The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Sujit Jain - ASK Investment Managers Limited - Analyst
: Congratulations and complements for the highest-ever turnover like you mentioned. Quick question is on Coal India, a large order that you received,
which will kind of get carried over next 2 years. One presumes that a lot of it would be bulk explosive. Does that mean that because of the tax
change in the mix, the operating profit margins over the next 2 years compare it to you again?
Question: Sujit Jain - ASK Investment Managers Limited - Analyst
: Right. And when I look at the gross margin for Q2, they were kind of depressed. And as we've mentioned, the raw material price inflation would
be passed on to consumers with a lag. Does that mean that eventually our margins will come back to 20% from Q3, Q4 onwards?
Question: Sujit Jain - ASK Investment Managers Limited - Analyst
: Right. That's great. And you have called out INR 29 crores in other expenses as ForEx fluctuation item. If I add that back, ex of that, our margins
could have been higher by 3%, 4% for Q2. Is the understanding correct?
Question: Abhijit Mitra - ICICI Securities Limited, Research Division - Analyst
: Just to understand the nature of the margin drop, 33%, in this quarter a bit more. So in terms of your ammonium nitrate pricing, what is the kind
of escalation that we have seen in this quarter? And also to understand, is just pricing also leading to some amount of volume pushback from the
clients? Are you seeing some element of demand destruction happening also? The reason I'm asking is the sharp increase in working capital also
that we are seeing, which is pulling up your net debt. So some color on this, the upgrade.
Question: Amit Zade - Antique Stockbroking Ltd., Research Division - Analyst
: Maybe just one question on the domestic explosive industry side. I think, correct me if I'm wrong, I think last 4 to 5 years, we have seen this industry
almost in the range of INR 5,000 crores to INR 6,000 crores. And now what do you see this industry moving towards? And within this industry in
specific segments like demand from coal limestone, iron ore or other, if you can break key segments of the industry? And what -- which part of this
industry you are more bullish on and see higher growth traction in the near future, sir?
Question: Amit Zade - Antique Stockbroking Ltd., Research Division - Analyst
: Okay. Sir, the broad breakup of this industry in terms of coal limestone, iron ore and lower infrastructure?
Question: Amit Zade - Antique Stockbroking Ltd., Research Division - Analyst
: Okay, sir. Got it. And sir, another question on our Coal India revenue. So again, 3 class 3, 4 years, we have been in the range of INR 400-odd crores
of plus/minus 5%, 10%. And now we are little less confident of clocking almost -- if you add back bulk detonators, roughly INR 700 crores to INR
800 crores of annual run rate. So we are almost seeing a doubling of -- certainly doubling of the content from Coal India after almost being stagnated
for the last 5 years. So I'm confident on certain of volume with (inaudible)? Or you believe this kind of now that we have this, the next level, so that
it would again maybe stagnate as we deal for a couple of few years and then more go ahead?
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