Key takeaways of the conference call

Some upside was seen in the first quarter of this fiscal year in select segments like automobiles while several of the other key customer segments continue to encounter headwinds.

The company has closed its manufacturing operations at Khardah in Kolkata and all workers were settled. The entire manufacturing of Kardah plant was shifted to Ambattur (Chennai) plant without any disturbance to operational performance of the company. The manufacturing rationalization is expected to improve productivity and capacity utilization in consumables. The company is also been working on other initiatives in supply chain, manufacturing and other areas for cost reduction to help sustain and grow margins in a difficult environment.

Expect significant pressures on working capital due to tight liquidity conditions in the market. Further volatilities in commodity prices, project execution delays at customer end, exchange rate fluctuations and an increasingly complex tax and compliance environment are risks that need to be addressed/managed going forward.

Despite strong cash position, given working capital pressures and tough market environment the company has conserve cash and this has forced the company to be conservative in dividend payout.

The company sells about 3500 tonnes a month approximately and of which wires will be about 1000 tonnes. The profitability of welding electrodes is much higher compared to wires.

The sales credit period for the industry has increased and stood some where about 78 days and the company has also forced to offer higher credit sales of about 38-40 days.

The Kardah land parcel is about 10 acres. The company has appointed real estate consultants to find out buyers for this factory land. This locality has seen some residential projects launched by major realty players.

General fabrication is the key user segment which account for 50% of consumable sales.

Introduction of GST is good as it will bring price discipline to the market as tax evaders could not do so and pass on part of that tax benefit to customers distorting the market. The effectiveness of it will be known only on its implementation given tendency of some people to find loophole to evade tax.

The company has been working on opportunities to exploit its potential as a service provider in R&D and shared services to ESAB entities around the world. This is not generating any significant revenue as of now for the company.