Very helpful thread. I have a few questions on the business and industry. Would be helpful if anyone can help me gain some insights on the following. Apologies in advance for some basic questions due to my limited understanding of the business so far
Basic question first - I am slightly confused about the positioning of the company. Is it a consulting company or a manufacturing company? Does the company need more consultants to scale up or more capacity?
1.What is the current situation of the industry? If we are saying that Axtel is the only indigenous manufacturer with 200 cr topline, is everything else then imported into the country? How much of their revenues come from standard vs customised equipment?
2. If a food manufacturer does 100 rupees of capex , land + utilities would generally be 35 - 40 rupees? How much of the remaining capex does a company like Axtel cater to?
3. Many FMCG players are looking at outsourcing manufacturing to players like Hindustan foods, bectar foods etc. These contract manufacturers work on very thin margins and have fixed ROE contracts. How much of Axtels revenue comes from contract manufacturers vs brands? Should the magins and ROCE not reduce structurally if Axtel is supplying to contract manufacturers and hence becomes a Tier 3 player?
4. How much of their revenue comes from Nestle? How has the company been able to expand its customer base as that might have been a big hole to fill given that there are only very limited number of companies of that scale in India? What is their revenue concentration like currently?
5. Nestle has announced 2500 cr capex over the next 3-4 years. Any sense on how Axtel is positioned to benefit from this?
6. There are many D2C brands emerging in the country - small start ups with niche products. How does Axtel plan to cater to them? I understand the resources required will be higher to cater to such small customers but how is the company looking at this opportunity?
7. They win projects through competitive bidding - fair to assume that the company would be competitive as compared to imports in most cases? Bidding is done on man hour basis?
8.Does the company pay any royalty/fee to Wenger Inc. ,Anutec ?