Rama Steel Tubes Limited
4,642words
75turns
6analyst exchanges
3executives
Management on call
Atul Daga
CAPTIVE IR STRATEGIC ADVISORS PRIVATE LIMITED
Richi Bansal
EXECUTIVE DIRECTOR – RAMA STEEL TUBES LIMITED
Rajeev Kohli
CHIEF EXECUTIVE OFFICER - RAMA STEEL TUBES LIMITED
Key numbers — 39 extracted
rs,
o you Sir! Atul Daga: Thank you. Good evening everyone. On behalf of Captive IR Strategic Advisors, I would like to welcome you all for the Q2 FY2023 Earnings Conference Call of Rama Steel Tubes L
10%
der production by the end of next month, and then out of our total capacity we have approximately 10% to 15% is our export markets and then we have our own 100% owned subsidiary in Nigeria as well wh
15%
duction by the end of next month, and then out of our total capacity we have approximately 10% to 15% is our export markets and then we have our own 100% owned subsidiary in Nigeria as well where w
100%
ur total capacity we have approximately 10% to 15% is our export markets and then we have our own 100% owned subsidiary in Nigeria as well where we are into steel trading and then we have our own manu
150 Crore
ernments for Jal Jeevan Shakti. We have recently been awarded orders in the tune of 150 Crores from HP state government first unit supply of Jal Shakti Vibhag. I am talking about our financia
775 Crore
of Jal Shakti Vibhag. I am talking about our financial results in last year our total topline was 775 Crores and in H1 we have already touched the topline of close to 600 Crores. We are continuously increa
600 Crore
t year our total topline was 775 Crores and in H1 we have already touched the topline of close to 600 Crores. We are continuously increasing our number of SKUs at the moment we have 1300 SKUs tentatively w
0.5 million
easing more capacities within the group we have a target of scaling the capacities in the tune of 0.5 million tons by the end of FY2025. Rajeev would you like to say something. Rajeev Kohli: Good evening
3470 million
his year and in a nutshell I will tell you. The company has recorded revenue operations of around 3470 million in Q2 FY2022 and 5872 if you take it on a semiannual basis, actually there is a growth of 80% a
80%
million in Q2 FY2022 and 5872 if you take it on a semiannual basis, actually there is a growth of 80% and around 78% respectively in Q2 and H1 financial year though our EBITDA was reported around 1
78%
Y2022 and 5872 if you take it on a semiannual basis, actually there is a growth of 80% and around 78% respectively in Q2 and H1 financial year though our EBITDA was reported around 105 millions in Q2
105 million
% and around 78% respectively in Q2 and H1 financial year though our EBITDA was reported around 105 millions in Q2 FY2023 and 204.89 half yearly basis. To be honest I will let you know that it has dropped
Guidance — 6 items
“We are continuously increasing our number of SKUs at the moment we have 1300 SKUs tentatively what we are producing right now and we have a target of increasing the SKUs from 1300 to 2500 in the next one year and we expect almost close to 100% growth by FY2025 and we are even increasing more capacities within the group we have a target of scaling the capacities in the tune of 0.5 million tons by the end of FY2025.”
“So we are looking forward to it and we are expected to get around 100 millions of orders definitely and it will be executed easily to our government departments.”
“If we talk about the volume growth we did 120000 tons last year and then this financial year our target is 175000 tons, which is almost 40%, 45% growth.”
“So we are increasing more of a value added products and slowly and gradually we have a target of achieving at least 30% to 40% value add products and the balance we will be doing our structural products.”
“We only get one month of this value add product, this is a new product, new line what we have recently installed so we are under the trial runs of this product and I think we will be in full production by end of this month.”
“So from Q3 Ashoka Infra’s volumes and profitability and everything will be reflecting in the company’s account.”
Risks & concerns — 3 flagged
Richi one question I wanted to understand that we all know that our industry is in a difficult scenario right now with volatile steel prices or maybe destocking by the dealers and the organized players like yourself you have to push the sales through discounts or maybe take a hit on your margin so can you just guide a bit in terms of overall outlook when are we looking at some kind of stability in prices or maybe when the restocking?
— Shikha Kapur
If I talk about EBITDA per ton it has drastically fallen in last couple of months in fact quarter-on-quarter if you see there is a sharp decline so should I understand that it is more of a commoditized product in your mix?
— Shikha Kapur
In Africa definitely the profit margins are higher as compared to our domestic markets and those markets are little difficult and there is a lot of entry barrier to those markets.
— Richi Bansal
Q&A — 6 exchanges
Q
First of all I would like to congratulate you on an organized results and I wanted to ask you what is the location advantage you are having over other competitors?
Richi Bansal
Sir we are a pan India based company, if we talk about the location benefits like we have a unit based out of South and West and North. Right now we are covering three roles for the country, Eastern region we do not have any business right now so because logistic plays a very important role in our steel pipe industry logistic is almost 2.5% to 3% cost of the total product cost, so having a presence on a local basis in domestic market we are able to compete over other competitors. Only two or three companies in the country are pan India based thus otherwise all the people are based either someo
Q
Good evening Sir, many congratulations on your decent result. I do have one question regarding the capacity utilization front so what is our capacity utilization and who are our primary customers?
Richi Bansal
Right now we have our installed capacity of 300000 tons and this year our capacity utilization is almost 175000 tons out of 300000 tons, 30000 tons out of 300000 tons will be under production by the end of next month which is a new capacity what we have added and 50000 tons was the capacity what we have added last year only so that is still not fully functional we are able to achieve only 30%, 40% out of that, we are still increasing the number of SKUs on that particular tube mill, so as we increase our number of SKUs our capacity utilizations keep on increases and in our industry the capacity
Q
I would like to know what is the management vision over the next two years and then how are we seeing the competition evolving?
Richi Bansal
Sorry can you please go again how are we seeing the competition? What is our vision for the next two years Sir? I have already briefed it but I will tell you once again. So right now we have a capacity of 300000 tons, in the next two years we are looking at a capacity of somewhere close to 0.5 million tons in installed capacity and we are planning to give almost 35% to 40% growth on a year-on-year basis that is the basic target what we have, that is the overview what we have and then we are increasing more of value added products where we can get higher EBITDA margins so the 30000 tons new cap
Q
Mr. Richi one question I wanted to understand that we all know that our industry is in a difficult scenario right now with volatile steel prices or maybe destocking by the dealers and the organized players like yourself you have to push the sales through discounts or maybe take a hit on your margin so can you just guide a bit in terms of overall outlook when are we looking at some kind of stability in prices or maybe when the restocking?
Richi Bansal
Yes, at the moment global steel scenario if you look at we still see more correction in the steel prices a little bit more correction in the steel prices for next one quarter we still see the prices to go a little bit further down in the steel sector and then like our organized sector has to compete with the unorganized sectors in India which is one of a very big sectors always a parallel sector what we have in the country. So there is a little bit of a threat for another one quarter and after that we really see the markets to be very, very good. We see the margins coming back and though on th
Q
Good evening and congratulations on a robust volume. Sir just wanted to reiterate on your 120 Crores worth of order book can you help us with some split between value added products and general products would that be possible?
Richi Bansal
I comment on everything, but yes out of that like 50% of the orders from the government sector, balance of the 10% of the quantity is from the value add and rest are our domestic volumes with our channel partners. Sir second question is how are Ashoka Infra volumes coming or getting reflected in our consolidated financial statements? The volumes will start reflecting from Q3 because that provision got completed in September so in Q2 only September volume would be added to our balance sheet which is very normal one. So from Q3 Ashoka Infra’s volumes and profitability and everything will be refl
Q
Thank you very much everybody for giving such a valuable time of yours and I hope that we answered your questions properly and any kind of doubts or something you can always come back to us. Thank you very much. Thank you Richi Sir and thank you everybody being on the line.
Richi Bansal
Thank you. Have a nice day.
Opening remarks
Atul Daga
Thank you. Good evening everyone. On behalf of Captive IR Strategic Advisors, I would like to welcome you all for the Q2 FY2023 Earnings Conference Call of Rama Steel Tubes Limited. From the management team we have with us Mr. Richi Bansal, the Executive Director; and Mr. Rajeev Kohli, the CEO of the company. I would like to hand over the mic to the management team. Over to you Sir!
Richi Bansal
Hi, everyone. I am Richi Bansal this side Executive Director of Rama Steel Tubes Limited and we have Mr. Rajeev Kohli, who is the CEO of the Group on call with us. In the beginning I would like to briefly introduce our company Rama Steel Tubes Limited and about its latest developments. We are one of the pioneers in manufacturing of steel tube industry in India, we are a pan India based company, almost a four decade old company we are, we have four manufacturing units, two are based out of Delhi NCR in Ghaziabad then we have our third unit which is based out of Khopoli, Maharashtra, and the fourth unit is based out of Bengaluru in Lepakshi, and our total installed capacity at the moment is 300000 tons on an annual basis out of which 30000 tons will be in production that is the new capacity what we have added 30000 tons that will be under production by the end of next month, and then out of our total capacity we have approximately 10% to 15% is our export markets and then we have our own
Rajeev Kohli
Good evening everybody. This is Rajeev Kohli, I am the CEO of the company and first of all I would like to brief you about my financial performances this year and in a nutshell I will tell you. The company has recorded revenue operations of around 3470 million in Q2 FY2022 and 5872 if you take it on a semiannual basis, actually there is a growth of 80% and around 78% respectively in Q2 and H1 financial year though our EBITDA was reported around 105 millions in Q2 FY2023 and 204.89 half yearly basis. To be honest I will let you know that it has dropped down a little bit, but this is all because of the market owing the increase in the cost of the raw material if you see the tube industry and our PAT stood around 93.61 million in H1 FY2023 and basically the PAT margin stood around 1.58% in H1 FY2023 this is again it has taken a little bit of shift just because of the market scenario and all that and it is a promise now what we are doing is I am trying to tell you that this can be covered
Richi Bansal
If we talk about the volume growth we did 120000 tons last year and then this financial year our target is 175000 tons, which is almost 40%, 45% growth.