Darshan Gala:
Kirloskar brother’s Q1 Fy24 concall:
The results is their testament to their efforts to improve the product mix, increase operating leverage and reduce input costs.
order book is at 3020crs
Most of the international subsidiaries witnessed a healthy growth on the top line along with an expansion in Operating profit margin this was mainly on account of the company’s efforts to offer value added services, niche products along with creating sustainable cash_generating business streams.
Their Subsidiary in SPP Pumps UK has a global presence serving customer’s in different regions.
They focus mainly on Fire pumps for industrial plants, fire pumps for commercial buildings and as well as oil and gas. In addition to this, they focus on pumps for water utilities and for Chemical markets as well as service business.
In US, they cater to commercial real estate side of the business with focus on fire and water again. As highlighted here, there is no service business in the US entity.
In duth market they witness good traction on revenue side. Their focus remains on turning around the duth operations, further diversifying the order book by creating more daily business around destruction and services and continue growing their share of framework contracts in the services business.
Their Dutch entity will be launching unique and innovative products, which are focused on the Benelux region. They believe this value proposition will be a growth driver for turning around this business, along with various cost cutting initiatives, which they have already progressed in.
On their South African Business, service side is performing well. Their South African business has mJor service contracts in the power and mining sector. In addition to this, they have a lot of product sales into both the mining and distribution sectors as well as chemical sectors. Overall, the business continues to do sell on the operational and financial side
In their Thai business, they’re focusing on replicating the model similar to India with distribution, Here their Focus areas continue to be on building in commercial markets, fire markets, and chemical and industrial
Markets. Their endeavor is to increase the services portion of this business as well. They anticipate the increased investment in energy sectors and advances in pump technology will drive demand for pumps and have a positive effect on the global pumps market. In future years, this will benefit KBL and their international subsidiaries.
Additionally the international business, investment services and framework contracts, there are currently over 100 active framework contracts across all operations. They will continue their efforts to expand this business where they have implemented AI, AR as well as their 3D printer giving them some advantages
For kirloskar Ebara pumps Ltd, KEPL continues to have a healthy order book around 451crs this year and will continue its growth trajectory.
In Domestic market,they don’t want to give any guidance on growth but will grow faster than the economy.
According to them, there was no one off, these type of growth is sustainable
They do services business to create stickiness
In their B2C business, they are the only ones who can sell their products. They are the highest in price, and sre able to get a premium compared to the competition and they are the only ones who sell without giving any credit
On capacity Utilisation continues to be in the range of 60-70% and they have a continuous program for de-bottlenecking modernization. That is why they don’t do sudden spurts in capex.
In case of domestic B2B pumps, Oil and gas sector has picked up. There has been alot of orders that they have bagged for both Kirloskar Ebara as well as KBL. And actually, if you notice that there’s been a huge demand.
Darshan Gala:
However, they do believe that in terms of the number of steel vendors, that’s really not enough to cater to the huge demand that sector has today, which is why one of the reasons why they see a de growth in kirloskar Ebara sales is bcz the steel manufacturers have been really full in their capacity, and there have been alot of delays in dispatches from their side, which is why a lot of their consignments have not gone out this qtr
But that should go out in q2, so according to them yes demand is good, but there is an issue generally with the supply chain in India. They do believe that there are not enough qualified sub- vendors not the pump vendors, but the sub- companies to the pump vendors
On the opportunity on pump storage hydropower
They launched metallic volute pimps sometime 15-16years ago. And as you go larger, they have reversible turbines.
With the requirements in India, earlier being smaller pumps, they have developed a range of up to 30 megawatts . Where these pump storage schems actually require pps of 100 plus megawatts. And while they believe they are capable of doing this too. They are always asked where is you’re proven track record.
Now according to them, if India hasn’t had requirements of such pumps earlier. They cannot provide a proven track record. And they are therefore trying to see how they can still deliver . Maybe they will grow their sizes. The capability is, there, but i guess it’s not having supplied earlier that hurts them. Many of their customers over the years, for the last 8 years, have trusted us to make products of all kinds for the first time in India.
And while they have gone up 30megawatts.they need to build trust to go beyond 30 megawatts. That’s as car as pump storage schemes are concerned.
The order book of 3000crs is executable in 12-18months
Th American petroleum Institute certified pumps (API) they supply to is BB2, BB3, BBB4, BB5, and VS4,VS5, OH3 AND OH5 AND OH2. so those are the categories within API that they supply. And non API is ISO 5199
They are supplying pumps to GOOGLE, AWS and MICROSOFT, these pumps mostly go into data centres . They have fire pumps.
There is standardization for these pumps. And thays really why they’re able to get them in good numbers, bcz usually they are designed, the data centres are designed by big engineering companies, people like Arabs and all these guys. And so the specification is sort of put through them, usually or they sort of come up with the specification
KBL AND SPP qualify to almost every global standard that’s possible. And about a decade ago, KBL was the first pump company in India to have FMUL approval for its firefighting, the factory and it’s products
They are the only company who designs in India snd manufacturers in India for the world. So when their products are Accepted around the world, bcz they meet global standards, whether of quality or performance, or delivery, they make some of the most efficient pumps in the world.
They are already supplying pumps to India to the ame three entities they mentioned above microsoft, Aws, google. Bcz pumps are already approved for the entire group
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