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

Highlights of the call:

The quarter has demonstrated good growth in revenues. This growth was mainly driven by demand in switchgear business segment as well as due to good demand from Agri Market Cables.

EBIDTA has also grown, margins have improved. This is an indication of its efforts over the past three quarters on increasing margins and improving operating efficiencies.

The management expects this margin to sustain and its endeavour will be to continue to remain on path of profitable growth and margin improvement.

The company is focusing on adding new, niche and high margin products, enter new geographies and offer total and customised electrical solutions to existing and new customers.

The company is constantly on the lookout for any new opportunities for technical associations to strengthen the base for product offerings.

December 2017 quarter sales grew 22% to Rs 110.70 crore. PAT grew 57% to Rs 5.3 crore.

Sales growth is also driven by uptick in Industrial Switchgear and higher demand in Wire & Cable Segments.

Exports accounted for 18% of total sales. The company exports to 50 countries.

Nine months sales grew 16% to Rs 316.0 crore. PAT grew 16% to Rs 15.20 crore.

Direct Exports contributed to 18% of total sales. EOU and SEZ Sales contributed to 4%.

The increase in exports to USA has also been another significant factor contributing to the increased revenues.

The company is seeing good traction in Three Phase Transformers. This was the new product in industrial switchgear business added in current financial year.

The company has 4 manufacturing units located in Tamil Nadu.

It has more than 15 products catering to Industrial / Building / Automobile verticals.

The company added new clients in new industry verticals like railways, solar, etc.

The company is the largest manufacturer of Cam Operated Rotary Switches. It has market share of 25% share.

The company has been given supplier status from OEMs such as GE & Schneider.

With GST in place and recovery in economy the company is seeing increased demand from its customers for its Industrial Switchgear business. The management is confident this business will grow well further.

Building products is the only B2C business it has today. The company plans to increase the contribution of this division to 10% in next 2 years from the current 5%.

EECL is about to come out with large tenders according to sources. The size is expected to be around Rs 200 crore but the timeline is not yet know. Hopefully it will be by Q4. The company will participate in the tender.

Industrial Switch gear has EBITDA margins of 14-16%, Wires and Cable business EBITTDA margin is 6-7%. So the margins for the quarter will depend on the sales mix.

Exports to US and Europe command better margins in compared to the domestic market. Thus exports also plays big role in margins for a particular period.

During the quarter sales from USA were 5% compared to 2% last quarter. During the quarter sales from Europe were 5.5% of sales compared to 4% last quarter.

In Q4, Wire and Cable business contribution will go up. So EBITDA should remain at same level of last year or down by 25 basis points.

The management hopes to end FY 2018 with 18% sales growth.

Industrial activity seems to be better and picking up. Lots of green shoots are visible which is being seen in sales growth.

Sales outlook for FY 2019 is 18-20% growth so sales should not be less than Rs 530 crore. This is not taking into account the merger.

In FY 2019, 50% of sales should happen from Industrial Switchgear business and 45% should come from Wires and Cable business. Balance should account for the rest.

Tie up with L&T gives the company access to over 350 dealers in India. Besides its own network for modular switches is 50 stockiest in 4 southern & western states.

The world market is better and growing.

The company has started supplying its products to large solar industry and also to railways (metro and Indian railways).

Cash on books stands at Rs 19 crore.

If sales grow 20-25%, debt may go up marginally.

After acquisition of Salzer Magnet Wires (expected in Q4), sales should go up by another Rs 50 crore and PAT by another Rs 1.5-2 crore.

Capex for FY 2018 should be Rs 18 crore. FY 2019 should be around Rs 8-9 crore unless it comes out with unplanned capex.