CONFERENCE CALL - from Capital Markets
In FY 2016 the company hopes to sell 27000 power tillers (against earlier guidance of 28000) and 7400 tractors
VST Tillers held its conference call on 10th February 2016 after it declared its results for quarter ended December 2015.
Highlights of the call:
VST Tillers had informed in Q2 that Q3 will much better.
Sales grew 42% to Rs 151.37 crore. PAT jumped 47% to Rs 17.71 crore.
The company sold 6271 tillers and 1850 tractors against 4057 tillers and 1327 tractors y-o-y.
For the nine months the company sold 19447 tillers and 5868 tractors.
Tractor market adversely affected by monsoon failure in key markets namely Gujarat and Maharashtra.
Outlook bad so FY 2016 sales growth wont meet guidance of 15%. PAT will remain flat.
In FY 2016 the company hopes to sell 27000 power tillers (against earlier guidance of 28000) and 7400 tractors.
Power tillers will grow 15% but not the tractors.
FY 2017 is expected to be normal monsoon and thus hope that tractors will see good growth. Thus it should do sales of 10000 tractors in FY 2017 and tillers should grow 15%.
Karnataka state saw consistent performance. Orissa saw loss of market. Orissa is a major state for power tiller market. But the fall in Orissa market has been compensated by good growth in Andhra Pradesh.
Subsidy receivable from government sales is Rs 45 crore.
Sales break up for tractors was Rs 48.66 crore and for tillers Rs 80.77 crore
Maharashtra and Gujarat continue to account for 75-80% of sales but contribution from the other states will increase going forward. In two years the company expects Maharashtra and Gujarat should come down to around 50-60%.
Election will have impact for 30-45 days due to model code of conduct.
Receivables were Rs 101 crore against Rs 99 crore.
Inventory was Rs 150 in December 2014 quarter. Currently it is little less.
The company did not have Bonus impact due to New Bonus Act as employees in that segment are very negligible.
Chinese market share has gone down during the current year.
Assembly capacity for tractors stands at 36000 units in 3 shift basis. The same for Tillers stands at 60000.
Africa is a good market for power tillers but it is dominated by cheap imports from China. The company is not able to compete with Chinese companies there.
In western Maharashtra and Gujarat the company has 70% market share.
In Orissa there are 50 brands of Chinese tiller companies.
Current net cash is Rs 150 crore.
17% margin which the company enjoys is high. The company will be happy with 15%.
The company will continue with 20% dividend payout ratio in the future