Capitaline

Analyst Meet / AGM 14-May-12

Conference Call

Elecon Engineering

Expect to do standalone sales of Rs 1500 crore in FY13

Elecon Engineering held a conference call on May 14, 2012. The Key takeaways of conference call are:

Order backlog as end of March 31, 2012 is Rs 1522 crore and of which Material handling orders is Rs 1216 crore and gears is Rs 306 crore.
Of the MHE order backlog about 46% is power, mining 25%, cement 12%, Steel 5% and balance are others. Likewise the order mix of gears is MHE & Power accounts for 21%, Marine 13%, Steel 12%, Plastics 9%, Cement 9%, Sugar 8%, wind mill 4% and balance are others.
Material Handling order intake for FY13 is expected to be in the range of Rs 1200-1500 crore. And this is not factoring in any BoP orders if any BoP orders materialises during this fiscal the total OI is expected to be double of Rs 1200-1500 crore.
Order backlog does not include the Rs 272 crore order bagged from NTPC recently.
Standalone revenue (including Other operating income) for FY12 was up 13% to Rs 1331.67 crore and net profit was down by 21% to Rs 69.6 crore. While Material Handling grew by 16% the gears grew by 10% leading to overall growth of 13%. On eliminating the one off item of profit on sale of investment of Rs 20.7 crore in corresponding previous fiscal i.e. FY11, the PBT of FY12 was up by 13% at Rs 109.8 crore (Vs Rs 97.6 crore in FY11) and PAT was up 4% to Rs 69.6 crore (up from Rs 67.2 crore in FY11).
Loss at subsidiary (On deducting standalone PAT from consolidated PAT) is largely on account of one off expenses of Rs 6.5 crore due to shifting of premises on account of carving out of standard products out of David Brown (Benzlers-Radicon Group from David Brown Gear Systems Group). There is moving charges in USA and UK and this is one time exp and will not be recurring.
Expect to do a standalone sales of Rs 1500 crore (Rs 850 crore in MH and Rs 650 crore in Gears) in FY13 and the company is confident of retaining FY12 margin for current fiscal as well.
Subsidiary is expected to register a sales growth of 10% (up from Rs 255 crore in FY12) and EBITDA margin of 5-7% up from about 2-3% in FY12.
The wind mill gear boxes is for P-gears and is a common facility for power, cement , sugar and wind mills. Orders from Wind mill gear boxes will come in after trial runs at customers' end. The trial period will be of around 8 months. The company has already started trial runs for customers and after successful completion of trial run the customer will start placing orders on regular basis. The trial period for major customer is ending in another 4 months.
Order backlog of Material Handling has an average execution cycle of 24-30 months.
42-50 crore of defence gears will be invoiced this year giving 15-20% growth in gears.
Retention money is at about Rs 230-240 crore.

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