Analyst Meet / AGM - Analyst Meet
Benefits of capex for higher value added products will be visible from FY18
In Interaction with Mr. M. Mehta MD, Precision Wires India.
Key Highlights
There was a volume growth of around 4% in FY'16 and around 6% in FY'17.
Raw material prices be it copper or aluminium has been more or less steady or in upward trend. Overall, compared to past volatilities, management expects the prices to remain steady in a range without much volatility.
Around Rs 8-10 crore of capex for new machining lines for wires for 765 KV transformers has already been operational in Mar'17. The full year benefits will be visible in FY'18. The company already has orders to execute the same. The margins are better in these orders due to the higher value proposition. Most of the initial trial and other expenditures were booked in Dec'16 quarter and some costs were booked in Mar'17 quarter as well.
Entire capex has been from internal accruals.
Overall, OPM should see some 50-80 bps improvements in FY'18 as sale of higher value added products increase.
Of the total sales, broadly around 30% come from power electrical equipment industry, around 20% come from power generation sector, 20% from automobile industry and rest from various sectors such as consumables, infrastructure, industrials etc.
Power equipment, distribution and automobiles are doing well, while consumer durables have improved, but have been quite volatile.
The company does not keep any position open on forex or raw material side and always works on a back to back long term contract with the vendors and suppliers.
GST will only benefit the company, though not in a big way. There is a difference of around 4% on indirect taxation side between organised and unorganised sector, which post GST, the unorganised sector will be at par with organised sector.
The company is also looking for some other strategic investments particularly in renewable sector, generators etc, but is going with a very cautious approach.
Overall, management continues to remain optimistic and expects FY'18 to be better than FY'17.
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