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KEI Industries held its conference call on 22 May 2019 and was addressed by Anil Gupta Chairman and MD
Highlights of the call
OPM in Mar 19 quarter improved due to better product mix and higher volumes.
Institutional sales domestic stood at Rs 492 crore up by 14% in Mar 19 quarter. Institutional export sales stood at Rs 133 crore up by 34% YoY. So overall institutional sales stood at Rs 625 crore in Mar 19 quarter up by 18% YoY.
Retail sales through dealer network have seen an increase of around 29% growth to Rs 406 crore in Mar 19 quarter on YoY basis. Various major brand building exercises and large number of electrician meets resulted in good growth in dealer distribution Sales
Lot of branding activities in FY 19 including IPL. Rs 15 crore is towards promotional expense every year.
EHV sales in Mar 19 quarter stood at Rs 94 crore up by 81% YoY.
EPC division sales stood at Rs 247 crore as compared to Rs 187 crore a growth of 32% YoY.
Volume growth in cables business in FY 19 stood at 18% YoY.
In FY 19, institutional sales stood at Rs 1822 crore up by 17% YoY.
Retail sales through dealer network have seen an increase of around 43% growth to Rs 1400 crore in FY 19. Sales through dealer/distribution channel contribute approx. 33% of total Sales as against 28% last year. Out of this around 5% Sales goes through dealer indirectly.
Present dealer's network stood at 1450 active dealers as on Mar 19 with 50 new dealers added in Mar 19 quarter.
EPC division sales stood at Rs 730 crore in FY 19, up by 12% YoY.
Interest costs increased due to increase in bank guarantee charges by Rs 17 crore. Bank guarantees are given for next 5-6 years for EPC projects.
The company has total order book of around Rs 4707 crore as on Mar 19 of which EPC division stood at Rs 2395 crore, and cables order books stood at Rs 996 crore. Exports order stands at Rs 745 crore and EHV is around Rs 684 crore. Plus company is in L1 in Rs 113 crore as on date. The focus is on execution.
Expect FY 20 net sales growth of 17-18%
Completed the expansion in Pathredi plant in FY 19. Some more capex of around Rs 10-12 crore in Pathredi which will result in improvement in production capacity by Rs 100 crore.
In Silvassa, company has bought Land & Building with investment of Rs. 16 Crore for expansion of House Wires cables capacity. In 1st Phase, Company will spend approx. Rs. 45 Crore and will be operational by July 2019 and 2nd phase the company will spend around Rs 50 crore and will commence by Mar 2020. Expecting 30% growth in house wire segment. Currently house wire sales is around Rs 800 crore.
Net debt stands at around Rs 599 crore. No plan to increase further debt. No buyers credit as compared to Rs 137 crore in FY 18. Now the company has shifted to LC.
Total debt will be maintained despite the capex in the coming years.
Expects interest cost to remain at current levels of FY 19 despite increase in turnover.
Expects to margins to improve in FY 20 due to higher sales from EHV cables and EPC division.
Expects growth momentum to continue.
Tenders are coming on regular basis. Business environment continue to be strong.
Working capital cycle will improve further.
All projects in EPC are funded project and do not expect any delays due to elections or any other reasons for payments.
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