DCXINDIANSEMay 29, 2023

DCX Systems Limited

8,274words
94turns
8analyst exchanges
4executives
Management on call
H S Raghavendra Rao
CHAIRMAN AND
K S Ranga
CHIEF FINANCIAL OFFICER – DCX SYSTEMS LIMITED
R Sankarakrishnan
DIRECTOR – DCX SYSTEMS LIMITED
Rahul Trivedi
ADFACTORS PR
Key numbers — 40 extracted
INR25 crore
mark. And I come out with a 30-years background of electronic industry and grow this company from INR25 crores in 2017 to -- till about 2017 to 2023, about INR1,253 crores. And we build strong business visib
INR1,253 crore
nic industry and grow this company from INR25 crores in 2017 to -- till about 2017 to 2023, about INR1,253 crores. And we build strong business visibility, trustworthy relationship with global OEMs, mainly in o
rs,
build strong business visibility, trustworthy relationship with global OEMs, mainly in our customers, as well as domestic customers, strong supply chain system in the high-skilled technological team a
13.5 billion
s been given to the -- order to the OEM. As per -- the data available in the internet, there are $13.5 billion, it is offset opportunity available for Indian companies, especially on the owned and controlled
30%
ugh Indian companies. This is not an order value. This is an offset pending order. That means the 30% of the total order value is pending. That means $13.25 billion to be executed with Indian company
13.25 billion
s is an offset pending order. That means the 30% of the total order value is pending. That means $13.25 billion to be executed with Indian company. Our business model is unique and build to pri
1 million
mpletely the BOM guarantee has been taken care in this modality. Because today we get a PO about $1 million and this will execute in the couple of two, three years. But the semiconductor market is very,
100%
thing to the investors and we are able to build our own backward integration system. We floated a 100% subsidiary called Raneal Advance Systems where we buy normally in the Printed Circuit Board Assem
49%
ership, the foreign partner has to come to India, and it should not be a majority, it should be a 49% and 51% majority, where this can be supplied, all this 408-line item. There are make two, make th
51%
the foreign partner has to come to India, and it should not be a majority, it should be a 49% and 51% majority, where this can be supplied, all this 408-line item. There are make two, make three, the
INR1,200 crore
atulations on good set of numbers. Sir, I just wanted to know, our employee cost on a turnover of INR1,200 crores is only INR10 crores. Can you explain why it is so low? Mr. R. Sankarakrishnan: employees’ cost,
INR10 crore
f numbers. Sir, I just wanted to know, our employee cost on a turnover of INR1,200 crores is only INR10 crores. Can you explain why it is so low? Mr. R. Sankarakrishnan: employees’ cost, why it is so low?
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Guidance — 20 items
Dr. Raghavendra Rao
opening
“And there are big markets available in the US and France and Germany, like in the going forward for the Russia.”
Dr. Raghavendra Rao
qa
“Of course, there is a jump in the manpower again, maybe this year will be a doubled after our Raneal we required a more manpower.”
Yogesh Bhatia
qa
“So, should we expect a better execution in FY ‘24?”
Dr. Raghavendra Rao
qa
“Now going forward, this is the previous one.”
Dr. Raghavendra Rao
qa
“The going forward, this issue got already resolved.”
Dr. Raghavendra Rao
qa
“Going forward, as on today, I'm not seeing any challenges.”
Yogesh Bhatia
qa
“So, sir, can we expect the INR1700 crores order book to get executed in FY ‘24?”
Dr. Raghavendra Rao
qa
“This will be a stretch with two years, two and a half years.”
Yogesh Bhatia
qa
“So, any, sir, any revenue guidance that you would like to give?”
Dr. Raghavendra Rao
qa
“This will be a growth factor for always for the DCX.”
Risks & concerns — 7 flagged
We've done a risk mitigation model and with the OEMs and the DCX style is operation, we never touch any big PO without a customer advance, number one.
— Dr. Raghavendra Rao
One is BOM guarantee and the risk mitigation we have taken the BOM guarantee and the capex investment on the advances which is the model we are working with the main OEMs.
— Dr. Raghavendra Rao
The EBITDA margin definitely and you are going to give it to somebody that will going to remain same with the DCX that will go to your own sister concern to improve your EBITDA.
— Dr. Raghavendra Rao
It will not be to that proportion definitely you will see a considerable reduction, but it is difficult to quantumize the number right.
— Ranga Srinivas
And given the current order book on hand and the robustness of the pipeline that we are trying to build and the risk mitigation that we have been able to do both on the business front, which Dr.
— Dr. Raghavendra Rao
Rao explained and in the financial areas of eliminating the interest rate risk and getting into a positive interest arbitrage on our borrowings and given the DOM-W offset non offset opportunities and the enhancement of the business verticals from cable.
— Dr. Raghavendra Rao
It will be a well diversified portfolio of customers where the business again I want to repeat today DCX is a fully risk mitigated model both in terms of the business visibility and in terms of the financial visibility, thus protecting every dollar of the purchase order that we have got on hand.
— Jignesh Mehta
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Q&A — 8 exchanges
Q
Hello. Sir, congratulations on good set of numbers. Sir, I just wanted to know, our employee cost on a turnover of INR1,200 crores is only INR10 crores. Can you explain why it is so low? Mr. R. Sankarakrishnan: employees’ cost, why it is so low?
Dr. Raghavendra Rao
Let, let me answer the questions and compared to you were talking about the revenue and the employment cost, where it is my answer is, where I mentioned our model is a different model and whatever employee, we are, we are a DCX now put together about 150 people and directly and the product, what we built, it is a high value product. It is not like other company like EMS company making INR250 crores, INR300 crores is a general equipment and having 400 employees, 500 employees and that is a different category of business like, in the commercial lighting business or energy meter business, kind of
Q
Good evening, sir, and congratulations on a great set of numbers. Sir, I just wanted to understand a little bit on your order book. What would be the proportion of export orders in your current order book?
Dr. Raghavendra Rao
Export order in current book, what we have about INR1,700 crore, I can say about 60% on the export, 40% in the domestic. Okay. And how do you see the order pipeline panning out in domestic and in export? The upcoming days, whatever we are seeing the market and the opportunity, as I mentioned, this big market available. So, I am assuming export will be more. Okay, okay. That's helpful sir. And my other questions are already answered. So, I joined back the queue. Okay. Thank you.
Q
Sir, congratulations on the numbers. And sir, I wanted to understand the PCB and EMS business that you are going to incur starting from June. Because what I understand is that PCB, you will be using it for your internal use and how much you will be adding to the new business. And what would be the change in the margins in terms of execution by -- of this PCB and EMS?
Dr. Raghavendra Rao
Basically, this PCB, it is going on a live by not June, July, a commercial production is going to start. And June is the first article and other formalities will be done with OEMs. But plant commercially is going to operation by month of July, which we have already PO on a hand to execute. And what you rightly said for an initial, for this year, we are doing only captive business. So, the captive business is where DCX buy something out and we have a chance to produce our own PCB for internal consumption too. And the next we are expecting about to go in the full fledge, because the system is ne
Q
Thank you for the follow-up opportunity. Sir, I was going through the press release, and I saw that you have mentioned that you are open to acquire product technology in aerospace and defense. So, can you tell us a little bit more about anything which we can expect in FY ’24? That would be my first question.
Dr. Raghavendra Rao
Yes, companies even though IPO time and we are a strong believer to acquire technology, we rise -- we kept reserve some money through the IPO to acquire a technology. And it is a many process involved in as well as the government of India and the government of foreign OEM also. The process is on. There are things are in very positive in the area in we are working with different countries, like, Israel or even though take, France or US. Things are looking at positive, but nothing is in writing, yet which pattern it will go on a product technology. But one thing I assure you that DCX become in w
Q
Yes sir. Hi. Good evening. My question is on the working capital actually. If I look at the March ending balance sheet, there seems to be a significant increase in the working capital across inventory, receivables, everywhere. Could you explain that because if I look at your annual number of INR1,254 crores versus INR1,102 crores last year top line, so incremental top line is about INR150 crores, but our working capital has gone for a toss. It seems that there is like INR600 crores increase in the working capital. Could you explain what is that exactly?
Dr. Raghavendra Rao
I will request our CFO to clarify on this point. Mr. Ranga, go ahead. There are two things which has caused the increase in working capital. One is the receivables and the inventory which you have rightly pointed out. The receivables, everything, if you see our sales up to December and up to March, you can see 50% of our sales has taken place almost in last quarter and that too in March. So as a result, what happens is the collection time is beyond April. That is why the receivables number of days or investment in receivables has gone up. That is one point. The second point is major part of ou
Q
Hello sir. Sir, my question is regarding to at the time of IPO listing there is one interview on Zee Business of yours. You said that four to five customers means you will add in with your company so is it a new customer is a new your customer joint or not?
Dr. Raghavendra Rao
The company is working of course; we added many customer which has been in IPO time we have mentioned, also we are working I answered the previous call we are working with a different customer base and marketing has been enhanced with many other country. And we are positive to add more customer more the area of OEMs where there is a lot of opportunity has been created by ‘Make in India’ or the existing offset pending orders. And not only like go behind for the even the OEMs are looking very, very positively on the local vendors in India for, to cater their requirement. This is the one of the f
Q
Hello, sir, I have a question related to your receivable. Since we are saying that we have had large sales at the end of March. So, can you throw some light that in April, May what sort of collections or sales have been done? Mr. R. Sankarakrishnan: Yogesh ji I think talking anything about April and May, may not be in line with the sense and spirit of the call. It will be like a futuristic statement, etcetera. But if you go by the track record of our receivables with the OEMs and the domestic clients, we have a track record of very few days of receivables at any given point in time in all thes
Yogesh Bathia
Okay, sir, thank you.
Q
Thank you so much for your valuable time. Once again, please. We recommend we are an upcoming company, technological company going forward is very well positioned and I request all our investors to give their very valid question asked and I hope we are also covered. Many of the questions has been answered and thank you so much. Thank you for your kind cooperation and having patience to listening to us. Thank you so much. Namaste. Jai hind. Thank you. Mr. R. Sankarakrishnan: Thank you so much. Namaste. Ranga Srinivas : Thank you.
Management
Speaking time
Dr. Raghavendra Rao
29
Sagar Parekh
15
Ranga Srinivas
13
Moderator
10
Janmajay Gandhi
8
Dipen Vakil
7
Yogesh Bhatia
6
Jignesh Mehta
4
Yogesh Bathia
2
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Opening remarks
Dr. Raghavendra Rao
Thank you. Dear investor, firstly, Namaskara, Namaste. I am Raghavendra Rao, as a Founder and Promoter of DCX Systems Limited. It gives me a great pleasure to all of you in the call, first-ever earnings call. I'm really glad to welcome on this call and thank you very much for your valuable time and joining this, our first earnings call. Personally, I thank you all for joining this call. Just to take this call forward, see, I just -- a few points about the entire journey of DCX, about our future positioning, and we'd like to highlight in my opening remark. And I come out with a 30-years background of electronic industry and grow this company from INR25 crores in 2017 to -- till about 2017 to 2023, about INR1,253 crores. And we build strong business visibility, trustworthy relationship with global OEMs, mainly in our customers, as well as domestic customers, strong supply chain system in the high-skilled technological team available in the DCX, and good visibility on the business opportu
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