KEI Industries Ltd Q4 2021 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Naval Seth - Emkay Global - Analyst : Hi. Thank you for the opportunity, sir. A few questions from my end. First, you explained on receivable part that there is close to around INR165 crores, INR160 crores pending as a retention money, which will be released. But this year, somehow, your receivables have not reduced despite of the fact that revenues have declined. So are there payments which are stuck with government authorities and will be released in first quarter of this year? That is my first question. Second, is it the same reason why your capital employed in cable and wire has increased on a year-on-year basis as well? And third, on the dealer additions. So this year, there has been only five new net dealer additions. Now, you have set targets on retail revenue growth and added sales force as well. So any number you would want to add over here in terms of what kind of number, apart from the long-term 10%, 11% CAGR, which is there on dealer addition number as well? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 31, 2021 / 6:30AM, KEIN.NS - Q4 2021 KEI Industries Ltd Earnings Call

Question: Naval Seth - Emkay Global - Analyst : Understood. And my last question is on exports. The order book has fallen this quarter. So any sense how export order book will be built up as you enter the new territories? Or there will be challenges this year also, as we have entered the second wave of COVID, there are travel restrictions? Some thoughts about there also.

Question: Naval Seth - Emkay Global - Analyst : Sure. And sir, do you want to share any progress on your expansion into electrical products, where we are now? Any timelines you want to state?

Question: Naval Seth - Emkay Global - Analyst : Sure. Thank you, and all the best.

Question: Saurabh Patwa - HDFC Mutual Fund - Analyst : Good afternoon, sir. Thanks for taking the questions, and congratulations on the really good number. I just wanted some broad thoughts on the EHV side. So you've been doing really well in the last few years. But I believe now, other companies are also trying to get into this business, specifically, maybe Finolex Cables with -- so do you believe there is increasing competition in this side? Because so far, I think, you were competing largely from players outside India. Is anything changing there?

Question: Saurabh Patwa - HDFC Mutual Fund - Analyst : And second was on the solar and other renewable power side, which you just briefly mentioned. So what kind of product, specifically, we sell there? Or who would be the competitors there? Because that market would expand very fast in the coming years.

Question: Saurabh Patwa - HDFC Mutual Fund - Analyst : So who would be the current -- who will the competitors over there, sir?

Question: Saurabh Patwa - HDFC Mutual Fund - Analyst : Okay. Sir, just one last question, if I can just squeeze in. Any thoughts on the second wave and how it would have impacted? Because there are mixed views from when we speak to multiple companies. Some believe the impact would be larger; some believe it could -- as the lockdown starts opening, easing out, the demand would come in sharply. So your thoughts on the same, sir?

Question: Lavina Quadros - Jefferies India Private Limited - Analyst : Yeah. Hi, sirs, and congrats on a good set of numbers. Sir, just on the debtor side, now that EPC revenues will go down further, retail proportion should rise. Where do you see this debtor number stabilizing in the next two years? Because it's moved up by about 20%, so I understand the upticks of lower EPC revenues. But where do you see that headed?

Question: Lavina Quadros - Jefferies India Private Limited - Analyst : Understood. Sir, on the EHV side, any thoughts on the tender pipeline or bids that are coming up over the next 12 or 18 months? I understood the color that was given --

Question: Lavina Quadros - Jefferies India Private Limited - Analyst : Okay. And sir, lastly, can you give me a split, please, of the interest costs, the breakup?

Question: Lavina Quadros - Jefferies India Private Limited - Analyst : Thank you.

Question: Lavina Quadros - Jefferies India Private Limited - Analyst : Okay, sir. Thank you.

Question: Rahul Agarwal - InCred Capital - Analyst : Hi. Good afternoon, and congrats for decent results, Anil-ji and Rajeev-ji. I had two -- three questions actually. Firstly, on the greenfield expansion, can we have some kind of details, analyze the location land, project finance, and what products we're talking about here? Obviously, I know it's more to do with EHV, LT, HV, but any finer detail possible?

Question: Rahul Agarwal - InCred Capital - Analyst : Got it. So as I understand, LT cables and housing wire has a lot of scope to grow because of capacity. But HT, as well as stainless steel wire and EHV has capacity constraints, is that correct? As of now, I'm saying.

Question: Rahul Agarwal - InCred Capital - Analyst : All right. So --

Question: Rahul Agarwal - InCred Capital - Analyst : So peak sale possible for housing wire was INR1,600 crores; for stainless steel wire, about INR150 crore; and for EHV, about INR500 crore. Is that correct?

Question: Rahul Agarwal - InCred Capital - Analyst : And overall company level, it was INR5,800 crores. Is that correct?

Question: Rahul Agarwal - InCred Capital - Analyst : INR6,500 crores?

Question: Rahul Agarwal - InCred Capital - Analyst : Okay. Got it. And one last thing on capacity utilization. You said cables was about 59% and stainless-steel wire was -- I missed the housing wire number. If you could help me with the capacity utilization.

Question: Rahul Agarwal - InCred Capital - Analyst : Okay. Thank you so much. Best wishes for future. Thank you.

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : Sir, I have a couple of questions. One, for your industry, what is the importance or contribution of power sector as a percentage of total sales, and how does the dynamic changes under the rising solar installations empower versus the conventional, thermal, or wind? Does the cable intensity goes up, and by what proportion?

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : Does the intensity rise for a megawatt of solar project versus a megawatt of thermal project in terms of cable consumption?

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : Okay.

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : Okay. And sir, my second question is, and it links to that debtor reduction to about two to 2.5 months. So one, will the EPC business cap side a certain number in your mind in terms of size? And what will be the net debt figure in '22 and '23 for the company? Considering this reduction in debtor days, change in mix, and I don't know, what is your assumption, EPC business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 31, 2021 / 6:30AM, KEIN.NS - Q4 2021 KEI Industries Ltd Earnings Call

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : And if your indicated number is INR400 crore that we see as total, which you have mentioned in the presentation, after acceptances, what number this INR400 crore should go toward the next two years?

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : My last question, sir, what is the challenge that you are facing in housing wire in '21 for not able to generate growth?

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : What is the challenge you are facing in housing wires for us not able to generate growth?

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : And it has -- what percentage margin higher than the company level? How much percent is higher than the (inaudible)?

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : Institutional moved from 9.5% to 10.5%?

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : Okay. So your company level margin of 11% that we see end of year gone by is a sustainable number?

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : Okay. Thank you very much, sir, and all the best --

Question: Pritesh Chheda - Lucky Investment Managers - Analyst : Okay. Thank you, sir.

Question: Charanjit Singh - DSP Mutual Fund - Analyst : Yeah. Hello, sir. (inaudible) One, if you can just highlight to us in terms of the price hike which you have taken in the retail and the institutional side, the [quantum]? And do you intend to take any further price hikes in Q1?

Question: Charanjit Singh - DSP Mutual Fund - Analyst : Hello? Sir, can you hear me now? Is it better?

Question: Charanjit Singh - DSP Mutual Fund - Analyst : Sir, just in terms of the price hikes, can you just elaborate what's the kind of price hikes which you have taken at the retail level or for the institutional sales also? And in Q1 also, do you intend to take any further price hikes? That's my first question. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 31, 2021 / 6:30AM, KEIN.NS - Q4 2021 KEI Industries Ltd Earnings Call

Question: Charanjit Singh - DSP Mutual Fund - Analyst : Okay. And on the retail channel front, sir, what are the benefits which any retail or dealer would see? From KEI's perspective, is it a better margin or a better product portfolio mix which you think that could attract them to start selling more KEI products? And in terms of any region, where we are trying to focus more in terms of this retail channel expansion, if you can give more inputs on that.

Question: Charanjit Singh - DSP Mutual Fund - Analyst : So in terms of our channel margins versus the competitor channel margins, how different were we? And in terms of the ROEs and ROIs for any dealers, do you think it will make more sense to go ahead and start selling KEI brands?

Question: Charanjit Singh - DSP Mutual Fund - Analyst : Okay. And sir, last question from my side. You have also talked about other retail channel expand further. We also could have two to three more products added into the portfolio, which we would like to push from this channel. So if you can elaborate on those product segments, sir, which you are looking to expand into, what could be the strategy in terms of the scale-up on those strategies? Yeah. That's all for me.

Question: Charanjit Singh - DSP Mutual Fund - Analyst : Okay, sir. That's all for me. Thanks for taking my questions.

Question: Akshay Bhor - Premji Invest - Analyst : Great. Thanks, and congratulations on good set of numbers. Sir, my first question is on -- unallocable has reduced substantially in the quarter, and there is some movement on the cable margin as well. Can you clarify what's happening there?

Question: Akshay Bhor - Premji Invest - Analyst : That's right, sir.

Question: Akshay Bhor - Premji Invest - Analyst : Understood, sir. So the INR26 crores is coming from the cable segment, sir?

Question: Akshay Bhor - Premji Invest - Analyst : Got it, sir. Got it. And just, sir, one more clarification. In terms of the 2.5 months that you indicated, was that overall working capital, or that's only for receivables? And if that's the case then, what's the --

Question: Akshay Bhor - Premji Invest - Analyst : And just one last clarification from my side. The elevated capital employed on working capital, is that also because copper prices have gone up, and your quantity would have remained the same either with dealers in terms of selling or inventory for you? I mean, is that also a factor that has played in?

Question: Akshay Bhor - Premji Invest - Analyst : Got it. Thank you. Thank you so much.

Question: Atul Bhole - DSP Mutual Fund - Analyst : Yeah. Thanks for the opportunity. Sir, just one question. You are giving a guidance of 35% growth in the retail side, whereas you have taken 40% price hike. So does that mean that a large part of the growth will be price hike and you're expecting to return all this growth for the next year? So can you -- with just the guidance, can you provide the bifurcation of volume growth, please? Thanks.

Question: Atul Bhole - DSP Mutual Fund - Analyst : But is it possible to provide volume growth guidance for the retail business, given the expansion you are doing on the distribution side?

Question: Atul Bhole - DSP Mutual Fund - Analyst : Okay. Thank you, sir.

Question: Shrinidhi Karlekar - HSBC - Analyst : Yes. Hi. Thank you. Sir, I just have a couple of questions, a bit of hypothetical question. Sir, if we assume that copper prices remain where they are now throughout the rest of the financial year, would you say your margin would remain in the guidance range of INR11.5 crore?

Question: Shrinidhi Karlekar - HSBC - Analyst : Yeah. Sir, next question is that, do you think from a pricing point of view, more of a margin, or you think more from a contribution profit? So it appears like, if I think more from a margin, even the industry thinks more from a margin point of view, right?

Question: Shrinidhi Karlekar - HSBC - Analyst : Okay. Yeah. Understood. And sir, you have guided something 15% to 16% growth rate on a consolidated company level --

Question: Shrinidhi Karlekar - HSBC - Analyst : Okay. Clear. Okay, sir. Thank you so much for taking my questions, and all the very best.

Question: Shrinidhi Karlekar - HSBC - Analyst : Yes, sir. Yeah.

Question: Shrinidhi Karlekar - HSBC - Analyst : Right. Understood, and all the very best (inaudible). Thank you.

Question: Santosh Yellapu - AMSEC - Analyst : Thank you for the opportunity. So I had a couple of questions, sir. Just first, the bookkeeping question. Could you please share your revenue mix for your wires business for A, B, and C-plus cities for FY20, sir?

Question: Santosh Yellapu - AMSEC - Analyst : Yes, sir.

Question: Santosh Yellapu - AMSEC - Analyst : So these numbers are referring to FY20, sir?

Question: Santosh Yellapu - AMSEC - Analyst : Sir, I'm just trying to understand when the -- it was the second consecutive year when the industry [de-grew] in FY21 as per, i.e., in your numbers. And if that is the case, then already most of the cities we are seeing a lockdown kind of a scenario. What gives us the comfort that even for the remaining 10, nine, 10 months of the year, we would see a strong growth? Because nothing has changed much when I compare to FY21 scenario, then the growth was not there, right? Housing wires, we saw there's still 6.5% growth.

Question: Santosh Yellapu - AMSEC - Analyst : Sir, I'm referring only to the housing wire growth, and I'm taking your guidance. I'm trying to understand how things have changed.

Question: Santosh Yellapu - AMSEC - Analyst : Okay. Understood, sir. Sir, one last question, if I may. Sir, the share of exports in Q4 declined; the share of retail increased. Even if I consider the number of INR165 crores of retention money to be released, is it that on a Y-o-Y basis, the retail working capital has got a bit stretched?

Question: Santosh Yellapu - AMSEC - Analyst : Okay. Understood. Thank you, sir. Thank you.

Question: Paarth Gala - Prabhudas Lilladher Private Limited - Analyst : Good afternoon, sir. Thank you for the opportunity. Just one question from my side. Sir, of this EPC excluding cable for the full year that we did of around INR460 crores, what would be the EHV contribution on that? If you can just help with that.

Question: Paarth Gala - Prabhudas Lilladher Private Limited - Analyst : So on the EPC, ex cable, for the full year, the number that you did of INR460-odd crores, what would be the EHV contribution, the EHV, EPC, sir, in this number?

Question: Paarth Gala - Prabhudas Lilladher Private Limited - Analyst : So INR150 crores would be EHV. All right, sir. Thank you so much.

Question: Sparsh Raina - Mirabilis Investment Trust - Analyst : Yes. Thank you for the opportunity, sir. I had just one question. Sir, could you give a comment on how the employee costs have reduced the spend for this quarter? And are these sustainable or will we go back to the last year's number?

Question: Sparsh Raina - Mirabilis Investment Trust - Analyst : Okay. Thank you very much. That's all for me.