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AIA Engineering hosted a conference call on
Aug 2, 2023. In the conference call, the company was represented by Mr Kunal
and Mr Sanjay.
Key
takeaways of the call
Volume:
In Q1FY2024, the company sold 74046 MT
(Produced 73702 MT) as against 67898 MT in Q1FY2023. The company has broken the
70000 MT mark which it was doing for quite few quarters.
Mining volumes stood at 53256 MT in Q1FY2024
against 45710 Mt in Q1FY2023. Non mining volumes stood at 20790 MT in Q1FY2024
as against 22188 in Q1FY2023. Non mining volume includes Cement and thermal
sales. The company expects non mining volumes to normalize in coming quarters.
Mill liners volume for the quarter stood at
9000 MT of which 4000 MT was from new plant. The company had done around 25000
MT mill liners in FY2023 and expects to do around 30000-35000 MT in FY2024.
Revenue from sales stood at Rs 1,220 cr in
Q1FY2024 as against Rs 1065.0 cr in Q1FY2023.
EBITDA for the quarter stood at Rs 402 cr and
PAT stood at Rs 272 cr.
Healthy margins are on back of improved
product mix, decline in raw material cost and freight cost. Usually it takes
2-3 quarters for the company to complete the pass through.
Other operating income for the quarter stood
at Rs 19 cr which is primarily export incentives.
Other income stood at Rs 59.5 cr in
Q1FY2024 of which Rs 2.8 cr is gain on account of foreign exchange fluctuation
and the balance is treasury income.
Cash
Balance: The company has a cash balance of Rs 2750
cr on which the company on an average earns around 7% yield.
The company wants to retain the cash
balance for working capital requirements as the company foresees ample growth
opportunities available.
The company will continue with 20% pay-out
for shareholders and will review the same every six months.
Working capital: The working capital days
decreased to 100 days which remained at around 120 days for long time. This is
primarily due to decline in finished goods inventory to 69 days which was
earlier around 75-80 days. Decline in finished goods inventory days is mainly
due to easing of supply chain.
Expansion: The company is doing some restructuring with respect to its
manufacturing plant, working on automation, upgrades, debottlenecking and
creating some ware houses which will result in improvement in operations. The
company has earmarked around Rs 200 cr for such reorganization.
The company is increasing non grinding
media capacity by around 20000 tons in next 4-6 months (Oct to Dec).
The company is working on brownfield
capacity expansion of grinding media. It plans to add 80,000 MT. The same is
expected to be commissioned by next year. The CAPEX for the same is around Rs
250 cr.
The company also plans to invest around Rs
50 cr+ on captive renewable.
CAPEX: The company plans to incur a total CAPEX of around Rs 510 crore
over FY2024 and FY2025. Of the same the company has incurred CAPEX of Rs 63 cr
in Q1FY2024.
Brazil: The duty levied in Brazil is
around 11.8% which is expected to end in March. The duty levied was for 5
years.
The company does around 8000-10000 tons of
volume per year in Brazil.
TAX
rate: Tax rate for the quarter stood around 26.5%.
The company expects the tax rate for the whole year around 23%.
Outlook:
The company has a order book of Rs661cr as
on July 1 2023.
The company has done volumes of around 291000 MT in FY2023 and expects to do incremental
volumes of around 30000 for FY2024.
The company has provided directional EBITDA
margin in the range of 20-22%. However expects to do better that the same.
The company continues to focus on mining
millers and for metals mainly copper and gold.
The company is in talks with around 30-40
miners and the talks are at various stages.
The company is extremely bullish on North
America and Latin America markets. The company plans to have more direct
presence in Latin America markets and is working very hard.
On an average it takes around 2 years to
convert miners.
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