Aug 2024(Q1 2024- Concall)
1…Bathware segment
A…Restructuring
=Q1 was affected due to
A… restructuring and consolidation of sanitary and faucet segments
@25% affected
B…Slow down of market leads to low revenue but fixed cost is there
So ebidta decreased
=In the September quarter, we are not expecting any deterioration in our bathware segment performance because of the sales force restructuring, which we have done in the June quarter.
=That’s a onetime impact we took out, 25% of our off-roll and on-roll manpower at that time. And we believe it had whatever impact it had to have
happened in quarter 1. Quarter 2 will basically be more reflective of the market
.
=Building upon the success of our cost optimization and business streamlining initiatives, we have
deepened synergies between our Bathware and consumer appliances business.
=This collaboration has resulted in improvements in efficiency and cost. Early wins in warehousing,
logistics, marketing and particularly institutional sales channels are promising.
= While the full impact of our back-end integration will be realized in the coming quarters, we are also streamlining our sales force to optimize efforts and expect extremely positive results.
B…Complete insourcing
=Focus is completely to in-source material and provide alternate to imports. This will also help us further garner up the margins, which we had talked about because right now, when we import from China, a lot of margins are left with the vendors in China, which we plan and intend to bring it in-house
2…Pipe segment
=We feel that pipe business has an
ample opportunity to grow
=We have expanded our product portfolio with the successful launch of 24 products for underground drainage systems. Additionally, we are set to introduce high-value offerings such
as Double Wall Corrugated pipes and Fire sprinkler systems by this year end
=We expect 16-18% volume growth and Double digit ebidta growth
3…Consumer segment
A… Restructuring
=Our consumer Appliances business delivered INR111 crore in revenue with an EBITDA of INR3 crore at a 2.7% EBITDA margin reflecting the positive impact of restructuring cost optimization and exiting our loss-making retail furniture business
=What we have done is we are now having a lot of synergies which are shared between Bathware as well as our consumer business in terms of our back end.
B… Exiting from loss making
=We believe that kitchen is our core business. That’s where we
make our margins.
=And currently, there are some categories which are eroding all the margins which we are earning in the kitchen part of the business. So, this evaluation is currently on. Once
the conclusion is done and we make appropriate decisions, take an approval from the Board, I
can share more details to the investors.
4…Restructuring
=So, as an answer to the Bathware business, in the bathware business, we had only one specific objective around merging our faucet business into your sanitaryware business in terms of the
manpower, in terms of the sales force
=We have done that. So, no more restructuring to happen for the bathware business.
= Additionally, what we have done is we are now having a lot of
synergies which are shared between Bathware as well as our consumer business in terms of our back end. So, the marketing, logistics, warehousing, the synergies are coming into both
consumer as well as our Bathware business.
= So that’s already happened now in terms of our execution is done. The benefits will start coming into us in the course of the year.
= We will be evaluating if there are any categories where we would be not making money or we’re losing. So, some evaluation of the categories in our consumer business is an ongoing exercise, which we do. So, if any other restructuring which can happen is around those lines. But for that, I think most of our restructuring has already been done, and the benefits will start coming in the second half of the year.
4…Capex
=new plant will start contributing from Q3 2025
=Other new plant @170-180cr@rokree plant
5…Board has approved raising fund@205 cr
6…Capacity utilization
=Our capacity utilization in Q1 FY25 for sanitaryware was about 86%, and for faucet it was about 58.5%.
7…Expected growth
=We feel on a medium to long-term range we should continue to grow on an average 15% to 18% on sales, and 20% plus on the EBITDA margin.
=next 3, 4 years, we’ll be able to demonstrate 20% CAGR on EBITDA.
Disc…invested
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