Anup engineering -concall-may 2022
1…Flattish growth
=The revenue was impacted due to multiple challenges at the supply chain both at the vendor as well as our customer sides including due to COVID delays, however, we were able to continue and maintain healthy EBITDA margin of 24.3%.
=I think the impact we had on our operations in last year quarter 1 and because of the shortage
of manpower and that really hit us quite badly. In H2, we had organized ourselves better, but then that impact which was there of wave to was actually there, a lot of sites of our project sites where our equipment were headed to, they had got delayed and also another thing that happened
was lot of our suppliers, they were not able to deal with that kind of a situation and that impact kind of really disrupted the flow of materials as required. So, I think primarily these are the reasons which really are responsible for a flattish kind of a growth.
2… Order book
=I am pleased to inform you that we have an all-time high opening order book of approximately Rs. 400 crores.
=We are looking at something like a growth of about 25% in this year in order booking, 25% to 30%,
3…Odhav capex
=On the CAPEX front, the CAPEX for the development of the clean room at Odhav will be completed in May. It is almost already complete and the bay is commissioned already.
=The clear room facility powers Anup into the elite group of global fabricators having the necessary
infrastructure for fabricating exotic materials like titanium and tantalum.
=It will open the doors for the new product as well as new market segments.
=The Odhav CAPEX has just got completed, it will be close to around Rs. 15 to Rs. 18 crores
=The clean room technology, the whole development of this bay and this facility is to get into higher order or higher kind of segment.
=All the CAPEX that Odhav is now complete and we can increase the turnover from this
facility itself to about Rs. 600 crores, between Rs. 500 to Rs. 600 crores.
Q=you mentioned that once this Odhav CAPEX starts, we will be
having much larger product basket, so it will be like different kind of heat exchangers we will be making or any new product will be doing?
Ans=Primarily, the product mix is going to continue to remain as Shell & Tube Heat Exchanger, may
be more of advanced designs like the Helical Heat Exchanger and EMBaffle kind of heat exchangers that we have in our portfolio.
Q=And that will go in any other industry or it will be more or less similar like refinery petrochemical
and all?
Ans=Definitely, they are going to find use across industry segments.
4…Kheda plant capex
=The total CAPEX of Kheda, all phases put together is close to around Rs. 275 crores. In the first phase, which we have already started, we will be incurring Rs. 120 crores.
= As far as Kheda is concerned, the phase 1 construction work in Kheda is also going on in full swing and is all tracked for commissioning
in H2 FY23, sometime towards the end of quarter 3 and beginning of quarter4
5 …Order execution cycle
=Order cycle continue to be in the region of about anywhere between 9 months to 12 months in most cases.
6…Ebita margin
=As far as the margins are concerned, it will be, as you know that the costs have risen very sharply in the recent months, so although we have increased our sales prices and also hedged majority of our inputs which will help us to improve our absolute EBITDA on an yearly basis,
=However, the percentage margin will definitely see a decline and at this moment it will be difficult to forecast
how much percentage margin at this juncture due to very sharp volatility which continues to prevail in the input cost.
=I think that may be it would be fair to assume that anywhere between 3% to 4% will be an impact on margin
7…Growth
= We are looking to grow by around 30% in the next year
= Whole CAPEX has been designed to power our growth at about 30% a year, FY23 onwards.
Q=In last June you guys are bullish on this growth side that we have very
good order book and all this stuff, right, in your last concall, but we have not seen any growth
Ans=So, last, 2 years we have had a kind of difficult years because of COVID , it has been actually flattish kind of a transition
into FY22 and the main reason for this is like I have mentioned earlier in the call, the impact on the supply chain that was something which was quite underestimated by us when we talked about in the last concall and also the impact of this on the customer side, the delays that happened at
the customer side, the project sides which were not ready to accept the equipment’s. So, I think
those kind of delays were not really expected and not estimated.
=The other thing is you were to
look at which is different in this year, how it makes it different is that never before have we opened the order book at this number at such a high order book. Last year, I think it was
somewhere about Rs. 256 crores, this year we have opened that something like around Rs. 400 crores and subsequently also we have booked of orders and that the order flows looks to continue going forward as well.
=So, that gives us the full order to plan our kind of equipment, be
engineering, procurement and ensure that the material and all, whatever inputs are required for fabrication of our equipment are all available on time
8…Target to achieve Rs. 1,000 revenue by 2025
= I think this is deferred by another 2 years because we lost a couple of years due to the COVID impact was quite substantial for our industry.
9…Diversification
=There is diversification is definitely very much high on our agenda and if we were to look at the current order mix also, the proportion is growing in the petrochemicals, we have in the
past years also already made the breakthroughs in the power segment and we are continuing to
do so in the current year as well. Even precision equipment the likes which are required for nuclear, aerospace and defense is something that is going to come up as Kheda, towards the
completion of the third phase of Kheda.
10 …View on fear of slowdown
A=Currently I think the refining capacities and petrochemical
capacities in India, they are likely to continue to have the CAPEX in the next may be 3 to 5 years, that is likely to continue
B=However, we are looking to now focus on the global market as
such and start growing our exports.
=I think that is one area where we have taken where the focus
is going on and the areas like, we have already made beginnings in projects of their blue hydrogen projects for certain, in fact the first project of its kind, we are getting into chemicals,
we are getting into different sectors like fertilizers, gases, geopower, green hydrogen, green ammonia, so these are the areas where we are going to diversify and there are definitely
opportunities available to us at the global level more certainly
= I would place the main reason for that is that we are into the high-end engineering kind of equipment. These equipment’s are key to our plant’s operation. So, I think these equipment
are definitely something which where we are not seeing any kind of a decline there.
11…Export
Q=Since the transportation cost of
our capital goods equipment’s plays a very important role since they are bulky, so how does the
competitiveness get affected if at all it gets impacted when we are transporting or making it for
a client who is based out of India?
Ans=We have exported in the past as well to all parts of the globe including the United States and Canada and South America.
=Apparently, what is happening is that these kind of engineered equipment’s, the capabilities to engineer, the capabilities to design are our strengths here in India and also the manufacturing, the whole manufacturing technology for these kind of engineered equipment is our strength and that is the reason why we are seeing that the kind ofcapabilities
that we have
= Those companies are in the developed part of the world where either they have already shut shop because they are not able to compete this being a very material and labor intensive kind of work. Engineering efforts are so intense in this that in fact most of these companies they have their procurement and engineering centers located here in India.
12…Competition
=If you look at the kind of peers who have approved for these kind of products that we are making,
you can count them on your fingertips
=It is a very small field, these are highly critical, highly complex and the degree of engineering which goes into these equipment is quite high, so we
have very few competitiors there and I think that is the competitive landscape is very favorable for us.
13…Specialty/proprietary equipment
=In the order book, it is to be tune of may be to the extent of about 45%.
= As far as the revenue mix is concerned, maybe we will have to find that data, it could have been to the tune of about 15% to 20%.
=These are advanced designs of heat exchangers, I have already named the helical and there are several other designs like this, so I would refrain from naming the other designs.
=These equipment give a clear advantage to the user in terms
of efficiencies and in terms of savings, so that is the reason why people are now, most users are now switching over to these advanced designs.
=I think the demand for that product is increasing. One thing is that the kind of experience that we had in this kind of advanced designs for the last 20 years and the second thing is that
more users are becoming aware about it. So, they are referring to go in for these designs rather than going for a standard kind of heat exchanger.
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