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KEI Industries held its conference call on 5 Feb 2019 and was addressed by Anil Gupta Chairman and MD
Highlights of the call
Volume growth in cables business in Dec 18 quarter stood at 15% YoY. For 9 mths the volume growth was 19% YoY. Dec 18 quarter saw higher copper cable sales and less of aluminum cable sales.
Export sales stood at Rs 190 crore during Dec 18 quarter as compared to Rs 109 crore for Dec 17 period.
Institutional sales domestic stood at Rs 554 crore up by 21% in Dec 18 quarter.
Retail sales through dealer network have seen an increase of around 32% growth to Rs 356 crore in Dec 18 quarter on YoY basis. Present dealer's network stood at 1400 active dealers as on Dec 18 with 50 new dealers added in Dec 18 quarter.
EPC division sales stood at Rs 176 crore as compared to Rs 160 crore in Dec 17 quarter. Expects sales to be at same level for FY 19 as it was in FY 18.
Expects cable volume growth of more than 20% in FY 19
The company has total order book of around Rs 3866 crore as on Dec 18 of which EPC division stood at Rs 1508 crore, and cables order books stood at Rs 996 crore. Exports order stands at Rs 748 crore and EHV is around Rs 614 crore.
Plus company is in L1 in Rs 175 crore as on date. Another Rs 650 crore orders to be awarded by Mar 19.
The 1 st Phase of expansion in Pathredi, for LT Power Cable has already been completed and the 2nd Phase, HT Power Cable expansion will be completed by February-March 2019 with cost of Rs. 30-35 Crore which will enhance capacity of HT Power Cable by Rs. 200 Crore.
In Silvassa, Company has bought Land & Building with investment of Rs. 16 Crore for expansion of House Wires capacity. In 1st Phase, Company will spend approx. Rs. 45 Crore (FY 2018-19 & 2019-20) for Capacity of Rs. 300 Crore and in 2nd phase
Company will spend approx. Rs. 30 Crore (during FY 2019-20) which will add further capacity of Rs. 300 Crore for House Wires.
Debt costs have increased due to higher bank charges due to higher bank guarantees given. Rs 6 crore is towards bank charges in Dec 18 quarter.
Overall debt is Rs 755 crore as compared to Rs 825 crore in Mar 18.
Total debt will be maintained despite the capex in the coming years.
Expects margins to improve from FY 19 levels due to higher sales from EHV cables and EPC division.
Expects growth momentum to continue. FY 20 also targeting 18-20% growth given order book position. Margins will be more than 10.5% at operating level.
Tenders are coming on regular basis.
Working capital cycle will improve further
No concerns due to NBFC. No concern on payments.
All projects in EPC are funded project and do not expect any delays due to elections or any other reasons for payments.
Rs 15 crore is towards promotional expense every year.
The company is approved for Railways towards high tension cables and signaling cable. Focus is more on Metros.
Business environment continue to be strong.
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