Geekay Wires Ltd

I am sharing notes from their AGM24 below.

1. Can you please breakdown our 3% sales growth in FY24 into volume vs realization growth?

4.12% increase in volumes
Stainless steel fasteners are doing well in domestic market – 7.51% of FY24 sales (vs 6.72% in FY23). Expect to penetrate more customers in FY25

2. Our export was down in FY24, are we facing increased competition in our products being sold to USA? What was the volume decline we witnessed?
3. Can you please tell us more about competition in USA? Are Chinese suppliers back and are they impacting our growth? What’s our diversification plan beyond USA?

Exports down due to competition
Competition in US: huge competition from Chinese and global suppliers.

4. “Other payables” reduced to 33 cr. (vs 41 cr. in FY23). Can you again explain how it is different from “Trade payables” and why are we continuing with this non-conventional practice? We don’t see any other listed companies following this practice
Other Payables: general practice

5. We show cash taxes paid under cash flow from finance which should be shown in cashflow from operations. I request to please rectify this in subsequent annual reports.
Will talk to auditors

6. In FY24, we spent 21 cr. in capex. However, we don’t see any increase in capacity in any of our products. Instead we see a decline in our nails capacity (from 30,000 MTS PA in FY23 to 25,000 MTS PA in FY24). Can you please explain this discrepancy and give a breakup what this capex was spent on?
7. What is our capex plan for FY25 and what growth do we envisage this year?
Not done any major expansion – refurbishment + upgradation to maintain outputs
300 tons capacity added
35 cr. capex in FY25 – to increase wires (from 30k tons to 48k tons) – running at peak capacity in FY24

8. What was our capacity utilization in our different business segments in FY24? We used to report production numbers earlier but this data was missing from last couple of annual reports. Can you tell us production numbers for FY24?
9. What utilization are we operating at and what is peak revenues we can generate from this capacity?
46’500 MT production – 83.38% utilization (97% utilization in galvanized wire, 36% in stainless steel fasteners)

10. In the USA, we sell through a promoter owned entity “Geekay Wires USA”. Why do we require to sell via a promoter entity and why can we not sell directly by incorporating a subsidiary in USA?
Geekay wire USA has a customer base already

11. We have lent 15 cr. to ASP Pvt Ltd and taken approval to lend upto 50 cr. Can you tell our plans for ASP Pvt Ltd? Its not even a subsidiary, yet we are lending large sums of money here.
ASP: profitable co, will help them grow in fasteners

12. In our industry, most peers make 5-7% EBITDA margins whereas our margins are much higher. Are FY24 margins sustainable and what kind of normal margins should we expect?
Diversified customer base with a lot of products
10-12% PBT margins are sustainable

13. Our receivables over 3 years has consistently been around 99 lakhs for several years now. Why are we not writing it off?
Management believes receivables are fully recoverable

14. In the spirit of better governance practices as we scale, I request management to atleast organize a half-yearly conference call so that investors can be updated with the company’s progress.
Will consider

Other points:

• Raw material for products is almost same (but different grades and sizes)
• Margins: Galvanized wire: 14-15%, stainless steel fasteners: 10-12%
• Market for galvanized wire is mostly domestic
• In last few years, added new products (stainless steel nuts and bolts), expanded capacity, and are adding newer products
• Freight income: part of sales value and is shown differently under invoices due to customer requests
• Market is good currently, 8-10% expected revenue growth
• Optimistic for next-3 years (big OEMs + solar sector)

Disclosure: Invested (sold shares in last-30 days)