Genus Power - Smart Metering

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Earnings call Transcript - Q3/FY21 - Feb 4, 2021

Business Updates

• Management
  • two imminent personalities have joined us in our board. Mr. Subhash Chandra Garg as Independent Director and Dr. Keith Mario Torpy as Non Executive, Non-Independent Director
    • Mr. Subhash Chandra Garg, he is a Independent Director. He has great experience of running government businesses and basically his coming in the company as an independent director will help us more to deal with the government and to be more financially disciplined.
    • Having Dr. Keith Torpy I would say is a big achievement for us. Dr. Torpy as part of Genus now, brings in great technical knowledge and the background from smart metering market for providing complete end to end solution. See we are now moving from product company to a complete solution company. And till now we are outsourcing a lot of solutions and software. In the times to come, we will become absolutely self dependent.Complete solution will also provided by the Genus and a lot of investments will be undertaken on the software side and on the solution development. Dr Keith Torphy will play a major role in guiding us in the right direction there, with the kind of experience he comes in with. He also has the network all across the globe., He will add great value-addition.
    • I would like to add that it will give a big chance to Genus for increasing its global footprints because Dr. Keith has almost dwelled a lot in America, Australia and most of the time he was travelling to a different parts of the world. And secondly our Chief Technical Officer, Mr. Anukram Mishra has worked in Landis+Gyr with Dr. Keith, so they have very good relationship. That is why Dr. Keith has joined as a non-independent director
    • His deliverables will be to extend the global footprints of Genus and bring a a lot of new technological changes in Genus which will help us to grow globally and domestically also.
• Demerger
  • we are undertaking business restructuring wherein company’s investment in non-listed group entities is being demerged and amalgamated into another listed company Genus Prime Infra Limited, in lieu of which Genus Prime will issue its shares to shareholders of Genus Power
  • Demerger has nothing to do with debt or cash. There is no cash outgoing from the company with demerger and there is no debt outgoing from the company with demerger. It is just the investment that is going out. So there will be no change in debt or cash position of the company after this demerger.
  • The treasury share of our own company and Genus Paper both are hold by trust which is the part of the company and that trust is not going out of the company. So no listed company shares are going out of the company with this demerger.
• Gas Metering
  • This industry is pretty small, but lot of opportunities are coming up
  • my estimates we should become Rs. 800 Crores to Rs. 1000 Crores industry in two to three years. So we should have at least 15% market share if not more
  • we received order of 10,000 gas meters from Green Energy
  • very good opportunity of 50,000 meters. We are very close to that opportunity also
  • our focus in the gas meter is on the AMI side, where we bring an established brand in electricity metering and where we are very strong in communication models that are coming up now in gas metering industry.
• FMS
  • we participate as a single tender, so there is no separate tender for FMS
  • right now the FMS revenue is very low, because for most of these projects the FMS will start from next financial year
  • we expect at least Rs. 20 Crores to 25 Crores from the FMS in FY22

Financials

• Order Book
  • Rs.1005 Crores
    • smart meters constitute about Rs. 650 Crores
    • share of export is around Rs.70 Crores
  • Tenders worth almost Rs. 4,500 Crores tenders are either live or will be quoted in next couple of months
    • tenders of worth Rs. 1,800 Crores which are live, which we have already participated
      • smart meters that value is Rs. 575 Crores,
      • conventional meters is Rs. 1,200 Crores
    • there are tenders of Rs. 3,000 Crores which are to be participated in the next two months
      • will be quoted in coming 30 to 45 days
      • Rs. 1,350 Crores to Rs. 1,400 Crores constitute conventional meters and Rs. 1,650 Crores to Rs. 1,700 Crores constitute smart meters.
• working capital cycle is almost 200 days
• Margins
  • 16% margin guidance
    • our margins are almost around 17% to 18%
    • there could be impact on margins due to raw material from 3% to 4%, but that will be covered once volume increases. Once our production increased, our margins will increase around 2% to 2.5% and already we are giving you guidance almost 1.5% lesser than what we are currently achieving

Capacity

• Our capacity utilization remains subdued in this quarter due to muted volume of uptake on account of postponement of dispatches of meters to forthcoming quarters. This is primarily on account of customer centric nature of our business which requires human intervention for installation of meters.
• Rs. 2,000 Crores plus we can easily generate with the current infrastructure

Competition

• about 18 companies in the country.
• Chinese comapnies were trying to enter through the EESL mode. So all the SEB business are anyways with the Indian companies. It is not easy for anybody to enter and exit. So I do not see any major change in terms of competition whether Chinese companies are coming or not coming
• we are probably one of the very few companies of India, where the content of chinese raw material we consume is by far the lowest than the competition

Forward Looking

• Order book will further improve dramatically in next three to four months and we should achieve topline of Rs. 1,200 Crores in FY22
• EBITDA of approximately 16%
• we are being very conservative and as the government is giving a lot of thrust for the smart meters, so this topline number can be far higher than what we are expecting
• the way the things are moving we can probably touch Rs, 2,000 crore revenue target in 2024