Elecon Engineering Company Limited
8,628words
42turns
0analyst exchanges
3executives
Management on call
Prayasvin Patel
CMD
Kamlesh Shah
GROUP CFO
Narasimhan Raghunathan
CFO
Key numbers — 40 extracted
Rs.184.8 crore
Rs.228 crore
Rs.33.6 crore
Rs.37.6 crore
18.2%
16.5%
Rs.15.8 crore
Rs.12.4 crore
26.9%
Rs.63 crore
Rs.270.9 crore
Rs.52.3 crore
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Guidance — 20 items
Kamlesh Shah
opening
“Sir, secondly now there is a hypothesis which says that globally in US and Europe specially the steel prices are increasing significantly and going forward it will further increase because of their various CO2 emission norms which are coming into play.”
Kamlesh Shah
opening
“But as I told you, if that happens, then naturally we will be at a much better position because our products would be cheaper than the competition which would give us a definite advantage.”
Kamlesh Shah
opening
“So I just wanted to understand how can we see this division going forward?”
Subham
opening
“So, is it fair to say the Rs.7 cores loss was only one time now and going forward we would not report loss in an ideal situation.”
Zaki Nasser
opening
“As a matter of fact, from next year onwards it will start making a reasonable amount of money.”
Zaki Nasser
opening
“Sir going forward next 3 years where do you expects the top line to stabilize at this is first part of the question.”
Sunil Kothari
opening
“What type of opportunities opening up over next year, any size, any numbers any specific if you would like to talk?”
Sunil Kothari
opening
“And now we have become profitable and going forward it is going to generate very good healthy margins for us.”
Sunil Kothari
opening
“As the period of time goes by we intend to deploy more of our dealers or agents in various territories because these countries quite often are very large like Canada and the United States.”
Sunil Kothari
opening
“So we feel very confident that going forward we should be able to grow our business to considerable aspect.”
Risks & concerns — 11 flagged
And in turn, they quite often arm twist you and try to close a contract and it is very difficult to asserting what ultimately would be the result whether there would be additional amounts which have to be booked in by us or not, or we will tend to gain ultimate.
— Prayasvin Patel
So, this is the scenario that continues and therefore it will be difficult to give you an answer as of now, but as far as what we see is what we represent to you.
— Prayasvin Patel
However, now we are seeing that there is an upsurge of orders from the domestic market, and therefore again the percentage to maintain where we are today still becomes more and more difficult.
— Prayasvin Patel
Because let's understand one thing, that when we go into the international market and if we go into countries where we have not been there before, the acceptability of Elecon products becomes difficult.
— Prayasvin Patel
The second thing is that since they have not experienced our products in the past it is difficult.
— Prayasvin Patel
As we said Prashant that it is very difficult to have a onetime loss in material handling because as we keep on closing contracts, we will know more as to where we stand and whether there is any additional losses to be booked.
— Prayasvin Patel
And therefore, it is very difficult to tell you which one is going to increase beyond or go above the other.
— Prayasvin Patel
So I told you compared to what we do this year, the growth is expected to be 20%, however, it is very difficult to ascertain very clearly.
— Ankit Babel
It would be difficult unless there is some inorganic acquisitions that take place.
— Kartik
Is there a risk that you become a personal non grata at a certain level because you are not taking orders below your terms?
— Kartik
So, that is a very difficult situation and which is the reason why we have tried to get out of projects apart from the fact that as we mentioned earlier, that the customer in the end just doesn't want to pay for it.
— Prayasvin Patel
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Opening remarks
Kamlesh Shah
been healthy, the price realization has been good so all in all it's a very healthy centre. Fair enough. Sir, secondly now there is a hypothesis which says that globally in US and Europe specially the steel prices are increasing significantly and going forward it will further increase because of their various CO2 emission norms which are coming into play. So in that situation given the steel price remaining quite low as far as India is concerned. So, there may be a situation where in engineering product out of India can see a very high growth. So, in this light what is your view and how are we placed in that scenario? Normally, what we have seen is steel prices internationally find a balance and remain more or less similar and generally speaking, all over the world because otherwise steel tends to migrate from one place to the other in a big way. China had originally if you remember, years ago, China had a lower prices than the international market and therefore the sales of Chinese st
Subham
So, is it fair to say the Rs.7 cores loss was only one time now and going forward we would not report loss in an ideal situation.
Zaki Nasser
See what my colleague was trying to explain to you is first of all, there is no cash loss. So we have to understand that it is not a cash loss that we are talking about, number one. Number two, is when we are trying to close contracts aggressively, at the end the customer quite often negotiates with us that this is the amount that we will pay and this is the amount we won't pay. So it is a situation of give and take. Apart from that, we have to understand that suppose we do not agree with the client then we have recourse to arbitration and then from arbitration it goes to the courts and so forth and then you get a decision after 6-7-8-10 years quite often. Now, quite often the management takes a practical approach whether it is worth letting a certain amount go and still get majority of the amount rather than fight with the client. Because first of all, it creates a bad feeling on top of it you will get money after 8 or 10 years where that value will depreciate to a very large extent.
Prayasvin Patel
I'm glad you asked these questions because these are very important questions that you have narrated. Basically, the way things are panning out there is going to be an increase in turnover because first of all we are sitting on a capacity utilization which is around 55-60% which was much lower earlier in the gear division, so there is a scope to further increase the turnover, it all depends on the order inflow. Looking at the present Indian scenario, the inflow of orders has started increasing and we presume that will bring in a further increase in turnover in the years to come that is number one. Number two is this will also reflect in a similar way with material handling, though as we said that we are not interested in taking contracts and projects right now but we would be still selling our products. Our after sales business which is spare business continues to remain. So all in all, we see a very rosy picture. Apart from this in the gear business, there is also a growth in the expo
Zaki Nasser
So, can we can we reasonably assume that may be next two years down the line we will stabilize at 1200 crores plus in terms of top line
Sunil Kothari
Fantastic and about the alternate use of that material handling facility which you had mentioned. So, is something happening on that front or will it take some more time. We are actively pursuing because we have machinery which is catering to very large components and very large kind of fabrication. It is not easy to look for such kind of things they go into only specific certain types of industries and therefore we are pursuing it but we are also very judicious because we want to go into areas only when there are healthy margins because we are not interested in going into areas where there are low margins and very high competition. So we want to do work which is high precision and where the margins are healthy. So we're just taking a bit of time but just to say we want to only go into areas which would make money for the company. Thanks a lot and best wishes for the future. Thank you. We have the next question from Sunil Kothari. Please go ahead. Thank you very much Prayasvinbhai. Sir
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