KAMDHENUNSEQ1 FY23July 27, 2022

Kamdhenu Limited

4,377words
78turns
8analyst exchanges
2executives
Management on call
Satish Agarwal
CHAIRMAN & MANAGING DIRECTOR
Harish Agarwal
CHIEF FINANCIAL OFFICER
Key numbers — 40 extracted
rs,
ll. Along with me, I have Mr. Harish Agarwal – Chief Financial Officer and Strategic Growth Advisors, our Investor Relation Advisors. We have uploaded our Results and Investor Presentation for the qua
15%
commodity prices. Domestic steel industry was impacted by falling global prices and imposition of 15% export duty on certain steel products. Export duty changed the consumer sentiment in India in ant
26%
m the local user industry and eventually consumption fell. Industry wide export also dropped by 26% due to the weaker global demand and its position of export duty. There has been increase buying
70%
nsumption during FY23. Now coming to steel business: Our Company has reported revenue growth of 70% year-on-year to Rs. 191 crore for Q1 FY23. This was on account of increased construction activiti
Rs. 191 crore
3. Now coming to steel business: Our Company has reported revenue growth of 70% year-on-year to Rs. 191 crore for Q1 FY23. This was on account of increased construction activities due to government push for
7%
roads, railways, PM Aawas Yojana shall lead to demand creation for steel products. EBITDA grew by 7% to Rs. 15.4 crore during the Kamdhenu Limited July 27,2022 quarter. We saw commodi
Rs. 15.4 crore
railways, PM Aawas Yojana shall lead to demand creation for steel products. EBITDA grew by 7% to Rs. 15.4 crore during the Kamdhenu Limited July 27,2022 quarter. We saw commodity inflation which
30%
in the coming quarters. Our franchise volumes as well as volumes from our own facilities grew by 30% on year-on-year basis. Our Company constantly monitors their research and development division an
4%
nologies like converting steel commodity into high yield strength vendor with TMT steel bar to be 4% lesser in weight and 20% stronger than other normal TMT steel bars. Our premium product Kamdhenu
20%
steel commodity into high yield strength vendor with TMT steel bar to be 4% lesser in weight and 20% stronger than other normal TMT steel bars. Our premium product Kamdhenu PAS 10,000 TMT has unique
38 lakh
offer. Going ahead, we are focused on increasing our annual capacity through franchise root from 38 lakh metric tons to 50 lakh metric tons over a period of two years. As you are all aware that our Comp
50 lakh
are focused on increasing our annual capacity through franchise root from 38 lakh metric tons to 50 lakh metric tons over a period of two years. As you are all aware that our Company was in the process
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Guidance — 14 items
Now coming to steel business
opening
“Kamdhenu Limited July 27,2022 78% of our paint revenue are water-based and we plan to increase the share of premium texture paints where margins are higher.”
Ashay Jain
qa
“Sir I have few questions firstly sir I was looking at that our royalty income has grew by 28% on a year-on-year basis, so could you tell the amount of royalty Company is charging per tonne and does the Company have any plans to increase the royalty income going forward?”
Ashay Jain
qa
“So where we intend to increase the capacity by around 25%, so any update or progress on that front and as the Company found any other region apart from Telangana where the capacity can be increased for franchise?”
Harish Agarwal
qa
“Yes you have rightly pointed out that we are increasing our capacity by 25% in next two years and the present capacity is 38 lakh metric tonne which will be increased to 50 lakh metric tonne through the franchise root and our main focus is on increasing the capacity not by increasing the number of franchise.”
Harish Agarwal
qa
“Demand is increasing day by day because there are construction activities, there are government project which are going on.”
Atul Kothari
qa
“And sir what is the target for the entire year as a percentage of sales?”
Harish Agarwal
qa
“Yes, there is a demand in the market because there are government project which are going on, there are infrastructure projects and there are housing project also, Prime Minister Awas Yojana and at the rural areas there are organization from Kacha ghar to Pakka ghar so there is a demand in the market.”
Pankaj Jain
qa
“Since the scheme of arrangement has been signed the demerger of the paint business came into effect from 18th July, so when do we expect the Kamdhenu Ventures getting listed?”
Pankaj Jain
qa
“And the management structure who will be running that business?”
Pankaj Jain
qa
“And sir lastly with the paint business getting demerger and the Company is planning to achieve near about 1,000 crore revenue by FY26, so will we be looking at any strategic partner or private equity or any fund raise if you can throw some light on that end?”
Risks & concerns — 2 flagged
Our premium product Kamdhenu PAS 10,000 TMT has unique feature of double risk, double strength, double safety, making it unmatchable strong and more suitable for highly seismic zone and high-rise constructions.
— Now coming to steel business
So, there is no big impact of the price hike because in the same proportion raw material price increase, finished product price increase, finished product price decrease, raw material price decrease.
— Harish Agarwal
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Q&A — 8 exchanges
Q
Sir I have few questions firstly sir I was looking at that our royalty income has grew by 28% on a year-on-year basis, so could you tell the amount of royalty Company is charging per tonne and does the Company have any plans to increase the royalty income going forward?
Harish Agarwal
In fact, we are trying to increase the volume rather than increasing the rate of per tonne. So, our main focus is on the increase of volume. In fact, we have agreement for three-year, five year with the franchise unit and at the time of renewal we definitely try to increase the rate by Rs. 25 or Rs. 50 per metric tonne. So, it is not practically possible to increase every quarter. Sir my next question is on steel capacity so the Company has plans to increase TMT steel capacity through franchise root and we have also identified franchise unit in Telangana. So where we intend to increase the cap
Q
Sir I have got few questions as far as steel business is concerned so sir in a steel business revenues from our own facilities were up by 73% on year-on-year basis, so was this growth driven by volumes or was it on account of higher realizations?
Harish Agarwal
It is both. In the Q1 of FY22 we were having the production of around 16,000 and this time we have 24,000 and at the same time the price was 52,000 the average price in Q1 FY22 and this time it was Rs. 62,000. So, it is on account of both increase in the volume and increase in the selling price. And sir what is your view on the demand trend going ahead? Demand is increasing day by day because there are construction activities, there are government project which are going on. So, we are seeing good demand in the market. ‘ Secondly sir our Company has realigned the capacity of steel manufacturin
Q
So, sir I had basically two questions that you talked about the inflation and the commodity prices, so what measures or arrangement have been done by the Company for the control of our pricings relating to this and secondly you talked about price hikes which you are looking to pass on to the customers, so what would be the range of that, just wanted an idea on that?
Harish Agarwal
You are talking about the steel business only. Yes sir steel business. In fact, we are into the secondary market where we buy raw material as Ingut and billet from the market and re roll in our plant or our franchise plant and sell in the markets. So, there is no big impact of the price hike because in the same proportion raw material price increase, finished product price increase, finished product price decrease, raw material price decrease. So, there is only impact on the stock lying in the factory. So, the cost inflation and deflation will affect the primary producer first and realization.
Q
Sir can you tell me what are the current utilization levels that for steel and paint plant?
Harish Agarwal
In the steel we have around 80% capacity utilization of our plant. And what about the paint plant? Paint plant we have around 40% utilization of our existing capacity. Could you throw some light on the demand scenario for steel products? Yes, there is a demand in the market because there are government project which are going on, there are infrastructure projects and there are housing project also, Prime Minister Awas Yojana and at the rural areas there are organization from Kacha ghar to Pakka ghar so there is a demand in the market. How have the price trended currently in the steel business;
Q
Since the scheme of arrangement has been signed the demerger of the paint business came into effect from 18th July, so when do we expect the Kamdhenu Ventures getting listed?
Harish Agarwal
We will file the application in the month of August and we are expecting to be listed it in the September or in October. And sir what would be the management structure and the shareholding of Kamdhenu Ventures? Post demerger it would be 59% promoters and 41% public. Kamdhenu Limited July 27,2022 And the management structure who will be running that business? Mr. Saurabh Agarwal will look after as a MD of the paint business and Mr. Sunil Agarwal would be the Non-Independent Chairman and Mr. Sachin Agarwal would be the Director. Out of four Promoter Director of Kamdhenu Limited, three will take
Q
Sir I have couple of questions sir firstly are you on track on achieving your stated branded revenue turnover of Rs. 22,000 crores by FY22 and royalty income of around 150 crores by FY24?
Harish Agarwal
Yes we are on track. You can say that in this quarter we achieved Rs. 5,300 crore turnover. So, if you multiply it by 4 then 20,000 we can achieve in 23 itself. So, we are on the track whatever we are projecting it will be definitely achieved. Sir and can you share any strategy to achieve that? You are already having the result and numbers then there is no specific strategy required. If we are targeting 22,000 crore turnover in 24 than in 23 we have already crossed 20,000 crore. So what kind of strategy you are looking for where our strategy is successful whatever we are doing. Sir my next que
Q
My question is that in the paint business prices of raw materials have been on like they have shown an increasing trend, so do you think the Company has been able to pass through the price in the last quarter?
Harish Agarwal
Yes, we are trying to pass on the price inflation of raw material to the customer, but there is a limitation on our part because whenever Asian and Berger Paint increase their prices then we are able to increase our prices otherwise not, but in the last quarter there was a price hike of around 2% to 3% and we have also taken the similar price hike in our MRP prices. So, can you give an idea of what is going to be the trend going forward in the coming quarter? In the coming quarter we are not seeing any further increase in the raw material price except 1% or 2%. So, that will depend on the stra
Q
Thank you. I take this opportunity to thank you everyone for joining on the call. I hope we have been able to address all your queries. For any further information kindly get in touch with me or strategic growth advisors, our investor relation advisors. Thank you once again.
Management
Speaking time
Harish Agarwal
34
Moderator
10
Atul Kothari
7
Pankaj Jain
5
Amit Shah
5
Yash Sachdeva
4
Amogh Shah
4
Kanika Kothari
4
Ashay Jain
3
Satish Agarwal
1
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Opening remarks
Satish Agarwal
Good afternoon and a very warm welcome to everyone present on the call. Along with me, I have Mr. Harish Agarwal – Chief Financial Officer and Strategic Growth Advisors, our Investor Relation Advisors. We have uploaded our Results and Investor Presentation for the quarter on the Stock Exchanges and Company’s website. Hope everyone has a chance to go through the same. Quarter 1 of the financial year 2023 started on a strong note. Our Company delivered robust performance despite high commodity prices. Domestic steel industry was impacted by falling global prices and imposition of 15% export duty on certain steel products. Export duty changed the consumer sentiment in India in anticipation of further fall in prices, buying reduce from the local user industry and eventually consumption fell. Industry wide export also dropped by 26% due to the weaker global demand and its position of export duty. There has been increase buying of TMT bars across Indian spot market like Chhattisgarh, Delhi N
Now coming to steel business
Our Company has reported revenue growth of 70% year-on-year to Rs. 191 crore for Q1 FY23. This was on account of increased construction activities due to government push for infrastructure development. Focus on development of roads, railways, PM Aawas Yojana shall lead to demand creation for steel products. EBITDA grew by 7% to Rs. 15.4 crore during the Kamdhenu Limited July 27,2022 quarter. We saw commodity inflation which has not been fully passed on. We will pass this cost in the coming quarters. Our franchise volumes as well as volumes from our own facilities grew by 30% on year-on-year basis. Our Company constantly monitors their research and development division and the ongoing process. Our Company has further enhanced its capabilities by adapting new technologies like converting steel commodity into high yield strength vendor with TMT steel bar to be 4% lesser in weight and 20% stronger than other normal TMT steel bars. Our premium product Kamdhenu PAS 10,000 TMT has unique feat
Harish Agarwal
Thank you sir. I will take you all through the financials for Q1 FY23: Our steel volume including franchise root have stood at 7.54 lakh metric ton in Q1 FY23 as compared to 5.80 lakh metric ton in Q1 FY22 a year-on-year growth of 30%. Our TMT volume from own manufacturing stood at 24,429 MT in Q1 FY23 as compared to 16,917 MT in Q1 FY22 a year-on-year growth of 44%. Total brand turnover for Q1 FY23 stood at Rs. 5,309 crore as compared to 3,485 crore in Q1 FY22, a growth of 52% year-on-year basis. Royalty income through franchise stood at Rs. 27.6 crore in Q1 FY23 as compared to Rs. 21.50 crore in Q1 FY22 a growth of 28% year-on-year. Revenue from own facility was up by 73% to 152.60 crore in Q1 FY23 as compared to Rs. 88 crore in Q1 FY22. Total sales from steels business stood at Rs. 191.20 crore for Q1 FY23 as compared to Rs. 112.70 crore in Q1 FY22 a strong growth of 70% year-on-year basis. Our EBITDA stood at Rs. 15.40 crore in Q1 FY23 as compared to 14.4 crore in Q1 FY22 a growth
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