Kamdhenu Limited
3,749words
56turns
9analyst exchanges
2executives
Management on call
Satish Kumar Agarwal
Chairman and Managing
Harish Agarwal
Chief Financial Officer and Strategic Growth Advisor our Investor
Key numbers — 40 extracted
11.4%
e had a chance to go through the same. India the world second largest crude steel producer posted 11.4% growth in finished steel consumption during April to October to 65.5 million tons. Indian demand
65.5 million
crude steel producer posted 11.4% growth in finished steel consumption during April to October to 65.5 million tons. Indian demand remains a bright spot in major steel market as domestic consumption is seeing
25%
ut now the prices seems to be stabilizing gradually. Our company has reported a revenue growth of 25% year-on-year to 191 crore for Q2 FY23 for H1 FY23 revenue stood at 382 crore delivering a growt
191 crore
ems to be stabilizing gradually. Our company has reported a revenue growth of 25% year-on-year to 191 crore for Q2 FY23 for H1 FY23 revenue stood at 382 crore delivering a growth of 44% year-on-year. With
382 crore
ported a revenue growth of 25% year-on-year to 191 crore for Q2 FY23 for H1 FY23 revenue stood at 382 crore delivering a growth of 44% year-on-year. With the wide portfolio of products from TMT bars, struc
44%
ar-on-year to 191 crore for Q2 FY23 for H1 FY23 revenue stood at 382 crore delivering a growth of 44% year-on-year. With the wide portfolio of products from TMT bars, structural steel and color quote
rs,
382 crore delivering a growth of 44% year-on-year. With the wide portfolio of products from TMT bars, structural steel and color quoted profile sheet we are well established to cater any demand going
38 lakh
ler network and also enhance the steel TMT capacity by increasing annual production capacity from 38 lakh metric tons to 50 lakhs metric tons Kamdhenu Limited November 14,2022 through franch
50 lakh
hance the steel TMT capacity by increasing annual production capacity from 38 lakh metric tons to 50 lakhs metric tons Kamdhenu Limited November 14,2022 through franchise route by FY24. We h
Rs. 70 crore
to the scheme of arrangement. We are delighted to inform that we are raising funds to the tune of Rs. 70 crore this will help to reduce our debt and make us debt free. This will also help create a better bran
Rs. 10
nts. Each warrant gives the holder the right to convert into equity shares with the face value of Rs. 10 and get one fully paid- up equity share in exchange for each warrant within 18 months of the date o
Rs. 141
up equity share in exchange for each warrant within 18 months of the date of issue at a price of Rs. 141. With this, I would hand over the call to our Group CFO – Mr. Harish Agarwal for the financials.
Guidance — 8 items
“The demand for TMT bar has also been picking up on account of demand from the infrastructure and the essential projects which will be huge.”
“Demand for decorative paints have been witnessing strong traction over the past few quarters and we expect this momentum to continue on back of shortening of the painting cycle, housing demand and consume preference to build pucca houses.”
“We further plan to expand our franchise and dealer network and also enhance the steel TMT capacity by increasing annual production capacity from 38 lakh metric tons to 50 lakhs metric tons Kamdhenu Limited November 14,2022 through franchise route by FY24.”
“Last question how do you plan to increase our franchise and dealer network as such?”
“So, in this way through franchise route we are building up our capacity and like Harish has said that we have 38 lakh ton capacity and 50 lakh ton we will be able to complete till 24 and in the coming time the demand which is coming then accordingly we have to maintain the premium as well and we have a continuous growth and we have to expand this further that is our plan.”
“Our plan is in fact we have aim to reduce our debt and to make the company zero debt and also to have the new brand positioning and the other is redefining our franchise business model.”
“I just had one question sir can you tell us by when the Kamdhenu Ventures will be listed?”
“It has already got the in principal approval and it is expected that SEBI will clear the proposal in November and the corporate action and some other formalities will be complete in December itself.”
Risks & concerns — 2 flagged
On the raw material front commodity prices have been very volatile and have seen a sharp rise, but now the prices seems to be stabilizing gradually.
— Satish Agarwal
Compared to other part of the country in South there is a less presence and there is a pressure of premium, but we command premium.
— Harish Agarwal
Q&A — 9 exchanges
Q
I just have a couple of questions in our paint business what is the proportion of business from our own manufacturing versus what is outsourced?
Harish Agarwal
In this first half we have turnover of 119 crore against that 92 crore from own manufacturing and around 27 crore from the outsourcing business. Sir my next question is so as you mentioned our royalty income grew by 16% year-on-year and 22% in H1, could you tell the amount of royalty our company charged per ton? The average for 6 month is Rs. 384 per metric ton and the volume is in the Q2 it was 6.82 lakh metric ton as against 6.02 lakh in the last year Q2. For H1 last year it was 11.66 lakh metric ton and this year it is 14.12 lakh metric ton.
Q
I have a couple of questions firstly what was the branding and promotion expenses for steel business for Q2 FY23?
Harish Agarwal
In the Q2 FY23 it was 12.5 crore jointly spent by Kamdhenu as well as its franchise units. Secondly, how is the demand scenario for paint business and how do you see it panning out going ahead? You see demand for paint business is continuously growing as you know the Kamdhenu is only working for the decorative segment and decorative paints and you can very well understand that the Q2 was a rainy season and we are having floods in each and every part of the country and accordingly in Tier-2, Tier-3, Tier-4 cities the demand for low price item that is distemper, putty, primer and low price ename
Q
Sir, I would like to ask a question actually I am somewhat new to the company, so can you just tell me some of the competitor which your company face in TMT bars?
Satish Agarwal
I want to tell that our franchise model which is there it is asset light innovative model and at Kamdhenu we had a vision around 25 years back that we want to make a good quality product for every house throughout India at a reasonable cost and I think that dream we have been able to accomplish In our entire country we have more than 80 units across India who are making different products of Kamdhenu, TMT, structural steel, pipe, angle, channel and color coated steel so in that way we are working and in India we have a major presence in retail business share. Company has around approximately 1
Q
I had three particular questions first one is on the utilization level, so you can tell me the current utilization levels at your steel and paint business?
Harish Agarwal
It is around 80% capacity utilization in the steel business. In our paint business we are gradually increasing, but right now it is around 35%. And second question was on the demand scenario so could you throw some light on the demand scenario for your steel products and also how is the trend in the prices of raw material? I think in the previous question it has been answered. Normally the demand of steel is 6% to 8% in India and there is a continuous growth, but Kamdhenu Limited November 14,2022 Kamdhenu is converting unorganized sector into organized sector and our inorganic and organic both
Q
I would like to ask in our steel business revenues from our own facilities were up by 24% in Quarter 2 and by 44% in H1 FY23, was this growth driven by volumes or was it on account of higher realizations?
Harish Agarwal
Can you please repeat the question. In our steel business revenues from own facilities were up by 24% in Quarter 2 and by 44% in H1 FY23, was this growth driven by volumes or was it on account of higher realization? It was mix with the realization and with the volume. If you want to know the volume when the volume has increased from own manufacturing that is in the Q2 last year it was 25,190 metric Kamdhenu Limited November 14,2022 ton, this time it is 26,785 or for the H1 last year it was 42,108 metric ton and this time it is 51,214 metric ton. So, this is by way of volume it is increase to 2
Q
congratulations on the fund raise. Just wanted to understand why are we doing it in the steel business and what are our plan?
Harish Agarwal
Our plan is in fact we have aim to reduce our debt and to make the company zero debt and also to have the new brand positioning and the other is redefining our franchise business model. So, this is the main objective of the fund raising. And any update on the fund raise in the paint business? Yes we are planning on that in the last interview I appraise that around 200 crore we are planning to raise the fund in the paint business for repositioning of brand and making some CAPEX for the future after one year or two years and also some working capital. We are planning to raise the fund by inducin
Q
I just had one question sir can you tell us by when the Kamdhenu Ventures will be listed?
Harish Agarwal
Within this quarter. It has already got the in principal approval and it is expected that SEBI will clear the proposal in November and the corporate action and some other formalities will be complete in December itself.
Q
So, you just mentioned about your capacity utilization for steel business is around 80%, so is it for the franchise business? Kamdhenu Limited November 14,2022
Harish Agarwal
This is our own plant. And what about franchise? Franchise is around 60% capacity utilization. So, is it increase or decrease from the previous one? Yes it is increasing.
Q
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 SGA our Investor Relation Advisor. Thank you once again.
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 Advisor our Investor Relation Advisor. We have uploaded our result and investor presentation for the quarter on the stock exchanges and company’s website hope everyone had a chance to go through the same. India the world second largest crude steel producer posted 11.4% growth in finished steel consumption during April to October to 65.5 million tons. Indian demand remains a bright spot in major steel market as domestic consumption is seeing growing at a high single digit rate over the next 12 months to 15 months. Steel industry is poised towards growth on the back of construction sector which is going to a Pan India driver of steel demand in the country. This would be driven by strong government trust for infrastructure development and housing for all. Further support to development of the steel industry is expected to come throu
Harish Agarwal
Thank you sir. I will take you all through the financials for Q2 and H1 FY23. Our steel volume including franchise route have stood at 6.8 lakh metric ton in Q2 FY23 as compared to 6 lakh metric ton in Q2 FY22 a year-on-year growth of 13% for H1 FY23 steel volume grew by 21% to 14.1 lakh metric tons. Our TMT volume from own facility stood at 26,785 MT in Q2 FY23 as compared to 25,190 MT in Q2 FY22 a year-on-year growth of 6%. For H1 FY23 TMT volume grew by 21% to 51,214 MT. Total brand turnover for Q2 FY23 stood Rs. 4,916 crore as compared to 3,792 crore in Q2 FY22 a growth of 30% year-on-year basis. For H1 FY23 total brand turnover grew by 40% year-on-year to 10,225 crores. Royalty income to franchise stood at Rs. 26.2 crores in Q2 FY23 as compared to Rs. 22.5 crores in Q2 FY22 a growth of 16% year-on-year basis. For H1 FY23 it grew by 22% to 53.8 crores. Revenue from own facility was up by 24% to 155.8 crores in Q2 FY23 as compared to 125.5 crores in Q2 FY22. For H1 FY23 it grew by 4