I can just add to what Ramesh has mentioned here that we have both aluminum and copper are down between 25% and 30% from their all-time high. So there will be obviously an impact in terms of per kilometer cost or per ton cost of the Apar Industries Limited July 29, 2022