Everest Kanto Cylinders declared the results for the quarter ended December 08 and held a conference call to discuss the same and its future growth strategies. The key takeaways from the concal are as follows:
The top line of the company stood graciously high by 99% to Rs 251.17 crore. The interest expense increased by 136% on the back of loans taken by the company and the depreciation scaled up by 154% to Rs 21.15 crore as the company wants all its plant to follow one method of calculating depreciation. The company mainly follows written down method of depreciation and has recalculated the depreciation for its US and China plants which came about Rs 4.65 crore. Around Rs 89 lakh of depreciation on extra capex was also included in the depreciation for the quarter ended December 08. Thus the company reported healthy profit of 30% to Rs 38.17 crore.
The company’s Nandigram facility is expected to go on stream by mid of March of FY 09.
Volume wise around 1.80 lakh of cylinders were produced in the quarter ended December 08 as against 1.57 lakh cylinders in the corresponding previous quarter.
Around 1.53 lakh cylinders were sold in the quarter ended December 08 as against 1.58 lakh cylinders in the corresponding previous quarter.
For the nine months ended December 08, around 5.38 lakh cylinders were produced (as against 4.55 lakh cylinders) and 5.05 lakh cylinders were sold (as against 4.65 lakh cylinders).
For the nine months ended December 08, the company has sold Rs 474 crore value of CNG cylinders, Rs 70 crore of Industrial cylinders and Rs 170 crore of Jumbo cylinders.
Across geographies, Sales for the quarter ended December 08 includes, 11043 cylinders from China, 56200 cylinders from UAE, and 1.53 lakh cylinders from India.
The company is short of deliveries, in the industrial front and with the huge demand in the upfront, the company is eager to cover up this demand in coming 3-6 months.
Due to the slow down in OEM market and cut in production of domestic Auto players like Tata, Ashok Leyland etc, in the quarter ended December 08 the company saw dip in sales in the CNG market.
The Dubai based plant has improved the realization by the improved mix and the realization was around Rs 15000 per cylinder.
The demand for Jumbo cylinders has shown the improving trend in the (1700 cylinders sold as against mere 400 cylinders) and the realization is around Rs 700000per cylinder.
The company has Forex loss of Rs 22 crore for the nine months ended December 08, on the back of Net loss of Rs 13 on FCCB’s and loss of Rs 9 crore in the forward transactions taken by the company. For the quarter ended December 08, the company has forex loss of Rs 9.50 crore.
Capacity utilization of Company – 78% for the quarter ended December 08.
The company is optimistic in the volume growth in Dubai by around 25-30% in FY10. The Dubai plant has a capacity of 1.96 lakh cylinders per annum. However, this capacity is operating at 125% of capacity utilization to produce more cylinders to meet huge demand. Indian plants will provide supplementary facility to the Dubai plant if more is required.
The company has order book of USD 28-30 million for the US plant.
The company is hopefull for the demand to pick up for China plants as the Government is a definitive supportive of CNG.
The company expects capex of around Rs 120-150 crore for FY10. However, it is cautious in implementing the capex in China in this weak demand, as it could get 50-70% increase in capacity by investing around Rs 50 crore.
The company has also some orders in hand for supplying CNG in Delhi.
The consolidated Debt on books of the company was around Rs 404 crore excluding FCCB of Rs 174 crore. The company’s rate of interest on the dollar denominated terms came down but the interest on the Domestic rupee loans was on a higher side.