Shaily Engineering Q4FY21 Earnings call notes
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After much delays in construction as well as equipment installation, we have finally successfully commercialized operations at our carbon steel furniture plant in December 2020. This was one of the most technologically advanced projects which we had undertaken outside our core area of expertise. And unfortunately, due to the pandemic we had 0 to minimum support from suppliers of various equipment to set up with this all. Despite such challenges, today, the operations are running fairly smoothly. This shows our uniqueness and ability to grow in the most difficult of times.
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I’d like to announce the resignation of Mr. Anil Kalra in the position of Chief Executive Officer due to health reasons. Unfortunately, Mr. Kalra contracted COVID in the month of March. And since his return from the hospital has continued to have some health issues. We are actively looking for a new CEO and a vacant position over a period of time.
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We have started construction of our new plastic plants at our new campus at Halol. There has been no delay due to lockdown, and we expect the plant to be fully operational in the first half FY '22. This will help us service new orders, especially in the home furnishings orders.
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Overall, throughout the year, we have built a very robust order book, which shall help us grow in the years to come. We anticipate fairly substantial growth in the current year. Looking at our order book, we are fairly confident of achieving a much higher rate of growth in the current year.
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In a mere 1.5 years since we entered into the toys business that’s been matured, and we have now made our position even stronger with large orders from one of the world’s top 3 to brands and are en route to becoming one of the preferred Indian suppliers in the toy industry.
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Machine utilization rate was 56% in Q4 FY '21 as compared to 64.5% in Q4 FY '20. This was basically due to increase in the number of machines, which we added for the toys business in our Halol and Rania facility.
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Exports during the quarter stood at 77% of total revenue as compared to 68% in the same period last year. As for FY '20, exports stood at 73% as compared to 69% in FY '20.
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Our revenue stood at INR 109.8 crores during Q4 FY '21 as compared to INR 79.6 crores for the same period last year, showing a growth of 38%. The double-digit growth is accrued on account of supply on Carbon Steel furniture and increased business on all other segments of business .
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EBITDA margin in FY '21 was impacted in the second half due to withdrawal of MEIS benefit by the government post December.
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Peak revenue potential for the new investments that we have made in the new plastic facility as well as carbon steel and toys is likely to happen by Q4. Somewhere between Q3 and Q4 of FY '22, which means that at that point, we will have a run rate that represents the peak potential we have for the current capacity. So if you were to look at from its current asset base, then look at revenue, you should probably look at somewhere between 2 to 2.5 times, an average of 2.25 is peak revenue from the current assets.
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On the healthcare in the presentation. Yes, we are anticipating 2 to 3x growth. So we’re roughly looking at growing the business at somewhere between 35% and 45% year-on-year basis for the Healthcare business .
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Capex in FY22: INR 80 crores to INR 90 crores, which also includes the new plastic facility which we are setting up and expansion of the pharma facilities. FY '23 will have a similar number as the current year. About 50 to 70 cr is what we would okay.
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overall inventory levels have gone up because we are executing multiple projects on the toy segment where inventory has come in quarter 4, which we will start looking at – commercial again now commercialize those projects in Q1. So we expect as we move forward, we should basically be able to improve the working capital cycle between Q1 to Q3
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I think we could scale up the Toys business to where we are on our Home Furnishings business over the next probably 4 to 5 years .
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How you are visualizing the healthcare pen segment over the next 2 to 3 years?
We have existing orders for instance and supply in the current year. We have orders for all the other bit liraglutide, teriparatide. Again, small batches, small [indiscernible] batches, they’re still somewhere between 100,000 pens to 0.5 million pens. In the next financial year, we see this ramping up on 2 molecules, particularly to about 3 million pens. And then FY24 onwards, we’re looking at scaling up substantially. -
Margins are sustainable. And as we move forward, we expect margins to grow in the coming years. We are seeing a gradual ramp-up on our steel furniture business, where we expect full ramp-up to happen probably by Q3 . And that’s when we would basically – suppose that we should be able to see improvement in margins there .
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Apart from pharma, we probably have a list of 20 to 24 customers. And the top 6 or 7 would contribute to 85% of our revenue.