Arihant Superstructures Limited Q3FY17

Financial Highlights

Arhant Superstructures Logo
Income Statement Arihant
Arihant Incoem Statement
  • Revenue for the quarter clocked Rs. 369.9 Million with 26.6% EBITDA at Rs. 98.6 million.

  • PAT margin is 13.9% at Rs. 51.3 million. Compared to Q2 company has recorded better numbers but in comparison to YTD Q3 FY16 it is trailing mostly because of

    1. higher interest cost on borrowing cumulation.

    2. Recognition of two projects that have higher costs and revenue from them is yet to catch up

    3. Higher selling and distribution costs

  • Average price that company got in Q3 was 3317 per Sqft with Rs. 2986 in Jodhpur and Rs. 3661 in Mumbai in affordable housing segment- Arihant Aanchal at Jodhpur and Arihant Arohi and Anshula at Navi Mumbai.

  • Due to new opportunities coming up in future particularly in Navi Mumbai, one can expect fresh equity offer after around 18 months.

  • Sale of 70 flats in Jodhpur and 82 flats in Mumbai in the quarter. This year company has given possession of 1200 flats.

  • Average selling price of a house in Mumbai is Rs. 5000 per sq feetwhereas in Jodhpur it is Rs. 2500 per sq feet.

Effects of Demonetisation

  • Stagnation in Sales in November and December
  • All sales for the quarter have taken place mainly in the month of October.
  • The collection cycle of 90 days is also expected to stretch. Partial revival is expected only April'17.
  • With bank's coffers full of money to be lent, housing sector should see a solid revival.
  • Labour payments by contractors are being done by e-route.


Growth Drivers on account of Government policies

  • Government has a strong focus on affordable housing segment and company has been a operating in this segment since 2009.
  • RERA, demonetisation and GST together shall lend impetus to the sector.
  • Direct incentives to developers and additional benefit to end consumer in regards to home loans will fuel this segment
  • Reducing the eligibility of size from 60 sq metre of built up area to 60 sq metre of carpet area as defined in RERA and includes projects that got their certificate of commencement after June 2016
  • Various incentives and benefits for affordable housing programmes
  • More players are expected to enter the affordable housing due to government's encouragement through policies but the company is already having good projects in its kitty alongwith the right kind of experience.
  • On account of no taxes on profits from affordable housing projects, the margins should increase by 25% on affordable housing projects. Other than this one advantage, there seems to be no factors leading to increase in margins.

Future Outlook

Future monetisation Arihant
  • New programme called Arihant Ananika was launched on 11th February which saw sale of 89 units totalling to 85000 sq feet just in a period of 7 days.
  • Of the 14 projects of the company, 10 fall in the affordable or low cost housing segment.
  • Total of ongoing projects requiring approvals and on shelf for sales is 11 million sq feet, of which 7 million Sq feet pertains to affordable or low cost housing segment and 2 million to projects under approval.
  • In 2017-18, company targets to sell 25 lakh sq. feet and deliver 18 lakh sq. feet.
  • Company expects to deliver 25 lakh sq feet YOYfrom 18-19, 19-20 and 20-21 with 70% in Mumbai and 30% in Jodhpur and EBIDTA at 36-38%.
  • About 4-5 million of sq feet shall be delivered in the next three years in affordable housing.
  • Other than the above and redevelopment projects into premium section in Navi Mumbai (Vashi), company does not have any other huge land banks.
  • Company will get 30-35% of the total area in the redevelopment projects that have been signed.
  • Land costs have seen a slight fall mainly coming through villagers who own land and developers who undertook projects but are unable to complete them.
  • 63% of company's portfolio pertains to affordable housing i.e. projects in the category of Rs. 2000-4000 and 29% caters to upper middle class with Rs. 4000-6000 category of projects.
Note: All numbers, estimates and projections exclude projects under approval.

Note: All numbers, estimates and projections exclude projects under approval.

  • Owing to incentives on taxes, company should be able to pass on 5%-10% benefit to the end user.
  • Presently the company is focussing on the region of Panvel and does not have plans to expand beyond Navi Mumbai and Jodhpur.
  • New Airport to be constructed by GVK in Navi Mumbai, upcoming Corporate park and Nhava Sheva Sewri link reducing the time taken to travel from South Mumbai to Navi Mumbai are some of the factors that will fuel growth and demand for housing in this area. A new city adjoining Navi Mumbai is also coming up and has all the political will and support required.
  • Jodhpur happens to be the hub of employment, education and modern living in Western Rajasthan and therefore company's focus as well.
  • Company's IRR mark is 20% PAT margins on all investments which gives a target of 26% year on year basis. Average cycle of a project is 36 months.
  • Company is geared up for a 2 times increase from the present level.
  • Company will be interested in JVs only when there won't be requirement of buying the land and in segment of Rs. 2500 sq feet.

Arihant's Strength

  • In affordable housing completing projects within the cycle and controlling expenditure is extremely important and is a challenge for smaller as well as big companies. Arihant is sitting right on the sweet spot
  • Company does not charge transfer costs, escalation charges and impose lock-in period.
  • Standard operating procedures that are infused into all projects right from Rs. 15 lakh to 80-90 lakhs.
  • 20% of the sales happen on referral basis which results in cost savings on channel partner commission, brokerage and advertisement.
  • Risk alert system helps the company being proactive.
  • Company's model is that of outsourcing labour to a contractor and procuring from the company to contractor. Company does not give lock and key to any company where there is no engineering section.

Heritage Foods Q3FY17 Concall Summary

heritage foods logo

Financial Highlights

Heritage foods Q3FY17 financials
  • Total Turnover has grown by 14.50 % to Rs 6671 m
  • Dairy turnover grew by 6.79 % growth to Rs 4596 mn
  • Milk volume Sales Grew by 5.89% to 8.63 LLPD
  • 18.22 % growth achieved in Branded Value Added Products Sale
  • 19.43 % growth in Packaged Curd sales (accounts for approx. 80% of Branded Value Added Products Sales)
  • 12.16 % de-growth in Milk Procurement to 10.55 LLPD (Lakh Liters Per Day)
  • Dairy EBITDA is at Rs 369 mn.
  • Retail EBITDA is at Rs 11 mn as against Rs (21) mn in Q3 previous year. 
  • Agri EBITDA is at Rs (1.10) mn as against Rs (1.30) mn in Q3 previous yea
  • Vet Ca EBITDA is at Rs 4.50 mn as against Rs 3.50 mn in Q3 previous year. 
  • Bakery EBITDA is at Rs 2 mn as against Rs 1.40 mn in Q3 previous year.
  • Total debt stands as Rs 124 crore, long term- 67 crore, short term-67 crore

Business Highlights

  • Procurement price is Rs 32.60 per liter right now
  • Milk prices going up both from procurement side to sale side
  • Different increase in prices in different market
  • On average, 2 RS per liter increase both in the procurement price and sale price is expected
  • Company will increase the milk prices by around rs2 per liter
  • Curd prices will be increased by RS 4 per liter
  • During this quarter there was no revision in milk prices. However, realizations increased due to favorable product mix (buffalo vs cow milk, full cream vs toned)
  • Fat content in milk
fat content in milk
  • Accumulated loss in retail is Rs 300 crore
  • 20% of the total sales comes from their own parlour
  • Working capital cycle for dairy - inventory period is 19 days, trade receivables are 2 days and trade payables are 13 days, the networking capital cycle is 7 d                                                                                                                                                       

Dairy Vertical

Heritage foods dairy vertical key metrics Q3FY17.png

Retail Vertical

Heritage Foods Key Metrics Retail Vertical Q3FY17

Procurement volumes

  • Procurement volume went down by 12.2% y-o-y
  • Company claimed that this was because previous year, the company leased a plant in Haryana which converted milk into milk powder and such conversions did not take place this time.
  • Current procurement is 10.5 lakh liters per day

On Retail demerger

  • They have got the no objection from the SEBI Stock Exchanges.
  • Applications have been filed in the NCLT and the competition commission
  • Approvals are expected by March end or April beginning and integration with Future retail should begin by May
  • The demerger will enable the retail stores to join a larger group, which is scaling up the stores faster and it is already profitable business
  • Also, the company expects that retail business will able to earn higher margins by joining with a larger group which is important as currently the division is incurring losses at the PAT level.
  • It will also help the company to sell its products through the larger group of future retail
  • Lock-in period is for 3 years after which they can exit their position

Acquisition of Retail dairy

  • It will help in building scale and making operations viable in Delhi
  • Reliance also offered their shelf space they have around 550, 600 food and grocery stores where the company can supply its products


  • Capex is expected to be around 70-75 crore per year for the next 12-18 months

Tax rate

  • Tax rate was 29% this year, compared to 34% previous year
  • Company said the tax rate is expected to go down as their efforts to bring renewable energy will bring in tax benefits due to accelerated depreciation

Future Plans

  • Initial plan to reach 6000 crore revenue mark by 2020 will have to redrafted since they are planning to demerge the retail, agri, bakery verticals
  • For the dairy vertical they are still aiming the 4150 crore revenue mark
  • To achieve increment growth, they are increasing their capex to increase capacity
  • Value added products are expected to have 40% of the total revenue share by 2020 compared to 21% right now


AllCargo Logistics Q3FY17 Concall Summary

AllCargo logistics logo

Financial Highlights

AllCargo Q3FY17 Financials
  • Total Revenue from operations stood at Rs 1411 crores for the quarter ended Dec 31 2016. This is an increase of 6%.
  • The volumes have grown both in MTO & CFS businesses
  • EBITDA for the quarter was 99 crores, which is a decline of 13%, this was mainly due to cost arising from rentals from Kolkata CFS, which is yet to start & also for expenses incurred in Q3 FY17 for managing the CFS at Mundra
  • Q3 saw a slowdown in logistics & shipping business, as there were no new projects that really took off ground. 
  • The company has considered moving away from lower ROC business & selling of hazard assets
  • In Q3 the company sold ship which was more than 25 years of its effective life & one ship was under repair.
  • There has been transfer of similar business to ACCI due to the IndAS this is reflected in PAT by way of JV accounting. All these factors affected company’s P&L for the quarter
  • PAT was 49 crores a decline of 10%. This was mainly because of deferred tax impact on account of IndAS guidelines. 
  • Net Worth as on Dec 31 2016 stood at 1894 crores. 
  • Net Debts stood at 259 crores
  • Consolidated Return on capital is at 14%. 
  • Last year, the company the company had announced buyback to reward shareholders. The buyback was completed by January at price of Rs 195 per share. The total buyback size was 64 lakh shares that translate to approx. 2.54% of total number of share outstanding. The total amount of buyback was 124.8 crores
  • There is Other Income of 18.27 crores which includes Dollar to Euro translation income & other income rentals & other miscellaneous & unclassified spread in income
  • There is other comprehensive income which is below net profit which is the share in JV & associates. This is because of new IndAs, which has to be shown separately
  • The company has not able to find out why MTU realization are dropping. The company believes that this phenomenon is temporary & as freight rates start kicking back the company will reap the benefits of the freight rates. 
  • ICD volumes for the Quarter have gone up 13% to 9035 TEU’s
  • Earlier, all the expenses incurred till the facility commenced operation was capitalized, but as per the new accounting standards and in line with the generally accepted accounting principles, the lease rental paid to the Kolkata port has been debited to the revenue expenses and not capitalized, and for the 9 months ended December 2016 the amount is close to 3.5 Crores, and that has been accounted in this quarter as expenses.
  • Decline in EBIT is of 8 crores out of which 3.5 crores is on account of rentals to Kolkata port & 4.5 crores on account of expenses for Mundra CFS.

Business Update

  • The board has given in principle approval of acquisition of 49% stake in terminal & combined volume of both the ICD which are growing i.e Kheda & Dadri that is 9000 TEU
  • There is slump sale where in all the business of CFS Transindia Logistic park is taken over by Allcargo. The deal numbers is not included in current quarter as the transfer will be effective from 01/01/2017
  • The CFS volumes have gone up but no increase in revenue due to cost of rentals & other expenses which are as per Ind As for Kolkata is under setup & there is no revenue there. That is the reason cost has gone up
  • Utilization of crane & equipment during the year is 90% upwards
  • Kolkata has approximately 4 CFS & all of them are small size. The Port volumes have been increasing by approximately around 20% in last 2 years. The port activity has been improved because BSA has taken over the operations and maintenance of the port at Kolkata, so the company expects that the volumes should continue to rise. This would increase approximately 65-70% of company capacity. 
AllCargo Segment breakup Q3FY17

Industry Update

  • Indian logistics market size is around 130 billion and is expected to grow by 300 billion by 2020.
  • It contributes to 5 – 6% to GDP & has been growing at CAGR of 11-12% 
  • Government has introduced for a selected few importers direct port delivery or commonly called as DPD to improve port clearance
  • DPD has become a new segment of business. DPD has introduced a new mix of business for CFS. Presently DPD volume is in range of 5% of the imports at JNPT & right now DPD is only at JNPT
  • The government has focused on infrastructure development in the budget & with GST implementation it is a positive step.
  • The government has taken decision to improve ease of doing business & came out with new customs regulations in which the ports have been asked to give deliveries directly from the terminals instead of putting it into the CFS. But what the company has seen in recently is that most of the cases the volumes have not been able to be delivered at the terminal because the process with which the trade works is different. 
  • The trade requires in many cases that call should be made of credit terms, the original bill of lading, the clearing process, the factories or the trading houses to have their own storage facilities, these issues have come up from the customer end.
  • Right now the volumes are only 5% but the company says it will have to wait & see how industry adapts to this new policy.

Impact of Demonetization

  • Demonetization has been a disrupter for the business
  • It did affect the company as a logistic player during the quarter as it was completely B2B. Also for clients it did impact & this may cascade down to company


  • The Total Capex incurred for 9 months is 167 crores. This inlcudes:
    • Cost for dry docking of ship - around 4 crores.
    • Addtion of a crane of 600 tonnes at 31 crores,
    • JNPT additional expansion is 43 crores
    • For Kolkata till date the expenses incurred are 31 crores & thereafter other maintenance Capex are pertaining.
  • For full year it will be less than 200 crores

LCL Business

  • The company is world leader with a global network covering over 80% of the world.
  • The company operates out of 300 offices in 164 countries.
  • Volumes have grown by about 14% Y-o-Y
  • Revenue stood at 1206 crores, a Year on year increase of 11%
  • EBIT for the Q3 was 42 crores. The ROCE was around 28% in this part of segment of business
  • The company’s aim is to continues to maintain global market leadership & focus on growth & strengthening network across all the markets

CFS & Project & Engineering

  • The company started with CFS & ICD operation & CFS expansion is well on track.
  • The company is still waiting for final approvals from Indian railways for logistics park in Jhajjar
  • DRFC on the western corridor is expected to be ready by 2020, so the Jhajjar project is in line & it is dependent of course in the future on the DRFC.
  • The setting up of CFS at kolkatta is on track & expect to start operations by 1st quarter of next financial year
  • The company has started managing operations of facility at Mundra & this is an asset light model. The company has leased out 40 acres & expecting numbers to be ramped over the coming months.
  • This facility at Mundra will not only add to the volume numbers but will also help in the P&L.
  • In Q3 volumes grew by 14% Year on Year to 75787 TEU’s & this is from all the 5 facilities including new Mundra facility.
  • The volumes of the two ICDs, which are Dadri and Kheda for the quarter, grew by 13% to approximately 9000 TEUs
  • The revenue for the quarter grew by 1% to 111 Crores and the EBIT for the quarter was at 32 Crores, a decrease of 17%. This was mainly on account of lower dwell times which was seen CFS business, rentals booked for the upcoming CFS at Kolkata as per the new IndAS guidelinesand the expenses of managing the CFS at Mundra in Q3.
  • The return on capital employed was 32%.
  • The company bought high tonnage crane of 600 tonnes this quarter against long term contract with a large MNC. Continued slowdown seen in the business
  • However in the past 2 months the company has seen order book developing & there is good traction & expect to close 2 or 3 contracts shortly
  • The company's equipment leasing business continues to do well, in the shipping business the company sold one ship that was around 25 years old & may sell one more.
  • One of other ship is under repair & maintenance last quarter due to engine failure. This ship was out of business for last 2 months & expect this vessel back in sailing shortly.
  • All the above factors contributed to a decline in revenue & profits from the shipping business
  • Revenue for the quarter was 111 Crores, a decline of 21% and the EBIT was at 5 Crores as against 7 Crores
  • The company will continue focus on increasing our market share in CFS, ICD, and P&E business by opening new offices in geographies to increase footprint and scale alongside increasing our product offerings


Borosil Glass Q3FY17 Concall Summary

Borosil Glass Log

Financial Highlights

Borosil Glass Q3FY17 Financials
  • YTD revenues grew by 71% (organic – 21%) and stood at INR 270 Crores.
  • Margins of the group were impacted due to the acquisition of Hopewell – main reason was the large advertising expenses required for the branding campaign.
  • EBITDA for the 9M period of Hopewell is about INR 56 lakhs – including one off items like expenses of about INR 5 Crores prior to acquisition. Further, other one offs were like advertising and promotion (~INR 10 Crores), which are not expected to remain at the same level.
  • Consumer division of the group registered a revenues growth of 9% for the third quarter.
  • Lab division, on the other hand grew by 17% in the third quarter.
  • The growth figures were impacted due to demonetization.
  • On a 9M basis, Consumer division grew by 26% (not including the acquisition of Hopewell) and the lab division witnessed a growth of 16%
  • The 9M EBITDA has grown from INR 16.6 Crores to INR 26.5 Crores, growing by 60% - mainly driven by margin expansion in many product categories
    The cash surplus of the company was about INR 200 Crores as on December 2016

Key business updates

  • Vyline Glass Works Ltd., will be merged shortly (subject to regulatory approvals) which has an EBITDA of INR 8.9 Crores. This EBITDA will be consolidated post the completion of the merger.
  • The two divisions of the company – consumer division and the lab division – provide a good hedge because the scientific products division in Q3 have been a good hedge with a growth rate of 16%.
  • The investments in advertising and the sales promotions have helped the company and the company has identified few issues in the manufacturing process that will enhance the capacity and improve the quality.
  • Gujrat Borosil will become a 58% subsidiary post the scheme of amalgamation is in effect. The subsidiary is expected to post a very good result with a 9m EBITDA margin of 23% and revenues of INR 135 Crores.
  • Margin expansion in the labs division was mainly driven by operating efficiencies due to the increase in the revenues & the cost below the gross profit does not increases. Even the margins are expected to be sustainable.
  • From a sales perspective the acquisitions made are doing well. However, from a manufacturing efficiency perspective the company expects to improve further which is reason why company plans to spend on capex.

Key Metric Updates: 

  • Gujrat Borosil is able to sell out its entire capacity and is increasing its market share despite stiff competition from China
  • Warehousing and freight costs together constitute for about 7 to 8% of the revenues. Going by the central warehousing structure, the company is expected to reduce by at least 3 to 4% going forward.
  • che distribution of products is very strong for the company in North and South region. Western region is one of the weak areas for the company (5 to 10% a year of the distribution expansion is what the company is planning)
  • In the SIP business, the company is looking at Middle East, Africa and South East Asia geographies because they have no domestic or local players who make laboratory glassware.
  • Akhand Diya has done well and is now an old product. The product has been there for the last three to four years and it still continues to do well.
  • Implementation of GST is going to expand the company’s margins as a large percentage of input for the consumer business comes from the imports and currently there is a countervailing duty which the company pays and do not get Cenvat credit for. Under the GST, the company will get a Cenvat credit for that – which will improve the margins.
  • CDV amount is 12% of the imports
  • A lot of money was spent on advertising and sales promotion for Hopewell – which has been the major contributor
  • La Opala sells at a price of about 10% to 15% higher than Borosil
  • Almost INR 10 Crores was spent on promoting Larah as a brand
  • Modern trade contributes to about 30% of the revenues

Capex/Expansion Plans

  • In the next year, the company is expected to spend about INR 55 Crores for expansion at Hopewell and another INR 20 Crores for establishing new warehouses in Jaipur for the consumer division.

Company Outlook:    

  • The medium term growth outlook for the consumer products division is expected to be in the range of 18 to 20 %.
  • For the scientific products division, the growth is expected to hover in the range of 12 to 15% in the short-term and about 10 to 12 % in the medium-term
  • Over the next 12 to 18 months, both the acquired companies will start contributing substantially to the bottom line of the company
  • The company targets a ROCE of about 20% going forward (currently it has an ROCE of 18% excluding the non-core asset that the company has)
  • Company is currently discussing with the boards at an informal level regarding a formal dividend policy. More clarity will be available going forward.
  • For Hopewell specifically, the company expects to achieve EBITDA margins of 20%
  • The amount spent on advertisement is expected to be at the same level of the previous year (~INR 25 Crores), however, the mix is definitely going to change next year.
  • The four major areas where company focuses on are – microwavables, Opal ware, storage (storage in the form of glass is an exciting opportunity for the company) and tumblers. These four areas will be the key areas in the next one to two year.