Kei Industries Q3FY17 Concall Summary

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Financial Highlights

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  • Net sales were at 716.19 Cr, Operating profit at 77.89 Cr and  operating profit margin at 10.88% in Q3FY17
  • PAT for Q3FY17 is 27.18 Cr and PAT margin is 3.8%
  • Growth of Net Sales growth rate against Q3FY16 is 28% while that of Net PAT against Q3FY16 is 83.03%
  • Net sales in exports in 9 month FY17 is 304 Cr , a growth of 128% against 9 month FY16
  • Net sales through dealer network in 9 month FY17 is 564 Cr , a growth of 9.3% against 9 month FY 16
  • Financial costs margin of 9 month FY17 Is 4.89%
  • The segmental wise revenue breakup is as follows:-
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Working Capital

  • Working capital has moved up in terms of number of days in the EPC division because inspite of whichever contracts gets executed, the retention money has accumulated which gets released once every 3 months which is result in its decrease
  • Working capital days in EPC division=135 days; receivables cycle=90 days
  • Working capital has increased because of completion of projects in Mathura and Bareilly.
  • Company expects the receivables ot come down because of a few big projects releasing their retention money.
  • Roughly 60 cr. of the receivables money is retention money
  • Payables around 482 cr. which is lower when compared to the previous quarter which shows that working capital loan has gone up by 100 cr.
  • However, this increase in working capital loan has not been reflected in the interest cost because of payment of term loans worth 40 Cr
  • Bank borrowing is at 320 Cr of which term loan is 227 Cr , unsecured loan and hire purchase loan=11 Cr while acceptance) comes under creditors) is at 120 Cr
  • Working capital days in cable division is at 90 days
  • Receivables cycle in of 15 days in consumer business indicates that turnaround capital employed is better in the consumer business.


  • In the EPC division, the orderbook is around 2052 cr. With 1700 cr. From UP and 350 cr. From other states mainly Goa, Jammu & Kashmir and Himachal Pradesh
  • The company expects that development will continue irrespective of the election result of U.P. where it has an orderbook of 1700 cr. Which it expects to complete in 2 years. However it cannot predict the direction of order flow after election
  • Company cannot predict how much L1 it is in overall order pipeline but its bids are strong in both IBDS projects and metro projects.
  • The company expects bid success rate to be 15%
  • In EPC division for the third quarter the total order intake was around 500 cr. And for 9 months the total order intake was around 2000 cr. And including the cable division, it comes to 3100 Cr
  • Total execution in the 9 months is 450 Cr including cables  and 320 Cr excluding cables
  • 25% of the 2052 cr. Order book in the EPC division is cable orders
  • Company is targeting a 50% non-UP order book in the coming next 2 years.
  • Most orders in the EPC division are government orders while in the case of cables they are around 15-20%.
  • Company has not yet planned to go into electrical appliances for the next 1 year.

Financial Costs

  • For the 9 month period, the interest on term loan is 17.6 cr., working capital is 20.67 cr., bank charges are 18.59 cr. And processing fees=5 cr. Totaling 92.55 Cr
  • Rate of interest has reduced by 1.5% and interest rate is expected to decrease
  • Company credit rating has improved from BBB+ to A- which can result in a 2-2.5% reduction in working capital demand loan.
  • Company expects credit rating to improve to A in this financial year.
  • The increase in interest cost to 115 cr. Is mainly due to bank guarantee charges which have increased due to order received in EPC division
  • The revision of the interest cost will have its impact from Q4.


  • The debt level has increased mainly because of the increase in working capital and inventory. Term loans have not decreased
  • Total term loan paid in the quarter=40 cr.
  • Total term loan to be paid in the financial year to be 60 cr.
  • Total debt level expected at the end of the year is 600 cr.

Dealer network

  • Company expects to add around 100 new dealers yoy
  • Current number of dealers=1086 with 160 dealers added in the last 1 year
  • Company is opening up in newer areas pan India which result in dealer growth
  • The revenue generated from dealers and distributors accounts to 25% of sales.

Turnkey Projects

  • Profits are not recognized in projects with completion rate<25%
  • In FY16, 12.5% EBITDA margins have been achieved in turnkey projects
  • Company expects the EBITDA margins to improve in the following years.

EHV segment

  • Productivity in this segment has suffered and revenues are at 100 cr. A quarter
  • The company expects that it can achieve a revenue of 250 cr. In the next year
  • The EBITDA margin in the EHV segment is around 15%.

Utilisation Rates

  • Current utlisation rates at Chopanki plant=35%
  • Utilisation rates in Bhiwadi and Silvassa=95%(excluding extensions).

Expansion Plans

  • Company expects a 15% growth in volume which may vary according to commodity prices
  • Company expectsa conservative 15% growth in exports and expects around 400 cr. In exports with competition from China
  • Company sees export growth mainly because of itself getting approved in many utilities mainly from the Middle East(around 50%) which have resulted in good and sustainable growth in FY17.
  • Company has higher exports than imports and is managing its currency exchange risk by maintaining an edge between receivables and payables in forex.
  • The company has a 236 cr. Order book in the EHV segment which has a market of 1500 cr. Which is mainly met through imports because of lack of qualification by Incianmanufacturers and KEI intends to meet these requirements.
  • The company expects to generate revenues around 300 cr. In EHV cables.
  • The company does not have any CAPEX plans set for FY17
  • It has maintenance Capex of 10-12 cr. Every year.
  • Company increases its capacity by 150-200 cr. Every year and expects that current capacities can take care of demand in FY 18