HCL Technologies Q2FY18 Concall Summary


Financial Highlights

HCL Tech Q2FY18 Financial Highlights.png


  • H1 revenues grew 11.7% and net income grew by 11.55 when compared to the same period last year
  • HCL saw industry-leading performance and nature of growth was broad-based
  • HCL also witnessed a very robustand broad-based booking performance in H1 of fiscal ’18 which is significantly higher than thesame period last year


  • Revenues grew by 2.3% in US dollar terms and 0.9% inconstant currency terms
  • Q2 EBIT stood at 19.7%
  • In Q2 revenues from India SI business declined by approximately $20 million due to completion ofimplementation of few large SI programs
  • Last quarter HCL also rolled out salary increases for employees as per our regular appraisal cycle which cost 50 basis points impact to our margins
  • Through the quarter, HCL won 15 transformational deals, it represented a well-balanced Mode-1, 2, 3 services mix
  • The deal wins were across US, UK, Germany and Australia among othercountries

Trends emerging from H1 performance

  • Growth is becoming more and more broad-based across all service linesand HCL has reduced dependence on any single service line
  • Each of the Mode 2 services, Digitaland Analytics, IoT Works, Cloud-Native Services, Cyber Security and GRC are bringing in significant number of deals
  • All these services have a robust pipeline and are establishing very strong thought leadership in their respective businesses
  • Over the last five quarters, HCL has perfected the art ofintegrating IP Partnerships
  • IP Partnerships and Acquisitions will continue to be a key element of HCL’s growth strategy across Mode 1, 2, 3 portfolio

Revenue guidance

  • HCL retains its FY’18 revenue guidance of 10.5% to 12.5% growth in constant currency
  • HCL translated the 10.5 to 12.5 on constant currency into the actual currency based on the 30th September rate
  • This would translate to 12.1% to 14.1% in US dollar terms based on September end rates
  • Revenue guidance builds in the impact of
  1. reductions in India business in H2
  2. the reductions in H2 revenues due to conversion of DXC Joint Venture arrangement into an IP partnership
  • HCL’s booking and pipeline is giving them confidence that they will be in lower end of the guided range
  • HCL is expecting that inorganic deals would not have any material contribution to the revenues before March 18

EBIT Guidance

  • HCL retains EBIT guidance at 19.5% to 20.5%
  • The EBIT guidance assumes dollar at Rs.65.5 and other currencies at the FY’17 average rate
  • HCL does not see any downside currency risk to margin because margin number is given without taking benefit of hedge gain

Financial Metrics

HCL Tech Q2FY18 Revenue Breakup.png
  • Excluding India, the growth was 3.4% in reported currency terms and 2% in constant currency terms
  • Revenue per employee is on a consistently increasing trajectory; it is now close to $64,500 and the non-linear momentum continues
  • Revenues have grown in the last 5-years at 12% CAGR
  • Headcount increase is 7%
  • EBIT has grown by 15% CAGR and net income has grown by 20% CAGR, much higher than the growth in the revenue

India business

  • India business declined by 20 million this quarter and if we expect same trend going forward, there will be impact of 70-75 million in this financial year
  • HCL has converted DXC partnership into an IP-based partnership which currently has revenue run rate of about $22 million
  • If it is assumed that revenue will become half there will be $22 million impact in the remaining two quarters.So both these put together will have $100 million impact this quarter

EBIT Margin

  • EBIT margin is at 19.7% and it is well within the guided range
  • This guidance of 19.5% to 20.5% was given with the exchange rate of US dollar to Indian rupees being 65.50 while the rest of the currencies is the average rate for last year

Wage hikes

  • This quarter also has the impact of wage hikes which is about 40 bps
  • HCL did gain because of currencies which had a positive benefit on the margins by 20 bps
  • The salary increase has been about 5% offshore and 1.5% onsite

Earnings per share

  • The earnings per share on quarterly and YoY basis has gone up by 10%
  • It is at Rs.62.70 the annualized earnings per share
  • HCL started investment program particularly VIP-led investment program more than one-year back
  • HCL’s return on capital employed has been very consistent; it would have only increased marginally at 23%, being one of the best in the industry
  • The dividend this quarter is at Rs.2 per share
  • HCL intends to maintain dividend pay-out ratio above 50% this year which was last year close to 50%


Layered hedging program

  • HCL’s layered hedging program continues to deliver results
  • HCL had exchange gain of 22.3 million in Q2FY18 which is below the EBIT line

Net income to operating cash flow

  • Net income conversion to operating cash flow last sequence is at 99.9%
  • EBITDA to free cash flow if we take out IP deals - inorganic is at 68% which is also pretty good

Working Capital Management

  • HCL continues to be the best in the industry in terms of working capital management with net current assets as a percentage of revenue is at 10.6%
  • DSO which was at 63-days is marginally up at 64-days this quarter


Amortization comprises of:

  1. IP-led deals
  2. Non-Organic acquisition like Geometric
  3. Customer relationships
  4. Quarter wise amortization
  5. Q1 – $18 million
  6. In Q3 it is expected to go up to $24-25 million
  • HCL’s EBIT guidance is after taking into account the level of amortization HCL will be doing

Mode 1 Services

Engineering services and BPO

  • Engineering Services grew 4.4% QoQ in constant currency supported by growth in existing clients and IP partnerships
  • The IP partnerships has not only given a growth momentum for Mode-3 products and platforms offerings, but is also creating new opportunities for a traditional Engineering and R&D Services
  • BPO Services grew at 2.9% QoQ on constant currency
  • BPO market is undergoing repositioning as traditional business process engagements is giving way to Digital-led initiatives embedded with (RPA) Robotic Process Automation solutions
  • Both Infrastructure and Applications Services together had approximately 20 million revenue decline from India projects

Infrastructure services

  • Infrastructure Services declined by 0.2% QoQ
  • If we look at constant currency growth excluding the India business, Infrastructure would have grown by 1.8% QoQ

Application services

  • Applications Services remained flat QoQ in constant currency terms
  • If we look at constant currency growth excluding the India business, Applications Services would have grown by 1% QoQ

Mode 2 services

  • HCL saw good traction across existing clients as well as several new logo wins driven by the differentiation andthe mind share created for Mode-2 offerings
  • In several renewals, HCL also earned an extended scope for the Mode-2 services
  • HCL signed several strategic engagements like Modern Applications Services engagement with the Fortune 100 technology major

Digital and Analytics

  • In Digital and Analytics, deals are expanding from small to medium size to more significant scope aligned to the very core client’s business
  • Digital Applications, customer experience in Analytical Services for a global 100 European financial services organization
  • Big Data, Data Science and Predictive Analytics engagements with the leading Fortune 100 Courier Services and shipping provider
  • Digital Applications Services and support for a UK-based multinational semiconductor and technology company

Trend in digital deals

  • There is a market movement from Digital moving from POC Digital or experimentation of digital programs in enterprises to more mainstream digital programs or scale digital programs

IoT Works

  • HCL went live with the program for a European lighting major wherein they will be managing the company’s global smart lighting installations on a build, operate, transfer basis
  • HCL announced the opening of the Global Customer Remote Operations Center in Bangalore for thisEuropean client
  • Remote operations centre will be a key value proposition for HCL’s IoT Services in the coming quarters and can really open up a very huge market opportunity
  • IoT team also announced industry-leading solutions like Cold Chain Logistics Monitoring Solutions, Remote Service Platform Solutions for medical devices
  • HCL also entered into a strategic partnership with Siemens for Industry 4.0 solutions on MindSphere, a Cloud-based Open IoT operating system
  • Other interesting IoT work deals signed this quarter:
  1. IoT-enabled platform for a Fortune 100 Courier Services and Shipping Provider
  2. IoT Ecosystem for Nordics-based Global 2000 Manufacturing giant
  3. Predictive Maintenance Solution for a Fortune 500 Global Life Sciences Technology Provider
  4. An end-to-end IoT Solution for US-based Global Paper and Packaging Company

Cloud-Native Services

  • HCL is helping existing customers transition to Cloud as well as open net new accounts with the service portfolio
  • HCL has signed (+30) deals, small, medium and large combined in this segment in the last quarter
  • HCL is also signing milestone deals like the recent engagement being which is one of the first Cloud programs in the utility industry in UK where HCL will be responsible for full end-to-end Infrastructure and Application Migration to AWS Cloud
  • The Cloud-Native Services team has also built unique solutions along with partners like a solution called Containerized IT solution which helps them legacy to Azure Migration, built in partnership with Microsoft and Mesosphere
  • PowerObjects, the company acquired two years back is also punching in with opening new deals and building IPs on Microsoft dynamics 365 stack

Cyber Security and GRC

  • HCL is looking at dynamic security which is based on a philosophy of constant governance
  • It is built on a framework of governance and continuous assessment and uses best-of-breed technologies supported by Artificial Intelligence
  • With the roll-out of GDPR in Europe region, global enterprises are rushing to assess their compliance posture and work towards aligning their policies and controls

Total outsourcing deals

  • HCL is also entering into total outsourcing deals with managed security services as a component as well as standalone consulting-led security deal
  • HCL won an engagement with a leading North American producer of Coated Paper and Specialty products to manage their end-to-end security landscape
  • HCL is also working with a leading UK-based insurance company to deliver GDPR program and other security services for a leading global vehicle leasing company and also a North American bank as well as an Energy Services provider in Germany

Mode 3 services

IP partnership

  • HCL expanded IBM Partnership by signing a five-year IP Partnership deal which adds the IBM collaboration solutions to HCL’s growing portfolio of products and platforms offerings
  • HCL also restructured joint venture with DXC - changed the JV format into an IP Partnership arrangement

IRR expectations from IP deals

  • HCL is set to achieve double-digit sort of IRR from our investment
  • In 2016, one of the deals have completed one full year and HCL has seen that performance to be in line with what they had projected, in some of the products it is even better

DXC Technology partnership

  • DXC Technology partnership will involve rebadging of the people
  • HCL had two joint venture entities with DXC – one is known as CFT and other is CFES
  • In CFT HCL has 51% stake which is consolidated line-by-line
  • HCL picked up $58 million of revenue and very marginal loss in CFT
  • The current rate out of HCL-DXC venture is 22 million
  • When the joint venture was entered into, it was the CSC and now it is HP plus CSC put together which is now called DXC. Therefore, HCL will be now getting a share in the revenue
  • From a run rate basis, there will be less revenue which will get recorded from October quarter onwards and for this financial year it is 22 million impact
  • Last year revenue from CFT was 58 million and in H2 was 25-30 million and it is not expected that trajectory will improve much

HCL’s confidence to build IP partnership

  • One of the reasons that HCL continues to do these partnerships is because:
  1. HCL’s underlying strengths
  2. Partnership is giving good results, particularly some of these really battle tested, hardened products with very large installed basis, injecting energy, new features and capabilities in the roadmap allays HCL’s focus on the users and the communities around these products
  3. HCL is seeing really good return in terms of the response from these customers
  4. HCL also sees additional opportunities in terms of building service capability around these products

Performance assessment of IP deals

  • HCL is not providing deal-specific investments from Q2FY18 but all the investments get accumulated in license IPR line item due to client confidentiality reasons which HCL had overlooked in the past
  • Even though HCL has done large investments, our EBIT continues to be stable, our return on capital employed continues to improve
  • IP growth is also visible under Engineering and R&D Services which has had an impressive growth in addition to the regular organic growth that is possible on the ERS business
  • HCL has got competitive edge through IP partnership strategy and has the first mover advantage and HCL wants to capitalize on it
  • HCL is in the final stages of concluding similar partnerships with other technology players with whom it will work for a long time
  • A large part of IP revenue still continues to come from what HCL’s partner is selling and HCL’s sales channel is just starting to pick some momentum

Synergy with IP deals

  • An example of IP synergy deal:HCL brought very rich set of IP and all of the product managers, the deep product experts, the people with deep implementation skills around that product and then integrated that into the broader HCL service capability delivered it in one box to the customer
  • The model which HCL is looking to replicate, whether it is in the testing area or in a lot of the other categories of products, HCL is doing across these IP Partnerships

Internal IP creation

  • HCL filed 12 patents in next-generation technologies and platforms
  • HCL’s DryICE COPA which is Cognitive Orchestrated Process Autonomics Platform registered some excellent wins

Risks associated with IP partnerships

  • First risk is IP partnerships are complex relationships.HCL’s confidence come from the fact that they are working with trusted partners, companies that with whom they have had multi-year relationships and 360 degree relationships
  • The second key risk factor is maturity of the underlying technology.HCL is thinking proactively about innovation areas and opportunities to continue to extend the relevance of those products to expand the reach that they have within those installed basis
  • The third focus of the company is just  to continue to broaden both the breadth of products and the breadth of partners while preventing concentration issues

Performance in different geographies


  • US market continued its strong growth with 1.5% QoQ
  • This is on back of strong Q1 where US grew 3.8% QoQ


  • Europe put up a strong performance with a growth of 4.4% QoQ and a major share of this growth came from Financial Services
  • ROW declined 12% QoQ and a decline is largely due to India business

Performance in different Industries

  • Manufacturing and Financial Services delivered sound growth of 2.4% and 1.2% QoQ and 21.9% and 14.2% respectively on YoY constant currency basis

Telecom Vertical

  • HCL is doing lot of investment specifically in America a Telecom standpoint
  • New frameworks are being designed for customers (Big Telecos) to get on boarded
  • The investments that were going in were also getting diverted from the Mode-2 areas into Mode-2. So there was some shrinkage seen in the last few quarters
  • HCL is doing substantial investment in Telematics specifically in America
  • Through telematics, customers are finding new revenue sources, in areas such as track and trade, supply chainetc.
  • HCL also set up something very substantial in the China market for one of the big Telecos in Q1FY18
  • Shift from Mode-1 to Mode-2 has seen some softness in revenues but the investments in Mode-2 specially incutting edge areas will lead to upsides coming in the following quarters

Client Metrics

  • HCL did extremely well with top-20 clients growing faster than the company average, reflecting the strong performance of the client partner program
  • HCL saw strong client additions on YoY basis across all revenue categories

Segregation between inorganic and organic growth

  • Analysts expect organic growth to be 5-7% however HCL cannot call out the separation of organic and inorganic growth because after integration of the business there are too many dynamics
  • HCL is expecting not only an overall industry leading growth but in the inorganic business as well, it will deliver significantly in the top quartile of the industry

Acquisition of Urban Fulfilment

  • Urban fulfilment deal got concluded this quarter and a very small revenue of about $2 million came this quarter
  • The acquisition process got delayed by almost 2-2.5-months

HR ,Client and CSR Initiatives

Employee training

  • YTD HCL trained about 57,000 employees, 5,600 of which are on four Mode-2 skills
  • Employees continue to generate direct value for customers through HCL’s flagship Deep Platform Value portal, $500 million of impact was delivered in H1 alone

Client Partner focus

  • HCL is laser-focused on client partners who are successfully driving top revenue generating clients increasing sales and expanding footprint for HCLservices within the accounts

Women Leadership Development Program

  • Women Leadership Development Program made industry headline this quarter by winning gold at Brandon Hall Awards 2017

CSR activities

  • CSR arm of HCLTechnologies continues to drive sustained social impact both across India and our global communities


Borosil Q1FY18 Concall Summary


Business Highlights

  • During April and May, both Lab and Consumer department showed a healthy growth but observed a sharp decline in the month of June due to destocking by retailers over uncertainty over GST.
  • In July, sales performance showed a decent increase.However, recovering lost sales for Consumer ware is not certain. There is reasonable certainty is  for recoveey in Lab ware segment .
  • GST is beneficial from long term perspective and it is already showing benefits in terms of interest from tax compliant organized players.
  • The Company is focusing on threeprinciple growth drivers: LabQuest,Klasspack & Export.
  • Q1 has seen good increase in the piece of products however profitability has been wiped out because of inefficiency of furnace, which is a short-term phenomenon.
  • Scale benefits will start to kick in & Sales along with EBITDA margins are expected to increase faster over next two years.
  • Shareholders’ approval awaited for a planned ESOP and also for a proposal to reduce face value of each share from INR 10 to INR 1.
  • Board has also approved a scheme of amalgamation, however, statutory approvals are still awaited.
  • Significant investment has been put into Larah and new warehouse in Jaipur.
  • Traditional sale contributes to majority of business (60%). Modern trade constitutes 20 to 25% and rest is occupied by CSD and e-commerce.

Financial Highlights

Borosil Q1FY18 Sales Highlights.png
Borosil Q1FY18 Financial Highlights.png
  • The lab ware division had a minor de-growth of 0.3% on standalone basis. Klasspack, the entity that was acquired by Borosil last year, registered a 14% YOY growth on standalone basis (Not on book as on last year). Overall lab ware division registered a 29.5% growth.
  • The consumer ware division declined by 7% on standalone basis and Hopewell comprising the brand Larah, declined by about 11.5%. Overall Consumer division registered a 7% decline.
  • The company revenue grew by 4% primarily fueled by revenue from Klasspack division.
  • EBITDA declined to 8.4% of topline compared to 12.9% of toplinelast year. Lower EBITDA margin was due to decline in Hopewell (Larah) & rebuilding of furnace.
  • PAT is down to 5 Crores this year from 10 Crores last yeardue to dismal Hopewell show and change in base year for calculation of capital gains tax.
  • Gujrat Borosil achieved a sale of 43 Crore with an EBIDTA margin of 19.3%.
  • Company has cash surplus of roughly 200 Crores which is put aside for future acquisitions.
  • Company board has also approved the disposal of 68 Crores non-core assets. These non-core assets include some residential apartments in Mumbai and outside Mumbai.
  • The current funds are being invested in mix of fixed income and liquid funds.
  • Company has reduced its advertising expense in this quarter. Ad spend was about 3 Crores this quarter compared to 5 Crores in the same quarter last year.
  • Equity has reduced substantially as a part of broader strategy to move from investment portfolio to traditional corporate treasury.
  • There may be a fund raising activity for Gujrat Borosil in near future.
  • Large CAPEX is meant for refurbishment of Hopewell furnace and the new warehouse.
  • The company expects business to normalise by Q2FY18
  • Restocking is expected by early Diwali 2017

Company Overview

  • Company is doing fairly well in exports.
  • In consumer segment, growth in microwave segment is supplemented by the newly introduced storage products.
  • Borosil is also coming up with new advertising campaign on Lunchbox. This product has received fantastic reviews from the customers.
  • Larah also won large contracts & its distribution penetration & customer acceptance are increasing.
  • Company will start receiving input credits after implementation of GST.
  • EBIDTA margin of Gujrat Borosil decreased because of a production trial of thinner glass material in newly implemented CAPEX facility. It is still not commercialized, but, the company expect to boost profitability for the same.
  •  No permanent loss in sales is expected expect certain distribution channel like expected
  • Brosil’s primary business is in borosilicate glassware and there is no anti-dumping duty on that.
  • Distribution of channels for consumer business: Traditional Trade: 60%, Modern Trade: 20-25%, CSD: 10-15% & E-Commerce: 5-6%.
  • Borosil would earn margin by increasing quantum of sales and not trade.  Certain tax credit can be availed after implementation of GST.
  • By second half of 2017, Hopewell should have acapacity of 150 to 170 Crores.
  • Kitchen appliance segment grew well despite almost no marketing in Q1FY18
  • The company focuses its marketing spend on beon storage & Larah brand.
  • The Company is a C class supplier in pharma industry. Product is of importance but of low value.
  • Klasspack vials are entirely for pharma and 70% lab glass business is from pharma sector.
  • Exports have been doing well for lab space. Company has been exporting to Middle East Africa and Southeast Asia in pharma space.

Industry Overview

  • The Ministry of Commerce has recommended applying anti-dumping duty to Chinese solar glass imports & only Ministry of Finance approval is pending. It is a good sign for the company.
  • Another separate antidumping duty is applied on Chinese opal glass. Company is happy to compete in the level playing field created by the Government.
  • Two separate antidumping duty which company applied for its two separate lines of businesshas gone to companies favour. This will boost company’s top-line in the short to medium run.
  • There is antidumping duty applied to soda lime glassware also. However, Borosil is not really involved in that business.
  • Fall in solar price is artificial and due to Chinese government subsidizing exports. With recommendation of new anti-dumping duty, the margins are expected to improve
  • In UAE import duty has been reduced to 4.45% from 30-31%. However, most of the imports are from China & not from UAE, because of high cost structure. There are some undeclared Opalware import observed from Iran & Europe.
  • Opal ware segment has market size of 500 Crores and it is growing rapidly at a rate of 15-20%.
  • After implementation of GST, there could be substantial reduction in unbranded products from China. There will also be stocking of branded products.
  • With anti-dumping duty imposed on melamine, bone china and porcelain by government, opal has good opportunity to grow and take market share
  • Pharma sector has been in distress for past 2 years and pricing in some pharma companies has been a challenge. Company had to offer some discounts to counter this challenge.


  • Borosil competes against La Opala, Cello & Treo in Opal-ware category.
  • In pharma packaging, the company has only one major competitor-Schott Kaisha


Adani Ports Q1FY18 Concall Summary


Key Highlights

Adani Ports Q1FY18 Financial Highlights.png
  • APSEZ (Adani Ports and Special Economic Zone) handled cargo volume of 44 million ton in quarter 1 of FY18. Additionally, ABPO Australia 6 million ton of coal.
  • Mundra which handles more than 1 million TEU for the first time in a quarter and it is likely to become the largest container port operator in India in FY18. APSEZ achieved this increased market share by commissioning container terminal port and adding five new shipping lines across Mundra and Hazira.
  • Looking ahead in FY18, APSEZ expects to containerize more cargo and gain further market share.
  • The incremental container volume will be handled from Ennore which was commissioned in June 2017 and company expects thefirst vessel to call the port in September.
  • In FY18, coal volumes are expected to grow by 5%, this is on the basis of company’s long-term contract with Reliance for 2 million tons each at Hazira and Dahej.

Financial Highlights

  • Compared to Q1 FY 16-17, Company’s consolidated operating revenue in Q1 FY17-18 grew by 50%, EBITDA grew by 37% and profit before tax grew by 24%.
  • The total operating income has grown by 50% to 2745 Crores. The total operating income which is relating to the ports and the logistics and also the SEZ has grown by 29% to 2364 Crores.
  • Port revenues are up 7% up to 1742 Crores and port’s EBITDA excluding FOREX is 1255 Crores which is am 8% growth. Company will be improving the Port EBITDA margins by minimum of 100 basis points year-on-year.
  • EBITDA has grown by 31% to 1598 Crores and thecompany stands at 68% EBITDA margins.
  • PAT for the quarter stands at INR 702 Crores.
  • Income from ABPO business in Australia was INR 99 Crores and EBITDA was INR 17 Crores.
  • Company expecting 30% to 35% revenue growth in thelogistics business.
  • In terms of ports EBITDA margin, thecompany expects at least 100 basis points increase in margin on account of higher capacity utilization, technology initiative and cost efficiencies.
  • EBITDA margins are based on EXIM and domestic volume. Also, the recently started Kila Raipur in Punjab is responsible for volatility.
  • The company will continue to focus on reduction of CAPEX, debt, and ensure higher free cash flow in FY18.
  • The profit after tax because of Mundra hitting the full taxation regime from this quarter and from this year onwards stands at 702 Crores down from 829 Crores.
  • Interest expense increased to certain extent because of payment of earlier ECBs & some IndAS adjustment.
  • Interest income which was 234 Crores last year has come down to 167 Crores.
  • Lease rentals of 100 to 150 Crores are a part of SEZ business itself and are represented as annual guidance asset.
  • At the beginning of year, CAPEX guidance was given about 2500 to 2800 Crores and company might end up saving 100 or 200 Crores.
  • Adani Logistics Limited grew 28% in revenue in quarter 1 FY18, compared to this last time of the year. Adani Logistics continues to improve its share as the single largest private rail operator in terms of volume.
  • At the end of year steady state, 12% EBITDA margins can be taken for logistics business.

Cargo Mix Details

  • Adani continues to pursue our strategy of diversifying cargo mix, thereby reducing dependence on any single type of cargo.
  • Logistics volume consists of 35% EXIM and 65% domestic.
  • In quarter one of FY18; while coal volumes remain static at 16 million ton, Company’s other bulk cargo excluding coal increased by 12% and container volume increased by 21%.
  • In quarter one of FY17, coal which was 37% of company’s cargo mix is now 35%, containers which earlier constituted 35% is now 41%. Other cargo including crude now constitutes 24% of cargo.
  • Dwelling more on container growth, APSEZ handles more than 1.22 million TEUs of the container, its share of container volume in India has now increased from 31% to 33%.
  • APSEZ is confident of achieving guided cargo volume growth of 12% to 14% given at the start of the financial year.
  • In terms of coal, APSEZ has take-or-pay arrangements with TATA.
  • The company had a little less coal due to cyclone situation in Australia but ramp up is visible in this segment.
  • SFI on export is generally 35 Crores in one quarter.

Performance of Ports

  • Adani’s cargo volume are less because of HMEL, a key customer at Mundra port had shut-down their operations of dedicated facility for scheduled maintenance for more than 60 days which, in turn, company’s crude volume by almost 2 million ton.
  • With HMEL now being operational, Company will be able to cover this temporary shortfall in the remaining three quarters. HMEL is also in the process of increasing capacity by a further 2 million ton which will reflect in cargo volume in the next 2 years.
  • Lines added by APSEZ in Q1FY18-At Mundra IMEX, IMAD and Misawa were added and at Hazira IMEX and IMAD were added.
  • Coming to volume growth at APSEZ’s large ports, Mundra grew by 5% and Hazira grew by 19%.
  • While container volumes at Mundra grew by 20%, coal volumes grew by 6% and other bulk cargo grew by 8%.
  • The company is also in talks with the reputed PSU for handling coking coal at Dhamra with MGT of 7 million ton.
  • Recently the company has signed several long-term contracts. To name a few with JSW Cement for handling blinker with the minimum volume of 1.2 million ton at Dhamra, with HPCL at Mundra for increased throughput from 5 million ton to 8 million ton and with Tata Steel at Dhamra for handling steel coil amongst other.
  • Hazira port is expected to grow by 20-25% this year
  • Kattupalli port grew by 30%. In fact, in May 2017, Kattupalli handled container volume of 42,000 TEUs in a month. 30-35% volume growth is expected at Kattupalli this year.
  • Dhamra registered a flat growth as one of the berths was shut for expansion for 23 days. It is expected that volumes Dhamra port will grow by 20-25% in FY18.
  • Dahej port has also seen a remarkable transformation after de-growth in FY17, APSEZ turned around the port to achieve a growth of 3%. In quarter 1 of FY18, Dahej port started handling fertilizer and Agricultural products.
  • For Kattupalli port, APSEZ has taken over operations in November 2015 and ever since thecompany has been billing to customers directly and receiving revenues directly.
  • Dharma port was shut down for 23 days due to some necessary infrastructural alterations but there won’t be any further disruptions this year in terms of cargo growth.
  • CAPEX invested on Kattupalli is about 30 Crores overall. The total outlay of Dhamra is about 800 Crores.
  • With 24 operational rail volumes during the period increased by 69% from 34,000 to 58,000 TEU's. Similarly, Logistics segment handled the terminal volume of 74,230 TEU's which is an increase of 14% compared to the same time last year.
  • The increase in rail volume in on account of the debt started in new ICD. Also, large traffic from north India diverted to Mundra is responsible for increasing rail volume.
  • Mundra International Container Terminal that is incorporated because Adani is in talks with another shipping line for doing a similar joint venture as CT4 and CT3.
  • The gross of about 500 is what we likely to spend the entire year on Vizhinjam.
  • In Hazira in Q1FY18, APSEZ has handled almost 1.3 million tons of coal and almost 110,000 TEUs that is a container which is translating about 1.6 million tons in terms of tonnage and then the company has also handled liquid, it is about 0.6 million ton that is 600,000 tons.


Parag Milk Foods Q1FY18 Concall Summary

Parag Milk Foods.png

Awards received in Q1 FY18

  • Consumer Voice Award for Gowardhan Ghee in the Cow Ghee Category
  • Parag has been ranked No.1 in the Next 500 companies by Fortune India
  • Recently about a couple of months back, Parag Milk Foods won Consumer Voice Award from JagoGrahakJago which is government of India initiative on being the number one brand in the cow ghee category

Financial Highlights

Parag Milk Foods Q1FY18 Financial Performance.png


  • The revenue from operation for Q1FY18 have grown by 7.7% to Rs. 412.8 crores compared to Rs. 383.5 crores in quarter Q1FY17
  • Growth was driven by the consumer product segment and expansion of distribution network
  • Consumer product category observed an 8% growth from Rs. 238.9 crores to 257.7 crores in quarter Q1FY18
Parag Mik Foods Q1FY18 Revenue Breakup.png

Fresh Milk

  • Fresh milk growth was lower than expected at 5% year-on-year due to farmer strikes in the months of May and June which caused delay in distribution in supply of milk

Skimmed Milk

  • The share of skimmed milk powder remained stable year-on-year at 12.5% along with an increase in its revenue by 7% year-on-year from Rs. 48.1 crores in Q1FY17 to Rs. 51.4 crores in Q1FY18, which is mainly due to better realization in the market

Gross Margin

  • The company has seen a marginal increase in gross margin of 40 bps from 28.6% in quarter one FY17 to 29% in Q1FY18
  • There is probability of expansion of 100-200 basis pointsin gross margins because there is good monsoon down the line


  • Company’s EBITDA declined by 120 bps from Rs. 31.8 crores in the Q1FY17 to Rs. 29.4 crores in the Q1FY18
  • The impact on EBITDA margin was due to higher expenditure on marketing and distribution

Marketing and distribution spend

  •  Primarily due to new product launches like Avvatar and the Slurp
  • Company also increased depots, so the new depot rent  and expenses contributed to the other expenses
  • Company appointed Vector Consulting, so their initial expenses also contributed to the other expenses
  • On an annualized basis annual marketing spend was roughly around 2.7%-2.8%, would be in the range this year as well
  • Raw material price increase during this quarter on YoY basis were flat


  • The increase in depreciation from Rs. 9.8 crores in Q1FY17 to Rs. 11.6 crores in Q1FY18 was offset by a decrease in the finance cost from Rs. 9.6 crores in Q1FY 17 to Rs. 7.9 crores in Q1FY18

Net Profit

  • Company's net profit has increased by 3% from Rs. 10.2 crores in Q1FY17 to Rs. 10.5 crores in Q1FY1
  • PAT margin remained stable at 2.5% in Q1FY18 as compared to 2.7% in Q1FY17

Tax rate

  • Company received tax benefit of 80IB in the cheese and whey protein.So it fell under the MAT provision, minimum alternative tax
  • Company also had Ind-AS adjustment, so tax rate has come down to 10% in Q1
  • The company will be in the range of 20%-25% tax rate

Working Capital cycle in Q1

  • Creditors in FY17 were around 300 crores
  • Creditor Days in FY17 was abnormal because in Q4FY17 company received more milk and the milk cycle was extended to two cycles
  • Majorly around 50% amount contributed to the milk suppliers and rest of thecreditors are related to the materials and packing creditors
  • Going forward creditor days will come down in the range of around 40-45 days


  • Company has 3-year CAPEX plan
  • Company has taken 150 crores from the IPO from which 85 crores have already been deployed
  • Remaining 60-65 crores and around 100 crores from internal accruals
  • So over the next 3 years, company will have approximately 150-175 crores

Strategic Focus Areas

  •  Priority area identified was supply chain strengthening and distribution expansion with Focus on Freshness
  • Towards this endeavour Parag Milk Foods is working with Vector Consulting

Vector Consulting

  • Vector Consulting, has expertise is in two parts:
  • One is the backend in terms of the supply chain in logistics
  • Second is the frontend in terms of distribution expansion
  • Primary focus of hiring consultant is improving the freshness of the products in the marketplace and ensuring the width of distribution
  • One of the mandates on the distribution expansion is more than doubleHoReCa direct customers
  • Vector consultants are working on fixed plus variable pay

Consumer Product Portfolio

  • Growth rate on the consumer product portfolio is around 8%

Cheese business

  • Production has increased by around 50% but still the revenue is not getting reflected
  • Cheese business particularly export and institutional business because of hardening of Indian rupee and the increase in pricing in domestic market company lost business for a temporary period of 2-3 months
  • Overall sentiment of the consumer was low and hence there was an offtake which was slightly lower in the QSR segment which has led to decline in revenue

Cheese capacity

  • Cheese capacity per day in terms of tonnes ramped up from 40 to 60 in Q1 of FY18
  • Current capacity utilisation of 60%-65% (around 50 tonnes) of maximum utilisation of 85%
  • Dairy industry would run at an 85% installed capacity i.e.60 tonnes per day


  • New Paneer plant is now operational and the distribution expansion across the country is under progress


  • Early signs in July month, show a decent pipeline and re-stocking
  • Company has factored in the GST rates as end June and took a marginal price correction of Rs. 10 in the month of July on the ghee MRPs

Farmers strike in Maharashtra

  • Maharashtra saw the farmers strike which impacted liquid milk dispatches

Price increase

  • Post the price increase in Q3FY17, company hasn’t taken any further price increases
  • There has been some impact on cheese institutional and exports sales due to price correction
  • Overall for milk products the price increase was in the range of around 12%-13%
  • Company is looking at a little softening of prices going forward in Q3 particularly
  • The price decrease is going to happen post September - post Diwali purchases are done and those will last only till end of January or February
  • In terms of quantum there won’t be much decrease as annualized rate of inflation y-o-y is 5-6%
  • Company does not have plans to discount its products
  • Once they into a direct HoReCa customers, service becomes more important than the pricing
  • Pricing is only confined to large customers who have a direct relationship


  • Parag Milk Foods will now be able to take input tax credits for excise on packaging material, service tax & octroi, etc.
  • GST will drive operational efficiencies by reducing the complexity of inter-state transportation and uniform law across states
  • Company witnessed pre-GST destocking in the last two weeks of June, which impacted growth during Q1
  • Trends post 1st July, indicate that there was no major loss of consumer sales and the pipeline filling at retail level is getting back

PAT Guidance

  • PAT Guidance of 5% given in Q4FY17 does not include impact of GST
  • Company normally gets mega project incentive around 6.5 crores
  • Q1FY18 PAT is 10.5 crores and in coming quarters because of festive season and GST benefits PAT will increase beyond 10.5 crores

Project with Government

  • Company has got the in-principle approval and are now at the last stage of compliance
  • Mega project incentive may be effective from July-August and will continue for 7 years

New product performance

Avvatar (100% absolute whey protein)

Parag Milk Foods Avataar.png
  • Company is now into the expansion mode with a plan to cover all major markets with direct distribution and with the e-commerce business
  • Company received certification from Informed Sports which certifies Avvatar being free from any abusive substances

Avvatar product line

  •  Avvatar plant has got 3 product lines
    • One is the basic product which is WPC
    • Second is next level of filtration, it comes to a grade which is used as ingredients in basic foods and pharma
    • The final nano-filtration stage gives the product which is useable as the direct consumer product - Avvatar
  • If company produced only Avvatar and not produced the mid level intermediate, they would be able to produce 4 tonnes per day
  • Whey is a by-product of cheese manufacture and is linked with demand for cheese production

Marketing strategy for Avvatar

  • Advertising spends are going to be disproportionately higher than standardized budget over the entire consumer product business
  • The marketing campaigns will focus on key influencers like Gym trainers, nutritionists and dieticians apart from digital plans
  • A large proportion of company’s initiatives in terms of campaigns are going to revolve around influencers and to bring the brand alive in the consumer’s mind throughsocial media
  • Company has started initiation of discussions with sports authorities and that will be the next level of getting into a direct touch with the sportsman and the consumers of the product

Mango drink – Slurp

Mango Slurp Q1FY18.png
  • National expansion plans will be implemented within next two quarters
  • USP - made from 100% alphonso mango with a dash of milk
  • Marketing campaign revolves around “Yeh Aam, Aam Nahi” and will be exemplified across digital, consumer sampling and point of consumption stores

Operariinal efficiency in the Palamaner plant in South India

  •  The utilization of the Palamaner plant with respect to the UHT linesis about 55% to 60% and hence company hasenough capacity to expand in that sense
  • In order to ensure efficiency and optimum utilization of the UHT plant, the endeavour was of getting into newer product lines and one of them was Slurp

Average daily procurement of raw milk

  • On an average, company procures around 12 lakhs litresper day
  • Company has an installed milk processing capacity of 20 lakhs litre per day procurement capacity
  • Q1FY18 there was little bit blip due to the farmer strikes in the June and the May month
  • Procurement was around 5% lower than that in the Q1FY17 around 10.5 LLPD

Human Resource

  • Company short-listed candidates for CFO position and are currently in the process of finalizing a suitable candidate for the position

Organization Strategy as an FMCG company

  • Company intends to have very well defined personality for each of the brands
  • In terms of brands company has BTL initiatives, consumer sampling, bringing alive the brand at the trade level
  • These activities constitute a pretty high spend of close to about 6% of revenue
  • Net spends on the brand is close to about 8.5% - 9%
  • Once company has a well-established distribution model and strong trade connect, A&P spends will be in the range of 3.5% to 4%
  • Within major 3-4 brands, the marketing campaigns are strategically well designed to support a large amount of the money beyond the new brand. For example, once Avvatar gets established over the next 12-18 months, some other category comes into focus which will have a disproportionate spend and the other three will have a sustenance kind of a support

New product launch for future

  • From the next 3-years horizon, company will not be adding any new brand
  • Category expansions may happen, but there will not be a new brand
  • So any of the new category we get in will either be under the Go, Gowardhan or the Avvatar brand
  • Company doesn’t have plans for any new brand acquisition

Pride of Cows portfolio

  • Business model which has been designed behind Pride of Cows is by invitation brand
  • ‘Pride of Cows’ will continue to focus on the mainstream milk and it will remain at that level of milk
  • Company might add a couple of categories but they will still fall under the by invitation home delivery model

VISI coolers

  •  Increase in the number of VISI coolers deployed in the market would me multifold – 5x

Season time for business

  • Starting from August till end January is a typical season time for the business

Business in geography

  • Parag Milk Foods started operations in Manchar,Maharashtra
  • Over a period of time, company strengthened themselvesin Maharashtra and then in Gujarat and the Western region as a whole
  • In an endeavour to become a pan India company, they have distribution across the country
  • In the urban centers of the country, they have a distribution and presence felt in most of the markets
  • Company has expanded well in the North India and in parts of East India
  • In geographies like North East and states like Sikkim, company is pretty much strong because of well identified distribution pockets
  • Over the next 18 to 24 months, company’s endeavour is to cover the balance part of East and also get into South with a focus

Cow Ghee category

  • Company is a pioneer in the cow ghee category with a clear focus on cow’s ghee benefits
  • In the beginning of the year, company were awarded the most trusted brands for Gowardhan Ghee by Brand Trust Report and this was for second consecutive year
  • Company had number one ranking in 2016 and again in 2017 and in the overall brand rankings which cover all the categories, company has moved up 132 launches from rank 435 last year to 303 this year

Future outlook of Parag Milk Foods

  • The company is well poised in strategic growth journey and is on course to becoming an FMCG Dairy Company with a focus on health and nutrition
  • With the pan India distribution network, several strong brands, a pipeline of value added innovative product and a unique positioning of 100% cow’s milk, company is confident of a sustained mid-term and long-term growth


Avanti Feeds Q1FY18 Concall Summary

Avanti Feeds.png

Financial Highlights

Avanti Feeds Q1FY18 Financial Performance.png
  • The gross income from operations for Q1FY18 was Rs. 1004.35 crores compared to Rs.726.22 crores last year showing a growth of 38.30% y-o-y
  • The PBT and exceptional income during Q1FY18 was Rs. 226.46 crores against Rs. 74.98 crores last year showing a growth of 202.03%
  • The revenue from feed business during this quarter stood at Rs. 881.28 crores compared to Rs. 631.24 crores, exhibiting a growth of 39.61% y-o-y
  • The profits from the feed business rose to Rs. 210.15 crores in Q1FY18 from Rs. 67.80 crores last year, showing a y-o-y growth of 209.95%
  • The reason for this increase was due to increase in sales volume and reduction in raw material prices
  • The company hedges its dollars and thus the variance in dollar rates does not affect margins much
  • Globally, India is the number one exporter of shrimps with 485,000 tons of export
  • The company recorded a 41000 tons increase in Q1 compared to last year

Processing and Export Business

  • The shrimp processing and export business has been transferred to Avanti Frozen Foods Pvt. Ltd.
  • GST on feed sales is NIL and fishmeal, soyabean meal and wheat flour are exempt from GST, the GST on spares and other inputs is also insignificant
  • With consistent maintenance of high quality feed, technical support to farmers and improvement in feed technology the company is confident of utilizing full feed capacity
  • The company also hopes to fully utilize shrimp processing capacity, grow in exports and maximize returns with support of Thai union
  • The present feed manufacturing capacity is 4.25 lakh tons, the company is going to add 1.75 lakh tons and make it reach 6 lakh tons
  • Per kg fish meal prices ranged from Rs. 70-80 for Q1
  • The checking of consignments for Indian shrimps has been increased from 10% to 50% by the EU

Business Highlights

  • The first crop of shrimp culture started a bit early this year and a healthy growth of 10%-15% is expected because of increase in area of culture, favourable climatic conditions and conversion from fish to shrimp culture
  • Avanti keeps one month of stock for indigenous products but increases the stock to two or three months of stock in the new crop season
  • The present in-built capacity is more than 20 lakh tons feed and the company is able to utilize 100%-110% due to quality and technical support to farmers
  • The seasonality of shrimps has reduced and farmers are stocking one crop after the other but there would still be relatively less material in the non-peak season
  • The raw material prices have come up as the government increased the MSP on soya by 10% and GST has been levied on soya seed, these are low compared to Q2FY17 but higher than Q1FY18
  • Shrimp export prices have an average realization of $5 to $5.5
  • The market share of the company in the feed business has increased by 4%-5% to 43%-45%
  • The feed conversion ratio for the company has increased over the last one year and a half and is presently stable at 1.5 to 2.5
  • Although the industry has a sustainable growth rate of 10%-15%, the company is achieving 2.5 to 3 times the industry growth rate/This is because the company provides a FCR ratio of close to 1.2-1.3 against others average of 2
  • The feed sales increased to 1,38,532 MT in this quarter against 96,706 MT in the same quarter last year, registering a 43.25% growth
  • The trial production at the new plant hat Yerravaram has started and commercial production is scheduled to start by the end of this month
  • The company has established its marketing network in the US and would be helped by the Thai Union
  • The company has got international standard quality products so the demand would not exceed capacity
  • The tailwinds of lower raw material prices were present in Q4 last year and continued in Q1 this year
  • For the feed business, 10%-12% is a sustainable margin, whereas, for processing, 5%-7% is a sustainable margin
Indias Shrimp exports Q1FY18.png


  • The new shrimp feed at Bandapuram, West Godavari District of Andhra Pradesh commenced production from August 2016 and a further expansion of plant is undertaken to add 1,75,00 MTA capacity after which the total capacity of all units put together would be 6,00,000 MTA
  • The company has completed implementation of new processing plant with capacity of 15,000 TPA at Yerravaram, East Godavari District in addition to current capacity of 7,000 TPA
  • Avanti Feeds  has purchased land for the hatchery and is expecting few clearances to come in a month’s time and expects production to start by next year July-August
  • Thai Union would help with technology and in marketing of products
  • The company expects revenue potential of about Rs. 600 crores from expansions and the new plant
  • The company expects Rs. 50 crores of CAPEX expenditure in the next four to six months
  • Rs.75-80 crores of CAPEX would be required For 1 lakh feed capacity greenfield plant for 1 lakh feed capacity greenfield plant, 

Future Guidance

  • Presently the ratio between feed revenue and shrimp export revenue is 87:13. The company hopes to make this ratio 60:40 and emerge as a billion dollar company by 2022
  • The company is setting up capacities and going for more value added products to improve margins and focus more on exports
  • The company expects 10%-12% margins for the value added products
  • For shrimps, the first quarter represents the peak season, then sales dip and come back up again during the third and fourth quarters
  • For the export business, the company is expecting a capacity utilization of 30% and expecting a revenue of Rs. 300-350 crores
  •  The company expects to earn Rs. 3500-4000 crores of revenue from six lakh tons of sales volumes of shrimp, in three to four years
  • The company expects the ROC of the shrimp processing business to be much lesser than feeds
  • The production of frozen foods, the capacity for which is 15000 MT, will start by Q2FY18


Advanced Enzyme Q2FY18 Concall Summary

Advance Enzymes.png

Financial Highlights

Advanced Enzyme Q2FY18 Financial Performance.png
  • AET had an uptick in the consolidated sales, up 9% to 986 million vs 904 million in Q2 FY’17.
  • Consolidated EBITDA for Q2 FY’18 stands at 414 million as against 487 million in Q2 FY ’17, down 15%.
  • The net profit in FY ’18was 387 million in the first half as compared to 569 million in the first half of FY’17.
  • EBITDA margin is about 40% in H1 FY’18 as against 52% in H1 FY ’17.
Advanced Enzyme Q2FY18 Revenue Breakup.png

Business and Operational Update

Advanced enzyme Q2FY18 Revenue Split.png
  •  AET also had the acquisition of Evoxx Technologies in the first half.
  • 10-15% growth rate is expected during the entire year.
  • Gross margins in Q2FY18 were only 75% compared to 1stQuarter of FY '18 gross margins of 80%.
  • The gross margin is up by 65% Y-o-Y, where other expenses are also up by 65% in 1st quarter and employee cost was up 24% in 1st quarter.
  • Average EBITDA margin last year was above 47-48% across the 4 quarters, whereas for this year the average EBITDA is around 40%.
  • In first-half there was negative 6% growth.
  • Evoxx has been a negative contribution to EBITDA of about 2 crores.
  • Excluding Evoxx, Revenue growth from geographical perspective for Q1 and Q2 have been 3%.
  • Overall EBITDA growth rate from Europe would be forecasted around 8% to 10%.
  • India Business of AET has grown and the Revenue coming from India will grow comparing Q2 FY17 to FY18
  • On Y-o-Y basis, the top client contribution remained similar, 27 crores.
  • The gross profit (Net sales minus raw material cost) is showing a year on year decline.
  • Decline in gross margin is due to mix effect instead of top customer. It is related to currency loss of 4.1%.
Advanced Enzyme Revenue Split H1FY18.png


  • Acquisition or setting up a subsidiary in palm in Malaysia to establish itself as a global player and to establish its office in the south-east Asian market.
  • 10% to 15% annual guidance in the next 2 quarters will increase margins.
  • The U.S. business has been driven by top-end customer.
  • Established technical support team in the Malaysian office, hiring 5-10 hard core technological people for the same.

Future Guidance

  • Approximate topline guidance for Q3FY18 quarter is 380 to 400.
  • Projected full year margin will be in the range of 40-45%.
  • Target achievement is difficult to predict, as the year sales target is 380 Crores to 400 crores FY18, but till now AET has covered only 172 Crores, so the remaining 210 crores has to be covered in the next 2 quarters. 


Trident Q4FY17 Concall Summary


Financial Highlights

Trident Q4FY17 Financial Performance.png

For Q4FY17

  • Net revenues stood at Rs. 1330.1 crores, up by 36% compared to Rs.978.2 crores in Q4FY16.
  • EBITDA improved by 27.3% to Rs. 262.1 crores translating to EBITDA margin of 19.7%.
  • PAT grew by 63.6% to Rs. 99.7 crores against Rs. 60.9crores in Q4FY16.
  • PAT, including comprehensive income, up by 50.8% to Rs. 91.7 crores.
  • Outstanding loans of Rs. 132 crores repaid including high cost debt of Rs.68 crores.
  • Segment-wise Performance
  • Textiles Segment
  • Revenues up by 40.1% at Rs. 1055.8 from Rs. 753.5crores in Q4FY16, YoY.
  • EBITDA was up by26.9% to Rs. 180.1 crores; EBITDA margins stood at 17.1%.
  • Paper Segment
  • Revenues up by 3.5% to Rs. 225.4 croresfrom to Rs. 217.8 crores in Q4FY16.
  • EBITDA sharply up by 28.1% to Rs. 82 crores;EBITDA margins of 36.4%, up by 699 basis points YoY.
Trident Geographic Revenue Breakup Q4FY17.png

For FY17

  • Net revenues increased by 29.3% to Rs. 4839.3 crores.
  • EBITDA Improved by 29.9% to Rs. 991.9 crores translating to EBITDA margin of 20.5%
  • PAT stood at Rs. 337 crores, up by 39.1% compared to Rs. 242.3 crores in FY16
  • PAT stood at Rs. 337 crores, up by 39.1% compared to Rs. 242.3 crores in FY16.
  • PAT including comprehensive income, improved by 33.6% to Rs. 331.7 crore.
  • Net Debt stood at Rs. 2714.5 crores as on 31st March 2017, down from Rs. 3420.8 crores as on March 31, 2016.
  • Net Debt to Equity Ratio stood at 1.0 against 1.4 as on 31st March 2016.
  • Free Cash Flow stood at Rs. 749.4 crores for FY17.
  • Repaid a total of Rs. 576 crores in FY17 including Rs. 227crores of high-cost debt.
  • Long-term debt as on 31st March 2017 stood at Rs. 2048 crores, of which 75% (Rs. 1552 crores) is covered under the TUF scheme.
  • Segment-wise Performance
  • Textile Segment
    • Revenues stood at Rs. 3864.1 crores, up by 34.2% YoY.
    • EBITDA increased by 31.9% to Rs. 690 crore s; EBITDA margins stood at 17.9%.
  • Paper Segment
    • Revenues up by 5 % to Rs. 872.4 crores.
    • EBITDA u p by 25.7% to Rs. 301.9 crores; EBITDA margins at 34.6%, up by 569 basis points YoY.

  Capacity Utilization

Trident Capacity Utilization Q4FY17.png
  • For Q4, Yarn operated at 96% utilization; Bath Linen at 54% utilization; Bed Linen at29% utilization; and Paper at 88% utilization.
  • Full-year rates are 93% for Yarn; 50% for Bath Linen; 29%for Bed Linen; 89% for Paper.
  • In FY 2018,expected Bath Linen utilization is 55%-60%; Bed Linen utilization is40%-50%.


  • FOREX realization was Rs 40 crores for Q4, highest ever in any quarter.
  • Hedging is done with 4-5 months of hedge position;30%-40%, and open at 50%-60%.
  • India's export share to U.S. is right now around 40% in Towel and 50% in Bed Sheet.
  • Company market share of towel in U.S. for the calendar year 2016 is around 13%.

 Income Distribution

  • Other income of Rs. 49 crores in Q4.
  • FOREX gain is Rs. 40 crores.
  • Interest income is about Rs. 5 crores from the customers and vendors
  • Other small amounts are insurance claims and others.
  • EBITDA Margin guidance for FY18 is 18%-22%.


  • Total gross borrowings are Rs. 2,852 crores; net borrowings are at Rs. 2,714 crores
  • Out of the total borrowings, TUF based loan is Rs. 1,552 crores and short-term borrowing is Rs.804 crores.
  • Scheduled repayment for FY18 is about Rs. 300 crores.However, expected repayment is about Rs. 400-450 crores.
  • Average cost of debt is around 4%, but Rs. about 500 crores still cost 10%-10.5%.

 Home Textile Segment

Trident Home Textile Segment Q4FY17.png
  • Cotton inventory dipped by Rs. 100 crores as compared to last year.
  • Internal consumption for Yarn is 35% for FY17, and 37% for Q4, expected to be 40%-45% in FY18 due to utilization improvement.
  • Breakeven at EBITDA level for Bed Linen expected in Q2FY18 when capacity utilization is 40%.
  • For Bed and Bath Linen, CAGRwas 3% to 4% in the Europe.
  • CAGR in US for last 4-5 years was 4% to 5%.
  • In FY 2018 expected CAGR is 3% to 4% in U.S. market.

 Paper Segment

Trident Paper Segment Q4FY17.png
  • Paper price increase in Q4FY17 is 4%.
  • Upgradation of Paper machines can be expected in the coming quarters with CAPEX of about Rs. 100-200 crores spread over 2-3 years.
  • Effective tax will be around 27% - 28% in FY 2018 also.
  • Ratio of branded vs Copier segment in Paper business is around 50%-55%.


  • No expansion is expected for any of the businesses
  • The focus would be on debottlenecking of Bath and Bed Linen, costing about Rs. 50-100 crores for FY18.


  • From FY16 and FY17, the Yarn realizations has improved by double-digit.
  • Bath Linen is more or less flat in FY 2016 and FY 2017.
  • For Bed Linen, this is the first year of operations, with an improving quarter-on-quarter.
  • In a 5-years period, the Towel realization has been improved significantly, currently at 70% - 80%.
  • 2 years back market share in U.S. Towel exports was around10% - 11%, now up to 13% for the calendar year 2016.
  • For India, market share in U.S. market is around 40% to 42% in Bath Linen and 50% to 52%in Bed Linen


Gulf Oil Lubricants Q2FY18 Concall Summary

Gulf Oil.png

Financial Highlights

Gulf Oil Lubricants Q2FY18 financial performance.png
  • EBITDA margins have gone up to 19.2% which are higher than the last quarter.
  • EBITDA has reached 62 crores.
  • Gross margin is near about 49% and had improved by 1.75% over the June quarter.
  • QoQ and YoY, an increase of 250 basis points in the margins.
  • A&P expenses has gone up in this quarter due to market conditions from 6-7% to 7%.
  • On the balance sheet Gulf is debt free and is cash positive despite the dividend payments which came in September.

Operational and Business Updates 

  • Q2 has been the best quarter for Gulf oil.
  • August and September were good months for Gulf.
  • Overall, a double-digit volume growth is achieved in the quarter.
  • 13% growth in volume, supported by the three main segments.
  • Margins have also improved more than 150 basis points.
  • Diesel has also gone into high single digit growth from low growth rate previously.
  • Personal mobility growth was 20%.
  • Q2 sales of oil has been 22500 Kilo-litres.
  • Industry growth of gulf oil has been about 2-2.5%.
  • Delta change is certainly in the three segments, the B2C channel sales.
  • 10% of the volume growth is tracked without base effect of institutional order.
  • Motorcycle and Car segment both have shown a good growth of more than 20% as both come under personal mobility.
  • PCMO sales will take some time as the campaign has just started in Aug-Sep.
  • PCMO has bounced back to double digit growth after the hit from GST in Q1.
  • The base oil came down from the peak of June-July till October and has been stable around 3%.
  • Bazaar growth has been 2-2.5% overall.
  • Getting an additional capacity of 40000-50000 tonnes without any extra fixed cost of the impact on P&L.
  • Personal mobility contributed 22-23% which was about 18-19% MCO and 4% PCMO. Gone up by about 2% and the balance diesel engine oil is about 36-38%.
  • Automotive industry generally tends to be 18-20%.
  • All these combined factors have led to this Rs.7 to Rs.8 of sales realization.


  • Gulf has continued to invest in its brand and has also launched campaigns for the passenger car motor oils as well.
  • Gulf has launched a Fan Academy for Manchester United, to leverage its global properties.
  • Chennai plant is almost operational where  most of the equipment and machineries are in the final stages of installation. The company is prepared to start the production in this plant from Q3.
  • CAPEX apart from the Chennai plant has been around 4-5 crores only and one can expect similar CAPEX in the next quarter as well.
  • B2C business and OEM dealership has provided with growth in the quarter.
  • Personal Mobility, OEM related businesses and industrial lubricants had been the three main segments for Gulf which served with huge benefits.
  • Demand is also increasing except the infrastructure segment.
  • Margins have improved because of better realization, pricing distributions and due to the B2C/B2B mix of Gulf, which has been changed from 67/37 to 65/35. As, personal mobility also sits in the B2C.
  • Increased visibility in metros.
  • The company is looking to increase sustainability by improving the mix between the B2B and B2C mix, it is also looking to grow margins and volume growth.
  • Personal mobility should grow faster and margins should expand.
  • Gulf has expanded its business to new territories with its OEMs like Bajaj and Mahindra

Pricing strategy 

  • Price changes take a lag time of about 2-3 months.
  • To take care of the lag effect of the crude oil the company carries inventory which they keep on slightly increasing or decreasing between 10-15 days extra wherever they see an upward trend.
  • The company also negotiates prices for large quantity purchases, as additives are added in and Gulf is able to get the scalability.
  • Maintain an inventory of about 45-60 days for base oil because 70% of this base oil is imported.

Market Share:

  • Share in B2C or bazaar market has been 7.5%.
  • Share in motorcycle segment is 9-10% and in passenger car is less than 5%.
  • South India volumes are close to 30% of overall volumes.Double digit at least Gulf is delivering CAGR volumes for last 7-8 years.
  • 40000 tonnes additional capacity will be able to fill up going forward. Which can be met by shifting volumes, gulf can reach 60% capacity from Chennai and from there it will be ramped up.

GST Impact

  • GST has been a challenge for the company.
  • The most impacted segment due to GST in Q1 has been PCMO. It was a high value product and since the differential was high.


Infibeam Q2FY18 Concall Summary


Company updates

  •  Infibeam operates a business model about product platform infibeam.com and services platform, which is contributed to the Infibeam Web Services.
  • Infibeam has resumed the operation of the newly setup registered incorporate office at GIFT City located in Gandhinagar.
  • Gandhinagar office is spread across nearly half a million square feet of area. This location houses all the company’s data infrastructure.
  • Infibeam has added Adani Wilmar to their group and merchants to their portfolio.

Financial Highlights

Infobeam Q2FY18 Financial Performance.png
  • Consolidated Q2 FY2018 revenue grew by 76% Y-o-Y to Rs.2016 million, the increase in revenue was driven by robust growth in Infibeam Web Services.
  • Infibeam Web Services revenue grew 264% Y-o-Y which continues to maintain a very high growth momentum
  • The consolidated EBITDA of the company for Q2 FY2018 grew by 90% Y-o-Y to Rs.404 million headed by strong growth in service segment
  • The PBT of company has grown by 110% to Rs.286 million in Q2FY2018 from Rs.136 million in Q2 FY2017
  • PAT of the company has grown by 76% Y-o-Y to 415 million
  • The EPS of the company has increased by 132% Y-o-Y to Rs.35.
  • The product segment revenue was Rs.794 million
  • The service segment revenue increased by 264% Y-o-Y to Rs.1223 million especially on account of the large transaction volume processed on the platform and addition of new merchants.
  • The total numbers of transactions processed on the platform where the company earn commission in Q2 of FY2018 were 26.6 million
  • The total value of payment that is processed during the Q2 of FY2018 was Rs. 4579 Crores
  • The number of merchants increased Y-o-Y by 34%
  • The growth margins of the company have improved to 4%.
  • Product business now contributes to less than 40% of the overall revenue; this was earlier 70% last year.
Infibeam Q2FY18 Business Segment Performance.png

Infibeam Web Services  

  • The company has focused on building up the Infibeam Web Services portfolio.The margins on the web services segment are 38%.
  • Infibeam Web Services contributes 61% in Q2 FY2018 compared to 29% in Q2 FY2017
  • The company has integrated the platform with payments with logistics with other value-added services to drive demands to become a one-stop solution to the clients.
  • Infibeam has UPI integrated. They have connected to the mPSI switch and all wallets integrated into the system
  • The company uses a lot of AI component in each of their services. 


CC Avenue.png
  • The company offers payment solutions through their fully owned subsidiary CCAvenue.
  • CCAvenue is the payment aggregator. It is one of the largest direct debit card engine, CCAvenue powers more than 80% of the pay e-commerce merchant.
  • The payment platform can process across 27 international currencies, and it has got all the new age mobile payment like IMPS, EMI and all is integrated.
  • CCAvenue offers more than 240 plus payment provider options in India
  • CCAvenue did not have a significant presence in utility payments.
  • Revenue of CCAvenue last quarter was about Rs. 50 Crores and this quarter it is about Rs. 53-54 Crores.


  • The company has a strong logistic solution platform Ship droid to manage logistics for e-commerce industry player.
  • While logistic is not revenue generating for now but it will generate revenue in coming quarters
  • The company plan to expand additional 75 centers within the next few quarters at an estimated cost of Rs. 37.5 Crores 

.OOO domain

OOO Opportunity.png
  • The company will set up a top-level domain.OOO
  • .OOO top-level domain registry has a significant competitive advantage in the acquisition of merchant strategy.
  • The company intends to leverage the.OOO domain registry to attract additional merchants to their platforms, which will be a very cost-effective merchant acquisition strategy. 
  • The cost of managing the .OOO domain for the year has been brought down to a fraction from current level.
  • The company have not announced the price of .ooo domain yet, but it will be much lower than a dot-com


  • Infibeam has evolved from being a marketplace to mature Technology Company in the last ten years. 
  • The company is focused on offering cloud-based full-suite e-commerce platform, the small basic businesses, SMEs, large enterprises as well as recent government organizations.
  • They have scaled their business from being India focused on global
  • They developed multiple languages capability, multiple currency support, multiple logistics company integrations as well as many other capabilities to power e-commerce across the globe.

Government eMarketplace and Bharat Bill Pay

  • Infibeam has engaged in the Government eMarketplace project, which is meant for central government procurement,
  • It is estimated that procurements from GeM can be as high as hundred billion dollars a year for the central government.
  • Government e-Marketplace has already had signups from 15 States which will also start procurement on GeM
  • According to gem.gov.in, there are 40,000 sellers with nearly 2.5 lakh products over more than 950 product categories with more than 1.2 lakh orders that have already been placed and total transaction of more than Rs. 2000 Crores.
  • The company will charge 0.5% as transaction fees. Infibeam’s share of the per transaction would be 6 to 12 bps.

International market

  • The International market for Infibeam is small; there is very large potential in the international market.
  • The Middle East is the largest geography for the company. They have started their service in US and Europe as well.
  • Saudi telecom has become an aggregator as well as a user of the company’s framework and the platform.
  • The revenue contribution from international market is about 12% to 13% this quarter.


Aegis Logistics Q1FY18 Concall Summary

Aegis Logistics.png

Financial Highlights

  • Total revenues for Q1 areRs. 856 Crores versus Rs. 739 Crores, 15.8% growth on YoY basis.
  • Total segment EBITDA for Q1 isRs. 66.8 Crores versus Rs. 56.3 Crores, 18.7% growth on YoY basis.
  • Profit before tax isRs. 49.1 Crores versus Rs. 38.6 Crores, 27.2% growth on YoY basis.
  • Profit after tax for the Company isRs. 46.8 Crores versus Rs. 31.7 Crores, 47.6% growth on YoY basis.
  • Profit after tax after all minority interest isRs. 40.4 Crores versus Rs. 27.5 Crores, 47% growth on YoY basis.
  • Q1FY18 is steady in terms of financials but in the second half FY18 from Q3 onwards company expects a steep jump in profits as the new projects like the Haldia LPG terminal will be fully operationalized.

Liquid Terminal Division

  • The revenues for quarter one areRs. 42.7 Crores versus Rs. 37.6 Crores, 13.5%growth on YoY basis.
  • EBITDA for Q1 for liquid terminal division isRs. 27.9 Crores versus Rs. 21.1 Crores, 32.2% growth on YoY basis.
  • The growth driver is the new capacity which is commissioned in Haldia, which is helping to boost the profits.
  • Other terminals are doing well with the exception of Pipavav,which is still reasonably soft but Q1 FY 2018is better than Q4in FY 2017.
  • Incremental increase in EBITDA in the liquid terminal division of 32% mostly accounted for by the very good performance of the new capacity in Haldia.

Gas Division

  • Revenues for Q1 areRs. 813.3 Crores versus Rs. 701.7 Crores, 11.6% growth on YoY basis.
  • EBITDA for gas division isRs. 38.9 Crores in Q1 versus Rs. 35.1 Crores, 10.8% growth on YoY basis.
  • LPG throughput volumes in two terminals in Mumbai and Pipavav, in Q1 is 301.5 thousand metric tonnes versus 278.6 thousand metric tonnes, 8%growth on YoY basis.
  • The reason behind not so spectacular growth is company not yet got Haldia coming through which should be coming through in Q3.
  • Sourcing volumes for gas is also up 10% on on YoY basis.
  • AGI sold in Q1 is 232,612 metric tonnesversus 211,371 metric tonnes, 10% growth on YoY basis.
  • Packed LPG Cylinders business is basically static, 2,946 metric tonnes in Q1 versus 2,927 metric tonnes, YoY basis.
  • Bulk industrial sales of LPG industrial distribution is very good in Q1 as  it is 8,836 metric tonnes versus 5,231 metric tonnes, 69% growth on YoY basis.
  • Auto gas is 6,204 metric tonnes in Q1 versus 5,763 metric tonnes, 7.7%, growth on YoY basis.
  • Mumbai debottlenecking is done to the extent of one part, which is the Uran pipeline connection, company completed last December nine months ago.
    • Company expected Chakkan pipeline to be ready by October 2017 but HPCL says that now it is delayed up to the March 2018.
    • Once  it is completed (expected in next financial year), it is expected that HPCL will start using this pipeline facility and cutting down road traffic.

Capex And Expansion Plans

  • New capacity in Haldia Phase II which is 35,000 kiloliters will be completed in Q1 of FY2019
  • New capacity in Kandla 100,000 kiloliters, will come on stream in Q3 and Q4, which will boost the liquid terminal revenues in the second half of the year.
  • For gas capacity, company is adding another 10,200 metric tonnes of LPG capacity in Pipavav.
  • Half of this expansion is completed i.e. three spheres of the six spheres are completed, the balance three spheres will be completed by the end of this September ’2017.
  • This expansion will lead to exponential growth in revenues from Q3 & Q4.
  • LPG Terminal Projects
    • Company is working on the next cycle of LPG terminal projects after Haldia.
    • The company is working on at least two LPG projects going forward and it is reaching a stage where company is getting ready to probably start work .
    • It is expected to put these LPG projects before Aegis board very soon, possibly in next board meeting.
    • Company is very near to signing its next LPG project.
    • Next project is still a little further away as company is still doing some commercial negotiations.
    • Company is making good progress on those next two projects and it will bring it to the board of Aegis for approval and after that details like of size of capacities, location etc will be shared, but it is for the future earnings call.
    • Company has received a bulk of the environmental permissions already for the said two projects
    • Company has already identified three possible anchor customer for the new LPG projects.
    • For new projects company is looking for pipeline connectivity similar to Haldia and also for rail & road connectivity.
    • Working with a public sector client for gas project in South India.

  • LPG Bottling Plant in Haldia

    • Though the Haldia project is a bit delayed but company has received in written from HPCL that HPCL is willing to use Hadldia facility asap.
    • Company has not yet been able to get a sourcing agreement and throughput which will be done at Haldia as HPCL is concernedthat they have not released the tender for the supplies for Haldia.
    • Throughput step up jump from the coming quarters will be much more than the sourcing jump.
    • In The Haldia Probject Company’s subsidiary has been financed through loans by the holding companies so once the subsidiary company issues new shares and gets the money from the JV partner ITOCHU it will be the used to pay back the loans of holding company so there will be no tax effect
    • For Haldia LPG project, the mechanical completion is done and a few days ago company started the commissioning of the project with the gassing up process and that is going on.
    • Though the Haldi a LPG project is delayed, company expects to complete commissioning by end of September’ 2017.

Future Outlook

  • For liquid terminal division, company expects continued steady growth for quarter two and bigger revenues and profits in the second half of the financial year.
  • ITOCHU deal is expected to be completed as per the legal agreements next month in October, they will be remitting a Rs. 250 Crores for that equity stake.
  • Company expects a very large jump in profits when the new projects of the Haldia LPG terminal, the Pipavav, LPG terminal, the Kandla liquid terminal, Haldia liquid expansion etc., are commissioned in September.
  • HPCL is an anchor customer in Haldia.
  • Company has already identified and reached an agreement in principal with the anchor customer however not yet signed agreement.
  • Since price of petrol is being revised daily, linkage of prices of CP, LPG does not exist anymore. Resulting better margin for auto gas.
  • Provisioning of taxes is low due to implementation of Ind-As and write back of deferred tax.
  • Due to change in income tax rules, change in base year company will see non cash component in the range of 5-6 crores for all quarters of FY 2018.
  • Current throughput at Mumbai about 80000 tonnes a month, expected to grow once Mumbai-chhakan pipeline will be completed. It is expected to grow to 1.3-1.5 million tonnes per year from currently 1million tonnes.
  • As Reliance is planning to replace propane by ethane to there is a change in opportunity for the Aegis and Aegis will propose backup plan to reliance which should be acceptable to reliance.


PVR Q2FY18 Concall Summary


Financial Highlights 

  • Q2 FY 18 revenues Rs 559.5 crore
  • EBITDA for Q2 was about Rs 94.7 crore, which is down by 3% over the last year
  • PAT for the quarter was Rs 24.7 crore, against Rs 29 crore last year
  • Exhibition revenue higher by 3%
  • Company’s average spend per head grew by 9%
  • Advertising revenues up by 10%; estimates of 15% to 18% growth in absolute terms for the next two years
  • LTL growth down by 5%; ticket pricing grew flat
  • Cost increases ~4% on overall cost basis
  • Lower rental cost is due to the input credits the company received on GST
  • Input tax credit is not at risk of the anti-profiteering clause introduced by the government
  • Effective tax rate unchanged
  • Y-o-Y increase of ~16%-17% in terms of content cost or film hire cost
  • Net box office revenues effectively unchanged because earlier govt grants were reduced from net box office figures and shown as other income; this amount is effectively zero versus Rs 11.5 cr in the similar quarter last year
  • Other operating income down by 55%; largely because the tax benefit has gone away
  • Revenues of BluO was about Rs 10-12 cr booked in this quarter

Business Updates 

  • Slightly lower revenue figures
  • No  big films during this quarter
  • Loyalty programme launched recently
  • Film line-up for Q3 seems good with Padmavati, Tiger Zindahai, Justice League and a lot of good regional content films in Tamil, Telugu and Marathi
  • Sale of company’s bluO business completed in this quarter
  • Overall flattish revenue growth over the same quarter last year
  • ~50% of total tickets sold are done through PVR app, Bookmyshow, PayTM, Ticketnew, and other online platforms
  • Apart from vouchers and discounts offered on sites like PayTm and Bookmyshow; PVR will launch PVR privilege, soon, to provide additional benefits to its customers
  • Piracy remains the No.1 problem for the industry


  • Company opened 21 screens in the first half of FY18; another 48 screens in the rest half; maintaining the target of adding 60-70 screens annually
  • Some screens await mall opening in the quarters to come
  • Two to three events done in the quarter
  • Company opened a big screen format – P[XL] in Kolkata
  • P[XL] to be opened in Bengaluru and Mumbai shortly
  • PXL is ~ 1/3rd the cost of IMAX screen; ~2.5-3 years of payback with ticket price charging between Rs 25 and Rs50 premium on PXL as compared to a normal auditorium
  • Medium-term perspective of having 11 screens in all in the next 18-odd months
  • The company was first to launch virtual reality lounge in a mall in Noida, India; five to six additional such screens to come across India

Loyalty programme

  • To give competitive advantage to the company by getting people to consume more at their cinema
  • Short-to-mid-term advantage of the programme- create more stickiness on immediate basis, increase & encourage visitation and LC spending at F&B
  • Long-term advantage in terms of huge competitive edge through establishing direct link with company’s best customers and engage them in a meaningful precise manner
  • Discounts/ redemption benefit on loyalty programme are treated as an expenditure; this treatment is mutually exclusive  from ATP; no impact over ATP
  • The accounting perspective- sales of Rs 200 ticket and Rs30 redemption as a cost

LBET (Local Body Entertainment Tax) and other issues in Chennai (Tamil Nadu)

  • Continuous engagement with the govt; supportive & receptive response from the govt
  • As  an outcome, the company has opened cinemas in the region with usual business, though conversation with the govt continues to find solution to some of the challenges that the company is facing there
  • The company continues to push for zero LBET & to push for non-Tamil language film LBET
  • In case the govt & the various local body would have LBET, the focus would be on having the same LBET for non-Tamil language films as well in the state
  • No other state except Greater Chennai,has levied LBET on ci