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KEI Industries hosted a conference call on Aug 8, 2020. In the conference call the company was represented by Anill Gupta, Chairman& Managing Director.
Key takeaways of the call
Order backlog as end of July 31, 2020 stood at Rs 2951 crore (EPC Rs 1094 crore; EPC EHV 627 crore; cables Rs 1112 crore; Exports 118 crore) compared to RS 3244 crore (EPC Rs 1233 crore; EPC EHV 731 crore; cables Rs 1116 crore; Exports 164 crore) as end of Mar 31, 2020.
Sales decline by 31% in Q1FY21 is due to lockdown restriction of business activity during the quarter. Factories shut for whole of April and resumed production only after April.
Dealer sales contribution in Q1FY21 sales is 25% vs 34% in Q1FY20.
Exports include Rs 96 crore of sales billed to Dangote order. Order pending to be executed in Dangote order is just RS 9 crore and that will be despatched in Aug 2020.
The company during Q1FY21 bagged 400 KV EHV cable order worth Rs 148 crore from TNEB.
Company should be able to do 85% sales of precovidlevel for FY21. The company expect to honour this considering its pending order position and exposure to international and domestic market.
As far as retail sales is concerned the company expects to touch a sales that is 75% of precovid level in FY21. Still many of cities and towns are facing lockdown due to containment or local lockdown which impacts the retail activity.
Net debt as end of Jun 30, 2020 stood at Rs 349 Crore as against Rs 152 Crore as on 31.03.2020.
Working capital cycle is expected to get regularised by Oct 2020. Outstanding payment from Institutional sales that was held up or delayed due to lockdown has started coming in.
Of the Rs 389 crore EPC exports order book close to Rs 100 crore will be cable portion. This is in addition to Rs 118 crore cable exports reported as part of order book separately.
Lower interest cost is largely due to lower WC interest and LC interest.
| Interest Break-up |
|
Q1FY21 |
Q1FY20 |
| TL Interest |
1.4 |
3.74 |
| WC Interest |
8.5 |
14 |
| Bank charges on LC |
0.98 |
2.75 |
| Int on LC |
3.64 |
7.18 |
| Bank Charge on BG |
1.7 |
3.35 |
| other BC |
0.6 |
1.18 |
Retail sale usually close to 30-32% of total sales of the company. It expects to go back to 30-32% in balance period of current fiscal from around 25% in Q1FY21.
July sales is as good as last year sales. Institutional sales and exports sales was good. The retail sales is reaching around 95% of pre-covid level. However due to prevailing uncertain conditions due to intermittent lockdowns this trend will continue or not could not be said.
The company's usual annual export run rate (excluding Dangote) is about RS 500-600 crore. Dangote order is one kind of order and that is getting over by H1FY21. So the company will maintain its usual export runrate in FY21.
In Australia there is no domestic manufacturing of cables and wires. So the company is increasingly focusing on this market. The company supplies to solar and wind farms in Australia and looking at other opportunities in that country.
There is pickup in capex from GOI. Lot of tenders on T&D side in last one month.
Good set of new export orders from MEA, Australia and Africa. Booking has been strong and getting good orders every month. In July also exports order booking is strong.
The company continuously bidding for EHV tenders. Bidding of the company worth about Rs 400-600 crore are currently under evaluation. The company is submitting bids worth about Rs 250 crore every month.
Housing wire – In June and July seen strong sales coming from B class and C class cities. Demand from big developers is very weak. And expect to remain weak in near future. Pre covid the contribution of C class cities to total housing wire sales of the company was about 40% and that has now improved to 44%.
Major capex will be only in FY22.
Planned Capex for Silvasa plant was Rs 90-100 crore. Phase I of the project is already operational and Second phase will now be operational in Q2FY21 instead of original Q1FY21. Spent about Rs 71.5 crore in this project till July 31, 2020.
So Capex in FY21 will largely be balance capex of Silvasa and maintenance capex. Balance capex is about Rs 10 crore and that of maintenance capex was about Rs 10-12 crore.
Any capex on Greenfield project will happen only in FY22 as the company will review it only by Q4FY21.
Debtors – Current debtors level is about Rs 1368 crore as of now. Inventory has come down by Rs 200 crore from March 2020 end levels.
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