Rajesh Doraiswamy, Jt. Managing Director of the company addressed the call:

Highlights of the call:

Q2 sales grew 34% to Rs 134.70 crore. EBITDA grew 30% to Rs 16.7 crore. PAT fell 3% to Rs 5.6 crore.

EBITDA margins fell from 12.81% to 12.4%.

H1 sales grew 27% to Rs 261.20 crore. EBITDA grew 31% to Rs 30.7 crore. PAT grew 3% to Rs 10.2 crore.

The company demonstrated good growth in revenues, despite a challenging industry scenario domestically especially in the industrial switchgear market.

The growth has been predominantly driven by increase in demand of products under building and industrial switchgear segments.

Building segment has grown more than 190% as company has added new products in this segment and increased its retail presence in India.

Domestic sales accounted for 84% of sales.

Industrial switchgear business grew 17% on account of demand across sectors

Industrial switchgear business also saw uptick in sales of new products like Three phase dry type transformers and wire harness as well as legacy products and, rotary switches. Legacy products under industrial switchgear segments like rotary switches and toroidal transformers have continued to show robust growth.

Building products business grew 194% due to increase in new product offerings like Modular Switches, MCB'S Distribution Boards, changeovers, Wires and Cables. The focus was also on the retail segment in India.

Wires and cables grew 24% mainly on account of consolidation of Salzer Magnet Wires which was acquired in March 2018 quarter.

The company has seen good demand and uptick in other two new products namely three phased try type transformers and wire harness.

Going forward, focus will remain on adding new high margin products, reach out newer geographies and offer customized solutions to clients.

The company is constantly looking for new opportunities for technical associations/acquisition to strengthen its product offering.

The company has withdrawn proposal to acquire 2 overseas companies announced in January 2018 as there were valuation issues.

Debt decreased by 10% to Rs 122 crore compared to FY 2018 end.

Focus will remain on profitable growth.

Other expenses are in line with sales growth as a %.

The liquidity crisis has affected the MSME. The economy was very buoyant till April 2018 but pessimism has come since Aug 2018 but the management does not expect this to last long and have much impact.

The company hopes to grow by at least 25% in FY 2019 similar to growth level in H1.

The borrowings will continue to be at the current level or go down. It won't increase further. But there is a capex planned for which term loan will be for Rs 12-15 crore will be required if this plan goes ahead.

Due to election the company does not see major slowdown in growth.

Inventory dropped from 106 days in March 2018 to 90 days. The company is looking to bring it down to 85 days.

In Q2 sales of Salzer Magnet Wires was Rs 14.5 crore against Rs 10 crore last year.

Target is to increase promoter's stake to 40% in next 2 years.

Together with deferred tax it will be around 33% for FY 2019. Without deferred tax it has been always around 25%.

Margin in exports is around 18%. The company exports only switchgears products.

Exports will continue to be around 17-17.5% of sales going forward. It used to be around 20% but it has come down due to its acquisition of Salzer Magnet which is purely into domestic business.

Raw material % will continue to be same as the management does not see any significant change in raw material price. Even if there is spike in raw material price the company will be able to pass it on with a lag of 2 months.