NOVEMBER 2017 CONCALL

Kamdhenu Limited has a manufacturing unit in Bhiwadi in Rajasthan where we focus for research and introduce new products based on customer requirement in the market. We currently have a strong TMT product portfolio, which includes Kamdhenu TMT, Kamdhenu SS10000 and Kamdhenu Nxt.

Kamdhenu believes in the asset-light model and therefore we have created a franchisee business model for developing the brand leadership in steel bars PAN India. We provide design and technology to the franchisees and also assist them to upgrade their facility wherever necessary. The investment made in the upgradation is done by the franchisee itself.

We are associated with more than 75 franchisee units to manufacture steel bars, structurally steel products and colour coated profile sheets.

Through these franchisees we are selling products for over more than Rs. 6,000 Crores under the Kamdhenu brand. We have 6,500 exclusive steel dealers across India.

Since we have franchisees, dealers and distributors in each state they ensure quick delivery of the TMT bars. We ensure delivery within 24 hours to any place in India.

For franchisee’s this is a ready platform in a niche market giving facelift to them and also to unorganized players which can leverage our brand Kamdhenu and provide them with the exceptional distinctiveness, which enables them to on premium on their products.

Capacity - Kamdhenu through its franchisee has a capacity of manufacturing 25,00,000 metric tons of TMT bars, 5,00,000 metric tons of the structural steel, and 2.5 lakh metric tons of color coated profile sheets.
Through the franchisee model we made Rs. 41 Crores last year. Our vision is to increase our annual production capacity of franchisee business to 50 lakh metric tons by 2022 and have a royalty income of over Rs. 100 Crores by 2020.

Coming to our Paint Business, we have an installed capacity of more than 46,000 tons per annum having 40 products across 10+ product categories.

*In the past we were focusing on the establishment of brand and incurring expenses on the brand so the bottom line was lower which led to lower ROE but in the near future you will see better ROCE and ROE ratios.

What is our business model? When we have the franchisee, so we get franchisee fees. So is it leading to volume or how does it work?
First we charge a signing amount, an upfront fee and thereafter we charge on a per ton basis of sales that is ranging from Rs.300 to Rs.450 depending on the area-to-area premium in that region.

Throughout the regional level you will feel that slowly, the unbranded goods are diminishing because TMT Bar is a secured product and nobody can take any risk for the building. So the main problem with the unbranded product is they are not able to utilize even they are 15% to 20% capacity that is why Kamdhenu is growing rapidly.

EBITDA is not negative. It is around 5% in paint business.

Can you tell us that when we take Rs.300 to Rs.450 per ton from franchise what is our cost there? Since this product directly goes from franchisee to the dealers, so what is our cost there as all these numbers flow directly into our EBITDA is that right?
The cost includes branding expenses, marketing expenses, and various schemes for the dealers and distributors and we also have a dedicated team of 300 marketing people to manage this so all these cost is attributable to the royalty income.

COST would be around 60% of the royalty income broadly.

And what will be the margins at Rs.500 Crores sales in Paints?
It would be around 13% to 15% on EBITDA level.
The net profit margins would be around 8% to 10%.

It is only Kamdhenu which has the franchisee business model in the TMT sector.

Your EBITDA margin are sub 4% and they are coming down since the last four quarters (on a year on year basis) so what gives you the confidence that this will improve (steel and paint business) further considering the fact that we are more like a trading organization rather than a manufacturing organization?
Yes you are right. We are a branding and marketing company but if you see the result for the last four to five quarters, the bottomline is increasing but you are right that we have to further improve the EBITDA and PAT level.
Till date we have expensed a lot of money in creating the network, in creating the painter’s royalty, in creating the dealer’s royalty and a lot of money was invested on reaching to the consumers also. Now I think that period is over.

Sir how do we give incentives to our franchisees and dealers on our regular basis so can we know a few details about the same?
In this particular model we have the unique USP that Kamdhenu products are having a premium ranging from Rs.1500 to Rs.4000 a ton in different parts of the country as per situations. So the average out premium of the Kamdhenu product is Rs.2500. Out of this Rs.2500 premium, normally Kamdhenu charges a royalty of Rs.350 a ton, Rs.350 ton is charged by the distributor, Rs.1000 is the margin of the retailer on the counter and Rs.700 to Rs.800 is normally the margin of my franchisee and this is the strength of the Kamdhenu product and you can analyze that this brand is creating or generating profit of more than Rs.400 crores a year out of that we are just having only Rs.60 or Rs.70 crores though rest is invested retained throughout all the network and that is beauty of Kamdhenu.

In our franchisee model, we depute at least two people in the plant of franchisee to monitor the raw material as well as finished products and to look after the operational issues and we allow franchisee unit to directly sell their products to the dealers, which is appointed by Kamdhenu, so we do not buy the material and sell to the dealer. It is a direct purchase and sale, franchisee directly purchase material from the raw material manufacturers and produce in their plant and sell to the marketing network of Kamdhenu.

Sir we have earned last year Rs.40 odd Crores from royalty, Rs 200 Crores from paints, what is the other 600 Crores in the topline?
This is Rs.200 Crores from the manufacturing of our TMT Bar from our Bhiwadi unit and Rs.400 Crores from the marketing of the TMT Bar manufactured by the franchisee units, there are some areas where corporate clients or big developers do not want to deal with a franchisee unit they want to deal with Kamdhenu so we buy material from the franchisee unit and sell to them those are interested to make dealing with Kamdhenu only.
What we do is the people who do not want to deal with or purchase the materials from the franchisees then they can give an order to Kamdhenu on a bulk quantity basis. They will fix an order for one month. So we give it on fixed prices and sell the materials to them. What happens in this is we keep a little margin in this and hence we purchase this through our franchise and we do not work on any other brand. There are two types of income in this, the royalty business which is there through the franchises, we charge the royalty from the clients and this is as per the royalty agreement and the materials which we buy and sell in that also we keep some margin

No Sir my question is if we do it directly from the franchises and give the materials to big clients then it would not show it in our revenue?
Correct.
So your revenue in each quarter will be very volatile?
Yes, it might be volatile.

FEBRUARY 2018 CONCALL

Kamdhenu is the largest TMT selling brand in India

Through these franchises we are selling products for over more than Rs.6000 Crores under the Kamdhenu Brand across India.

More than 80% of our sales is retail sales.

We expect that the demand of TMT steel bars to grow multifold with the kind of opportunities, we see in our country. Affordable housing would be a big boost to the TMT steel sector. The government is planning to build 5 Crores houses in the next three to five years even if they are able to build 2 Crores houses, it will require 10 Crore metric tonnes of TMT bars in India. That is at least 2 Crores metric tonnes of additional demand every year.

Our vision is to increase our annual production capacity of franchise to 50 lakh metric tonnes by 2022 and have a royalty income of over Rs.100 Crores by financial year 2020.

We are having more than 4000 dealers associated with us in our paint business. We have an installed capacity of 46000 Tonnes per annum

For Royalty Income of Rs. 100 crores, need to have capacity of around 50 Lakh Metric Tonnes.

Now with the change in technology, we are installing all the induction furnaces or other furnaces and trying to setup the Concast where the Concast will be directly converted to the TMT bars. This will save at least Rs.1000 per tonne as re-heating of either through coal or through the furnace oil. So that is the technology we are using everywhere and more and more units are installing this technology or we can say it as the backward integration for the rolling mills and as soon as their capacity increase, their process is changed to feeding from the Concast to the rolling mill. So there is a substantial growth in the margins of the company. We are focusing more on the expansion of the existing units and the backward integration process for all the roll units so that the profitability is considerably increased. This will give a win-win situation for Kamdhenu as well as to all the franchise unit.

Now our sales are 50% of the premium products whereas four to five years back the premium products hardly contributed 15% to 20%. This means Kamdhenu products are accepted at each and every project may be a five star hotel, maybe a luxury project, Thus there is acceptance for our product in the market and we hope from the next quarter onwards the numbers will be definitely positive for the paint division also.

The franchises royalty we collect is not on the percentage basis but on per tonne basis. That is continuously increasing.

The royalty was Rs.41 Crores in last year which on per tonnes was Rs.282 per metric tonne. Now it is Rs.364 per metric tonne. The royalty has increased due to the launch of Kamdhenu NXT product in April 2017. So per tonne basis royalty is increasing.
As more and more units are going for the Kamdhenu NXT product and the royalty for that is charged at a higher rate.

Kamdhenu brand is commanding a premium over the local brand of Rs.2500 a tonne. Kamdhenu is getting royalty at Rs.360 or Rs.370 a tonne, retail counter is getting a margin of Rs.1000 a tonne, my distributor who invests money on the dealers and provide them credit facility normally gets Rs.400 a tonne and the balance is retained by all franchises. That way all the four partners in the system are benefited all the way. Moreover, the sales quantity which you asked last year the quantity for the entire year, was 14.66 lakh metric tonnes and this year we are hoping to cross more than 16 lakh Metric tonnes so in the nine months we have already achieved 12.50 lakh tonnes of quantity.

However, there is a considerable cost we have to incur because everywhere whatever schemes and programs we are providing them as a marketing tool, may be gold coil scheme, may be the tour scheme, may be the foreign tour scheme, so all these schemes are discussed and the targets for the next year are discussed, whole performance are discussed and award ceremonies are conducted in all the meetings. So that is the second aspect. The third we normally float several marketing schemes may be foreign tour every year more than eight or ten tours are organized for all the dealers. So that is a big tool. We organize abroad meeting and motivational tours of the dealers and distributors.

My own production is hardly 60,000 tonnes. Out of this 25 lakh Metric tonnes capacity, we hardly have a capacity of more than 50,000-60,000 tonnes and that unit is not only used for the production, but also for the R&D, as well as to train all the quality people of the franchises, to train the production people to cut the cost and thus there are a lot of expenses which we incur in the existing units. I think it is very difficult to separate all the costs.

If you go for a construction of three to four story, 5 kgs of steel is used for per square feet of the construction. Suppose you are going for a construction of 1000 square feet house, you will be required 5000 kgs of steel that is 5 metric tonnes of steel and now a days the price of steel is almost Rs.50 a kg, you can work out Rs.250 per square feet steel for the construction. The steel is required in this proportion every time. If the building is much higher 20-storey, or 50-storey then this steel consumption is comparatively increased from 5 kg to 8 kg. 50% of the steel is further increased.

Kamdhenu brand is commanding an average premium of Rs.2500 /MT across India ranging from Rs.1500 to Rs.4000. In the Rs.2500 there are four partners, Kamdhenu, franchise, distributor and dealer. We are charging Rs.300 to Rs.400 per metric tonne. Distributor is also charging Rs.400. Rs.1000 is charged by the dealer and Rs.700 to Rs.800 is retained by the franchise units. So in that way they are all incentivized, Kamdhenu and others.

MAY 2018 CONCALL

In FY18 we earned a royalty income of Rs. 61 crores, a growth of 50% from last year and expect royalty income of over Rs.100 crores by FY2020.

During the year the company spent Rs.50 crores on branding and marketing and another Rs.20 crores was spent by the franchisee on the same.

Our aim is to add only those franchisees who have high production capacities. We are now only looking to add those who have annual capacities of over 1 lakh metric tons per annum.

Since the franchisee model which is asset light, the company should be analyzed on profit before tax and not on EBITDA level.

Total turnover including all franchisee for FY18 are at Rs. 8,072 crores, a growth of 33% from FY17.

Around 80% steel sales are in retail segment and 20% are in the project sites or to the builders.
In paints, we are totally into retail sales.

Presently we have 83% in steel and 17% in paint, in future you will find around 25% to 30% in paint and 70% to 75% in steel in our own balance sheet. Whereas in the franchise business you will find a turnover which we are targeting by 2020 of over Rs. 12,000 crores, which is presently Rs. 8,000 crores.

No, it is not 3% - 4%, it is around 1% because it is a volume game. (in the trading business)
Our focus area is franchisee business, royalty income which are very high margin.

No, in color coated sheet royalty earned is more, we are charging Rs. 1,000 per metric ton.

Because the ROCE that we have calculated on the steel business is also 42% where I think capital deployed is some Rs. 120-odd crores.

In the paint business the sequence is quarter one, then quarter two is better, quarter three is more better and quarter four is more better, this is the sequence of the paint business.

Royalty income per tonne is not fixed for all, it depends from region to region and market to market and franchisee to franchisee, the royalty income ranges from Rs. 300 to Rs. 500 per metric ton.

Apart from royalty there is no other income from franchisee that accrues to Kamdhenu

IMPACT ON RISE IN STEEL PRICES- Because we are in the secondary market, we buy ingot and billet from the market and reroll, the price is directly linked with the raw material prices. The moment the prices of raw material increases, immediately the sales price also goes up. So there is no impact in increase in the prices, except few marginal impact in the stock lying in the factory, either in our own factory or in franchisee unit. So there is not much impact on price increase or decrease.

We are not planning expansion by capex infusion,, rather we are expanding our capacity through franchisee route. So we are planning to double our capacity in the next five years.

Sales2.5 lakh tons for structural sheet and color coated sheets and 14.5 lakhs for TMT.
RoyaltyRs. 53 crores from TMT and Rs. 8 crores from the structure and sheets

AUGUST 2018 CONCALL

In paints business, EBITDA margins is around 4.5% where as last year same quarter it was 3.5% .

So, when you say we have received Rs. 19 crores of royalty income this quarter, does that include any of this upfront fee?
Yes, from total of Rs.19 Crores, one time fee contributes Rs. 52 lakhs .

Last year we had achieved a target of Rs. 200 crores from Rs.167crores.In the current year ,that is FY19 we are planning to achieve a target of Rs. 275 crores. Apart from this, those low priced products liked distemper, putties we have started outsourcing since 2017.

Yes, in the upcoming 3-4 years we are expecting at least a business of Rs.1,000 crores from the paint business which will help us adding Rs100 Crores to the bottom line

Actually, we are de-bottle necking our plant or you can say upgrading our plant and the capacity would be increased from 72, 000 to 1,20, 000 metric tonnes. And CAPEX would be around Rs. 10 crores with regard to our own plant and with regard to franchisee model we are planning to double our capacity over a period of 3-5 years.

Intro of GSTSee in this, unorganized sector use to evade tax before the introduction of GST, but the fact that now there is GST they won’t be able to evade tax and after paying 18% they cannot even compete with the organized players. So, the unbranded products, those which used to be in the grey market, they are compelled to move to the organized sector. And as soon as they move to the organized sector and pay 18% tax then the viability of those people will not be there. So, people like us who are the big players will be benefited because the un-organized sector will be eliminated.

NOVEMBER 2018 CONCALL

Our ROE has improved by 650-basis point to 13.6% and our ROCE has improved by 520-basis point to 16.8% as of September 2018.

In the franchisee side, presently we have a capacity of 25 lakh metric tonnes and in the next three years we are going to double this capacity.

Yes the main producers usually work only for the big projects. So Kamdhenu has strength across the country through the retail network and we cater to the entire country.

In the Paints business, in the first six months of this year EBITDA is 4.2% as compared to 3.5% in H1 FY18.

For the capacities which we have in our existing plants, for that we plan to enhance so that we can have a sales of Rs. 450 Crores from our plants. That will make the turnaround in the paints division.

In that Rs.1 Crore tonne, the major players are the main producers and they are doing the main sales through projects and government projects. So in retail segment Kamdhenu is the largest player, we have the largest network, we have the largest team and we are doing a business of more than Rs.22 lakh metric tonnes a year. Tata Steel is hardly doing Rs.10 to Rs.11 lakh metric tonnes yearly, others are doing a very minor share. In retail segment the total market for the organized sector is hardly Rs. 30 to 35 lakh metric tonnes.

JANUARY 2019 CONCALL

We have decided to bring in more efficiencies in our own manufacturing and increase market share by the way of leveraging our brand and our asset lite business model.
In line with this we have reduced our focus on sales than to B2B segment and which we will call it as trading sales. This shift in strategy will lead to number one increased margins, number two better efficiencies with higher ROE and ROCE, number three reduced working capital requirement.
With this change in strategy, we believe the right way to monitor us would be by the way of tracking our sales excluding the trading sales, which has gone up to 57% compared to nine months of FY2018.

Around 20% market share in the organized sector.

When it comes to color coated sheet, we are expanding our business only through the franchisee business. So, our income is only from the royalty sources, so this business is increasing through the franchisee route only we are not undertaking any production or manufacturing in this.

Our plant is being used for the R&D purpose and for the training our marketing and quality personals whom we depute in the franchise unit.

For this our business development team identifies the unit, considering various parameters such as, whether the unit has a good potential in the market, quality of the promoters, , financial and non-financial discipline and after which they send a proposal to us. We basically identify those units which have the capacity, but are facing problem in selling their products and also conduct due diligence of that Company, Thereafter we depute our quality control team to visit their plants. If they find that the plant is okay to produce as per Kamdhenu quality parameters, we allow them to use our brand name, otherwise first we upgrade their plant at their cost and thereafter we allow them to use our brand. During this process, we tell them you have to manufacture only Kamdhenu brand products. You are not allowed to manufacture any other product number one. Number two you have to sell your products through our marketing network only. We have a huge marketing network of 6,500 dealers and distributor across India who are exclusively working for Kamdhenu, so we have the marketing network, We have the brand, We have the quality parameters. We depute two persons in their plant. One for operation and one for quality monitoring, so this process roughly takes around three to four months as we start from the scratch that is right from the production process to selling the product in the market.

When it comes to number of franchisees we are not inclined to increase the number of franchisees, but we are inclined to increase production capacity, which will be doubled in the next three years. Presently, we have a capacity of 25-lakh metric tonne of TMT, which in the next three years would be doubled to 50 lakh metric tonne, that’s what we plan. With regards to our dealers and distributor network in the next three years, it will be around 10000.

Competition, I think it is everywhere across the country, but if you are talking about the main producers only Tata is having the retail network and rest everywhere across the country in local market some regional brand is there and we have to selectively compete with all these regional brands and I think there is no major player except Tata Steel because JSW and JSPL are mostly working on the projects . Tata Steel also works on the projects , but they have the retail network also.

We have a very small market and our presence is limited mainly this north and center India. We have a lot of opportunities in Southern India and Central India or Western India. So we are growing at a pace of 32% to 35%. I do not see any constraint in this growth of 32% to 35% in the next three to five years.

As We are in the TMT segment which not only required in the real estate but also in the other infra and , government project example affordable housing schemes. So TMT is required almost everywhere. So we do not see any downfall from other players as well be it in organized or unorganized steel sector in the country.

Yes, we put this condition with the agreement that the franchise have to spend certain expenditure on the brand as they are the direct beneficiary of the sales in their region

On 100 Crores of royalty income, our net profit is 40 Crores approximately

MAY 2019 CONCALL

Our royalty income has also shown significant improvement and has grown by 37% to Rs. 84 Crores for the full year.

The company is on course to beat its target of Rs.100 crores as royalty income by FY20 and aims to achieve Rs. 150 crores by FY22.

AUGUST 2019 CONCALL

he company is on course to beat its target of Rs. 100 crores as royalty income during the financial year. We also aim to achieve a Rs. 150 crores of royalty income by FY22. Along with this we also expect to add more franchise capacity going forward and reach the 5 million MT per annum capacity by FY22.

There had been no human casualty in the said fire incident. The carrying amount as on date of fire of inventories, property, plant and equipment damaged in the fire was to the tune of Rs. 45.68 crores. The inventory, property, plant and equipment so damaged in the fire were validly insured and insurance policies were effective as on date of this fire.

The effect is not that much over us because secondary manufacturers who are there, there is a comfortable gap between raw material and finished products which everyone gets in manufacturing margin. Those who have mines and coal blocks and those whose raw material prices are fixed, they had a huge impact because of this.

Hence, With the reduction in steel prices, we are able to integrate the unorganized sector to the organized by connecting them with your franchise

Either franchises are added or their capacities are added. As we prefer that first of all that the existing franchise units increase their capacity. If the potential is there and franchise is not in a position to add the capacity then we have new franchise. So it is a continuous process and so some units are added in each and every quarter.

There is a slowdown and we are also hearing this news from various sources and in the news channel also. But as far as we are concerned, our business has increased by 20% which you can see in our result and will continue to increase by atleast 20%.
So we are not seeing any slowdown in our company because of our asset light business model and unique business model.

We have to understand the overall decorative paint segment. So there are three types of paints. One is powder based, second is solvent based and third is water based emulsions which is the high-value product. Today we are outsourcing all product as our production capacity is closed. So we are outsourcing each and every item from the third party manufacturer. In future we have the planning to outsource powder base and solvent base and in our own plant we will manufacture only water based emulsions and high value product like the stainer, colorant and emulsions. So this will enable us to achieve the best combination of attaining higher margins.

WHY CHANGE IN STEEL PRICES DOESNT IMPACT THE COMPANY OR ITS DEALERS (FRANCHISEES) --> Our franchise unit is not impacted by the pricing because they are into the secondary market. They are taking material from the market and rerolling it and selling to the market. So as and when prices of finished product reduce, simultaneously the prices of raw material has also decreased. So there is no impact on the franchise pricing or costing or anything.

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We do advertisement on brand rather than products. When we do advertisement of Kamdhenu brand so both products get leverage, steel and paint both.

NOVEMBER 2019 CONCALL

During the first half, the average price of TMT bars have reduced by 14% which has led to lower profits in the steel business. Despite of all these, our volumes have grown by over 17% and our profit before tax in the steel business has grown by 8%.

There will be improvement in the coming quarters which we are seeing but there will be pressure on the margins. As the price of the raw material has not decreased in the proportion to the decrease in the selling price so there is a pressure on the margin.

#Quote Once the demand is slow in the market, there is more dependency on a brand.

But unfortunately since the prices fell to Rs.5,000 to Rs.6,000 in this period, then there is a pressure on the margins and also in our own manufacturing there was pressure on the margins. But for franchisee business, whatever sales we were able to sell, in that our royalty income has remained intact and you can see that it is growing. Last year we had a target of Rs.100 Crores, hopefully we will be able to achieve it in March.

In infrastructure sector, the growth is hardly 5%-6% but the company is planning a regular growth of more than 20%. We could achieve 17% in spite of the worst period during the month of July to September 2019 which had excessive flood across country and as the sales pressure was there

Market SizeThere are many regional brands coming in. I think it is almost about 1.5 Crores tonnes of market which are of branded and there are many substandard products which are sold in the market. So, I think we sell around 27-28 lakh tonnes of products of Kamdhenu brand. We are almost commanding more than 20% share of the retail market. Tata Steel hardly sells about 10 lakh tonnes but Kamdhenu was able to do about ₂₈ lakh MT worth of orders.

FEBRUARY 2020 CONCALL

During the quarter Kamdhenu limited has once again presented innovative steel in the field of construction and brought one of its own type of steel Power Alloy Steel 10000 that is PAS10000 in the country. PAS10000 is capable of giving unmatched strength and safety to the construction. Its unique design gives 360 degree locking with the concrete, which a gives strength of up to 10000 PSI with the concrete.
The research of the company will take the Rebar Steel Industry to the next level. This alloy steel gives it better rustproof qualities and gives this rebar capability to be at 28% more weight along with that it also gives double earthquake prevention to the building.

Now an update on onetime exceptional item of Rs.24.39 Crores. The Company has very old pending excise & service tax matters pertaining to the period from 2004 to 2012 under various stages of dispute totaling amount to Rs.49 Crores. In order to clear the old disputes and litigation, the Company had decided to settle all these pending matters by opting for this Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

For third party paint manufacturers - We have deputed our own team in their plant to monitor the quality. We have given the specifications to them and we are taking material from them on outsourcing basis under our own brand name and transferring these materials to our sales depot, from there we are supplying to our retail dealers.

One is exclusively doing for us, which has a capacity of around Rs.100 Crores. However, the other unit is also doing for some other paint companies like Berger.

In paints business, in the next three years we hope to achieve the target of Rs.600 to Rs.700 Crores and hopefully we will do it.

For steel, in the franchise model, we have allotted dedicated area for each franchise to sell their material to our dedicated dealer network. But in paint we have to have total control on the market and formula of manufacturing also

JULY 2020 CONCALL

We are also looking to penetrate southern market where our presence is less and strengthen our footprint in existing geographies.

FEBRUARY 2021 CONCALL

We have set ourselves a target of reaching total Brand Revenue of 20,000 crores, expanding our franchise operations by reaching an overall capacity of 5 million metric ton per annum by FY22 and achieving a royalty target of Rs.110 crores by FY22.

The overall PAINT volume including outsourcing have increased by 38% on QoQ basis to 8,701 KL in Q3 FY21 and stood at 9,432 KL in Q3 FY20.

Paint industry in one way has got converted to FMCG sector. Secondly this is the only industry where there is 15% to 20% annual growth. Third thing is that if you will see since the GST has been introduced, unorganized sector has almost vanished, where unorganized sector had around 30% to 40% share of market. Now things are going in favour for the companies which are in the organized sector.

Presently we do not have depot in Tamil Naidu and in Kerala also we do not have a presence.
In Mumbai there are no retail sales, there are project sales more in Mumbai. *We have not created our presence there in Mumbai. Right now, we are focusing more on Tier-2, Tier-3, Tier-4 cities because in metros and in big cities brand pull is more. So premium big established brand is there so customers go first for that. *

Every option is opened and we want to grow like anything. We are willing to do anything either it is a global tie up or technology transfer or any other group in India who wants to come at many levels. These talks are there, but I think our mind is open that we have to multiply the paint business and we have to bring that at good level. Whatever we have learned in last 10 years, we can use that experience in developing the paint business.

From our family there are only four directors, all are engineering graduates, and everybody is looking after their independent vertical. Mr. Saurabh Agarwal looks after the paint vertical; Sunil ji looks after the franchise vertical and Sachin Agarwal who is MBA from UK, also engineering graduate looks after steel rolling mill division plus the whole marketing business.

For R&D in paint production, we have people who have come from AkzoNobel, Berger or Asian Paint like Companies. It is nothing like that we are a family-owned company.

As of today, we have 14 units of structure steel and around 5 lakh ton capacity is there. Apart from that, warehouses and industrials require, color coated sheet, for that we have around 25 units and around 2,50,000 tonne annual capacity

We expect to achieve royalty of Rs.106 to Rs.110 crores by FY 22 and Rs.150 crore by FY 23. so according to that PAT by March 2022 to be around Rs. 35 crore and Rs.58 to Rs. 60 crore in March 2023. We are expecting and we think that we can do better than this
By FY 24 we will be able to reach depending on how the demand situation is there and if the required demand is there we will do that before also. But by FY 25, we can definitely think about Rs.100 crore.

Not directly listing Paints business, because it has been advised by E&Y to get the funds before listing or before getting listing of the shares. So, if there is a private equity they would be interested in giving the funds in the unlisted company.

JUNE 2021 CONCALL

With that focus, we have recently collaborated with Preity G Zinta as a the Brand Ambassador for decorative paints business under brand name Kamdhenu Paints.

The target of Rs. 450 crore is easily achievable and after that we think that we will do some investment on plant and machinery and anything else working requirement will be there over the next 5 year for Rs.1,000 crore plan is there hopefully

We are getting better realization than in metros or in Tier-1 cities. Also the bigger dealers which are there have huge expectation in terms of discounts, incentive scheme and due to that realization comes very less though turnover is very good.

But our focus is on areas from where we are getting the best realization and like I have said through painters we have a lot of involvement, we have made a lot of scheme to incentivize on painters and apart from this we are giving them the recognition and we are doing their insurance also. So, nothing happens when the painters is not connected from their heart and painter get associated when they get the good product at a reasonable cost and they should have a good service life.

We have given our 10 to 12 years to build our brand, to create dealer network, to generate customer loyalty and to generate painters and dealer loyalty we have invested in that over past so many years. Now that our whole plant is ready and our installed capacity is there in two to three place. So I think it is a high time that with the demand we will be able to give it good growth

In the paint industry there are revolutionary changes that has come, perception has changed since Indigo has come, valuation criteria has changed. Before two years like as you all know that JSW Paints had also entered the paint segment. but they also are not in retailing, they are also making industrial paint required for color coated sheet that comes for warehouses. In paint decorative segment if anyone wants to come for that they have to create a very big retail network that is not easy. If you talk about paint companies the old paint companies they are present, they are 80, 90, 100 years old companies.. Over a period they have created brand loyalty and dealer network.. Grasim’s plan is that if to aggressively spend money then definitely they are all welcome and if everybody thinks that in the paint industry ₁₅% to 20% annual growth is there which is the only segment because per capita paint consumption is very less it will go three, four, five times it will go. I think potential is there, but when Grasim will come then also it is good like Asian is a market leader and others are also working and everybody is earning money and everybody’s work is going on and every product is getting sold so there should be a healthy competition.

Why we say OUR capacity because we have our exclusive agreement that he is going to make only for us and he is going to sell in our marketing network only, it is not like that he is going to sell the material anywhere outside our network and towards expansion of capacity, we are taking new unit and existing units wherein expansion is going on.

We are also working on line to raise funds through private equity or strategic investor, definitely to grow business, funds are required. So, once the listing is done then we will plan accordingly, and we have to reach Rs.1,000 crore turnover.

For Demerger- In terms of Shareholding, 1 is to 1 we are giving it in the mirror shareholding. In which for Rs.10 per share of Kamdhenu we are going to give Rs.5 per share of paint business.

Overall after the demerger, the both business will be separated, steel and paint, you have to see it differently like we were talking paint we are taking 50% growth and if we talk of steel we are seeing 20% to 25% growth. We will also do it in future and if you see the past track of the growth, it is coming in this way.

In paints, we have given 12% EBITDA level for Rs.1,000 crore.

AUGUST 2021 CONCALL

And sir when we can expect our paints business to turn PAT positive, any idea on that? Within this financial year itself.

So, for the Stainers that are there; Stainers are made by Pidilite also, Asian and Kamdhenu also. So, you will see that 30% sales comprise of our Stainer, that gives a big boost to our sales. Apart from Stainer our colorants that are there, we are focusing more on these because these are value-added and high margin products and their demand is also increasing.

Paint market is witnessing almost an annual growth of 18% - 20%. So, there is Rs. 30,000 crore market that is there, and approximately Rs. 5,000-5,500 crore of new market gets added every year as repainting is also happening and new projects are also coming in.

We have a lot of welfare schemes designed for painters and we run those welfare schemes for them and directly transfer the benefits through cash or card to them, we transfer to their bank. So, those things are picking up, Today we have approximately 25,000 painters enrolled with us and almost 10,000 – 15,000 painters are continuously procuring our sales material.

In fact, we have only working-capital loan, we do not have any term loan. So practically NO DEBT.

But in conversion there is not much of an effect for us because we have a set cost of production plus a margin. So in that, we or our franchise do not see much of a possibility of loss or profit, it is minimized for us.

Prices fluctuate in stock, it may go up and down but our conversion cost is almost fixed and the margin is fixed. Plus Kamdhenu’s premium is almost fixed, which varies from around Rs. 2,000- 2,500 a tonne at different places. And Kamdhenu’s royalty is also fixed, it is on per ton basis and not on the price.

So Asian paints have almost 60,000 machines installed in all over India, so we are also increasing it continuously and as and when the sales will increase and premium products are there, luxury emulsions increase, so for that tinting machine is mandatory for the dealer. So we feel in the plant, with great difficulty, we make only the fast running colors like black, brown, red, blue, yellow or green, the one which are fast moving colors, so they are only being made in the plant, the remaining shades, the pastel shades and all are made by the tinting machines. So we also have program in tinting machines, as the sales are increasing, we are opening new dealers, so we will install new tinting machines as well in the coming times.

And we are planning very aggressively for the coming two to three years and for 2023- 2024 we are targeting a royalty of about Rs. 150 crore. Going ahead, we are targeting a royalty of Rs. 200 crore + in 2025-2026.

NOVEMBER 2021 CONCALL

Further, I would like to update on the insurance claim, that as of 4th October, 2021, our company has fully received the insurance claim of Rs.15.44 crores towards the loss of stocks. Insurance claim towards building, plant & machinery is under process and expected to be received within this financial year.

Our Company plans to enhance it’s steel TMT bars capacity through its franchisee production facilities from 38 lakh metric tonnes per annum to 50 lakh metric tonnes per annum over the next two years.

We aspire to align our brands as brands of people’s choice and increase our brand turnover to 22,000 Crores by FY 2023-24.

Royalty income through franchisee’s For H1 FY22 stood at Rs.44.1 crores as compared to Rs. 35.2 crores in H1 FY21, a growth of 25% YoY.

As soon as the capacity utilization reaches ₇₅% to 80% and if we are supposed to get further sales then we have kept a CAPEX plan of almost Rs. 100 crore for one of our plant in the phase 1 and in phase 2 again we have a plan of Rs. 100 crore, so over the next two to three years, the company has planned a Rs. 200 crore investment in Paints for capacity expansion.

So by this way the total capacity is of 66,000 kl and total revenue of Rs. 600 crore we can generate from the existing facility

FEBRUARY 2022 CONCALL

Demand for decorative paints has been witnessing strong traction over past few quarters and we expect this momentum to continue on back of shortening of repainting cycle, housing demand and consumer preference to build pucca houses.

I would like to update on the insurance claim towards building, plant & machinery is under finalization stage and the claim amount is expected to be received within this financial year

We have clocked a revenue growth of 23% YoY to Rs. 149 crores in Q3 FY22 and 55% YoY growth in 9M FY22. During the quarter gone by, our company has face challenges due to external issue of pollution at Delhi and NCR region. TMT manufacturing plant at Bhiwadi was under partial operations/ shutdown for 27 days due to ban imposed by NGT (National Green Tribunal) in Delhi and NCR region.

Total Sales from Paint Business for Q3 FY22 stood at Rs. 77.5 crores as compared to Rs.62.2 crores in Q3 FY21
We have reported positive EBIT (not adjusted for unallocable expenses) of Rs.4.3 crores for Q3 FY22.

Total Brand Turnover for Q3 FY22 stood Rs. 3,973 crores as compared to Rs. 3,353 crores in Q3 FY21, a YoY growth of 19% and stood at Rs. 3,792 crores in Q2 FY22, a growth of 5% QoQ.

Royalty Income through Franchisee’s stood at Rs. 23.2 crores in Q3 FY22 as compared to Rs. 23.5 crores in Q3 FY21 and stood at Rs. 22.5 crores in Q2 FY22, a growth of 3% QoQ.

The big players who are coming in they will have the projects sale, institutional sales and , government sale will be there. They will not have big portion on retail side..

One thing is there that the outlook for the company was given that the company in the next four-five years, it will clock a turnover of Rs.1,000 Crores then for that we will do the rethinking with the dealerships and if there are any plans which are required or there is a requirement for tinting machine or any other investments, we will certainly do the funding for the money through bank or any other way.if it will be required .

Our own capacity is 1,20,000 metric per tonnes