Goodluck India held a conference call on 06 February 2023 to discuss the results for the quarter ended December 23 and way forward. Mr. M C Garg- Chairman, Mr. Ram Aggarwal - CEO and Mr. Sanjay Bansal - CFO of the company addressed the call.

Highlights of the Concall

• The company has been improving its product mix by expanding its footprint in the value added high margin product. It recently raised close to Rs 200 crore through the Qualified Institutional Placement (QIP) route to fund its working capital requirements

• The company witnessed the positive momentum on the demand side owing to the robust economy, rising capex spending by the government, China plus strategy on the export side and its momentum towards offering value added products.

• Exports are roughly around 25% in value terms. There has been a worldwide slowdown in export but the company has been able to maintain its momentum and it expects its export will close almost the same level as last year.

• Segment wise revenue - General product structure, pipes, etc, contributes around 50% of total sales, structure division contributes around 10% of revenue, CDW and ERW precision tubes contribute around 25% and forging division contribute 15%.

• The site development work has started for defense and aerospace and we it expects the production to start in the first quarter of the next financial year. It will be producing forging components.

• The government of India has decided to replace all diesel buses in the urban renewal mission program. All the buses will be replaced by electrical vehicles. There is going to be huge demand for tube which it manufacture.

• India is at the cusp of tremendous growth and well poised towards becoming third largest economy with a GDP of 5 trillion US dollar led by focus on Gati Shakti, Jal Jeevan mission, Rs 11.1 lakh crore announced in budget for infrastructure, 2 crore houses for middle class, 1 core houses rooftop solar, Rs 2.6 lakh crore for railway, 4 corridors, NHAI roads at top speed, defense outlay increased. The company is well poised to ride on the wave of development as it is in auto, defense and infrastructure.

• The company is taking up around 30MW solar power which forms about 30-40% of its total power requirement which shall reduce its power cost. Also it has entered into an agreement with the UP government for 10 MW of solar power at the rate Rs 3.4 per unit for next 25 years. As a result it expect drastic reduction in power cost.

• The company expects its sales volume to increase and margins to improve further going forward backed by a good demand and increased capacities.

• Goodluck Defence and Aerospace Private Limited, a subsidiary of Goodluck India Limited caters to the extensive needs of Defence & Aerospace Industry. It foresee a huge growth potential in the segment particularly with the Government’s increasing thrust on Make in India, Aatmanirbhar Bharat, which highlights the need to bring the country’s dependence on imports in these sectors.

• The comany expect its defense subsidiary to be Ebitda positive and contribute around 10% of total revenues by Q3FY25. At full capacity it will generate revenue of about Rs 350-400 crore.

• The company expects revenue of Rs 3500 crore in FY24, Rs 4000 crore in FY25 and Rs 4500 crore in FY26.

• The company expects Ebitda margin of 8.5% in FY24, 9% in FY25 and 9.5% in FY26 without defense.