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Craftsman Automation hosted a conference call on Oct 31,
2023. In the conference call, the company was represented by Mr. Srinivasan
Ravi – Chairman and Managing Director.
Key takeaways
of the call
Management is confident that demand for all
the segments likely to increase in the coming years. Company is becoming more
balanced in terms of different segment contribution.
Company
will benefit from increased outsourcing by foreign players from India. Its
medium term target is to grow exports.
In
Q2 FY24, EBITDA Margin of auto powertrain business has come down; however,
margin of automotive aluminium products has gone up on YoY basis driven by improvement
in operating leverage.
Decline
is Auto powertrain business is due to expanded capacity, however management expects
margin to come back as the utilization improves on higher capacity. There is
also some impact of repair and maintenance expense.
Direct
exports in Q2 FY24 was about Rs 57 crore. Indirect exports are much higher than
this.
Company
is manufacturing very small and precision parts, which act as a differentiator among
peers.
Company
expects auto powertrain business to grow in low double digit or high single
digit until FY26. After that, it will again grow at faster pace.
Aluminuim
products segment is expected to grow faster on back of robust orders. Storage
solution is expected to post strong numbers in H2 FY24.
In
automotive powertrain segment, CV contributed 57% to segment revenue, Off-Highway
18%, tractors 14% and PV 11% in Q2 FY24.
In
H1 FY24, storage solutions contributed Rs 164 crore to Industrial &
engineering segment.
In
Q2 FY24, capacity utilization stood at 70% for automotive powertrain business
and 80% for Aluminium segment.
Net
capex done for H1 was approx. Rs 260 crore. Total capex guided for FY24 is now
about Rs 450 crore.
Board has approved the proposal for
setting up of a new plant/unit at Kothavadi, Coimbatore. Proposed capacity
addition will happen in phases. Estimated cost of the project will be approx.
Rs 208 crore. Phase 1 will be for Automotive Powertrain & Industrial
engineering and is expected to get complete in 24 to 30 months. Phase 2 will be
for all segments, and is expected to get complete in 30 months after phase 1.
Board also approved an equity investment
in Sulur Maharaja Solar Green Power up to Rs 21,87,000 ( 2,18,700 equity
shares of face value of Rs 10 each) for solar power captive consumption.
The existing and the new plant are
within 45 kms reach; therefore operation management will be easy as both plants
will have better synergy of operations.
The company has a land bank of 48 acres
in Kothavadi – Coimbatore (Tamil Nadu).
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