AGM notes
Q. Scalability: our net fixed assets has close to become 3x in last few years. However, most of this increase is coming out of intangible items in the balance sheet. Can you tell us more about the intangible item and the capex we have undertaken in past few years?
o 5-10 cr. asset addition each year (plant and machinery) and some land and buildings for new projects
o Acquired certain companies which led to intangible
o Can reach 150 cr. in 3-4 years
Capex
- Increased capacity from 550 to 600 tons
- 460 tons production in FY23, 500 tons planned in FY24 and 600 tons in FY25 (will cross 100 cr. by doing 600 tons)
- Installed new robot and conveyor system
- 2 new robots + 1 refurbished robot: These 3 give leeway to increase production to 650 tons (improves standardization and quality)
- <10 cr. investment for new facility
Q. Given that we have capabilities in investment casting which seems more niche in nature, why are we not building capabilities in sands casting?
- Investment casting is a big market globally. Company is not into sand casting. Investment casting is higher value addition and used more in aerospace. Currently company lacks capabilities to deliver aerospace casting, as a result aerospace contributes <1% to Tamboli
Q. We saw strong growth in our domestic customer segment, with domestic customers contributing 10 cr. (vs 3 cr. in FY22). Can you tell more about our domestic business development, who are our large customers in India?
- 4 major segments in domestic: auto (large part; deemed export, supplied to domestic suppliers who then export complete assemblies), defense (marine, subsea application; small contribution today but it can scale), aerospace (ISRO, few other government bodies), locomotives (Bharat Ratna PSUs)
- Domestic business will be 16-18% in FY24, in talks with few domestic clients
- Develop lots of parts for ISRO, their product was used in Chandrayaan III
- ISRO can become a large client in the future
Q. For a given project, what is a timeline from receiving an order to delivering our products?
- 1 out 20 enquiries get converted into tooling orders; samples require 15-20 weeks followed by customer approval followed by pilot batch orders and then bulk supplies start: takes 9 month – 1 year for an entire order from design to commercial supplies
- Generally do 10-20 projects in a year
- Takes 3-4 years for projects to mature, once the end project matures in terms of volumes, Tamboli benefits from higher casting supplies
Q. Festo has been a large client for the past few years, you have mentioned adding new clients. Can you tell us about client. Something like top 3 or top 5 customer concentration to company’s turnover
- Top 5 customers contribute >60% of business
Miscellaneous
- Slowdown in Europe. Customers are sitting on a lot of stock, expected to turn around by January 2024
- Looking to diversify into multiple industrial segments
- 1MW solar plant to be installed
- Don’t have capabilities for titanium and super alloys
- In investment casting, beyond 100 kg is not commercially viable. Possible in sands casting
- 30 products were added in FY22
- Auto has increased and pneumatic has reduced a bit, but this is just reflection of end market demand
- Process to change name of company is undergoing
- Investor presentation done in 6 months
- Most customer loss is during quotation time, have not seen customer loss due to quality
Disclosure: Not invested (no transactions in last-30 days)
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