geo political risk and supply chain risk has been a huge risk factor for the company
for this to work out china and taiwan were most of semi conductors are sourced should be at peace along with its wester counterparts US as the company deals with a many of companies from all sides and cooperation between them is the key
individual countries political risk are minimal as the distributions is far and wide in short a truely global company

challenging times

Thank you for your insightful questions regarding Priti International Ltd (PIL) and its position in the furniture industry. PIL indeed has a distinctive profile that sets it apart from its competitors and positions it uniquely in the market.

Key Differentiators:

1. Focus on HNI’s & Premium Category Segments: PIL’s major focus on sales to High Net Worth Individuals (HNI’s) and premium category segments distinguishes it from many competitors. The company tailors its designs to cater to the specific tastes and preferences of this discerning customer base.
2. Global Market Presence: PIL stands out with its significant international exposure, exporting more than 80% of its products to foreign countries. This global reach enables PIL to tap into diverse markets and benefit from trends and demands worldwide.
3. Unique and Tailored Designs: In comparison to peers and international players, PIL prides itself on offering unique and tailored-made designs. This differentiation allows the company to provide a diverse range of products that appeal to various customer segments.
4. Limited Competition in Listed Furniture Businesses: PIL faces competition from a select group of listed companies in the furniture business, such as Godrej, Nilkamal Ltd, Parin Furniture Ltd, Shashwat Furnishing, Milestone Furniture, Omfurn India Ltd, and Seasons Furnishings. The limited number of listed players creates an opportunity for PIL to establish itself prominently in the market.
5. Competition with International Players: PIL competes with renowned international players like IKEA and Natuzzi. Despite the formidable competition, PIL’s focus on unique designs and tailored solutions contributes to its competitiveness in the global market.

Positioning Against Unorganized Sector:

PIL’s positioning against the unorganized sector involves addressing the challenges typically associated with this segment. Key strategies include:

• Quality Improvement: PIL is focusing on improving the quality of its products, aligning with the global trend where Indian manufacturers are gaining recognition for enhanced product quality.
• Global Standards: Aligning with global standards, PIL aims to differentiate itself from the unorganized sector by offering products that meet international quality benchmarks.

Asset Turns and Trading Activity:

The high asset turns, approximately 14x, can be attributed to PIL’s efficient management of its assets, inventory, and working capital. The company’s ability to quickly convert its assets into revenue reflects operational efficiency.

Regarding trading activities, it’s essential to consider the global supply chain dynamics in the furniture industry. PIL’s involvement in trading may be a strategic move to ensure a diverse product range, sourcing materials, or meeting specific customer demands.

Conclusion:

While the furniture industry faces challenges, PIL’s unique designs, global market presence, and strategic focus on quality position it as a key player in this dynamic sector. The company’s commitment to innovation and meeting global standards creates potential opportunities for growth in the evolving furniture market.

For a more in-depth understanding, I recommend exploring the provided links for additional insights into the industry trends and PIL’s strategic positioning.

Furniture Industry: Time for India to sharp its edges.

Kingfa AGM FY 23 Notes

Management commentary

• Factory is running in full steam with a total incorporation of 17 lines including the ones for development activities in the field of next gen polymer compounds.

• New laboratory inaugurated. High end laboratory in Chakan has been now commenced which will help with the right first time in development. This will soon be accredited, so that all OEMs and Tier 1 suppliers can use it for their needs. This lab is expected to reduce the lead time of development of new compounds and also to reduce the time for transfer of technology from China HQ to India.

• Going forward, all engineering plastics will be made and sourced in India which will eliminate the delays in shipping, logistics (from China HQ) and optimize the inventory levels.

• Prospects of India becoming an export hub is on the cards and will help improve capacity utilization levels, volume and margins.

• Traditional Industries have other own limitations in terms of their margins. It is the new age industries such as EVs, office automation and solar which will help improve margins and presents bright future for kingfa india in coming years. Approvals for new products have been received, special to mention is regarding the approvals of fire retardant compounds.

Q&A

• Capacity Utilization

Capacity 1.4 lakh tonn/annum across 17 lines. Utilization is around 70%. There is nothing like 100% capacity utilization possible because of the product mix and change over associated with it almost on a daily basis. Management is working to improve efficiency of the existing lines. No separate capacity for engineering plastics existing. Set-up is such that any product can be manufactured on any line.

Expansion: will and can keep adding new lines on need basis

Volume offtake ranking: Passenger vehicle–> 2W → commercial.

• EVs

EV are same as existing ones: Lot of requirement for flame retardant material for 2W and 4W have been development, lot around battery packs and associated components. Approvals for 2 more products is awaited. Presence with Ola EVs is significant and there from day 1, also have presence with other 2W OEMs. Company keep adding products on a regular basis. Volume with ola is 13kg/vehicle.

• Auto, Non-Auto Share

Auto and non-auto share: Air conditioner, washing machine and other white goods. 72% auto and 28% non-auto. 10% years ago it was 95% auto. Continue to improve non-auto share. Ideal is to reach at 60% to 40%.

Non-Auto

Home appliances, construction is the latest addition.

• Market Share

Market share can’t be calculated because of too many players in India including unorganized.

• Dividends

In the sub-sequent meeting(s), board might consider interim or final dividend. Already asked finance to propose to the board. They said they are planning it from next year, cannot be delayed so much- highly likely of dividend from next year.

• India as export hub

Potential to become export to Europe and USA.
Currently exporting to Thailand and South Africa. In the future, sees potential to export to African countries as well.

• 30cr Forex loss

Couldn’t understand thier reponse in Chinglish. However, understood that this won’t be the magnitude of loss going forward as almost all eng plastics sourcing and production is done in India.

• 8Cr R&D Expenditure in FY23

This if for Test related equipment and for the lab. Feature of the lab: Analyze raw material, competitor product, testing performance of products.

• Health care products

Nitrile gloves. Mask with inhalation valve, mask with carbon coated fabric to reduce unpleasant odors such as paint etc.

Skipped answering questions on Quarterly concalls, 3 year vision.

• Closing remarks

Management sounded super bullish on India growth and capability. Spoken about increasing the management bandwidth to cater it. Products side try to minimize input from outside India.

Techno wins 1750 Cr. Orders