Phoenix lamps – rising up from the ashes?

Few observations:-

1. Phoenix face tough time with brand recall in B2C segment – During my visit to a Maruti Suzuki dealer, I observed a big poster on halogen lamps promoted by Philips. While Phoenix supplies halogen bulbs to most Maruti vehicles it is not a familiar name among retail consumers. Philips, on the other hand is in fact a household name and is trying to capitalise the same by offering win-win situation for both Maruti (peddling the Philips product at an extra cost to the consumer) and itself (in terms of displacing an established OEM supplier like PLL).

2. Working Capital Days (Cash conversion cycle) looks to be an issue. For Standalone basis, it is coming at ~120 days, for consolidated its coming at ~95 days. Is it due to sales mix of aftermarket/OEM??

3. Bleeding European subsidiaries are a concern and bring down EBITDA (at standalone basis) from +20% to ~12.5% (at consolidated basis). Infact in FY14 CFO decreased from INR 770 Mn to -INR 100 Mn. Even with management guidance of ~14.5% EBITDA, may be Euro. subsidaries would not be so profitable in near term

4. Looks more like wait and watch game where how new promoters can turn it around

5. Few other queries, would help if anyone has answer on it:-
   a. production level/capacities for European subsidaries? what are the highest levels they can operate?
   b. Working Capital management?
   c. Capex cost of setting up manufcaturing unit, lets say 10 bulbs/yr?
   d. reason for spike in sales in FY14 even at Standalone level
   Phoenix Lamps – General Research.xlsx (62.2 KB)
   Disc. Not invested. Have also posted numbers excel herewithin…