BHARATWIRENSEQ1 FY241 August 2023

Bharat Wire Ropes Limited

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19analyst exchanges

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Key numbers — 40 extracted

Rs 158 crore

st quarter. For the first quarter under review on consolidated basis, we have recorded revenue of Rs 158 crores which is higher by 19% compared to Q1 of last year and EBITDA stood at Rs 41 crores as against

19%

under review on consolidated basis, we have recorded revenue of Rs 158 crores which is higher by 19% compared to Q1 of last year and EBITDA stood at Rs 41 crores as against Rs 25 crores which is alm

Rs 41 crore

d revenue of Rs 158 crores which is higher by 19% compared to Q1 of last year and EBITDA stood at Rs 41 crores as against Rs 25 crores which is almost 64% higher than the last year Q1 and the EBITDA margin f

Rs 25 crore

which is higher by 19% compared to Q1 of last year and EBITDA stood at Rs 41 crores as against Rs 25 crores which is almost 64% higher than the last year Q1 and the EBITDA margin for the quarter were repo

64%

pared to Q1 of last year and EBITDA stood at Rs 41 crores as against Rs 25 crores which is almost 64% higher than the last year Q1 and the EBITDA margin for the quarter were reported at 26%, which re

26%

is almost 64% higher than the last year Q1 and the EBITDA margin for the quarter were reported at 26%, which represents significant growth on year-on-year basis.Net Bharat Wire Rope

Rs 24 crore

nt growth on year-on-year basis.Net Bharat Wire Ropes Limited profit stood at Rs 24 crores, which is higher by 98%. Now I request Mr. ML Mittal, our managing director to give you a brief

98%

et Bharat Wire Ropes Limited profit stood at Rs 24 crores, which is higher by 98%. Now I request Mr. ML Mittal, our managing director to give you a brief about highlights of the c

15%

scal year 24. In Q1 2024, we had a very healthy sales growth wherein our sales volume increase by 15% year on year and we are currently operating about 60% capacity utilization level. We saw an impro

60%

growth wherein our sales volume increase by 15% year on year and we are currently operating about 60% capacity utilization level. We saw an improvement in our EBITDA margin due to stable raw material

improvement in our EBITDA margin due to stable raw material prices and downtrend of approximately 5% of the year on basis. The fuel prices are so we are seeing a downtrend resulting in a reduction i

20%

or changes in the selling price. Raw material price also going down gradually. It is not crashing 20% every month, so we are so taking into account when we quote the news, inquiries so by and large,

Guidance — 20 items

Anika Mittal

“Sir my first question is from the margin spend, what will be the level of the EBITDA margin and EBITDA per ton for the financial year 24 as a whole year?”

Anika Mittal

“So, it is fair to assume that quarter 2 will be muted on basis of quarter-on-quarter and year on year.”

Anika Mittal

“Okay and on this basis, it is fair to assume that quarter 2 will be muted.”

Anika Mittal

“So, it is fair to assume that quarter 2 financial year 2024 will be muted on a year-on-year basis and on quarter-on-quarter basis.”

M.L. Mittal

“We have not received we expect any moment because the government of Maharashtra right now things are under process.”

Tanuj Khiyani

“Sir, I just had one another question regarding the energy cost that we would be saving after the commissioning of the solar project.”

M.L. Mittal

“So, the effect will get maybe from 15 August onwards there saving will be around Rs 4 per unit and every MW we will be generating around 15 lakhs unit per year.”

M.L. Mittal

“So, 2 crores 10 Lakh rupees will be saving the 3.5 MW.”

M.L. Mittal

“And for third party, you know there will be getting a small saving maybe around 1 crore will get it”

Vijay Goyal

“Hi, Sir and in the last call you spoke about reduction in overall power and will cost, I think in FY23 it was 51 crores and you said it will be around 25 crores this year.”

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Risks & concerns — 11 flagged

It is extremely difficult to quantify the market share as this is again a very big industry and in elevators we have a huge replacement market as well.

— Sushil Sharda

So, it is very difficult to quantify what would be the market percentage as there is no official figures of the elevators that are coming in the market and the mode of rope they are using.

— Sushil Sharda

Improvement that we are seeing on YoY basis is always driven by the fall in the raw material prices or the impact of the...

— Viral

See, it would be very difficult to quantify that how superior we are, but I think people or our clients or customers are seeing some value and that is the reason we have more than 90% repeat orders.

— Sushil Sharda

That helps me a lot, sir and Sir, do we see any risk going forwards or any market conditions or something, you know that we should be on lookout for our speed bump on the need to growth.

— Darshil Jhaveri

So, it is very difficult to quantify it, which is better, but definitely we are going to take the local market also as compared to overseas market.

— M.L. Mittal

I just wanted to know about the now 85% of our turnover is coming from exports only Sir so any impact of the recession and the Ukraine war in European Union?

— Vivek Gautam

I mean they have, you know, we are now close to years of trials before they give certifications, so it is extremely difficult for a new entrant to enter any of the big brands of elevators.

— Sushil Sharda

Number 2 so for subsidy concern, government may further exchange or government can give some additional benefits.

— M.L. Mittal

It difficult to quantify the market share, but we were not very aggressively present in the domestic market.

— Sushil Sharda

So, is there any Bharat Wire Ropes Limited risk that we will be diluting margins or will we be able to maintain EBITDA for empty anything on this side?

— Devang Bhateja

Q&A — 19 exchanges

Sir my first question is from the margin spend, what will be the level of the EBITDA margin and EBITDA per ton for the financial year 24 as a whole year?

Sushil Sharda

Our EBITDA is 26% in the Q1 of 24. Sir I am asking about further going ahead margins. Then we would try to maintain the same percentage barring unforeseen circumstances, but we are quite confident that we will able to maintain this because in the current year. Okay and sir, further our sales for the ligation for empty improve this quarter, can we say these levels will prevail for the full year as demand outlook is good or it is a function of the raw material prices and steel prices to further see some correction in the HPA, so our realization. See realization order is going to impact the raw m

So, I had some few questions on the US certification that are required for the elevators. So, could you please throw some light on that? Bharat Wire Ropes Limited

M.L. Mittal

We have certification from the OEM and we are supplying it expert certification only at least three companies in India, we are supplying elevator company and globally also we are getting registration from the various elevator companies and we already have the BIS certificate, so that is also important for us. BIS and Lloyd's registration for the shipping industries. There are very few companies in the world which have the Lloyd's registration certificate which is used for shipping. So, you know, I believe that there are two segments which are high margin segments. One is the elevators in the w

Good afternoon, Sir. Congratulations for being a good set of numbers. So, my question is again pertaining to the gross margin side. Improvement that we are seeing on YoY basis is always driven by the fall in the raw material prices or the impact of the...

M.L. Mittal

There are multiple reasons for improvement of margin. #1 is our selling price is increasing every quarter. #2 the power and fuel cost is going down. #3 is the raw material cost also going down and this trend likely to continue for the entire year. So, we will see even you know improvement in the gross margin even available. Gradually we are increasing the product mix also, so we are involving our production capacity for the higher where we get higher margin so that also we are doing countries and we are making the new products also which gives higher like (Inaudible) 0:15:14 ropes we introduce

Sir, I just had one another question regarding the energy cost that we would be saving after the commissioning of the solar project.

M.L. Mittal

Yeah, energy we already put 5.5 mega third location. Their margin saving is not very high, but our own land this under solution 3.5 megawatts it was delayed by few weeks. So, the effect will get maybe from 15 August onwards there saving will be around Rs 4 per unit and every MW we will be generating around 15 lakhs unit per year. So, roughly you can say 52.5 lkahs unit and saving around Rs 4 . So, 2 crores 10 Lakh rupees will be saving the 3.5 MW. And for third party, you know there will be getting a small saving maybe around 1 crore will get it Okay got it.

Hi, Sir and in the last call you spoke about reduction in overall power and will cost, I think in FY23 it was 51 crores and you said it will be around 25 crores this year.

Management

OK, so I was saying Sir, in the last call, you said the power and fuel cost which was about 51 crores in FY23. So, it will be reduced to about 25 crores in this year FY24. So, I mean, are we on track of this?

M.L. Mittal

Yeah, let me explain you that Q1, if you see 12 crores 69 lakhs was the power cost that is around 10% versus. Now in Q1 11 crore is 7%, so 30% reduction. In the power cost as compared to Q1 of last year. So, the trend is likely to continue in the current year and in my last investor call, I mentioned 25-30% with saving in the current year and we are in the same line. We are working and we are saving that money. Understood and Sir, regarding the EBITDA percentage per ton in this quarter we have about Rs 40,000 of EBITDA, so what your guidance for full year? So, EBITDA is around Rs 40,000 per to

Sir in terms of utilization, how high can we go? Currently we see that you are operating at 60%.

M.L. Mittal

We are operating at 60%. Sir how high can we go up to 100. Up to 80-85. It can go definitely in two years time. Okay, sir and for our next 2-3 years growth, we don't need any capacity, right our existing capacities will take care of it. First we will not wait for three years. We are generating a lot of cash. So, definitely we have to plan something major CAPEX and the capacity expansion maybe this product or other products. Once finalized, then definitely we will come back to our stakeholders. we are going to generate in the operations 40 crores EBITDA in this quarter, last year 140 crores EBI

Yes, Sir. Thank you for this opportunity. Previous participant has just asked the question and you have addressed it. But I have another question on like you said that you are focusing on certain geographies, identifying new customers. Can you elaborate a bit more on what is making you differentiated in terms of getting value added business:

Sushil Sharda

So, basically all the customers are looking for value proposition that is what our focus is so giving them the required quality and at a better price. So, that has been our focus area since the time we started and we are working on the same, you know idea and that is why we are able to increase our market share as well as order book and we are focusing on almost all the parts of geography. So, right now we are supplying to almost 52 plus countries and our idea is to add another 30-40 countries within a short time. Okay, and we have many international competitors. So, how superior are our produ

Good evening sir and thank you so much for taking my question. So, firstly congratulations on a great set of results. Sir, I just wanted to ask about how do we see our revenue growth panning out like with our current capacity what do you think can be a peak revenue and how soon can we achieve it sir and how what do you see would be like would be say quarter improvement in the margins in the revenue or maybe we will see a higher jump in FY25, how would the revenue trajectory pan out sir? Thank you.

M.L. Mittal

See capacity as we discussed earlier also today also that 12 to 15% we are increasing utilization capacity we have 72,000 metric tons annual capacity and to achieve this we are adding balance equipment in next two years’ time we are confident and we will achieve this much 80-85% of the installed capacity and this will reflect in the numbers in the coming quarters and we are confident yes, we will achieve the capacity every quarter higher as compared to last year. So, so would it be fair to assume we might have around 20% growth year on year or maybe because the product mix is also changing and

Thank you sir. Thank you for taking my question. I have one query with respect from the annual report which you published recently. What I notice that the advances from customers, it has reduced quite comprehensively. So, it has been around 8-1/2 crores for past 2-3 years, but last year or this year it has got down to 2-1/2 crores. So, is there any change in the supply chain or any working capital, equations have changed or what is the reason for this drastic fall that I was concerned?

M.L. Mittal

Can you repeat your question actually, is it related to March 23 numbers? Yeah, it is related to March 23 numbers where I am seeing advances from customer of 241 lakhs and March 22, was 835 lakhs. So, I was just wondering why there had been significant reduction because even past two years, even March 2021 and 2020, it was in above of 8 crores. See, as we discussed 5 minutes back, now the company’s cash flow is very comfortable. Earlier we used to take advance from customers by giving some discounts gradually that we stopped. We want the right price; we don't want advance from customers. We ha

Sir as you spoke about that now the focus has been shifted from general ropes to value added ropes. So, could you just help me with the EBITDA margins for let's say general ropes or value- added ropes.

M.L. Mittal

Ma’am actually this is varied from generally very low category we can say around 12 to 15% is the EBITDA margin. But we have the high value products also. So, there will be EBITDA margin even up to 35-40%. So, average we achieved 26% in the current year first quarter. So, for general ropes we can get maximum EBITDA of 15. Bharat Wire Ropes Limited Maximum we can get 15% if you go completely low margin product that but that is not our target initial we used to do it in 2021, but now your focus is to go higher and higher value added products to get the better margin. So, maximum of 45% Yeah even

I just wanted to know about the now 85% of our turnover is coming from exports only Sir so any impact of the recession and the Ukraine war in European Union? Are we facing or we are able to overcome and or in India appearing to be a better market versus Export now?

Sushil Sharda

Thank you for the question. So, basically Bharat Wire Ropes is very well spread out in terms of geographies. So, even if there is Ukraine and Russian war, our geography is increasing. So, we are not seeing any downward or any muted order book from the geographies as we are continuously adding more geographies to our product portfolio. And Sir, how is the opportunity size for our products in India as well as in US and what is the growth rate we can expect in time to come, Sir? See, overall, this market. Again, these are not official figures. The market size of the product is somewhere around 10

Thank you for the opportunity. I just wanted to check in the current results. Was there any subsidy amount that was included in the EBITDA calculations?

M.L. Mittal

Eleven crores will be added in the EBITDA calculation. That is a part of the routine accounting. So, we have to make the approval basis, as per the account policies, but the actual receipt might take one year time. So, Rs 11 crores 71 lakh precisely we added. We added so if we look at the EBITDA margin, so if we say stand alone EBITDA margin without subsidy, so it should be removed. Without subsidy 44-11 approximately 30 crores. OK. So, around 30% is gross total. Okay, fair enough. So, that was my question.

Sir congratulations on a good set of numbers. I have three questions. Sir, firstly, you there is a Respondent: crores reduction in finance costs. What is that attributable to?

M.L. Mittal

See the there was an ICD in the company that has been paid so that is reduction of the interest cost number 1. Number 2, we held a lot of cash across last year, so bank borrowing also reduced substantially, working capital utilization hardly 20% of the sanction limits so that both things are reduction in interest cost diary. So, Sir, is it fair to assume that for the entire year we will have like 2 crore or so interest costs? Yeah, every quarter we expect that this reduction should continue may be more. OK. My second question is in Q1, I think our quantities of the products sold was some 10,30

Hi, Sir. Thank you for the opportunity. So, I just wanted to know what is the blend of high end or value-added ropes in quarter one? What's the revenue?

Sushil Sharda

So, basically the value-added item would constitute less than 10%, but our focus is again to increase that share continuously. And sir by FY25, where do you see this blend? Pardon me Sir. By FY2030, where do you see the blend going? So, basically our target is to at least reach 15 to 20% levels for the value added items. Okay. Thank you, Sir.

Just one question which I had just heard on the concall that you are able to increase your prices every with every customer about 1% every quarter now being in the B2B business and even when the raw material prices comes down with so much competition also we are able to maintain that and now we will be able to maintain that in the coming quarters also. Bharat Wire Ropes Limited

M.L. Mittal

Yes, we are able to maintain interest in market is where is now tender business it is one to one B2B business and the quality is very important. Three years back, between any competitive global market out margin gap was around 10 to 15%. That gap is reducing now we are as good as equal to the any global players. So, the 15% gap gradually are filling up we are equal to the European or any Koreans or anybody, you know product qualities. Okay sir Indian market, do we have what is the market share which we have in the Indian market, in the government orders? It difficult to quantify the market sha

Congrats on the good set of summers, Sir. My question was that you mentioned that LRPC might be a segment we may enter and we are focusing on government angles as well. So, is there any Bharat Wire Ropes Limited risk that we will be diluting margins or will we be able to maintain EBITDA for empty anything on this side?

M.L. Mittal

See, we are yet to take decisions while we see number 1. Number 2, if at all we take decisions, the absolute profit will increase. The absolute numbers will increase. Percentage might go down, but absolute numbers will increase and we are not going to leverage heavily that there is heavy borrowing other thing and once numbers finalized and we will definitely come back to you. Is there any new business we take up? What is our key priority user to utilize our existing volumes or to move on the value chain broadly? What are we looking at? Our first target is to optimize capacity up to 70,000 tons

Thank you for the opportunity and congratulations for a great set of numbers. Sir, couple of questions, Sir, Mr. Mayank mentioned that we are targeting to 50% export and 50% domestic. So, is it correct to assume that we have we might have the same realization in the export and the domestic market, is it correct to assume?

M.L. Mittal

See number one. Let me correct it. 50% does not mean we will reduce our exposure to the international market. Quantity wise we will not reduce it gradually we will shift to domestic market because higher capacity utilization is there in the coming next two years time, so additional capacity will earmark for the domestic where value addition is very. It is not bad. It is reasonable, it is good, maybe slightly lower than the export market, but we have to capture local market the way government is putting the focus on infrastructure and private sectors, improving all the thing. We are confident t

Thank you for all the participants this evening this earning call. I hope we have been able to answer all questions satisfy. If you have any further questions or would like to know more about the company, please reach out to our IR Manager, Valorem Advisors. Thank you.

Management

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Speaking time

M.L. Mittal

Sushil Sharda

Moderator

Deepesh Sancheti

Vivek Gautam

Tanuj Khiyani

Vijay Goyal

Anika Mittal

Viral

Bhavesh Chauhan

Opening remarks

Chaiti Gujarati

Good evening, everyone and a very warm welcome to you all. My name is Chaiti Gujarati from Valorem Advisors. We represent Investor Relations of Bharat Wire Ropes Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings call for the first quarter and financial year 2024. Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s earnings 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 those anticipated. Such statements are based on management’s beliefs, 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 call is purely to educate and bring awareness about the company’s fundamental business and fina

Sushil Sharda

Thank you, Chaiti. Thank you for hosting this call. Good afternoon, everyone for joining us today. It is my pleasure to welcome you all to our earning conference call for the first quarter of this year. Let me just give you a brief about the financial highlights of this first quarter. For the first quarter under review on consolidated basis, we have recorded revenue of Rs 158 crores which is higher by 19% compared to Q1 of last year and EBITDA stood at Rs 41 crores as against Rs 25 crores which is almost 64% higher than the last year Q1 and the EBITDA margin for the quarter were reported at 26%, which represents significant growth on year-on-year basis.Net Bharat Wire Ropes Limited profit stood at Rs 24 crores, which is higher by 98%. Now I request Mr. ML Mittal, our managing director to give you a brief about highlights of the company.

M.L. Mittal

Good afternoon, ladies and gentlemen, and thank you for joining us the first quarter’s concall for fiscal year 24. In Q1 2024, we had a very healthy sales growth wherein our sales volume increase by 15% year on year and we are currently operating about 60% capacity utilization level. We saw an improvement in our EBITDA margin due to stable raw material prices and downtrend of approximately 5% of the year on basis. The fuel prices are so we are seeing a downtrend resulting in a reduction in power and fuel cost. We have also seen improvement in the probabilities mainly on account of increase in both sales realization as well as increase in volume well as also focusing on high value-added products alongside this there has been a reduction in interest bearing loans, which are also adding the profits on company. Our credibility with our customers is improving and day by day resulting in repeat orders consistently coming to the company. We can now open the floor for the question-and-answer s

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