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KEI Industries held its conference call on 10 Aug 18 and was addressed by Anil Gupta Chairman and MD
Highlights of the call
Volume growth in cables business in June 18 quarter stood at 17% YoY
Export sales stood at Rs 79 crore during June 18 quarter as compared to Rs 110 crore for June 17 period. Export order book stands at Rs 195 crore. The company is L1 in around Rs 400 crore of orders from African market. Expects good growth from exports in FY 19 despite lower sales in June 18 quarter. Around Rs 50 crore of export cable order could not be dispatched in June 18 but was dispatched in the month of July 18.
Retail sales through dealer network have seen an increase of around 55% growth to Rs 326 crore in June 18 quarter on YoY basis. Present dealers network stood at 1302 active dealers as on June 18 with 18 new dealers added in June 18 quarter.
Good emphasis was given on brand building in June 18 quarter. The company sponsored chest logo for Rajasthan Royals in IPL 2018. Expects around 35% growth in sales from Retail sales for entire FY 19.
EPC division sales stood at Rs 158 crore as compared to Rs 174 crore in June 17 quarter. L1 in more than Rs 850 crore. Expects sales to be at same level for FY 19 as it was in FY 18. Shortfall of sales in June 18 quarter will be made up in coming quarters.
Some delay in execution on ground for some orders lead to lower EPC sales. Also early arrival of monsoon led to some delay in execution. Targets close to Rs 1000 crore of sales in FY 19 from this segment. For FY 20, expects 15-18% growth in EPC.
EHV cable sale in June 18 quarter stood at Rs 39 crore as compared to Rs 59 crore for June 17 quarter. In June 18 quarter the company received a single order of 220 EHV cable of Rs 129 crore from HPCL. Total order book of EHV stood at Rs 400 crore. Expects 100% sales growth in FY 19 on YoY basis.
The company has total order book of around Rs 2599 crore as on June 18 of which EPC division stood at Rs 1290 crore, and cables order books stood at Rs 667 crore. Exports order stands at Rs 195 crore and EHV is around Rs 447 crore. The focus is on execution. Plus company is in L1 in Rs 1592 crore as on date.
Pending order book as on date is Rs 3400 crore. Rs 1000 crore is L1 as on date.
Total borrowing stands at Rs 625 crore in June 18 quarter as compared to Rs 842 crore on 31st Mar 18. Better realization from debtors aided healthy cash flow in June 18 quarter
Expects sales growth of 18-20% in FY 19
All projects in EPC are funded project and does not expect any delays due to elections or any other reasons for payments.
Housing wire cable segment reported net sales of around Rs 180 crore in June 18 quarter which is a part of cables sales. Increased marketing on television which will continue in FY 19.
Affordable housing segment is one of the major growth drivers of increase in demand from cables apart from the Railways and Metros and other industries. Steel sector and refining sector are some other sectors from where the demand is coming up.
The capex of around Rs 55 crore is completed in FY 18 for LT cable which will generate around Rs 300 crore of additional sales in FY 19. The company is expanding its HT cable division by incurring a capex of around Rs 40 crore in FY 19.
Inspite of increase in sales and capex, no increase in debt.
38-39% of total raw material would be copper/aluminum and rest are other metals.
Forex gain in FY 18 stood at around Rs 9 crore. After considering effect of rupee at 69, forex loss for June 18 quarter stood at Rs 3 crore. Higher exports in coming quarters should result in forex gains or mitigate any further forex losses if any.
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