Analyst Meet / AGM - Analyst Meet
Margins are going to be better than Q1 FY'16 level
In Interaction with Mr. Abhishek Jain, Executive director
Key Highlights
There was a deferment of Rs 4 crore of order in Q1 FY'16, which resulted in about 1% fall in net sales on YoY basis, apart from lower raw material costs impact on sales.
In Q1 FY'16, the Ebidta margin of around 17% is gained through lot of internal drivers apart from about 100 bps advantage on fall in raw material prices. The company reduced its import content of raw material which used to be around 60% to 40% of total raw material. Company synchronized its logistics costs, which helped in lower other expenditure.
The company ensured and placed higher voltage lines in all its 4 manufacturing locations, so that entire power can be consumed from grid. Earlier company used to buy about 60% from grid and 40% from diesel gensets which costs nearly double. Thus, as per the management, going forward, margins are going to be better than Q1 FY'16's.
The company is operating at around 70% capacity utilization, keeping all its 4 owned plant and 1 leased plant in mind. There is plenty of leverage possible in all these plants.
Maruti and Honda cars India ltd constitute around 43% and 39% of total sales. While Tata Motors, M&M, Toyota Kirloskars, General Motors etc constitute the rest. The company is trying very hard for Hyundai Motors and some clarity will emerge by end of FY'16.
Total debt of the company stands around Rs 80 crore with about Rs 20 crore of long term and rest short term with average interest costs around 11.4%. Going forward in next 3 years, the debt will remain same, although long term will come down and short term will increase due to increasing working capital, in line with increase in sales.
The existing plants would require about Rs 10 crore of maintenance capex every year for next 3 years. The company has plans to built a complete manufacturing facility in Chennai facility which is currently on lease and works as an assembly facility. This would require capex of about Rs 25 crore. However, decision on capex will be taken by end-FY'16.Land has already been purchased in FY'15.
Going forward, with the way Honda Motors are growing, their share in total sales will cross Maruti's share in overall total sales of the company.
Management expects net sales of more than Rs 350 crore for FY16.
There are no plans for any acquisitions. No plans to raise any funds.
The company has debt equity ratio of around 0.4, which will not increase and will come down.
In FY'15, the tooling business was around Rs 30 crore. This business is uncertain and volatile. Its basically outsourced from China, Taiwan and from others. The company does some value addition and sells to existing customers who buy the automotive sealing systems from them. In FY'16, this business will be around Rs 10-15 crore.
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