ELECTCASTNSEQ2 FY2319 November 2022

Electrosteel Castings Limited

7,086words
201turns
13analyst exchanges
0executives
Key numbers — 40 extracted
rs,
call. We have here with us. Mr. Sivalai Senthilnathan - Vice President Finance and Corporate Affairs, Mr. V. M. Sridharan - Senior General Manager of Finance, Mr. Neelesh Daga - General Manager of Acc
Rs. 1,725 crore
nd then half year of our Company on a standalone basis. The total income for the quarter stood at Rs. 1,725 crores, an increase of about 59% year on year. EBITDA reported was Rs. 177 crores and increment of abou
59%
tandalone basis. The total income for the quarter stood at Rs. 1,725 crores, an increase of about 59% year on year. EBITDA reported was Rs. 177 crores and increment of about 32% year on year, with th
Rs. 177 crore
the quarter stood at Rs. 1,725 crores, an increase of about 59% year on year. EBITDA reported was Rs. 177 crores and increment of about 32% year on year, with the EBITDA margin at 10.24%. Net Profit After Tax
32%
an increase of about 59% year on year. EBITDA reported was Rs. 177 crores and increment of about 32% year on year, with the EBITDA margin at 10.24%. Net Profit After Tax reported was with Rs. 64 cro
10.24%
DA reported was Rs. 177 crores and increment of about 32% year on year, with the EBITDA margin at 10.24%. Net Profit After Tax reported was with Rs. 64 crores, an increase of approximately 18% year-on-y
Rs. 64 crore
about 32% year on year, with the EBITDA margin at 10.24%. Net Profit After Tax reported was with Rs. 64 crores, an increase of approximately 18% year-on-year basis while the PAT margin stood at about 4%. The
18%
gin at 10.24%. Net Profit After Tax reported was with Rs. 64 crores, an increase of approximately 18% year-on-year basis while the PAT margin stood at about 4%. The revenue in H1 FY23 stood Rs. 3476
4%
4 crores, an increase of approximately 18% year-on-year basis while the PAT margin stood at about 4%. The revenue in H1 FY23 stood Rs. 3476 crores, an increase of 65% year on year. EBITDA reported w
Rs. 3476 crore
ately 18% year-on-year basis while the PAT margin stood at about 4%. The revenue in H1 FY23 stood Rs. 3476 crores, an increase of 65% year on year. EBITDA reported was Rs. 402 crores, an increment of about 41%
65%
the PAT margin stood at about 4%. The revenue in H1 FY23 stood Rs. 3476 crores, an increase of 65% year on year. EBITDA reported was Rs. 402 crores, an increment of about 41% year-on- year basis wh
Rs. 402 crore
he revenue in H1 FY23 stood Rs. 3476 crores, an increase of 65% year on year. EBITDA reported was Rs. 402 crores, an increment of about 41% year-on- year basis while EBITDA margin stood at 11.57%. Net profit af
Guidance — 20 items
Management
qa
“The expansion work has already begun, we have already placed the orders for equipment, so and it will be primarily funded out of internal accruals and the cash generation.”
Kamlesh Bagmar
qa
“We will be more happy if that money is parked into the Mutual Funds, that's just as suggestion.”
Management
qa
“Yeah, so the capacity of utilization is 100%, and in our industry H2 is generally better than H1, we definitely expect sales volume to go up in H2 compared to H1.”
Management
qa
“So, ultimately, if you do the mathematics, it will be zero.”
Saket Kapoor
qa
“Okay, and sir if you could give some more color on… in terms of the EBITDA margins, which we may expect or the trajectory likelihood for H2.”
Management
qa
“Going forward, our target would be to maintain this EBITDA per ton, and we are very confident that we will be able to maintain because raw metal prices have started coming down.”
Saket Kapoor
qa
“For March, what should we look for the target, March 23?”
Management
qa
“March 23, I think it will be lower than this”
Ankit Puri
qa
“I wanted to ask what impact do we see with the starting and ramping up of the 400,000 Welspun Corporate DI plant, and also if you can throw some light on the overall market size and opportunity going forward?”
Management
qa
“We have not seen the replacement demand as of now, and going forward, this is expected to continue for three to four years more, then you have the regular demand also.”
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Risks & concerns — 13 flagged
This is wrong restatement of account also; investors will find it very difficult.
— Saket Kapoor
As mentioned in my earlier calls also, EBITDA margins is a difficult parameter.
— Management
Coking coal prices, which was very volatile, somewhere around May- June, has kind of stabilized in Q2, and it is around $300.
— Management
We have not seen any significant impact because of the war in Europe, but it will be difficult to give any comment going forward.
— Management
Since this is an essential commodity, and you know for very primary use, we feel that this will not see any slowdown in the demand.
— Management
Ankit, difficult to comment on that it is a management decision.
— Management
margins will give the wrong picture in times when the prices are volatile.
— Management
When the raw material prices are volatile, so if the raw material prices moves up from 100 to 150, simultaneously the realizations will also move up, and effectively the margins will appear to be down, but in absolute terms we will be able to maintain our profitability.
— Management
Sir very difficult to comment because all this is new for everyone.
— Management
Coking coal prices were very, very volatile during the month of May and June, it went up to $650.
— Management
The challenge for us is we also have to maintain the domestic you know, market share.
— Management
So, do we see any signs of pricing coming back or is it still highly intense or bidding driven market and the realizations are under pressure or how are… if you can just give us some color on the current scenario and the pricing?
— Chetan Phalke
So, raw material prices, generally, they were volatile for a couple of months, now they are stabilizing.
— Management
Q&A — 13 exchanges
Q
Okay, so one question on the part of your increase in Inter Corporate Deposits, like say it's around Rs. 172 crores in this particular quarter or first half, why such a sharp increase in the Inter-Corporate Deposits despite the fact that we have huge borrowing on the balance sheet and based on our annual report for the last year, we are just getting 7% interest rate on that, other than that, we can easily repay the debt or upon the working capital.
Management
Yeah, hi, thank you for your great query. So, we have total ICD investment of around Rs. 225 crores as on date, and this is out of the cash surplus that the Company has. On the debt front, the borrowing are in two parts one is long-term and short term. So, all the short -term borrowings is more towards working capital, and if you see from FY 22, that is March 22, and as on September 22, you will notice that the overall borrowing has not increased in spite of working capital investment has gone up. So, we have also used our internal accrual funds towards working capital and have not taken addit
Q
Greetings sir. Firstly, if you could share the H1 production and Sales number?
Management
So, our H1… DI Pipe production was around 3,44,000 tons. Okay. Sales was around 3,25,000 tons. Instead, what should we look forward for H2 in terms of… we were informed that we are running at 100%. Yeah, so the capacity of utilization is 100%, and in our industry H2 is generally better than H1, we definitely expect sales volume to go up in H2 compared to H1. This has been the past trend and we have delivered better in terms of volumes in H2. Do you have the last year H2 volume numbers? Last year H2 volume… just a second… so last year in terms of sales, we did around 3,42,000 tons. 342, so we a
Q
Hi, thank you for taking my question. I wanted to ask what impact do we see with the starting and ramping up of the 400,000 Welspun Corporate DI plant, and also if you can throw some light on the overall market size and opportunity going forward? Thank you.
Management
Yes Welspun has recently started its plant, I think June or July, and I think they are situated in the western part of the country. So, we are catering more towards the eastern part, the northern part, the southern part and the central part, and we are also present in export market. So, for most of the players, the areas of service are segmented because DI pipes are bulky in nature. So, it is not feasible to transport from one end of the country to another part of the country. As far as demand is concerned, we have been witnessing robust demand, because the industry that we are present into fo
Q
Thank you for the opportunity. Sir in the current condition, both iron ore and coking coal costs are stabilizing for us, and the volumes are also expected to interim increase. So, ideally your margin should be improving, while you are saying the current quarter margin should be maintained. So, am I missing here something?
Management
No. See, what I said is to summarize the coking coal prices and iron ore prices have started stabilizing from end of Q2 and Q3 onwards, and our focus is more towards maintaining the EBITDA per ton, not the margins. margins will give the wrong picture in times when the prices are volatile. When the raw material prices are volatile, so if the raw material prices moves up from 100 to 150, simultaneously the realizations will also move up, and effectively the margins will appear to be down, but in absolute terms we will be able to maintain our profitability. So, my idea is that even our focus is t
Q
Yeah sir, so my question is what is the percentage of our sales that comes from Europe? Management Percentage of sales from Europe would be around 7% to 8% of total sales.
Aman Sonthalia
What is the percentage of sales from Export? Export would be around 25%. 25%, and sir the margin is better in domestic market or is in the export market? Management It is better in export market. The export market? Yes. Okay sir, so Is there any impact on exports in Europe because of the recession? Not as of now sir. Till the first half, we have not seen any significant impact. The business has been stable only. In the second half, sir? Whether we will see some negative sales growth in the European market? Sir very difficult to comment because all this is new for everyone. So, will not be able
Q
Just a small point to understand you mentioned about this cashflow part, the formula being incorrect is that the right understanding Sir?
Management
According to the figure, which is 2932.68, which is a positive figure, it should have been a negative figure. Okay, If you do that that on back calculation basis then the total figure of 9031.64 total should also be then incorrect, and then the operating profit before working capital should also be not be 359 crores, is that understanding correct sir, because the entire… every line item will change. Not every line item, two-to-three-line items would change, your cash generated from operations would come down to minus 3864. It will come down to minus 3864. Cash generated from operations. No, I
Q
Yeah. Thank you for the opportunity, sir. Sir, what are the export realization in Q2 and first half of the year and any indicative EBITDA per ton in our export markets?
Management
Sir I will not be able to give you specific numbers, but our export realizations were significantly higher than the domestic realizations. In percentage terms, can you indicate how higher it is? In percentage terms, basically it would be higher by around 15% to 20%, maybe 15% not 20% but 15%, but that does not completely flow down to the bottom line because in the case of exports, the cost is also higher than the domestic cost. Okay, and when we say let's say if you have to compare EBITDA per ton of domestic versus exports… any similar impact if you can quantify it in percentage terms 10%, 15%
Q
Sure. Thank you ma'am.
Management
Q
Thank you for the follow up. Sir this 115 crores fundraising you are planning will it be entirely from promoters?
Management
Yes, sir. Okay, that's it from my side. Thank you very much.
Q
Good evening Sir. My question is, I just want to ask maybe some petition is filed by your Company in the High Court, can you just put some light on that? Like, how much, after how much time that amount will be refunded and this update on the case?
Management
Sir I think you are talking about the coking coal mine compensation. So, see, this mine was deallocated in 2015, and we are still waiting for the compensation to come in, matter is in Delhi High Court. Delhi High Court has already given the order in sometime in March 2017 and had directed the Ministry of Coal to expedite and clear the dues. But we don't have a significant update on it. We have been pursuing with the Ministry for releasing our compensation and have been submitting all the required information that they have been demanding from us. All we understand is that our claim is a genuin
Q
What is the reason for a certain jump in the interest costs?
Management
Interest costs have increased globally if you see RBI, the Central Bank has increased the repo rate by around 2% this year. So, in line with that, the banks have also increased the rates and we have been trying to use the low-cost funds as far as possible. So, for us the interest cost, interest rate has not gone up to that extent, but the interest rates are on the higher side No, it has increased substantially compared to last year Correct sir, because the interest cost has gone up, interest rate has gone up. So, our loan funds remain the same just because of the higher rate of interest, our i
Q
Yeah. Thank you for the opportunity again. Since raw material prices have come down, what will be the impact on our working capital? How much working capital will get released in the second half? Can we quantify the expected release of the working capital?
Management
When we see a cooling off, the working capital should reduce but it will happen only towards the end of Q4. Not immediately Okay, but any expected quantum let say assuming iron ore prices and coking coal prices that remain at the current level. So, we will definitely see a drop in the working capital, but how much I will not able to give you a clear figure on that, but definitely it will come down. Sir, a few quarters back, one of our competitors have given a commentary on their call that they think that the pricing power and DI pipes industry can eventually come back because the demand is ver
Q
Thank you all for actively participating in this conference call. I take this opportunity to thank the Valorem team and Chorus team for conducting this conference very effectively. Thank you all once again. Thank you all.
Management
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Speaking time
Management
92
Saket Kapoor
35
Chetan Phalke
21
Moderator
15
Aman Sonthalia
13
Anurag Patil
9
Ankit Puri
5
Nikhil Goel
5
Kamlesh Bagmar
4
Purvangi Jain
1
Opening remarks
Purvangi Jain
Thank you. Good evening, everyone and a warm welcome to you all. My name is Purvangi Jain, AVP from Valorem Advisors. We represent the investor relations of Electrosteel Castings Limited. On behalf of the Company. I would like to thank you all for participating in the Company's Earnings Conference Call for the second quarter of the financial year 2023. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings con call may be forward looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from both anticipated. Such statements are based on management belief, as well as assumptions made by and 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 conference call is purely to educate and bring awareness about t
Sivalai Senthilnathan
Thank you Purvangi Jain. Good evening, everybody. It is a pleasure to welcome you this Earnings Conference Call of the second quarter of financial year 2023. Let me first take you through the financial performance for the second quarter and then half year of our Company on a standalone basis. The total income for the quarter stood at Rs. 1,725 crores, an increase of about 59% year on year. EBITDA reported was Rs. 177 crores and increment of about 32% year on year, with the EBITDA margin at 10.24%. Net Profit After Tax reported was with Rs. 64 crores, an increase of approximately 18% year-on-year basis while the PAT margin stood at about 4%. The revenue in H1 FY23 stood Rs. 3476 crores, an increase of 65% year on year. EBITDA reported was Rs. 402 crores, an increment of about 41% year-on- year basis while EBITDA margin stood at 11.57%. Net profit after tax for H1 FY23 stood at Rs. 168 crores which grew about 56% year-on-year basis. PAT margins stood at 4.84%. On the operational front, t
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