Apollo Tyres Q3FY18 Concall Summary

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Financial Highlights

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  • On a consolidated basis, the net sales were at Rs 40.2 billion
  • The net sales crossed the Rs 40 billion mark for the first time.It is a healthy growth of nearly 17% on a YoY basis and QoQ basis
  • This growth is majorly led by Indian Operations where the revenue growth was 21%
  • EBITDA (excluding other income) was at Rs 5 billion
  • EBITDA registered a margin of 12.3%, an increase of about 2% on a QoQ basis
  • The sequential growth in margin was on account of decrease in RM prices
  •  RM consumption prices in Q3 increased by about 7% on YoY basis

New manufacturing unit

  • In Q3FY18 the company has started work on its next manufacturing facility in India
  • The foundation stone was laid in Andhra Pradesh on January 9, 2018
  •  The company plans to invest about Rs 2,000 Crores in the first phase

Brand building activities

  • The company has partnered with the ongoing Indian Super League (ISL) for the current season
  • The company has also become the principal sponsor for the ISL team, Chennaiyin FC, and the title sponsor for I-league team, Minerva Punjab FC

India Operations

  •  There was a significant benefit on account of decline in TBR imports post the antidumping duty imposition
  • The sales for Q3 were Rs 26.3 billion, a growth of 21% on a YoY basis and nearly 9% on a QoQ basis
  • This was primarily led by growth in volumes,majorly in TBR segment
  • The volume growth was nearly 16% on a YoY basis and about 12% on a QoQ basis
  •  EBITDA stood at Rs 3.7 billion, a margin of 13.7% as compared to 14.6% last year
  • However, margins improved by about of 2% on a QoQbasis

Revenue segmentation

  •  90% of the revenues continue to come from the domestic operations and 10% through exports
  • Given the strong volume growth in the truck segment, the revenue from the truck category increased to 62%
  • This is about 2% higher than thenormal standards
  • The raw material basket came down by about 3% on a QoQ basis

European operations

  • The sales were at Rs 13.9 billion, a growth of 11% on a YoY basis
  • EBITDA was at Rs 1.2 billion at 8.3%
  • Capacity in place would already be in excess of 10,000 tyres per day
  • The number of SKUs that are industrialised and hence cleared for commercial production limits the utilization of capacity
  • The actual production today has already crossed 5,000 tyres per day and hence it is saleable production
  • Volume growth was almost flat
  • The growth in revenue was primarily due to product mix improvement with major sales being in UHP and winter tyres

Hungary plant

  • Hungary plant progress continues to be on track
  • The plant has currently reached a production of about 5,000 passenger car tyres per day
  • The company expects to close the year at about 7,000 car tyres per day production
  • The total capex spent on the plant is now close to 450 million and balance would be incurred in the first half of next year

Plan for Hungary plant

  • The Hungary plant would be producing 7,000 tyres per day by the end of current fiscal year
  •  It should start getting close to the plant capacity
  • It should start getting close to producing about 14,000 tyres per day
  • The Hungary plant, starting from mid next year, would start ramping up on the truck capacity
  • As of now there has been no thought process, on phase 2 of Hungary plant
  • Hungary plant produces a mix of Vredestein and Apollo brand
  •  80%- 85% of volume would be the Vredestein brand, and the balance would be Apollo brand

 Dutch manufacturing unit

  •  The revenue from Dutch Manufacturing Operations was €121 million, a marginal growth from €118 million on a YoY basis
  • There was a significant growth contributionfrom ReifenOperations,given the winter season
  • Revenue for Reifen for the quarter was €66 million
  • The EBITDA margin improved from 8.5% to 12%
  • Hungary continues to be at loss, with the peaking of losses in the current quarter at about €3 million
  • The company expects to improve the situation in the coming times
  • There was no additional volumes coming from the Indian Operations, given the strong demand in India
  • The company would target to reach a break-even situation by end of the current quarter

Growth in India

  • The overall volume growth in the truck segment was 22% with about 50% growth in TBR and a marginal growth in the TBBsegment
  • Passenger car segment was flat vis-à-vis last year
  • The company continues to make good grounds with about 90% growth in the 2 and 3-wheelers
  • Light commercial vehicles witnessed a volume growth of 10%

Increase in other expenses

  • The other expenses in India have increased to Rs 488 Crores- increase of about 14% on sequential basis
  • The increase would be on account of  higher production and volume as the freight charges, power fuel, etcgoes up
  • The brand spend has also gone up
  • EBITDA for the European Operation is € 15 million, which is 12%
  • Reifen EBITDA is about 5%

Landed cost of raw materials

  • Natural Rubber Rs 140/kg, Synthetic Rubber Rs 125/kg, Carbon Black Rs 65/kg and Dipped Fabric Rs265/kg

Tractor tyre growth for India

  • QoQ growth was a flat because of weakness in the domestic scenario on a sequential basis
  •  Contribution of TBR & TBB to the top line
  • TBR currently would be about 35% and TBB would be 28%

Reduction in margins in European operations

  • Three reasons are majorly responsible for the reduction
  1. The startup cost of Hungary
  2. The increase in RM not really followed up by the industry in terms of price increases
  3. Company’s own change of a much higher cost structure looking at OEM business, which still has not materialised in enough volumes

Future outlook

  • The company expects a slight increase in the raw material prices going forward
  • The Gross Debt on a consolidated basis stood at Rs 43.6 billion at the end of Q3
  •  This is a slight reduction on a QoQ basis on account of scheduled debt repayments
  • The Net Debt came down substantially from Rs 41.4 billion to Rs 23.4 billion, primarily on account of the proceeds from QIP that the company had closed in the beginning of Q4
  • The Net Debt to Equity at the end of last quarter stood at 0.25
  • Going forward, the situation of European operations would improve as capacity ramps up
  • The target internally is to achieve EBITDA break-even by the end of Q3
  • The company hopes that it will start contributing positively to the profitability next year onwards
  • The company expects slight increase in the RM basket in Q4
  • Some of the players in the industry have already announced price increases in few product segments
  • Given the strong demand situation, there is a possibility of price increases
  •  The exports have come down significantly especially to Europe
  • The company has been running flat out on capacity
  •  At present, everything that is being produced is being sold in domestic market
  •  There is also a de-bottlenecking exercise that is going on
  •  Till then, there would be a capacity constraint, which is limiting the volume growth
  • In Europe, TBR production will start in the next couple of quarters
  •  There is a lag of almost one year vis-à-vis the passenger car- it would follow a similar curve
  • The TBR capacity in FY2019 in Europe would be a very small one
  • It will be in a meaningful manner only from FY2020
  • Europe also would see a small increase in the next quarter on account of the recent crude inflation
  •  The pricing scenario, as of now, in the industry remains weak
  •  No player has announced price increases
  • The growth in the industry overall in 2017 has been positive
  •  Margins of European players have been fairly good
  •  There is no real pressure in a big way on profitability on the European players


Elgi Equipments Q3FY18 Concall Summary

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Financial Highlights

  • Sales has increased by 25% from 3325 million to 4154 million
  • EBITDA increased by 71% from 278 million to 474 million
  • The company by virtue of the increase sales should have had a higher EBITDA to the extent of 370, but the material cost is higher in the current quarter compared to the previous quarter and that has taken away close to 26 million in revenue for the company.
  • The biggest incremental cost that has hit EBITDA is labor cost that is increased across the world with the biggest chunk of that coming from India.
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Domestic Growth Scenario

  • Company had growth across all the verticals of our businessin India
  • Industrial compressor business has been good, but the biggest growth came from construction and mining in terms of percentage the biggest growth was in construction mining
  • Company had seen growth in the railways, but not anything significant.
  • Overall India’s performance has been good across all the business verticals
  • 2018-19 to continue to move on the same trajectory as seen in the last two quarters
  • Reasonable contribution from the steel and power segment only if they start reviving . Not much expectations from power sector due to the many number of stressed assets and even in steel all the delinquent assets are being auctioned.
  • In terms of revenue split-up India is about 7072 and the rest of the world would be about 4300 ( in millions)

International Market Highlights

  • The company has done well in Australia, continuing to grow, profitable and expect to see some good initiatives there in the coming years
  • Southeast Asia has been a bit of a challenge so far; it is marginally better than last year, but nowhere near the targeted numbers
  • Middle East has been a challenge, but things are beginning to pick up now hence,fourth quarter should be better for Middle East and 2018-19 should be better.
  • Europe has done very well. Both Rotair products sold worldwide as well as ELGi products sold by Rotair in Europehave done well
  • America continues to be strong for the company;  growth seen across all all the verticals in America
  • Brazil has been a challenge though the economy seems to be coming back and the company has done reasonably well in terms of ensuring that no money is losing out and sales has been lower than last year.y
  • The company's primary focus is Europe, America and India is the high priority geographies. The second level priority is Australia, Indonesia and Thailand

Long-term Growth perspective

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  • The company has identified specific products and specific geographies that they want to focus on and have just initiated the search process for inorganic growth opportunities in these key markets
  • The company feels that it needs to first have a strong leadership team in place before venture into inorganic opportunity
  • In the next three to four months’ time, at least in the key markets the company will have all the resources in place to be able to pursue this opportunity.
  • 2018-19 could be at least minimum we should be able to do 15% without any inorganic growth opportunity.

International markets

  • Margins in international markets are expected to be affected by two things - One is the present stage of the price and cost structure
  • Marginal opportunities may be to increase prices and marginal opportunities to reduce cost
  • The country level risk where the company has been struggling two areas where there is a continuing kind of challenge one is China and the other one is Brazil
  • In China , the company has decided to scale down the operations but not exit since China is the largest compressor market in the world. The company is committed to remain in a hibernated situation in China and plans to go back to the drawing board and build a product strategy for China.
  • Until that period there are expected to be some marginal write offs that the management has decided to take in China.
  • In Brazil, the company growing, the company has restructured the business and has stopped making losses
  • The growth rate for Q4 and most certainly for 2018-19 is sustainable with the international subsidiaries and especially Europe and US

Impact of Increased domestic wages

  • Increased the headcount as part of our various market initiatives
  • Moving compensation towards the market level but doing it in a phasely manner.
  • Pressure on people cost to remain for the next few years at least

Oil Free Compressors

  • Already been rolled out for validation, got machine running in the field and have a detailed plan worked out.
  • Global launch will be probably in 2019, but India launch will be probably in the second half of this calendar year
  • Product can serve both very effectively, so to that extent there will be an expansion of opportunity rather than the market
  • Price difference between oil free screw and oil lubricated pistoncould be anywhere between double to 250 tons, 200 to 250% for oil free screw

Net Debt position

  • Net debt as of December was about Rs.180 Crores, debt position to be around Rs.115 Crores by March 2018
  • Plans to  bring it under control by March to the level of about Rs.115 Crores

Market share in the air compressor market and automotive equipment

  • In the compressor market, it is probably 30% and in the automotive equipment, it is about 40% to 45%.

Road construction, Railways

  • Railways has grown, but it is not a big number, it is a single digit growth
  • Double digit growth on a road construction business and general other road and dams and other construction
  • Presence in railways is more on the intercity and the goods railways.


Talbros Q3FY18 Concall Summary


 Industry overview

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  • Indian Auto Industry grew at 16% in Q3 and the company grew at 28% for the quarter
  • The performance of auto sector was mainly due to good monsoons, improved rural sentiments, increased production of BS-IV compliant vehicles.
  • SIAM final sales estimates for the current fiscal through March expects passenger cars to grow between 7% and 9%, commercial vehicles at 13%, two-wheeler 12%.
  • Industry report suggests the business environment on commercial vehicles, two-wheelers, three-wheelers and LCV has stabilized
  • Favourable macroeconomic conditions, stabilization post GST, healthy order books with a focus on localization will help in achieving company’s targets
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Company Updates 

  • Company is confident to achieve the targets for Q4 and for next two years mentioned in the business stateodstes
  • The company is already BS-IV compliant and also ready with BS-VI products.
  • Company has been approved by Governments for outsourcing.
  •  Instead of importing rubber-coated steel from Germany or Europe company will use Indian steel and will coat the rubber on it
  • Talbros is in talks with Iran Isuzu Motors and North European, non-automotive player to improve its exports
  • The company has already supplied to Volvo and Ducati and is in talks with Polaris of US for export.
  •  The company is already supplying Heat Shields to the commercial vehicle like Volvo and Daimler at about Rs.4 Crores to Rs.5 Crores per annum
  • The company is attempting to make indoors with Hyundai and Maruti
  • The company received a lot of RFQs from a global player for Heat Shield
  •  Sales of the JV were lower in this quarter because of the dependency on Maruti, Hero and Honda.
  • Yamaha, Hero, HMSI are the major customer and these customers also growing well
  •  The company gave certain cost down to Hero, which has impacted the turnover from the Hero side to maintain the status quo in terms of market share
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Financial highlights

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  • Total income for the quarter as for Indian GAAP was Rs.134.48 Crores, the same as per Ind-AS is Rs.103.98 Crores.
  • The difference is on account of consolidation of the share of revenue for JVs, which has not been taken into account in Ind-AS.
  • EBITDA as per Indian GAAP was Rs.17.1 Crores during this quarter with a margin of 12.71%
  • The EBITDA as per the Ind-AS is Rs.13.09 Crores, which does not include the share of JV.
  • Adjusted PAT for the quarter was at Rs.6.40 Crores as per Indian GAAP and as per Ind-AS, it is Rs.5.67 Crores.
  •  The adjusted PAT margin improved from 4.9% in Q3 FY2017 to 5.45% in Q3 of FY2018.
  • Total income for nine-months of FY2018 as per Indian GAAP was Rs.377.45 Crores, the same as per Ind-AS is Rs.287.02
  • The difference is on account of consolidation of share of revenue from the JV.
  • EBITDA as per Indian GAAP is Rs.45.58 Crores with the margin of 12.08%, the same as per Ind-AS is Rs.32.21 Crores, which does not include the share of JVs.
  • Adjusted PAT for nine-month of FY2018 is Rs.15.58 Crores as per Indian GAAP and PAT was Rs.13.19 Crores as per Ind-AS
  •  The company has reduced the working capital, which would be visible at the end of March
  • EBITDA increased by 12.7% for Q3 on a consolidated basis.
  • Profits decreased from associates, which is Rs.1.6 Crores in Q3FY18 compared to Rs.2.2 Crores in Q2FY18
  •  In aftermarket company increased its selling price by 4% and from January
  • The company expects the exports to be around Rs.9 Crores to Rs.10 Crores next year, on a turnaround of Rs.55 Crores next year
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Gasket Division including Nippon Leakless Talbros

  •  Talbros holds 38% of the market share domestically.
  • The revenue from standalone gasket business was Rs.74 Crores and NLK was at Rs.10.9 Crores during the Q3 of financial year 2018.This is on the account of company’s product mix going 55 towards export 45 towards domestic.
  • This segment saw combined EBITDA of almost Rs.12.3 Crores.
  • The revenue from standalone gasket business was at Rs.209.92 Crores and NLK was at Rs.35.3 Crores for the nine-months of FY2018.
  •  Consolidated EBITDA for this segment is of almost Rs.33.6 Crores during this nine-month.
  • Standalone gasket sales recorded a growth of about 22.37% because of improved rural demand and low vehicle financing rates.
  • Nippon Leakless witnessed sales volume growth on the account of sales to HMSI.
  •  The company is working with its local material suppliers to reduce dependence on imported content for Nippon LeaklessTalbros
  • The company expects growth of 20% minimum in the aftermarket on the gasket side
  • The sales in most profitable fter market segment had witnessed sequential growth over the last three quarters.
  • GST had introduced to 18% from earlier 28% in November of this year and company started witnessing the benefits from the same.
  • Focus on OE export business has helped in securing orders from Cummins, USA, Zetor Tractors – Czech Republic and non-automotive conglomerate in Austria for gasket business.
  • Other  business initiatives for cost savings such as the installation of post-coating line and localization of raw materials are on track.
  • The company sent estimates of certain global OEM contracts for gasket business from Cummins as well as ZetorTractors, Czech Republic.
  • Talbros in very hedged auto component player is supplying to all these segments.
  •  Order of Rs.4 Crores received from Cummins, USA and should start in the year by September quarter of this financial year
  • Margins went up to 13.31% of Q3, up from 12.7% last year quarter.

 Forging business

  • 54.3% growth in the revenues to Rs.29.15 Cr in Q3 FY2018 on a Y-o-Y basis from Rs.18.9 Cr. in Q3 FY2017
  • The revenue grew by 45.42% from Rs.51.9 Crores in nine-month of FY2017 to Rs.75.42 Crores in nine-month of FY2018.
  • The company secured contract from BMW for forging division and from Jaguar Land Rover for its Magnettidivision which will increase the working capital cycle in the case of export orders
  • The company’s decision is post coating line, which has got established in the month of February will help reduce imports
  • Disinvestment of company’s materials plant in Sona to India based materials by June of next year will help in reducing working capital
  • Forging business in this quarter showed growth of 54% and Rs.2 Crores a month is already happening from the forging business
  • Margins had gone up on 9.5% last quarter of last year to 11.7% this year.
  • Forging segments power consumption which used to be 18% to 19% of company’s topline power cost come down 10% due to use of grid power.
  • The company secured an order from Maruti Suzuki to supply control arm assembly for the tractor suspension with estimated annual revenue of Rs.24 Cr p.a.
  • The company received increased business from SML ISUZU for moulded hoses and started supplies of hoses to Japan Mitsubishi.
  • Talbros enjoys the success of the Baleno and Breza and the S-Cross where it is present both in Marelli as well as Talbros Marugo

 Magneti Marelli Talbros

  • Company has 50:50 joint venture with MagnetiMarelliChassis Systems, a Fiat Group company with the scope to design and develop complete chassis for OEMs.
  • MMT saw a 27.81% revenue growth this quarter because of higher volumes.
  •  Total portion of revenue to TACL in Q3 of FY2018 was around Rs.13.6 Crores.
  • Revenue grew by 28.96% from Rs.29.5 Crores in nine-month of FY2017 to Rs.38 Crores in nine-month of FY2018.
  • Margins improved on account of improved volumes achieved from the sales to Maruti Suzuki
  • Jaguar Land Rover business which is roughly about Crores and half a month has been successfully implemented.
  • Capacity utilization as well as exports on JLR have jumped to 7% for the quarter an EBITDA versus 5.6% in last year same quarter

 Talbros Marugo

  •  Company entered in a new joint venture with MarugoRubber Industry in Japan, which caters to antivibrationcomponents and hoses.
  •  TMR saw a 41.16% revenue growth in Q3 of FY2018 over Q3 of FY2017.
  • Total revenues share attributable to TACL was at Rs.5.2 Crores.
  •  Revenue has grown by 18.33% from Rs.9.99 Crores in nine-month of FY2017 to Rs.13.3 Crores in nine-month FY2018.
  • TalbrosMarugo has shot up to 7.39% for the EBITDA versus 2% of the last quarter due to better capacity utilization
  • The company started supplying hoses to Marugo Rubber Japan in Q3


  • The company is in the phase of expanding its capacity to approximately Rs.28 Crores to Rs.30 Crores per month.
  • The company’s special plant will be finalized by the month of March and company may require Rs.10 Crores to Rs.12 Crores for that
  •  In the forging business, company has just put up a facility of press 700 tonnes last month.
  •  A 1000 tonne press will be operational this month and by putting additional four or five machining lines capacity will be around Rs.12 Crores per month with a growth of another 25% to 30% next year.
  • •In Magnetti Marelli company is looking for capex in Jaguar and Maruti and expects a capacity of Rs.8 Crores to Rs.9 Crores.
  • Capex of presses and robotics will be around Rs.8 Crores to Rs.9 Crores and Rs.250 Crores will take care of the MagnettiMarelli
  • The company is looking at a capex of Rs.10-Rs.12 Crores in the gasket, Rs.5-Rs.6 Crores in forging, Rs.8-Rs.9 Crores in MMT, Anti-Vibration Rs.2-Rs.3 Crores, and in Marugo Rs.2-Rs.3 Crores for next year.

Capacity utilisation

  •  Nippon Leakless has a spare capacity line in Uttaranchal which can be used
  • Company is taking up a small facility in Manesar and putting up some robotics welding machines there with a capex of around Rs.1 Crore or Rs.2 Crores
  • Marugo Rubber has the capacity of up to Rs.20 Crores in hose business
  • Utilisation levels for the gasket are 80%, forging is at 85% to 90% level, MMT also 80%, Nippon Leakless is about 70% and TalbrosMarugo Rubber in the Anti-Vibration it is 80% to 85%


Heidelberg Cement Q3FY18 Concall Summary

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Financial Performance

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  • Increase in EBITDA by 73% on a YoY basis
  • At present EBITDA stands at Rs. 680 per tonne, i.e., almost 49% increase
  • Major benefit came out of GST
  • Almost Rs. 32 crore PAT
  • Depreciation as on 31st December is Rs. 500 crores

 Volume and Price Development

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  •  Increase in volume by 16.4% on an YoY basis
  • Increase of 7% in terms of gross realization per tonne on a YoY basis
  • 85% capacity utilization
  • Trade and non-trade mix is 80:20
  • Price range will remain the same but there will be some increases in February and March
  • Price increase of about Rs. 200 per tonne till now from the December quarter

Cost Development

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  • Marginal increase of 5% in cost on a QoQ basis
  • Costs increased by 12.1% in a YoY basis mainly because of increase in fuel related costs
  • Costs excluding logistics is less by about 1.6% on a YoY basis
  • Rail and Road mix is about 50:50
  • Lead distance continues to remain below 400 kilometers
  • Power cost id Rs. 6.25 per unit
  • Pet coke price for current quarter is Rs. 9,500 per tonne
  • Fuel mix is 70% pet coke and 30% domestic coal
  • Stabilization of WHR plant has allowed to operate on maximum loa
  • 20% share of the WHR in total power consumption
  • Improvements and tweaking on the equipment, plant and machinery front
  • Resolved the demand charges on the grid which has given benefits on account of lower power cost in the year 2017
  • 50 paisa per unit power generation cost savings from the WHR plant


  • Rs. 60 crores of interest free loan by the Uttar Pradesh government
  • Net debt is Rs. 500 crores
  • Three tranches of non-interest bearing loan from UP Government which amounts for Rs.170 crores
  • Net interest rate on interest-bearing debt will be around 10%
  • This quarter they have made one repayment of one tranche of $10 million
  • Going forward the run rate will be slightly higher than Rs. 12 crores


  • Sand and aggregate issue resolved in Uttar Pradesh
  • Some movement in the affordable housing in the rural market as money put in by Government
  • In the Tamil Nadu case, the Supreme Court has stayed the order of High Court saying that they cannot ban the limestone or sand
  • Capacity of close to 88% with a headroom for additional 7% by tweaking and optimization
  • 5% growth rate expected from market
  • 12% to 14% market growth in the last quarter
  • UltaTech capacity of 3 million tonnes to come up in Dhar in two to three years
  • A little pressure in the market due to UltraTech’s volume
  • Non-availability of rakes in the railway paving opportunity for the domestic players to sell a little better volume
  • But the evacuation of material from the plant to long distances is a problem because the wagons are not available adequately
  • Growth has picked up post sand mining resolution in UP because of higher pickup from UP
  • Momentum is picking in the low cost housing projects and the private projects of IHB
  • Road projects are also going on which requires OPC
  • A category pricing premium in the central India in most of the markets and B+ in some
  • For the nine months period the growth has been almost about 4% on year-on-year basis
  • For the nine months period the growth has been almost about 4% on year-on-year basis
  • Industry capacity utilization of about 73% to 74% in the central region
  • As of now Holcim is the only stand out brand in terms of premium brand in Uttar Pradesh


Astra Microwave Q3FY18 Concall Summary

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 Financial Highlights

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  • Earned revenues of about Rs.86 Crores in Q3 and for the nine months period it is about Rs.191 Crores
  • The gross margin for the quarter is around 65% and for the nine months period it is around 72%
  • Profit before tax is about Rs.25 Crores for the three months period and for the nine months it is about Rs.42 Crores
  • Profit after tax for the three months is about Rs.16 Crores and for the nine months period, it is about Rs.30 Crores
  • The PBT to sales is about 30% for the three months period whereas for the nine months it is about 21%
  • The 20% PBT margin will be maintained is it for Q4 as well
  • The PAT to sales is about 20% for the quarter and for the year it is about 15%
  • In terms of order book during the quarter they were able to book about Rs.46 Crores worth of orders
  • Cumulatively they have booked about Rs.214 Crores of orders and order book at the end of the year is about Rs.533 Crores
  • The long-term borrowing is about Rs.80 Crores at the end of nine months period
  • The short-term borrowings is about Rs.28 Crores
  • The gross sales for the three months is about Rs.97 Crores and Rs.239 Crores for the nine months period
  • The net sales for the three months is about Rs.82 Crores and Rs.199 Crores for the nine months period
  • For the current year so far they have booked about Rs.210 Crores and in Q4 that is the next two and a half months we will be booking around Rs.120 Crores
  • The overall exports for the nine months is are about 7 or 8 Crores
  • As of today they have a capacity to turnout about 1000 Crores of sales

Net Working Capital

  • Inventory is about Rs.165 Crores
  • Receivables and other current assets is about Rs.160 Crores
  • Total current asset block of about Rs.422 Crores
  • The current liabilities including the short-term maturity of the long-term liabilities is about Rs.152 Crores

Order Pipeline

  • Contract received from DARE is going down to next year due to technical challenges
  • The Akash Missile  subsystem which has gone for the design iteration had some technical issues in initial lot of production and these got resolved in November, December
  • The new design of radio proximity fuse had some technical issues which resulted in sales drop of Rs.20 Crores
  • Another project which is from the space, in which there was a delay from the customers to issue the free issue of material from Space Application Center
  • Rs.135 Crores 7 Squadron Akash is expected in the first quarter of the next year
  • Rs.190 Crore order from ELTA, which is a repeat order from India is also shifted to next year due to delay in getting the contract from India
  • RISAT-2 will materialize before March, whereas RISAT-1A, there was some delay in the contract finalization, so most probably by Q1 or Q2 we will be able to book that contract, worth of Rs.70 Crores
  • Taken up proactive development on X-Band and KU Band Seekers, which are under testing phase
  • Rs.650 Crores will be the orders booking for the next year
  • Breakdown of order book as of December
    • Defense and PSU is about Rs.286 Crores
    • Space is about Rs.65 Crores
    • The others within defense and space is about Rs.6 Crores
    • Exports is about Rs.16 Crores
    • Meteorology is about Rs.1 Crores
  • For the Q4 order book, expecting
    • Rs.80 Crores from space
    • Rs.40 Crores from defense
    • Rs.4 Crores from the exports
    • For next year’s order book
    • For defense Rs.286 Crores, is split into Rs.86.39 Crores from Radar and Rs.124.9 Crores Missiles and Rs.77.79 Crores from EW
    • Meteorology and all other put together about close to Rs.40 Crores
  • Currently developing one particular product jointly for missile application which is high power amplify
  • Possible bookings for the next three months, product wise
    • Two X-band order from ISRO
    • From Space Application Center also likely to book about 30 Crores for various subsystems
    • In the radar domain it is about 1 Crores
    • Missiles about around 10 Crores
  • Electronic warfare, which they are negotiating in Hyderabad, one of the Samudrika production program, likely to be booked around Rs.25 Crores
  • Execution of Rs.450 Crores in the next year out of which around Rs.100 Crores are for exports
  • Rest all is domestic, out of which
    • Around Rs.80 Crores from radar
    • Around Rs.80 Crores from the missile electronics and telemetry put together
    • Electronics EW is around Rs.60 Crores
    • Space is about Rs.125 Crores

Sales Breakdown

  • Radar will be contributing around 131 Crores
  • Missile and telemetry put together around 130 Crores
  • Electronic warfare segment about 32.6 Crores
  • Space would be around 28 Crores
  • Exports around 40 Crores

Factors affecting margins

  • The margins have improved largely because of the product mix in the current quarter
  • There is a significant amount of two or three products groups, where the gross margins are fairly better compared to the normal margins of the company

Future opportunities

  •  Likely to get repeat orders like Seven Squadron Akash and then also Army
  • Likely to get orders for two regiment
  • Likely to get orders like the BHH developed for new generation anti-radiation missiles and also for the PSM and fire control radar
  • BEL is likely to book the order from Air Force for the Medium Power Radar
  • For Army the Barney Mark II
  • Discussing few programs with LBIT and Rafael which likely to book close to about Rs.100 Crores in next two to three years
  • Other major order is AVACS program phase II, close to Rs.200 Crores worth of business in next two to three years including Seekers from FY2020
  • Project Uttam LRDE has completed the development part of it
  • Only the aircraft integration part is left and working that out with ADA
  • Estimating around 450 Crores for next year topline


Salzer Electronics Q3FY18 Concall Summary

Salzer logo.jpg.png

About the company 

  • Incorporated in 1985
  • Collaborated with the German Salzer, the manufacturer CAM operated rotary switches
  • Evolved from a single product company to a complete customized electrical solutions provider
  • Technical associations with the reputed companies across the world
  • Deals in high quality products of international standards
  • Associated with Larson & Toubro from 1993, Plitron from Canada in 1995 and with Trafomodern model from Austria in 2016
  • Focused on getting into niche and of great value technologies
  • Has a preferred vendor status with global giants like GE and Schneider
  • All the products are international certified
  • Operate under electrical and electronics segment
  • Classifies business into four different divisions-
  1. Industrial Switchgear Division
  2. Copper, Wires and Cable Division
  3. Buildings Segment Division
  4. Energy Management Division
Salzer Business Overview.png


Financial Highlights

Salzer Q3FY18 Financial Highlights.png
  • Financials restated as per Indian Accounting standard, Ind-AS
  • The net revenue from operations stood at 111 crores
  • In Q3FY2018 year on year growth of 22% seen as compared to Q3 FY’17
  • Exports contributed to around 18% of the revenues
  • Demonstrated growth in revenues in Q3FY2018
  • The growth mainly driven by a good pick up in industrial switchgear business and higher demand in the agri cable market
  • The EBITDA for Q3FY2018 stood at nearly 14 crores ascompared to 10 crores in Q3FY2017, showing a growth of 39%
  • The EBITDA margins improved by over 150 basis pointsto 12.2% on a year on year basis
  • Better product mix and increased exports to North Americabeing the reasons
  • The profit after tax is at 5.3 crores in Q3FY18 as against Rs. 3.4 crores in Q3FY2017 giving a growth of around 57%
  • Short term borrowing 100 crores and long term 10 crores
  • Cash on the books around  19 crores
  • Working capital required, but won’t increase in thesame pace, as mentioned in the previous quarter
  • Target is to come down to net working capital of around 90 days from 120days in March 2017
  • Expected to be down by 15 days in March 2018
  • Target is to go down another 15 days
  • The debt as working capital debt might go up if the turnover jumps by 20-25%
  • As a company net working capital utilisation will be coming down.
Salzer Q3FY18 Revenue Breakup.png

9MFY18 Performance

Salzer 9MFY18 Financial Highlights.png
  • The net revenue from operations stood at 316 crores in 9 months for FY’18
  • The year on year growth ofnearly 16% seen as compared to 9 months FY’17
  • Export contribution stood at 18% of the total revenues
  • The growth in the revenues has been driven bybusiness of industrial switchgear and also wire and cable
  • EBITDA for 9 month FY’18 was at 37 crores with an year on year increase of 12%
  • The PAT increased by 16% to Rs. 15 crores in 9 months FY’18

Breakup Of Revenues

The industrial switchgear division

  • In Q3FY18, 49% of revenue came from the industrial switch gear business with 16.5% of EBITDA
  • It is at 46% for 9MFY18
  • Positive outlook with GST regime in place
  • Witnessing early signs of revival in the switchgear buSinead
  • Received very good enquiries from large OEMs for switchgear products and new products like wire harness and three phase transformers
  • The high standards ofquality will improve the demand significantly
  • Three phase dry type transformers looks promising
  • Industrial switch gear business EBITDA margin between 14 and 16%
  • With revenue share of the industrial business going up,the EBITDA margins get better
  • The industrial switch gear segments has products at higher and lower EBITDA,so, the product mix was quite strong

Wire And Cable Division

  • Second largest contributed to revenue in Q2F2018. Copper business was at 45% revenue at 7.5% EBITDA
  • Focus has been to do brand labelling for major brands
  • Salzer is branding for Larsen and Toubro, CromptonGreaves Consumer Product Ltd. Texno, Efab and a few other companies
  • In previous 2 years, focused on giving value added products likeelevators travelling cables, hoist cables, UL listed wires to various other customers
  • Contributed 45% of total revenues during Q2F2018
  • Contributed 49% in 9 months FY’18
  • Wire and cable business EBITDA margin between 7 and 8%

Building Segment Product Division

  •  The only B2C business
  • Contribution to total revenue remains small
  • contribution in the next 2 to 3 years is expected to be around 10% levels
  • Have new opportunities in the real estate sector where annual ratecontracts with major builders in Karnataka and Andhra Pradesh were received
  • Contributed around 5% of revenues in Q2F2018 and for 9 months FY’18

Energy Management Division

  • Booked revenue of nearly 1 crore constituting about 1% of total revenues
  • Contribution is at 1% on 9 monthly basis
  • This revenue were some spill-over invoicing on the project being done for 4 corporations in Tamil Nadu
  • Focus on achieving profitable growth by adding newer products which are customized, andvalue added in nature
  • Newer geographies to be explored which can yield bettermargins
  • Constant lookout for revenue opportunities for technical associations to strengthen the base of product offerings
  • EESL to come out with alarge tender to be around approximately 200 croreste.Plan to participate in the tender
  • Will have some news by end of Q4

Copper Price Volatility

  • Very well protected in terms of pricing fluctuation
  • Operated on a monthly average pricing rather than on a daily price basis
  • Bought on monthly average and sold on monthly average and changesare passed onto the customera
  • No fixed contract price on the wires. It’s based on average price


  •  Exports to Europe and US gives better margins compared to Indian markets and also exports to Far Eastand Middle East.
  • In Q3FY18, exports to US contributed around 6%, as againstnormally 3.5 to 4%. Going forward this trend should continue
  • Wire and cable business revenues to go up
  • EBITDA marginsshould be remaining in the same level or 0.2 to 0.3% down from these levels
  • The full year FY18 to close at about 11.5-12% EBITDA marginwhich is there for 9 months as well
  • A 16% top line growth expected to be close at around18% top line growth
  • The three phase dry type transformers, enabled to get into new verticals like solar, solar inverter,UPS and railways
  • A good order and flow, or good query for the product in themarket 

New Products AndOutlook For FY19

  • The industrial activities are gettingbetter and picking up
  • Added three phase transformers
  • Added the wire harnessing for the industry
  • The contribution from these twonew products expected to grow significantly in FY’19
  • FY’19, the 50% of revenue will continue to happen from industrial switchgear business
  • Wire and cable to be around 45% and the rest of the business to be the balance
  • Revenue outlook for FY’19 to be around20% or 18-20%standalone outlook
  • Should not be less than 530 crores for FY’19

Reason For Margin Expansion

  • Certain products give higher and certain give lower margins
  • In Q3FY17 exports were down in the high margin area.That change gave better margins in current quarter
  • In Q3FY18 US contribution was almost 6% compared to only 2% in Q3FY17
  • In Q3FY18 Europe contribution was around 5.5% against 4% in Q3FY17

Industrial Switch Gear

  • After GST a reasonably consistent demand coming fromvarious industrial sectors in India
  • Hoping the growth to be sustainable

Overall Traction

  •  Salzer was at a 9 crores level after 9months in FY2018
  • Should be able to be closing at least 14 crores business in FY2018
  • At 14 crores 15-16% capacity being utilized
  • Plan to do at least double the utilization or little more
  • For all the projects, 1/4th billing around 8 to 10 croresexpected to happen in Q4
  • Also expecting some new orders to come
  • EESL to come out with a new tender

Dry Transformer Targeting

  • The demand is good and the product is good
  • Unlike selling on a retail segment, selling in to technicalindustries takes a bit more time
  • Estimation is 30 crores target but should be able to do a little more
  • Originally the target was to reach 90 crores in 3years
  • The target is still the same and going to change
  • It is being pushed to double this every year
  • Should be able to do around 40-45 crores also

Opportunity For Technical Association

  • Always on the lookout for new generation products
  • Waited for three phase transformers and got a good partner on the technical side to back up
  • Likely, looking atvarious other segments of product
  • If given opportunity, readyto tie up with companies abroad

Adding Of High Margin Products

  • All the industrial products are being exported
  • Switch gear products are better margin than the wireand cable business
  • Trying to export these products to as manycountries as possible
  • • The world market demand is definitely better, and growing

Plans To Diversify

  • The scope of the business activity expansion was nothing in part
  • Need to ensure to be covered up in terms of memorandum of articles
  • Focus to remain in core electrical business
  • Focus is mainly on industrial switch gear and on wires and cable

Retail Level From Housing Segment

  • Not great till end of Q3FY18
  • Things are expected to getbetter

GE Transportation 

  • GE transportation, already have a contract in place for the Indian factoryof GE
  • A small business of 10 crores business for 10 years so, 1 crore per year for supply of contactors
  • The opportunity looking for is to get through toUS GE transportation
  • Business is expected to start rolling on from FY2019
  • Expect to add three phase dry type transformers with contactors to both India and US
  • The expansion will be three phase near the contactors
  • The realization of margins would be much betteronce entered
  • Already supplying to large clients in thesolar inverter industry and to railways
  • Both metro as well as the regular train engines, electric locos.
  • Couple of customers into recycling machine manufacturers gave some orders

  Salzer Magnet Wires merger

  • Announced acquisition of Salzer Magnet Wires in the previous quarter and is in the final stages
  • The shareholders of boththe companies have approved the transaction
  • Final closure with transaction should happen in Q4FY18
  • On completion, it will give a good boost to top and bottomline
  • Will also help to expand customer base and reduce cost
  • Three phase dry type transformer been widely accepted
  • New customers from new industry verticals like solar, UPS, recycling industry and railways to be added
  • FY’18 financials will be with the merged figures
  • FY’18 top line is expected to go up by at least 50 crores in the top line
  • Bottom line is expected to grow at least by one and half to two crores
  • Will add 10 to 12 crores of debt from the company
  • After the merger, new products will be launched while some of them have been already launched


  • Capex for FY18 should be around 20 crores and FY19 should be around 8 to 9 crores
  • Normal maintenance capex should be between 8 and 9 FY19
  • The debt same level like last year March
  • For FY19 the debt should be flat plus 10 crores of acquisition
  • Debt should be by next year should be 130 crores.


IIFL holdings Q1FY18 Concall Summary


 Financial Highlights

IIFL Financials Q1FY18.png
  •  59% YOY growth in the group’s net profits
  • Current Net profit is INR 252 crore for the first quarter FY18
  • Net profits after minority interests have grown by 44% YOY to Rs. 198crores.
  • Net worth = 4581 crores
  • ROE = 17.7 %
  • ROA = 2.3 %

Business updates

  • The business of IIFL is divided into 3 parts
    • Loans and Mortgages( includes NBFC and House Financing subsidiary and micro finance subsidiary)
    • Wealth and Asset Manage
    • Capital Markets
  • Strategy for the firm is doubling, durability and de-risking.
  • Doubling strategy’s target is to double their income and multiply our profits by 2.5 times.
  • In incremental loans, significant contribution is coming fromsmall ticket home and SME loans

Macro- Environment

  • GST and RERA have been passed recently .
  • GST more smoothly passed then demonetization .

Loans and Mortgages

  • In NBFC strategy is retail lending and digital delivery
  • Reduced exposure to large ticket loans.
  • The firm’s Balance Sheet is becomingmore granular, lot more retail oriented,and lot more geographically diversified as well.
  • Demonetisation hit commercial vehicle finance also starting to look up


  • Loan AUM grew 26% YOY and 5% QOQ to INR 23,3000 Crores.
  • Profit after tax grew by 31% YOY to INR 116 Crores.
  • Net Worth – Rs 3580 Crores.
  • Tier 1 CAR is 18.1 % and total CAR is 20.6 %
  • Well capitalized to meet growth requirement for next 2-3 years
  • AUM growth primarily driven by 52% YOY growth in small ticket home loan
  • Headcount grew by 5% YOY to 7800 members.
  • NBFC branches still same at 1114 .

Home loans

  • Focus primarily on self employedsection , contributing 60% of Home loan portfolio
  • The fastest growing segment in is the affordable home segment with average ticket size of Rs. 10 to 12 lakhs. Called Swaraj Loans
  • More than 10% of home loan business are Swaraj loans.
  • Among the top six HFCs ingovernment’s Credit Linked Subsidy Scheme or CLSS , customers received Rs 90 Crore subsidy so far
  • Availed NHB refinance of Rs. 150 crores in this quarter taking the total to Rs. 325 crores
  • Regulators have confidence in the firm’s portfolio and mix
  • Crossed 31,000 customers in HFC  and the target of  50,000 by financial year end
  • Average ticket size for loan is 22 Lakhs
  • LAP book has seen a slight QOQ decline as the focus is to grow retail home loans
  • LAP products’ yield, andprofitability remainunder pressure due to competitive reasons
  • To focus on small ticket LAP ofbelow Rs. 50 lakhs and micro-LAP of up to Rs. 10 lakhs
  • The firm is doing larger number of home loans with ticket size of Rs. 10 to 12 lakhs and SME loans with ticket size of about 20 lakhs
  • 4500 approved housing projects up from 2000 in 2016 .
  • Cost of borrowing declined by 20 basis points QOQ and 140 basis points YOY to 8.6 %.
  • Borrowing from banks at their MCLR .
  • NIM at 6.6 % up 50 basis points YOY and down by 21 basis points QOQ .
  • Cost to income ratio at 39%  down 370 basis points YOY and flat QOQ .

 Wealth Management

IIFL Wealth Management Q1FY18.png
  • Record quarter in terms of new money
  • Highest collection of new money
  • With new money and other organic growth , the wealth business has done very well
  • Wealth PAT grew by 64% YOY to RS 86 Crores .
  • Assets under advice, management anddistribution have grown 60% YOY and 17% QOQ to reach Rs. 1.26 trillion.

Additional Disclosures this year

  • Reclassified the assets into five categories and removed few assets which were being doubled
  • Provided breakup of the retention yield into fee-based and fund-based yield.
  • Provided breakup of our retention yield into fee-based and fund-based yield.
  • The firm raised Rs.11,250 crores in net new money which is 50% of the net new money garnered in the whole of FY17.
  • In AMC, the firm raised Rs. 4000 crores in special opportunity fund to invest in pre-IPO and IPO situations.
  • AIF assets have grown 67% YOY to more than Rs. 8300 crores.

Capital Market Business

IIFL Capital Markets Q1FY18.png
  • IIFL is a leading player in the Industry
  • In last 2 decades , the firm has made strong franchisee in capital markets
  • The capital market sector is quite volatile as per the insights based on 10-15 years business
  • Emerged number 1 in Primary equity issuance
  • Average daily cash turnover was up 34% YOY to Rs. 1112 crores.
  • Average daily total turnover was up 53% YOY toRs. 11,063 crore.
  • The mobile trading app IIFL Markets, has had over 1 million downloads, and presently about 36% of retail broking clients trade through the mobile app
  •  IIFL is ranked number one investment banker in equity issuances from January 1, 2016, to June 30, 2017.
  • IIFL is ranked number one investment banker in equity issuances from January 1, 2016, to June 30, 2017.

Effect of Demonetisation

  • Commercial Vehicles finance which was hit by the demonetization is starting to look up.
  • The payment cycle from bank operator has gotten longer post demonetisation.
  • Karnataka and UP Portfolio affected by the policy and was compounded by the political


  •  Moved to 90 day NPA norm
  • GNPA were at 2.04% up from 1.82% .
  • NNPAS were at 0.94% up from 0.58% last year
  • NPA’s largely in the CV segment , as industry is still going through a slowdown in volume growth and collections .


  • 100% gold loans , 77% of CV loans , 26% of HFC Loans and 71% of SME loans were booked in digital mode in June 2017 .
  • 14% of Gold loans were sold through E-Sign.
  • Launched UPI-based collection on the mobile app to allow seamless and real-time payments into the loan account.


  • 99% of gold loans, 30% of CV and SME customers now getting booked on E-KYC platform


  • Strong focus on maximizing the use of data and analytics to drive business decisions
  • strengthen the risk analytics capabilities and incorporate scorecards into the digital on-boarding mechanism for core retail product

Acquistion of Majority Stake in Samasta microfinance

  • The firm acquired a majority stake in Samasta Microfinance
  • Samasta Microfinance is headquartered in Bangalore
  • Promoted by Venkatesh
  • Assets under advice for the firm was Rs. 284 crore .

Geographic Split and Reach

  •  35% South , 35% West , 12% East and 18% north
  • North business potential not fully utilised .
  • 1100 Branches in the country.


  • For Small Ticket loans , the firm has digitized the process for loans .
  • They plan to create insta loan for loans less than 10 lakhs .
  • Rs 10 – Rs 50 lakh loans is main focus for the firm.


Borosil Glass Q3FY18 Concall Summary


 Financial Highlights

Borosil Glass Q3FY18 Financial Highlights.png
  • FY 2018 has resulted in about a 15.7% growth of sales turnover compared to the same  months last year
  • The growth has been aided by revenue from Klasspack in which Borosil acquired 60.3% in July 2016
  • If this added revenue is adjusted for a like to like period from Klasspack, the growth rate stands at 12%
  • The organic growth in the scientific products division was flat during the 1st half of FY18 and now there is a growth of 5.2% YTD FY2018
  • The long-term or medium term guidance is of 10-12% growth for the lab division
  • Klasspack has got 10 more customers on board and many more in the pipeline
  • Combining the scientific products division as well as Klasspack the growth in labware was about 17% and 8% on a like to like basis after adjusting for Klasspack
  • The EBITDA from operations has grown by about 70% to about Rs 49 Crores which is a really good performance
  • The operating margin expanded to 15.7% during the 9 months and it was led by a more profitable product mix
  • With the introduction of new SKU’s next year the margins are expected to be expanded further, as the company gets scale benefits and overheads are absorbed on a larger base
  • The margins tending towards the market leader will probably happen from Q1 of next financial year
  • In Q3 the production was not there but the fixed costs are almost all the same, and thus decreased the EBITDA margins
  • Borosil has registered a PAT of about Rs 38.5 Crores in the 9 months
  • The PAT last time was higher due to a one-time gain on land acquired by Municipal Corporation of Greater Mumbai which was an exceptional item
  • If the exceptional item is removed, the growth rate in PAT is at 45% over the same period last year
  • The company has a cash surplus of about Rs 190 crores and will be investing approximately Rs 40 to 45 crorein the new warehouse
  • The board approved the further sale of non-core real estates of approximately Rs 67 crores
  • The company has obtained a current valuation of the assets from Knight Frank and engaged a broking firm to solicit interest in the property
  • Borsoil received multiple bids and the transaction is being concluded at Rs 68 crores in due course
  • The company expects to retain about Rs 200 Crores of Cash surplus, which can be used to fund further growth including acquisitions
  • Borosil have some real estate funds in the treasury, which are historical investments which will take some time to pay out
  • Upon redemption, the entire amount would be reinvested in debt mutual funds or liquid funds
  • The company has exited all equity mutual funds and directional are likely to move the entire surplus to fixed income
Borosil Glass 9MFY18 Financials.png

GST Impact:

  • June and July were quite disruptive, from a market perspective, owing to GST and the trade had been more or less shutdown
  • But in the period post July, from August to December, there was a healthy growth in the organization across all the verticals of the company
  • GST is likely to benefit organized players like Borosil in medium term, like getting more space on the shelf and new product categories getting emerged which were more unorganized dominated
  • Borosil will be focusing on its product development in the coming year and expects to introduce tens of SKU’s (50-60) in the next year
  • The price reduction taken by Borosil is around 3-4% depending on product

Marketing and Brand Building:

  • Sales are increasing faster than the marketing expenses are expected to increase
  • Marketing expenses as a percentage of sales will reduce over the next 2 to 3 years
  • In consumer products, both the storage and Opal ware have a strong tailwind
  • Rising awareness of the advantages of glass over plastic in storage and rising aspirations of middle-class for a superior product gave Borosil participation in growing categories
  • The advertisement expenditure is about Rs 13 crores in the first 9 months

Consumer Products Division:

Borosil Glass CPD DIvision Opportunity.png
  • This division has achieved a revenue of about Rs 194 crores at a growth of 15% over the same period last year
  • The Borosil branded products have grown about by 11.5% and in Opal ware, Larah has grown by 20%
  • The furnace in Opal ware business in November and December resulted in Out of stock for many products
  • The new furnace has started a few days ago and the preliminary production has been very good, both in terms of output as well as improvement of yields
  • The product is now available at probably 7000 to 8000 retail outlets nationwide
  • The growth driver and a core part in strategy has always been to sell more products to the same customer
  • Labquest is brand for bench-top instruments, has been gaining acceptance and Borosil is looking for organic as well as inorganic expansion in this area
  • The new segment of storage has been performing well and Borosil sees a large opportunity to convert customers from Plastic to glass
  • Borosil’s high-quality materials and product design which are both aesthetic as well as functional, are being quite well received
  • The TV campaign has been resulting in good feedback and YTD revenue from storage has been continually growing

Packaging Business:

  •  The idea of setting up a packaging unit through LLP (Limited Liability Partnership) with Borosil having 18% partnership is in progress
  • The place that the firm were to rent has not worked out, and had to relook a new place
  • The unit is expected to be operational in 3 months
  • This unit will not impact Borosil’s packing cost but would ensure to get packaging material supply on time
  • The partnership amount is around Rs 50 Lakh


  • The performance in Exports has been quite tepid and 2 clients have delayed their orders, owing to issues in their home markets
  • This is expected to be a timing issue and Borosil will continue to work on building a strong vertical in exports for lab glass division over the next few years


  • The Jaipur factory which manufactures Larah, has completed its upgrade and the capacity has been expanded by over 50% and is likely to help efficiency gains as well as improve the cost structure
  • Borosil is working on a large central warehouse for operations which will help in the reduction of overall inventory as well as reduce warehousing and freight expenses
  • The warehouse is expected to be operational from Q3 of the next financial year
  • From Q1FY19 the utilization is expected to be around 75-80% on the new furnace
  • The sales of Hopewell is expected to increase from the current base of Rs100 crores to around 120-125 crores and the capacity in terms of rupees would be Rs150-160 crores
  • The CAPEX of 15 crores in Klasspack is to increase capacity probably by 15-20% by year
  • The first phase of that has already been ordered and equipment will start arriving by Q1FY19

Corporate Initiatives:

  • The company subdivided its shares from Rs 10 to Rs 1 face value each and the trading commenced on September 14, 2017
  • The board has proposed a scheme of amalgamation
  • The matter could not be heard on the specified date by NCLT and the new date has been given as 22nd of February
  • For alignment of management incentives with long-term shareholder value Borosil has implemented an ESOP policy
  • The company has also applied for its shares to be listed on the NSE and the approval is awaited
  • The diluted shares post amalgamation would be 2.5 crores shares of Re.1 each


  •  Borosil has been working on e-commerce strategy and expects to have a lot of room for improvement
  • Borosil also likes to expand distribution footprint more in large format stores
  • The increase in capacity of Hopewell can be absorbed by the existing distribution channels

Gujarat Borosil:

Gujarat Borosil H1FY18 Financials.png
  • Borosil currently holds 25.25% of the Gujarat Borosil equity and upon implementation of amalgamation scheme will go to 58.38%
  • Gujarat Borosil has a board meeting to consider its results on 10th of February
  • India has already imposed anti-dumping duty on chinese solar glass and anti-dumping investigations have already started on solar glass from Malaysia


Cyient Q3FY18 Concall Summary


 Financial Highlights

Cyient Revenue Q3FY18.png
  • Q3FY18 has highest-ever quarterly revenue of US $152 million witha strong QOQ growth of 1.3% and a YOY growth of 11.9% in US Dollar terms despite the lower working days
  • For services business, the revenues stood at US $139.9 million, the highest ever with a robust QOQ growth of 4.2% and a YOY of 15.6% in US Dollar terms and a 4.4% in constant currency terms
  • Geography wise, America has grown 10%; Europe, 16% and Asia Pacific 10%
  • Operating margins for Q3FY18 sustained at 14.6% despite the headwinds of higher paydaysand the expansion is 116 basis points YOY
  • Operating profit for the quarter stood at Rs.143.1 Crores, which is also the highest ever, with a QOQ growth of 1.6% and a YOY growth of 16.5%
  • Cyient got a headwind of about 130 basis pointsbecause of mismatch between billdays and the payday
  • In services business the margin is about 16%
  • Net profit for the quarter stood at Rs.87.8 Croreswith a one-off event which led to loss on two grounds
  • Two months of operating losses due to Hurricane in Puerto Rico, and some marginal loss on divestment
  • Adjusting for the one-off, the normalized profit for the quarter would stand at Rs.108.8 Crores, with a YOY growth of 15.5%
  • Cyient’s other income QOQ has moved from 406 to 273
  • Adjusting the impact of unrealized FX loss/gain that moment of 93 to minus 50, which is a swing of about Rs.14 Crores, then Cyient is doing well on realized forward contract as well as on the treasury income
  • The total coverage is set at about $123 million.
  • Cyient declared a second interim dividend of Rs.4 per share, in line with revised dividend policy of payout of 40% from the current payout of 30% barring unusual situations

Cash Generation

  • Cash and cash equivalent stood at Rs.1,077 Crores or US Dollar $168 million, which is again the highest ever
  • Free cash flow generation for the quarter stands at 67% of EBITDA, and that is at Rs.113.6 Crores
  • Adding the proceeds of divestment, the free cash flow stands at Rs.174 Crores for the quarter
  • Cyient has spent money on the dividends that were declared last quarter and another Rs.21 Crores on long-term investments
Cyient Q3FY18 Cash.png


  • The divestment of 49% Joint Venture with Pratt & Whitneyhas been consummated in this quarter, exactly in line with what Cyient hassigned off
  • In terms of the financial returns, it has been a very handsome return, with an IRR of more than 50% on this original investment that Cyient made in 2013
  • Cyient got more than $20 million from the original investment of $250,000
  •  Cyient has got on a gross basis about $11 millionand on a net basis, net of tax, $9 million and highest-ever cash of $167 million
  • In terms of the income statement, the overall impact is about $3.5 million


  • Adjusting the reported ETR of 22.4%, because of the tax adjustment on IASI and also the adjustment for the deferred tax because of the US,and excluding one-off number is 27.9
  • It is estimated that ETR in SEZ stage should go down by about 1%, but some of the further impacts are still being studied, and Cyientcontinues to work on the SEZ ramp-ups, which could further reduce the tax rate in coming years

    Awards & Recognition:

    • Cyient obtained the ICRA rating of CGR 2+ for corporate governance practices of the company
    • Cyient won Pratt & Whitney, also called as the America Supplier Innovation Award for the fifth consecutive time
    • Won Productivity Savings Award, second time in the last five years
    • Won Golden Peacock Award 2017 for Risk Management recently in Singapore
    • Confederation of Indian Industries recognized Cyient as one of the most innovative organizations


    • Cyient established aerospace nearshore engineering center in Portishead, in the United Kingdom
    • Inaugurated the Cyient Defense Services offices in West Palm Beach in Florida
    • Expanded the Center of Excellence for a key customer with additional capacity of 75 seats, strengthening business relationship
    • Inaugurated the Global Tower Operation Center, in Hyderabad which is an IoT-enabled TOC provides 24x7 surveillance and remotely monitors all passive assets in cell towers across multiple locations around the world
    • Cyient’s Telstra delivery center in Blacktown, New South Wales got the coveted ISO 27001:2013 certification
    • Won Cyient’s first grid analytics project in collaboration with the recently concluded partnership

    Aerospace & Defence Industry:

    •  While there are challenges, on the commercial aerospace, the defense is starting to pick up
    • Cyient inaugurated the office in West Palm Beach, Florida, which does a lot of work for defense-related projects with 150 people
    • From a commercial aerospace perspective, design in commercial aerospace has been coming down for the last few years and it is stabilized, but it would not increase at least for the foreseeable future

    Communication Industry:

    • The Communication Industry cuts across a number of industries in the sense that it is an enabler for a lot of disruption that is happening across multiple industries
    • Cyient is seeing some good opportunities around fibre deployment, which essentially helps high-speed broadband connections and, communications is one of star performers at Cyient
    • The business is not going to grow at the same pace as what it has grown

    Utilities & Geospatial Industry:

    • There are some very good opportunities in this industry because there are new technologies like advanced metering, smart meters, etc., while the sort of the historic skills around transmission and distribution and network design are stable
    • There are some very good growth opportunities in the areas like software and analytics
    • From a commercial perspective the TomTom algorithm and the data is significantly more accurate than google maps
    • For FedEx or UPS whether the business depends on the quality of data it is quite a value add that TomTom provides like, accuracy of data, the accuracy of traffic and the algorithm to get from point A to point B including driver scheduling, how did they go up from address A to B to C
    • The second aspect is, maps historically happened to be two dimensional relatively accurate information whereas today with things like autonomous driving, they cannot just be two dimensional they have to be three dimensional

    Rail Transportation:

    • Cyient signed up with another new OEM, which is one of the largest OEMs in the world
    • With this, all the five large OEMs in rail are Cyient’s customers and not just tactical customers, but quite strategic in nature

    Industrial Energy and Natural Resources:

    •  Capex still tends to be at a premium, and the growth is muted for this year

    Semiconductor Industry:

    •  Between the last two years, growth has almost been 25%, which is a significant pickup compared to what it was a few years ago
    • The demand for memory chips, analog chips are looking quite appealing at this point and thedegrowth in this business in Q3, but that is just down to seasonality

    Medical devices industry: 

    • Cyient expects a CAGR of about 5% going forward and the major drivers of these are increasing healthcare expenditure, awareness, aging population, application of technology, etc
    • There was a small de-growth because of seasonality, but Cyient has started a number of relationships and some quite strategic with the top 10 medtech players

    Design Led Manufacturing Companies:

    • From volume perspective, the growth rate of DLM for year is going to be 20%
    • The reported revenue will look little bit lower because of adjustments done for GST
    • The manufacturing capability that Cyient have in Mysore can deliver about $25 million to $28 million of product in any given quarter
    • The margin will expand by about 50 basis pointsand the operational improvements gave 350 BPs, utilization mix, better onsite margin and actually that was a very important aspect because a significant portion of business is onsite
    • The wage hike took away 150 basis points
    • Cyient made about 100 basis points of investments and obviously these are quite strategic in nature be it through the new business accelerator or intellectual property investments, etc
    • There has also been a little bit of pricing pressure in various spaces, but that took away about 50 basis points, and that is where DLM will also end up with a low single-digit number for the year
    • Q4 growth is expected to primarily come from aerospace and defence that is why the order backlog is
    • It takes some time to get the design through to manufacturers
    • First product that Cyient designed has gotten EASA 1st approval, which is the European design authority or certification authority for aerospace
    • The second EASA approval will also happen imminently, and the volume in design is starting to build up
    • DLM has achieved break even at operating profit level, in this quarter and resulted in a positive cashflow


    • The smart way that Cyient can get price increases is really by packaging it as a project where it hasend-to-end responsibility or more comprehensive responsibility

    Make In India:

    • Due to Make in India, now that the first airlines also launched so there will be clear spending in the avionics within India as well
    • Cyient would not counter shake hands before the rooster hatch and nothing has hatched so far
    • Cyient is being very careful on how much it invests at the same time  is not expecting some huge numbers to come in immediately


    •  Cyient continues to support 25 government schools, supporting the education for the underprivileged children
    • As a part of initiative to increase IT literacy, Cyient has also added one more Cyient Digital Center, taking the total to 56
    • Cyient Foundation launched two smart classes, which is the first of such government school in the Telangana State


    Kellton Tech Q2FY18 Concall Summary

    Kellton tech.png

     Financial Highlights

    Kellton Tech Q2FY18 Financial Highlights.png
    • Total revenue for the quarter stood at Rs. 185.2 crores, which is 5.4% higher than the preceding quarter
    • EBITDA of the company stood at Rs. 28 crores which is growing by 34.6% year-on-year and 9.6% quarter-on-quarter
    • PAT of the company stood at Rs. 14.96 crores which is 2.4% higher than the preceding quarter
    • EPS of the company increased by 62.3% quarter-on-quarter and stood at Rs.3.17
    • Total revenue for six months stood at Rs. 361.07 crores
    • EBITDA for six months stood at Rs. 53.56 crores which is growing at 34.6 YoY
    • Net profit of the company stood at Rs. 29.58 crores which is 8.2% of the total revenue

    Revenue and Future Prospects

    Kellton Tech Q2FY18 Revenue by Industry.png
    • Revenue of the firm is expected to grow at 5.5% quarter-on-quarter and a little over 20% YoY
    • Acquisition of Lenmar has helped in attracting BFSI customer
    • IoT technology has helped in increasing the business
    • There would be a reduction in the number of pledge shares