Macpower Cnc: Notes from Arihant conference
Margin levers: – Backward Integration (largest driver of margins)
Services → high valued machines + defence machines have a sizeable service component as well
Operating Costs → co to aim to reduce operating costs to 15% from current 17%+ (revolutionary in Indian mfg)
As avg realization continues to improve from 20lacs, over the next 5 years co aims to touch 25% margins!
Expansion: – Starting May, co will be on track to utilize 2000 machine capacity for production – also with additional debottlenecking co will be able to manufacture upto 2200 machines
Over the next 5 years company plans to increase capacity by 2000 machines every year to reach 10000 machines capacity in 5 years (from 1500 in FY24)
Capex: – 10cr to take current capacity of 1500 to 2000.
100cr for 2000 machines in the new set up (reach 4k machines capacity) – 15cr additional capex every year to add 2000 machines every year (depends on demand as well).
Other Highlights: – no new player in the last decade, present 6-7 players will continue to compete – Due to govt focus to take manufacturing to 25% of GDP from current 17% loans have become easy, subsidized with interest rate waivers and tax waivers → this is leading to import substitution
Very conservative management.
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