Now, complementing this with physical scuttlebutt…
Our business, like most industries, uses V belts. We use Pix and Fenner. This is what a V belt looks like:
It is quite hard, not stretching at all. Can see that cracks form in the V belt, at which point it has to be replaced.
Disc- no holdings as of now, tracking closely
you mean to say, no need to buy complete belt, just repair the patches will work, replacement is not that frequent as it appeared,
No. These don’t get repaired. Have to be replaced.
honestly my experience with Pix is the same…
our factory had always been using JK fenner…(earstwhile FENNER) …they were much more durable and had much longer life…
pix is more easily available at industrial goods shops…but quality can never match fenner…(although that actually works good for their business ) 
Same here ,our company also tested pix for trial its quality not up to mark for a continious plant like petrochemical or oil and gas company , so here weused continental
Pix has released its annual report yesterday - https://www.bseindia.com/xml-data/corpfiling/AttachLive/cfde1596-ca79-49ab-a8de-ad7550b4ac2d.pdf
Nothing much to see, very dry report. A couple of things that caught my eye:
They have announced their AGM date on 20th July. @RajeevJ Rajeev Sir, Are you planning to attend this year? If so, will be eagerly looking forward to your notes from the event. If anybody else is attending, please share your notes here 
It will be interesting to get the Management’s view on domestic capex cycle and what kind of order inflows they are seeing…
PS: Not a peep in the report about the revamped website. A bit strange considering its a well made website.
Few additional points:
Chairman’s letter states: "However, the complexities that arose due to the Covid-19 pandemic have only been further exacerbated owing to the current geo-political tensions as well as the slowdown being witnessed across major geographies. Whilst we continue to review measures that can be adopted to safeguard our operations, *we believe that several challenges will persist through the course of the coming year and we will need to show further resolve to overcome them*". I am hopeful that members joining AGM will probe further and share their notes around this topic.
No of Share Holders – 23894 [was 12751 in FY21]. I am yet to join this club !!!
Present value of obligation as at the end of year ~11 Cr. Recognized in the B/S as Non- current Liabilities mainly. Someday it must flow to the PnL and will suppress earnings.
Term Loan repayment ranges from 33 months to 54 months
An accounting change (Seems to be a reasonable step): Note 46 - "Till previous year, the Company presented sales related discounts under other expenses instead of adjusting the same against the revenue from operations. In the current year, the Company has restated in accordance with Ind AS 8 - “Accounting policies, Changes in accounting estimates and Errors”, restating its numbers for the preceding year ended on 31 March 2021 in this regard. The information below summarises the impact of the restatement: Revenue from Operations as reported for the year ended 31 March 2021 with Rs. 37,323.34 lakhs; restated amount being Rs. 35,394.17 lakhs. Other expenses as reported for the year ended 31 March 2021 with Rs. 6,092.91 lakhs; restated amount being Rs. 4,158.58 lakhs. Other line items of Balance Sheet and Statement of Profit and Loss that were not affected by the restatement have not been disclosed. Furthermore, there is no impact on the profit and retained earnings of the Company for the said year. Accordingly, opening balance sheet has not been presented.
Foreign currency risk: The Company has not taken any forward contract during the current year and also there were no outstanding forward contract as on 31 March, 2022.My inference from the below image - Managing the Foreign currency risk in the current FY using ‘Foreign currency term loan’ , ‘Cash’ and trade receivables
Thanks a ton @nirvana_laha for your detailed & insightful post after taking pains of going through the Annual report in some depth.
It is clear that the volume shift towards exports is already happening with 60% of Sales coming from Exports in 21-22. This is only likely to gain momentum in the current year. Pix is a small player in the international market & there is plenty of room to grow there, leaving a long runway ahead for a number of years to come. I expect the increased capacity that will become fully operational only towards the end of the September qtr, to get used up in the next 18-24 months!
The Domestic market has its own challenges with every price increase being met with some or more resistance. Pix which is the market leader in the non OEM segment, has painstakingly helped build this market, so will perhaps never desert it, but if the demand is coming from the international market, then clearly that is where the focus will shift going forward.
The operating margins are set to revert to earlier levels gradually with freight charges already cooling off meaningfully. Meanwhile, the Co. increasing prices gradually is an on going process. Pix should start seeing exciting times over the next 6-8 quarters starting with the second half of the current year. It has already demonstrated its ability to scale up operations & I don’t see any execution risk here. Also, this scaling up has been carried out, both with alacrity as well as with financial prudence. The logistic hub is state of the art & the Co. should have talked more about it in the Annual report, but it is always extremely restrained when it comes to the AR.
The one criticism that the share holders can justifiably have against the Co. is that it continues to hold physical AGM’s in this day & age, that too outside Nagpur city at 9.30 am! With Pix taking a series of initiatives to get the attention of the investing community, hopefully this too would be addressed sooner than later!
Chairman’s address:
Lot of rains in nagpur
40 years is a long journey for any co
50 years very soon
2 acre of property we started. 50acre of property today as pix
Small company which started with bulk of biz with soviet union as per india protocol.
80-90 countries now.
Pix is in Top 7-8 brands globally.
Last year many challenges
Uncertainty of market conditions, rm, inflation, price increase, uncertainty of demands, global political scenario
Affected all cos
We embarked on an ambitious expansion plan. 75cr invested
Business has cycles. Peaks & depressions. One has to put up capacities before the cyclical peak in demand comes
We are making shipments to Russia & Ukraine, & getting payments. Expecting setback in winter situation for Russia & Ukraine. 80-90 countries we expect to make back in other countries.
Demand is growing
Availability of rm is challenge due to oil & has situation. Prices serious concern.
Working on programs to overcome this mitigate this
Uncertain situation.
Q&a:
R&d & innovation is key to be successful: r&d expenditure is very dynamic. 2cr we might spend for new product. Normal activities we would be spending 2.5cr for them. we have dedicated r&d center
Metalic chains to rubber belts. Servo motors call for timing belts which we produce. So it’s positive for us. Couplings or chain drives can’t replace v belt. Chain drive is noisy. Cannot work fast. Chains cannot work on 2000 rpm. Belts can. Certain applications chains can be replaced with coupling drives. Even ev scooters have got belt. At least 20 years it’ll be there
20B$ global market. Entire addressable for us using the current set of products.
Agricultural belt : we are largest player in this segment.
Roti kapda makaan. More mechanisation is required for agri. Textile is big consumer of belts. Pant shirt needs textile. Makaan : industrials : india is growing it’s infra rapidly. Look at Africa. Huge infra demand. Now even America has started spending on infra. Cement steel mining ceramics all need belts. At pix, value terms globally, 8-9%. Very dynamic situation driven in agri driven by climatic conditions.
Iran is a 10cr market for me. Due to sanctions we are not able to do right now.
Agri belts are high value products for us we want to grow it.
All capabilities are fungible across all products.
Pix has been an after market company. OEM is not branded. We want to build brand.
We do m&m, Tata motors in india.
If you walk around in hardware store: pix pix pix .margins are better in after market company.
We do certain amount of OEM : it won’t be more than single digit
90% of our products in We do it for largest lawn mower company in world.
In India 300 distributors, usa 5 distributors. We have been contemplating our own operations in usa like Germany. Due to covid we took a step back. We are not very comfortable with political situation.
It will be a 25-30cr investment i don’t want to do it in uncertain environment.
We have > 30000-35000 sku.
Payment terms in general are 45 days in Germany. 60 days after landing in usa. Walmart payment terms are : 90 days after it goes on the shelf.
Overseas we have changed our strategy completely: overseas distributors we are moving to upfront payment except our old 25 year old distributors. Receivables days is coming down.
Last 2-3 years exports has done really well for us. Global market is 20B$. Indian market < 2B$. Opportunity to grow is much larger in exports. There is a sentiment of good organization moving away from China gradually. Lot of cos in usa are dependent on china. Co from usa : 5 years back sole supplier from China. Now we have started doing supplies. 3M belt order for this year. Market is very large over there
Germany & us are top regions for us for exports. Position yourself. Ocean industries 140M$ co they were never buying. Gates might not give as much attention to them as we do.
Gates belts revenue is 3B$. Bando is 1.5B$ belts.
Same belt can do into many different applications.
We do know where final product is going. We use it for defining our strategy.
Koshish karte hain pass on karne ki.
Normally you can’t increase prices once or twice a year.
We have increased prices 8-9%. Still not enough to get 25-30%.
All our suppliers are monopolistic suppliers. These used to once a year. Now spot / or on spot. They are applying prices based on their feedstock.
In 69: 4 rupees kg. Now 200. Carbon black 2.9rupees. Now 140 rupees / kg
We have to increase distributors everywhere. In usa
180k to 270k belts. 800-900 cr ka potential
75k / belts a day which has now gone up 150k belts / day. 65% capacity utilisation.
This capacity should be good for next 3 years. Creating new capacities takes 18 months. Fortunately we have enough land for brownfield
All clients say this is the best plant they have seen. All our balance sheet investment have reduced our manpower costs.
Personal opinion: Chinese economy has been a bubble. Might burst. Capital good prices have gone down in china. All over world they are going up
Customer:
Security of supply for a manufacturer i very important.
Belt for ev vehicle: ather we are in touch. We are working on product. And this will be for OEM & after market both. This ev is made in India. Ev works on motor. The nature of belt is different than for ice. Completely different. We are competing against bando india for scooters. TVs yahama scooter. Harley Davidson motorcycle are coming on new generation belt we are making
10 years from now it’ll be more export driven than india. In India we should be #1
In some textile we replace belt every 15 days. Steel plant 6 months
Scope for adjacencies: pulleys, couplings, chains, oils
Distributors: relationships, make them excited about your product, 45k SKUs
You have to be on your toes on the time
All automotive have their own spd : spare part division, huge dealer network, 3500 network. So it’s easy for them to push their products. Industrials mei nahi hota hai.
Disclaimer: invested, biased.
AGM notes
R&D is key to success. R&D spend is 0. It merged with other expenses. From coming year, We will share separately.
This year, will introduce new generation product, will spend can couple of crores. They have an RD facility specifically dedicated and it has some 15 Employees, their salary gets clubbed in Employee benefit.
Ball park number for R&D 2-2.5 crores.
They have a Dedicated GM.
Comments on switch from chains to belts ?
Servo motors, call for timing belts, which Pix produces.
Couplings or chain drives can’t replace v belt. Chain drive is noisy. Cannot work on high RPMs. Chain is costly too vs Belts, chains can be applied in specific applications where low load is needed.
EV scooters has belts, we will drive that. We are working with some players like Ather
Atleast next 20 years, no issue with belts.
Global market size : 20 billion dollars. We are not even fraction in this market
Agriculture belts : We are largest in agriculture segment.
Whole world needs Roti, kapda, makaan.
Roti : Area of land not grow, more mechanization needed, hence our belts will be needed.
Kapda : Textile big consumer of belts.
Makaan : infrastructure. We need lot of port, highways, canal, irrigation system, airports. It needs belts. Infra will include Real estate, we got cement, steel, mining need belts.
At Pix Agri belt at 10% (~50 crores)
Agriculture is driven by climatic conditions/changes.
We are focussing on Vietnam, developing that in agriculture can be a 10 crore market.
Russia, Ukraine We are still supplying receiving payments. Western Europe seeing challenges.
Iran we used to do with INR trade. Last 2.5 years, RBI put sanctions. Now stopped. It is 10 crore market for us.
If RBI is now trying for INR trade, need to bypass Iraq sanctions.
Capacities are fungible, for all belts. We are most well spread companies in this space, say some end customer slows, we will divert to others. Our competition is focussed on a specific end market and hence can call for troubles.
Pix traditionally has been after market company.
In OEM, no brand creation. We tell we are suppliers toMM, Tata motors, IFB, whirlpool, Ingersol Rand. But brand creation not possible, ultimately they print their name.
90% of products in Replacement market. That is where value company wants to focus.
India : 300 distributors
US : 500 distributors (need to confirm, is it this wide?)
You walk down hardware company, u will see pix.
After market Replacement, high margin vs OEM.
For me to setup an office globally need 25-30 crores. US looks uncertain under Joe Biden. Hence use US distributors.
45000 SKUs. (This for me is really impressive)
When we go to open trade, Germany 30 days, US 60 days from end of month, Walmart(90 days after it leaves shelf).
I buy from reliance : upfront payment (they buy carbon black). Also birla supplies.
90 days is industry trend.
Total receivables made some changes to reduce them.: overseas business, due to uncertainty except for old distributors old (25-30 years sure money is secured), everyone now is upfront payment. India also we now take upfront payment.
With time, days will come down.
Global market is 20 billion dollars.
Indian is < 2 billion dollars.
We can grow fast in exports.
Globally, it may not be visible, underlying organizations away from China. US dependent on China, gradually moving away. Whirpoll US sole suppliers were china. Today we got orders for 3 million belts p.a. Elastic belts.
Market is large.
We are among Top 7/8 globally.
Motion industry in US. One single customer has 140 million dollars order they will not come to us.
They will never come to us. For that I need atleast 140 million dollars sales.
All their systems, linked to Gates system.
Globally very small player.
Gates belt revenue : 3 billion dollars.
Bando : 1 billion dollars
We do distributor analysis where it goes in end user, will do for strategy.
We try to pass on prices.
Normally cant increase prices once/twice a year.
India we did this time, 1st July, 8-9%. We need 50% more (total 15%), EBITDA margin 25%.
Globally anytime we increase.
All our suppliers are monopolistic suppliers. Take it or leave it. Price of comodity reduces, we dont get full pass on. Thing that has increased 10 won’t come down 10, now will come down 1rs.
Earlier we used to annually, half yearly, quarterly now price applicable on dispatch.
Carbon black. (Largest player) : price on dispatch
Natural rubber : when I started 4 rs a kg now it is 175 a kg
Carbon black : 2.9Rs now 140 rs
We will focus on own efficiencies to maintain margins.
New expansion will prepare for 800-900 crores (75k belts a day gone unto 150k belts per day). Current capacity is 65000-70,000 belts per day.
From drawing board to reality in capacity is 18 months.
We have enough land bank with us. Now get land land is tough.
When we work with Global customers who are from industry. Come here for audits, they say best we have ever seen.
Customers coming to us and asking, do you guarantee enough FG to supply to us. They need reliability. They are sticky.
We increased inventory since
Belts for EV vehicles. EV works on motors. EV scooters has belts. Honda/TVS/Yamaha/Piaggoe scooters (competition with Japanese bondo belts), has belts. New generation mototrcyles has belts. Usually motorcycles dont have belts.
Ather 2W approached us.
We try to generate a higher generation of product, works under strenuous life, higher life, more value addition.
Now it is getting traction.
Last year also 8-9% hike
Distributors are exclusive
Every automotive has own spare part dealer network take product from u and push through them.
Awesome coverage by both of you. Its as if I attended the call as well 
A couple of questions to both of you:
A. Both of you mentioned two SKU count:
Which is correct? Did you find anything
B. Did not get this point? Co want a 50% price hike to pass on fully?
And are they looking in INR denominated settlement in future?
Thanks in advance
It is 5, not 500 in the USA
45k+
It needed to increase prices by 15%, and have passed on half of that. So, another 6-8% price hike is required unless RM prices come down.
I went for the physical AGM again this year and somehow I felt even more comfortable about the company and its business model and competitive positioning.
I always used to feel that belt manufacturing would be a simple thing. But only when one goes for the huge plants and infrastructure created by the company gradually over the years and after spending time understanding the whole process, one will realise how many steps are involved and how tough the whole thing is. Management has done really well to automate some parts of the process (rubber mixing plant is highly automated) which gives them efficiency and scale while some processes still involve lot of skilled labor and manual interventions (despite lots of machines etc) and I think this is a great positive…something similar to BKT/Mayur.
Had it been simple and just machine work…lot of cos would had come in and taken away the profit pool. The business is able to make 60%+ gross margins only because of factors such as:
In near term there would be lot of concerns like - high rm cost, slowdown issues in Europe etc…and perhaps cost increase given the large expansion coming onstream. But if the management is able to execute on growth (over next 3-4 years) while retaining nos like today…there is still lot of value creation left.
Ayush
Disc: Invested in family and client acs. Views would be biased and subject to changes 
Further margin pressure this Q - https://www.bseindia.com/xml-data/corpfiling/AttachLive/dbffecef-1add-4507-97c1-d467ae8638ae.pdf
140bps EBITDA de growth QoQ. There is a sequential recovery in gross margins of 500bps which is good to see. But that has been completely offset by increased employee costs of 500bps. Hopefully not all of the 500bps is a permanent increase and has some one-off components which won’t get repeated in Q 2-4.
Having been to the plants during the AGM, i can say that there is actually not a lot of fluff in manpower, lot of automation, if they are up, to my mind it indicates that new capex is about to start.
GM being up is the part i find quite good as an investor. IMO the sales are also quite given that they dont have any space capacities.
disc: Invested, biased
Gates has delivered good results this quarter but continue to highlight raw material availability and supply chain disruption related inefficiencies. Demand strong for powertrain business and overall business has grown by 6% YoY in East Asia & India region. They have slightly reduced their CY22 EPS and EBITDA guidance due to supply chain and raw material challenges.
The last 2 quarters clearly shows Pix is in a commodity industry with no ability to pass on cost increases.In good times even an average company looks good.
In a flat Indian track even Hardik Pandya will score a century, but when the ball starts swinging you need a Rahul Dravid, Gavaskar or Tendulkar.
Pix seems like an overhyped stock on this forum. Comparing it to Balkrishna is like telling Sanju Samson bats like Viv Richards.
Wouldn’t say Pix is a flawless gross margin pass through company, but I just did a quick check with BKT and this is the comparison for the last 13 Qs.
