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Analyst Meet / AGM
28-Sep-11
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AGM
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Ion Exchange (India)
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Given the strong order book, the outlook for FY'12 remains encouraging
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The company held its AGM on 27th Sep'11 and was addressed by Chairman and Managing Director Mr. Rajesh Sharma
Key highlights
Ion Exchange (India) is one of the pioneer companies in water recycle and desalination business. In desalination, it is the market leader with total 8 large projects completed in India and 2 more in the pipeline.
For FY'11, the net sales of Ion Exchange (India) grew by about 15% and profits nearly doubled on y.o.y basis. According to the management, the company is fully booked in terms of orders for FY'12, and thus has optimistic outlook for FY'12.
Management is trying its best to improve the margins, but given the nature of the business, the margins are very competitive.
In FY'11, the Ion Exchange Infrastructure Company, the subsidiary of Ion Exchange (India) (76% stake), made profit of only Rs 14 lakh as against Rs 3.65 crore in FY'10, as there were costs overrun in few projects. However based on the current order book for FY'12, the management is more optimistic about the performance and profits in FY'12.
The company hived off its Turnkey Solution business into a new wholly owned subsidiary namely Ion Exchange Projects & Engineering so as to focus more on large industrial and municipal infrastructure water and waste water projects. This business constituted about 60% of total turnover for FY'11. The wholly owned subsidiary will have better access to large projects and it also opens up options for further leverage and fund raising etc.
Ion Exchange (India) has 100% wholly owned subsidiaries in Singapore, USA, Bangladesh, Thailand, and in USA. According to the management, one needs to have a base in respective country to tap the market, because the real income is into services business, which can only be handled if one has a base in that particular region. Ion Exchange (India) currently is concentrating more on the profits of its subsidiaries rather than the scale and then will plough back the profits to bring the scalability.
The water business is a high working capital business and generally in Q4 you have pile up of debtors, which is a normal course of business and that is why the year-end debtors numbers look large.
For FY'12, the company has capex plan of about Rs 19 crore to upgrade some water recycle capacities and to get its Ankleshwar plant US FDA approved for exports of chemicals business to USA.
The 12th 5-year plan has PPP plans on water and wastewater related projects, which will open up BOOT projects in this business. If that happens, then the scope of business will increase and so is the margins.
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