Transformers
& Rectifiers (India) hosted a conference call on Aug 11, 2023. In the
conference call the company was represented by Jitendra Mamtora, Chairman and
Satyen Mamtora, Managing Director.
Key
takeaways of the call
Orders
on hand as on July 31, 2023 stood at Rs 2149 crore. Of the current order book 95% are
domestic orders and 5% are export orders.
The
company has received new orders of Rs 377 crore during Q1FY24. So far in Q2FY24 the company has received new
orders worth Rs 250 crore including one large order worth Rs 145 crore from
PGCIL.
In
present order book the GETCO orders were just about Rs 92 crore.
Q1FY24
revenue from operations declined by 48% (to
Rs.155.57 Crore from Rs.300.34 crore in Q1FY23)
on account of multiple factors i.e. significant inventory built up as
materials were ready for dispatch but delivery got delayed due to non receipt
of dispatch instruction from customers there by unable to invoice those orders; delay in inspection from customers side in few
instances because of which the orders could not be dispatched and invoiced; Some
of the orders were deliberately slowed down by the company where there were
delayed payments by the customer. Apart
from these another factor that impacted the topline is non receipt of any
amount from GETCO during the quarter which increased the outstanding to Rs 183
crore, which impacted heavily on the deliverable of the company.
GETCO Issue update: On
July 13, 2023 GETCO issued stop dealing (not black list) notice stating that it
has decided to stop dealing with the company for 3 years on the ground that
company had allegedly submitted forged material dispatched clearance
certificate (MDCC) relating to 20 transformers supplied by the company under
the ongoing contract for supply of 29 transformers and 1 reactors to GETCO. As
per purchase policy of GUVNL (the parent company of GETCO), if stop deal order
is issued to any supplier same will be applicable to new business opportunities
or where the tender is not awarded. Purchase policy of GUVNL clearly mentioned
that it does not have any impact on existing contract or contract which is
awarded to suppliers and delivery has started under the same nor will it have
any impact on outstanding receivables. The delay in payment to the company by GETCO
is because the transformers that are said to be supplied under the wrong
documents are to be retested. The re test of 8 transformers has been done
successfully and the same has been dispatched under the fresh delivery
instruction (DI) given by GETCO. The balance transformers are already
commissioned and are in operational in good condition. The company expects that
payment process to start by end of August 2023 or early Sep 2023. Company is representing its case to GETCO
management to reconsider the stop deal order and revoke the same, management is
hopeful to get it revoked in near future.
The
GETCO order that was in question is of 29 transformer and 1 rectifiers the
pending order executable of this order is Rs 30 crore and apart from that one more small
order is that that is pending executed due to this issue . The company expect
the stop working letter will be revoked and this is one sided.
GETCO
may do away with retesting of balance of the transformers other than the 8
already tested as they are already in operation. There is no question quality not meeting the
requirement or performance parameters agreed upon by the parties. The company has booked revenue for all the 25
transformers. Total outstanding has been withheld by them is about Rs 183 crore and that will start
released starting from this month.
The
company is confident of YoY growth in revenue in Q2FY24 as the situation has
improved considerably and the company is showing good growth. About Rs 1400-1500
crore of execution of present order book is expected in FY24.
In
Q1FY24 the company manufactured 3600 mva but has sold only 2019 MVA.
Company
has participated under bidding process of state utilities, central utilities,
EPC’s, Private, TBCB tenders etc. for more than Rs.3,700 crore during the
quarter. It has also participated in 2-3 export tenders during the quarter
through its overseas associates and expects favorable outcome inQ2FY24.
Current
capacity utilization is about 60-65% with current throughput time. With reduction in throughput time the
capacity will go up by 15-20%.
Looking
for Rs 100-150 crore of bridge loan for meeting WC requirement. It is talking
to few funds.
Built
up inventory – The inventory buildup comprises
of Rs 50 crore of Oil India order and Rs 20 crore of small customers. Not releasing of fund of Rs 183 crore by GETCO
has deprived the company from further booking of Rs 150 crore of revenue as
the company could not fund WD requirements.
Similarly the company has also not
despatched orders for nonpayment.
Transformers
for green energy are seeing strong demand across the globe and the company with
its technology is well set to capitalize on this trend.
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