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Analyst Meet / AGM
26-Oct-12
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Conference Call
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Wabco TVS India
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Lower sales to OEMs resulted in lower sales and margins for Q2 FY'13
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The company held its conference call on 25th Oct'12 and was addressed by Mr. Rajagopalan CFO
Key highlights
- Sales for Q2 FY'13 was lower due to general slowdown in the industry at OE level. During the quarter sales to OE industry stood at Rs 143 crore (Rs 171 crore for Q2 FY'12), after market sale stood at Rs 76 crore (Rs 71 crore for Q2 FY'12) and exports stood at Rs 49 crore (Rs 38 crore for Q2 FY'12).
- The company predominately caters to Medium and large commercial vehicle and is hardly present in low commercial vehicle market. In exports business, the entire export goes to the Parent Wabco group.
- As per the management, even today, they cannot figure out the exact trend of OE industry as they are showing mixed signs. One of the reasons of fall in sales was also the inventory corrections happening at OE's end but the business plans of OE industry is also changing and difficult to gauge a direction at this juncture.
- The capacity for exports at Mahindra City will commence from Q3 FY'13 onwards and will slowly ramp up during the course of the year. So far in Phase 1 of expansion about Rs 80 crore is spent and about Rs 50 crore will be spent in Phase 2, of which so far Rs 15 crore is spent in H1 FY'13. At optimum capacity, the plant has a capacity to generate revenue of about Rs 250 crore p.a.
- Also the management has plans to set up an assembly line in North near Lucknow with capex of about Rs 10-15 crore.
- Costs of production have increased y.o.y, particularly with the power rate hike of 35% in Tamil Nadu and further Diesel price hike. Management is trying to pass it to the industry, but given the state of industry, it is very difficult and challenging.
- There was a forex loss of about Rs 2.3 crore for Sep'12 quarter, as compared to some forex gain of about Rs 1 crore y.o.y, and is booked in other income.
- Effective tax rate due to ramping up of Pantanagar plant and scaling up of production for exports from Mahindra City will result in slight lower tax rate to around 28%.
- Overall, as per the management it is difficult to gauge the direction and pace of growth in future, but based on historic assessment, H2 will be better than H1 FY'13.
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