Transcript of Investor's Call [Company Update]

8/20/2019 Transcript of Investor's Call [Company Update]

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“Greaves Cotton Q3FY16 Earnings Conference Call”

February 08, 016

!"#E$%&"$'( !$) '*+- .%/-%%+ !# 2 CE", G$E%E' C"&&"+

!$) +%$%Y%+ 4%$%'% C/EF F+%+C%- "FFCE$, G$E%E' C"&&"+


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!o5erator( Good Day Ladies and Gentlemen and Welcome to the Q3 FY-16 Greaves

Cotton Limited Earnings Conference Call We have !ith "s today on the call

#r $"nil %ahila&ani ' #D( and#r )arayan *arasia ' CF+ ,s a reminder all

.artici.ants/ lines !ill 0e in the listen-onlymode here !ill 0e an

o..ort"nity for yo" to as2 "estions after the .resentation

concl"des$ho"ld yo" need assistance d"ring the conference call .lease

signal an o.erator 0y .ressing45/ then 4/ on yo"r to"chtone .hone 7no!

hand the conference over to #r $"nil %ahila&ani than2 yo" and over to yo"

$ir

'unil .aila7ani( Good morning ladies and gentlemen $o as yo" see o"r 0"siness.erformance for "arter three generally the economic environment

contin"es to 0e still s"0d"ed and there is decline in t"rnover 0"t

sim"ltaneo"sly !e have 0een a0le to maintain and im.rove o"r .rofita0ility

0y almost 89 and !e have maintained mar2et share in all the 2ey .rod"cts

he most critical thing today as !e are in engine 0"siness and a"tomotive

engine 0"siness is the ongoing disc"ssions nationally aro"nd .oll"tion and

engine emission levels so 7 am ha..y to tell yo" that !e are f"lly geared ".

to achieve ne:t levels of emission ". to *$-;7 and !e !or2ing consistently

on that and 7 !ill 2ee. yo" ".dated from time to time and this !ill act"ally

.rotect o"r 0"siness for very-very long-term We have 0een a0le to maintain

foc"s on ne! c"stomer develo.ment and ne! .rod"ct develo.ment andvario"s ne! geogra.hies !hich have act"ally hel.ed "s We have 0een a0le

to c"t do!n material cost thro"gho"t !hich has reflected in o"r E*7D,

margins clearly and this is s"staina0le We have significantly red"ced on o"r

ca.ital We have as 7 said maintained on mar2et share and strengthening

1? to 16A9 for "arter ending 31st Decem0er >18 he %,


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for the "arter is re.orted at


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%sutos &iari( $"re ,nd sir are !e going to s"..ly this *$-7; com.liant engine to Eicher

%olaris as a .lan to la"nch in ier-7 cities in allB

'unil .aila7ani( $o since their c"stomer and any contin"ation if re"ires emission level

change !ill 0e ta2en care de.ending on the re"irement

%sutos &iari( +2ay ,nd this *$-; and *$-;7 ready engine that yo" sho!ed at ,"to E:.o

!hat is CC of that engine and !hat 2ind of c"stomers yo" are loo2ing for

that engineB

'unil .aila7ani( $o 7 do not 2no! !hich engine yo" have seen at ,"to E:.o

%sutos &iari( *$ this is three cylinder engine that yo" sho!ed at ,"to E:.o

'unil .aila7ani( +2ay $o three cylinder engine !hich is 2ind of model !hich is dis.layed at

,"to E:.o is 18 liter engine and 0asically it is only to comm"nicate that !e

have ca.a0ility to delivery m"lti cylinder engine 7t does not mean that !e

have ca.a0ility to deliver only three cylinder engine 7t means !e can deliver

any m"lti cylinder engine 0e it t!o cylinder three cylinder or fo"r cylinder

o2ay so this !hat and in ,"to E:.o since it is e:hi0ition yo" can only dis.lay

limited things so that is !hat it means

%sutos &iari( ,nd so are !e in decision !ith some other .layers for this engine 7 mean

0eca"se as of no! !e are mainly selling single cylinder engine so !e into"ch !ith any0ody for this engineB

'unil .aila7ani( Certainly !e are offering it and !e are trying to sell it

%sutos &iari( +2ay ,nd can yo" also .lease share the vol"me n"m0ers for the c"rrent

"arter vers"s last year three !heeler fo"r !heelers and allB

+arayan 4arasia( $o three !heeler vol"me is @ no! vers"s the earlier "arter of @8

Fo"r !heeler is a0o"t A vers"s 1 earlier

%sutos &iari( ,nd agri ."m.s and allB

+arayan 4arasia( %"m.s is a0o"t > and it !as the same n"m0er last "arter "arter

three of last year

!o5erator( han2 yo" )e:t "estion is from the line of *halchandra $hinde from

Centr"m *ro2ing %lease go ahead

4alcan5ra 'in5e(


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'unil .aila7ani Yeah !e are ho.ing more acco"nts and more c"stomers so !e are trying

for it and !hatever is ".date so far !e have shared 0"t as and !hen !efinalie any c"stomer !e !ill 0e very ha..y to share that

4alcan5ra 'in5e( *"t is there any ne! .rod"cts !hich !e are develo.ing or !e are trying to

gain c"stomer addition into e:isting

'unil .aila7ani $o are yo" only tal2ing only in conte:t of a"tomotive engine or are yo"

tal2ing

4alcan5ra 'in5e( Yeah only on the a"tomotive engine

'unil .aila7ani +nly a"tomotive engine o2ay $o regarding a"tomotive engine there aret!o 2inds of o..ort"nity one is that !e are no! !or2ing to achieve the

ne:t level of emissions so !hich means there is a .otential for "s to offer

engine !hosoever needs it for ne:t level of emission that is one o..ort"nity

0eca"se it is not easy for everyone to achieve and !e have that ca.a0ility

!e are confident $econd is that !e are no! into m"lti cylinder engine a

!hile ago one gentleman mentioned a0o"t seeing o"r engine in ,"to E:.o

and 7 e:.lained that $o m"lti cylinder engine is another family of engines in

a"tomotive !hich !e are offering $o these are t!o o..ort"nities !e are

e:.loring no!

4alcan5ra 'in5e( +2ay ,nd sir regarding .rofita0ility !e !o"ld li2e to 2no! ho! m"ch !ill0e the com.onent 0eca"se of the commodity .rices softening and !ill !e

see effect of .rice escalation in first "arter FY1A means !ill !e .ass

thro"gh the commodity .rices softening to the c"stomer 0y end of this

yearB

+arayan 4arasia( $o the first "estion of yo"rs !as a0o"t the commodity 0enefits already

flo!ing the %=L so since !e have a .ass thro"gh arrangement the

commodity 0enefit has also 0een .assed to the +E#s 0"t yo" 2no! all the

!or2 !e do in terms of val"e engineering and some strategic cost red"ction

!ith "s he commodity 0enefits and the commodity increase gets .assed

on to the c"stomers

4alcan5ra 'in5e( $o !hatever the .rofita0ility im.rovement is largely 0eca"se of the val"e

engineering and .rod"ctivity im.rovementB

'unil .aila7ani $o val"e engineering or innovation is something !e share !ith c"stomer

.artly and the commodity is .ass-thro"gh as my colleag"e &"st mentioned

$o !e al!ays have some 0enefit thro"gh innovation and that is the

s"staina0le .art !hich yo" are seeing

!o5erator( han2 yo" he ne:t "estion is from the line of *hargav *"ddhadev from

,m0it Ca.ital %lease go ahead


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4argav 4u55a5ev( $ir has Greaves la"nched their >8 2;, Gensets !hich !as one of the ga.s

in the .rod"ct .ortfolioB

'unil .aila7ani )ot yet !e are a0o"t to la"nch very soon .ro0a0ly ne:t "arter

4argav 4u55a5ev( +2ay ,nd sir if !e loo2 at one of yo"r largest com.etitors .erformance in

Gensets they have re.orted a strong gro!th in the domestic mar2et more

than >9 vol"me gro!th !hereas !e have 0asically re.orted a decline so

any comments on that sirB

'unil .aila7ani $o *hargav in terms of the vol"me there is no m"ch of a decline on Genset

in fact the "arter n"m0ers have sho!n a gro!th in the Genset vol"me

4argav 4u55a5ev( )o so nine months 0asically

+arayan 4arasia( $o nine months is not a very significant decline and any!ay o"r 0ase is too

small right $o overall ind"stry as Genset has not 0een gro!ing m"ch and

!e are too small in that !hole 0as2et $o the "arter has 0een .retty good

for "s yearly yes Y--D there is a slight decline and !e e:.ect that !ith the

>8 2;, la"nch !e are going to do soon !hich !e !ill 0e a0le to get it 0ac2

4argav 4u55a5ev( ,nd sir have !e c"t any .rices in Gensets in this year so farB

+arayan 4arasia( )o not to my 2no!ledge )o !e have not c"t any .rices

'unil .aila7ani )o !e have not c"t any .rices

4argav 4u55a5ev( +2ay ,nd sir on the a"tomotive engine side !e !ere tal2ing to some of

yo"r c"stomer and they !ere saying that till date is there no .ass-thro"gh of

commodity .rices !hich has ha..ened so &"st !anted to chec2 on that data

.oint 0eca"se they have not seen any red"ction in .ries of engines "ntil

Decem0er

'unil .aila7ani $o 7 do not 2no! !hy yo" have to tal2 to o"r c"stomers and give their

feed0ac2 to "s 0eca"se !e very !ell deal !ith them and !e deal in interestof com.any so !e do have "nderstanding on .assing-thro"gh 0asically

commodities and .art of innovation !or2 !hich !e do reg"larly and !e

have f"ll record of it

4argav 4u55a5ev( $o 0asically sir these E*7D, margins are s"staina0le right 7 mean 7 !as

more 2een to 2no! that

'unil .aila7ani Yeah that is fine

4argav 4u55a5ev( +2ay ,nd on the #"lti: side sir can !e get some vol"me n"m0ers 7 mean

!hat has 0een the n"m0er of engine dis.atchedB


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'unil .aila7ani Which oneB

4argav 4u55a5ev( #"lti: the Eicher %olaris ; !hat has 0een the vol"me of engines

dis.atchedB

'unil .aila7ani hat is very small 7 thin2 it is &"st 0eginning of the .rod"ction so 7 do not

have n"m0ers right no! 0"t can 0e shared later on 7t is very-very minor

n"m0er 7 !o"ld say

4argav 4u55a5ev( ,nd !hat co"ld 0e .otential sir for ne:t year 7 mean

'unil .aila7ani $o that de.ends on their .rod"ction that certainly is in control of c"stomer

ho! they gro! andso they are great com.any so !e have good confidencein their gro!th .lan so .ro0a0ly yo" can see their .rod"ction vol"mes and

accordingly !e !ill follo!

4argav 4u55a5ev( +2ay ,nd sir 7 loo2ed at "n-em.loyed ca.ital em.loyed has gro!n ".

significantly .ossi0ly that co"ld have 0een on acco"nt of cash so any .lans in

terms of "tiliation of that cashB

'unil .aila7ani Yeah so certainly !e !ill not de.loy it "nnecessarily !e !ill de.loy it only

!hen !e see the right o..ort"nity We are e:.loring those .otential

o..ort"nities

4argav 4u55a5ev( $o any C,%EH .lan sirB What is the C,%EH .lanB

'unil .aila7ani )o there is no s"ch .lan immediately and as 7 said !e are e:amining

o..ort"nities if !e have some o..ort"nity !e !ill do We are certainly not

in h"rry to s.end

4argav 4u55a5ev( +2ay "nderstood ,nd sir in terms of timelines is there any g"idance from

yo"r front in terms of addition of ne! c"stomers or yo" !ill have to still !ait

in terms of the feed0ac2B

'unil .aila7ani $o there is no anno"ncement so far

!o5erator( han2 yo" )e:t "estion is from the line of %avan I"mar from Jnifi Ca.ital

%lease go ahead

.avan 9u:ar( #y first "estion !o"ld 0e sir regarding are the three !heeler vol"mes this

.artic"lar "arter affected 0y the Chennai flood sit"ations .rimarily affected

;$ vol"mesB

'unil .aila7ani Chennai flood sit"ation certainly has affected 0"siness in some!here 0"t it

is o2ay that is a nat"ral calamity and !e are more concerned a0o"t the loss

of life and other damages and !e have 0een act"ally loo2ing into affecting.eo.le rather than 0"siness .layer so that is .art of life


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.avan 9u:ar(


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%:an 4atra( +f the ro"ghly something li2e 38 la2h engine yo" sell for three !heelers

and fo"r !heelers ho! m"ch !o"ld 0e c"rrently that yo" are selling it!o"ld 0e *$-777 and *$-;7 com.liant and ho! m"ch !o"ld 0e itB

'unil .aila7ani $o all o"r com.liant either *$-777 or *$-;7 0"t !hich ho! many are *$-;7 that

0rea2do!n 7 may not have right no!

%:an 4atra( +2ay ,nd if yo" can also thro! some light on the dividend that yo" have

declared


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'unil .aila7ani $o *$-7; has ha..en in only some of the vehicles and !e are 7 mean that

im.act is not so significant for this year

!anis Goyal( )o going for!ard sir for FY1A !hen it gets im.lemented across the 0oard

so can !e see im.act of higher cost engine 0asically a ;rice le5 gro!th in

the coming yearB

'unil .aila7ani ,0sol"tely so to the e:tent the .rice goes ". there !ill 0e a ;rice le5

gro!th and there !ill 0e a volu:e le5 gro!th *$-7; may not 0e in all cities

across the ne:t year right so to that e:tent yo" need to loo2 at the n"m0ers

0"t yes !hat yo" are saying is right

!anis Goyal( $"re ,nd !e !o"ld 0e a0le to maintain o"r marginsB

'unil .aila7ani +0vio"sly yes

!anis Goyal( +2ay ,nd sir sorry can yo" .lease re.eat the n"m0ers for a"to engine

vol"mes in the c"rrent "arter as com.ared to last "arter and 7 re"est

yo" to give "s the nine month n"m0ers also

'unil .aila7ani $o @ !as three !heeler diesel n"m0er vers"s @8 "arter three last

year Fo"r !heeler !as a0o"t A vers"s 1 "arter three last year

!anis Goyal( ,nd can yo" .lease give the n"m0er for nine months a"to n"m0er sirB

'unil .aila7ani )ine months !as a0o"t >3 vers"s >?8 last year and !as >8

vers"s 31 last year

!anis Goyal( $orry the fo"r !heeler !asB

'unil .aila7ani >8 vers"s 31 last year "arter so these are nine months n"m0er

!anis Goyal( ,nd agri if yo" can .lease give "s the n"m0er for nine months sirB

'unil .aila7ani $o agri is a0o"t 63 vers"s A-A8 last year

!anis Goyal( his is only %"m.sets yo" saidB

'unil .aila7ani %"m.sets yeah

!anis Goyal( +2ay ,nd %o!er iller !o"ld 0e 8B

'unil .aila7ani iller has 0een a0o"t 3 vers"s ? last year

!anis Goyal( +2ay ,nd ho! has 0een the so agri ."m. !e !ere .ro0a0ly !hat !e are

seeing is a trend to!ards electric ."m.s increasing 0eca"se of 0etter .o!er


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a0ility so are !e seeing im.act of that on o"r sales as far as .etrol and

2erosene ."m.s are concernedB

'unil .aila7ani $o the 0"siness of ."m. is to do !ith also s"0sidy and farm right so it is not

so m"ch a0o"t electric so diesel ."m. as a mar2et has al!ays 0een gro!ing

C"rrent year im.act is more 0eca"se of s"0sidy as !ell as the farm

.rod"ced

!anis Goyal( +2ay ,nd last "estion on the aftermar2et sales !hat are the gro!th !e

are seeing in aftermar2et sales in the c"rrent "arter and the nine months

sirB

'unil .aila7ani ,ftermar2et !e have seen a very consistent gro!th of any!here 0et!eenA9 to 19 "arter-on-"arter

!anis Goyal( ,nd this is largely a"to right sirB

'unil .aila7ani his is largely a"to 0"t it also has other aftermar2et as !ell !hich is Farm

and Genset

!anis Goyal( +2ay ,nd aftermar2et sales !o"ld 0e contri0"ting more than >9 of overall

reven"e sirB

'unil .aila7ani )o it is a0o"t 1@9 to >9 of the sales

!o5erator( han2 yo" he ne:t "estion is from the line of


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!o5erator( han2 yo" )e:t "estion is from the line of $an&eev ar0ade from Iota2

sec"rities %lease go ahead

'an7eev 8 2;, is also a0o"t to &oin that and then !e have very detailed

channel strategy and .romotion strategy to ca.t"re 0igger mar2et share

4arat 'et( C"rrently sir !e are 7 mean .resent over distri0"tion net!or2 is in %an 7ndia

or it is restricted to certainB

'unil .aila7ani 7t is %an 7ndia


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4arat 'et( $o ho! !o"ld !e then 7 mean !e have gained the mar2et share 7 mean

!hat !ill 0e o"r J$% so to gain that mar2et shareB

'unil .aila7ani $o J$% is o"r .rod"ct strength after this ne! emission norms o"r .rod"ct is

very strong and very !ell acce.ted and !e have also .ositioned o"rselves as

very .remi"m .rod"ct so !e see good res.onse coming !e have to gear ".

to strengthen o"r channel and distri0"tion and ma2e o"r .resence 0igger

4arat 'et( $o c"rrently !e have aro"nd 8 distri0"tion net!or2 correct for GensetB

'unil .aila7ani 7 cannot have n"m0er 0"t they are not 8 certainly !e have state to state

a fe! distri0"tors so all over 7ndia it !ill not 0e 8

'unil .aila7ani )o no !ay so o"r distri0"tion is relatively small today so !e are strong in

some states li2e G"&arat #aharashtra !e are very very strong !e have a

very strong mar2et share as !ell in some state 7n West *engal !e have a

very good distri0"tion as !ell $o generally !e have one or t!o distri0"tor

in every state right $o it !ill 0e in the range of some!here aro"nd >8

4arat 'et( Ko! do !e .lan to e:.and that !here do !e li2e to see in ne:t co".le of

yearsB

'unil .aila7ani $o it is a com0ination of many things right distri0"tions are com0ination of

.rod"ct service infrastr"ct"re so !e have consistently im.roved o"r

.rod"ct over the last co".le of years and no! !e are foc"sing on im.roving

o"r mar2et share in the areas of strength so !e are very strong in some

three states fo"r states five states and !e are contin"o"sly im.roving o"r

service deliveries et cetera et cetera in those states $o the first ste. !ill 0e

to im.rove the distri0"tion and .enetration in those states and then to ta2e

it for!ard from there

4arat 'et( $o have !e seen in last one year o"r mar2et share im.rovementB

'unil .aila7ani )o last one year o"r mar2et share has not im.roved 0eca"se one of the

im.ortant .rod"ct >8 2;, !as not there !ith "s right so overall mar2etshare has there 0een flat he im.ortant .oint is in s.ite of this .rod"ct !e

have not lost on vol"mes so !e have 0een a0le to maintain the vol"mes

once the >8 2;, comes on 0oard !e !ill .ro0a0ly get the mar2et share

0ac2

4arat 'et( ,nd second on e:.ort side ho! the things are moving 7 mean ho! m"ch o"r

contri0"tion has come from e:.ort this year 7 mean nine monthsB

'unil .aila7ani $o o"r e:.ort contri0"tion is aro"nd ?9

4arat 'et( Which !e !anted again 7 mean to ta2e it 19 so are !e seeing someim.rovementB


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'unil .aila7ani $o yo" see !e started !ith less than 19 and !e have vision to gro! this to

19 or more over a .eriod and !e are !or2ing to!ards that

4arat 'et( ,nd that !ill 0e mainly for !hich .rod"ct line that !e are loo2ing for

'unil .aila7ani 7t is across the .rod"cts it is Gensets it is Engines it is Farm E"i.ment it is

com0ination of all the .rod"cts !e .rod"ce

4arat 'et( $ir !e !ere also loo2ing for e:.anding o"r farm .rod"ct range so have !e

added any ne! .rod"cts and ho! !e res.onse that !e have already addedB

'unil .aila7ani Yeah 7 thin2 !e have made anno"ncements from time to time !e have

added many ne! .rod"cts and !e have la"nched in mar2et many light ,griE"i.ment some of the ne! %"m.sets We have la"nched from time to time

last one year also !e have done and in near f"t"re also !e !ill add more

4arat 'et( $o ho! is the res.onse 7 mean to that and is it really adding some gro!th for

the com.anyB

'unil .aila7ani Yes certainly

4arat 'et( $o c"rrently 7 mean !hat is the sie of agri if yo" really remove this %"m.set

and %o!er iller

'unil .aila7ani $o sie of agri 0"siness is aro"nd 189 yo" are right almost half of that is

%"m.set and rest is

4arat 'et( ,nd .rofita0ility !ise at cor.orate level or

'unil .aila7ani Yeah it is good

4arat 'et( +2ay ,nd sir ho! this LC; that !e !ere 7 mean tal2ing of 7 mean logistics

sol"tion that !e !ere tal2ing !e are logistic sol"tion .rovider more let "s

say !ith 0(3=(= coming so still 7 mean that are !e seeing declining !hen

!o"ld 7 mean see that there !e !ill 0e e:.ecting some 2ind of gro!thB

'unil .aila7ani $o yo" 2no! !e only s"..ly engine and !e s"..ly engine to vario"s vehicle

man"fact"rer so it is ". to their 0"siness model and their a..roach on that

and !e &"st follo! their vol"mes and so it for them to comment on the

vol"me gro!th

4arat 'et( ,"to 7 mean fo"r !heeler there is some decline !hich !e have seen is it

0eca"se of also the ata ,ce ne! model !hich they have their o!n engine

so is it 0eca"se of that alsoB

'unil .aila7ani )o idea 7 mean 7 cannot comment 0eca"se it is very com.le: mar2et !hichmodel is affected d"e to !hich model !e really cannot fig"re o"t


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4arat 'et( *"t are !e seeing gro!th in that fo"r !heeler mar2et that !e are cateringB

'unil .aila7ani We are ho.ef"l that it !ill gro! !e see .otential of gro!th as 7ndian

economy/s gro!th !e see that .otential

!o5erator( han2 yo" he ne:t "estion is from the line of 'erry0(36(06from

Edel!eiss %lease go ahead

'arni: !aesari( Kello sir this is $!arnim here $ir my "estion act"ally .ertains to the

gro!th on $C; ind"stry o"tloo2 so !e are seeing the $C; ind"stry act"ally

declining 0y almost aro"nd 19 to 189 in the first nine months and !e have

seen the KC; act"ally gro!ing 0y almost aro"nd >89 to 39 so 7 mean

!o"ld yo" li2e to comment on !hat is act"ally yo"r o"tloo2 on the $C;ind"stry that is one and second is if yo" !o"ld not have the fair idea on this

so yo" !o"ld 0e act"ally receiving some sort of im.roved demand from the

+E#s is it the caseB

'unil .aila7ani Yes so !e are ho.ef"l that year-on-year there is gro!th and there can 0e

vario"s drivers of $C; ind"stry getting affected may0e financing is one area

infrastr"ct"re is another area and so on so forth and alternative o.tions of

."0lic trans.ort and rest are also factor0(3>(06 so as 7 said it is very

com.le: and every vehicle man"fact"rer is doing its home!or2 to .re.are

the .lan overall !e see fore see gro!th 0eca"se !e are s"..lying engine to

so many of them so !e do not fore see any do!nside

'arni: !aesari( ,s sir !hile !e are s.ea2ing have yo" seen any im.rovement demand from

yo"r +E#s at this .oint in timeB

'unil .aila7ani ,t this .oint of time no 7 am tal2ing a0o"t another one year

'arni: !aesari( FY1A another t!o "arters - three "arters from here o2ay ,nd sir my

second "estion !o"ld 0e on !e are almost selling close to the 3 la2h - 38

la2h of three !heelers $o &"st !anted to "nderstand !hat is the mi: of

.etrol and diesel over thereB

'unil .aila7ani $o !e largely sell diesel tho"gh !e also sell some fe! .etrol 0"t it is largely

diesel

'unil .aila7ani $o it is 7 mean almost in .etrol is negligi0le amo"nt 7 mean 0asically largely it

is diesel

'unil .aila7ani Yeah

'arni: !aesari( $o 7 thin2 safe to say sir @9-@89 !o"ld 0e diesel and the 0alance !o"ld 0e

C,G or something elseB

'unil .aila7ani %erha.s


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'arni: !aesari( +2ay more

!o5erator( han2 yo" )e:t "estion is from the line of ;ai0hav *aid from #otilal

+s!al %lease go ahead

aibav 4ai5( $ir !hat !o"ld 0e o"r mar2et share c"rrentlyB

'unil .aila7ani 7n !hatB

aibav 4ai5( 7n the engines *$-7; enginesB

'unil .aila7ani +2ay $o in this $C; segment in o"r sie of o"r relevant mar2et !e have

mar2et share close to @9

aibav 4ai5( @9 o2ay ,nd sir do !e e:.ect this !hen do !e e:.ect this *$-; or *$-;7

to 2ic2-inB

'unil .aila7ani $o that de.ends on act"ally Government/s decision 0"t !e heard so far

thro"gh ne!s and thro"gh all the comm"nication and vario"s for"m that it

is li2ely to ha..en >1 or so

aibav 4ai5( ,nd sir the C,%EH of 8> crores !e are doing that for the s.ecific engine

the ne! on the com.liant norms to 0e com.liant !ith ne! normsB

'unil .aila7ani Emissioniing yes

aibav 4ai5( +2ay ,nd sir this @I that yo" have re.orted n"m0ers !as say @8 so

decline in !hich c"stomer are !e seeingB

'unil .aila7ani hat !as across the 0oard

aibav 4ai5( ,cross the 0oard not any s.ecific +E# rightB

'unil .aila7ani )o s.ecific +E# no

aibav 4ai5( +2ay ,nd sir in that segment only 7 mean !ho is the 0iggest c"stomer of

o"rB

'unil .aila7ani 7t is %iaggio

!o5erator( han2 yo" he ne:t "estion is from the line of )i2 Kanim from ,7#$ ,sset

#anagement %lease go ahead

+i? /ani:( 7 &oined the meeting late so if yo" can let me 2no! is there a t"rnaro"nd in

the a"to ind"stry as yo" e:.ected 7 thin2 in the last "arter yo" mentioned

that yo" are e:.ecting a t"rnaro"nd in the third "arter so has there 0een at"rnaro"ndB


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'unil .aila7ani 7t is very diffic"lt to ans!er this 0eca"se a"tomotive ind"stry is very lag

there are vario"s segments !hich are

+i? /ani:( 7 mean sorry for the three !heeler sorry 7 sho"ld have descri0ed

'unil .aila7ani hree !heeler is consistently no !e feel that it !ill gro! over a .eriod of

one year or t!o years 0"t the gro!th rate is not very high 0"t yes it !ill

gro!

+i? /ani:( $o far yo" have not seen it yet 7 mean the t"rnaro"nd yetB

'unil .aila7ani Yeah t"rnaro"nd means gro!th 0"t then it is not going to 0e very high

gro!th this is !hat !e foresee 7t is very diffic"lt for "s to say in anythingdefinitive !ay 0eca"se this is a ind"stry !e arethere are so many .layers

and they are 0est .eo.le to comment on that

+i? /ani:( 7 see Can yo" tell me !hat is the 0rea2do!n in terms of three !heelers in

terms of the f"el !hether .etrol C)G or diesel !hat is the 0rea2do!nB

'unil .aila7ani $o largely it is diesel and there is small vol"me of C)G very small vol"me

there is no .etrol

+i? /ani:( )ot for yo"rself 0"t for the mar2etB

'unil .aila7ani For mar2et may 0e yo" need to refer the $ociety of 7ndian ,"tomo0ile

#an"fact"rers data they give very correct data in their $7,# data if yo" can

search yo" can see that

+i? /ani:( +2ay ,nd do yo" sell diesel are engines for .assenger three !heelers or &"st

cargoB

'unil .aila7ani $o engine is same and it is only the a..lication is different

+i? /ani:( +2ay $o yo" sell for 0oth ty.es of three !heelersB

'unil .aila7ani Yes a0sol"tely

+i? /ani:( Do yo" have the 0rea2do!nB

'unil .aila7ani $orry

+i? /ani:( Do yo" have the 0rea2do!n in terms of ho! many engines go to .assenger

three !heelers and the other oneB

'unil .aila7ani )o !e do not have those 0rea2do!ns


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'unil .aila7ani hat also again this $7,# data can sho! yo" 0eca"se that de.ends on

vehicle man"fact"rers !hich a..lication the ma2e since engine is same for"s it is diffic"lt to identify that

!o5erator( han2 yo" he ne:t "estion is from the line of Chintan $heth from $I$

Ca.ital %lease go ahead

Cintan 'et( +n cash yo" did mention 8 crores so .ost that !e declare dividend so it

!ill come do!n to that e:tent rightB

'unil .aila7ani Yes yo" are right

Cintan 'et( +2ay ,nd sir !hen yo" mention that o"r vol"me gro!th !o"ld not 0e thatsignificant in terms of n"m0ers going for!ard as yo" foresee from the off-

ta2ers +E#s $o ho! are !e 0asically maintained o"r margin 0eca"se yo"

did mention that o"r val"e engineering and .rod"ct "ality im.rovement

has 0een s"staina0le and has 0een came in o"r margin 0"t on the

o.erational side if !e do not im.rove o"r "tiliation level then there is still

sco.e of if the vol"mes are not .ic2ing ". and "tiliation are not significantly

im.roving given the s"0d"ed off-ta2e in environment right no! $o ho!

confident that margins !ill s"stain if given the #7% recently got anno"nced

0y the steel com.any so ra! material .rice !ill start moving ". again for say

si: months as they mentioned in #7% doc"ment so ho! confident !e can

maintain 169-1A9 margin on engine overallB

'unil .aila7ani $o !e ma2e effort in every .ossi0le !ay it dee.ens on vario"s factors so !e

cannot .redict 0"t certainly vol"mes remain same or go ". since !e are

contin"ing to do innovation since !e are contin"ing to do 0etter and 0etter

in terms of internal cost so that is the !ay !e try and maintain margins so

confidence is reasona0ly good

Cintan 'et( +2ay ,nd sir !hat !ill 0e the "tiliation it has come do!n from last year 7

g"ess 0eca"se of the vol"mes are de-gro!ing so !hat !ill 0e o"r "tiliationB

'unil .aila7ani +"r "tiliation is a0o"t A9 today

Cintan 'et( A9 o2ay ,nd sir one more thing on engines yo" did mention yo" are

ready !ith all the variance in terms of .etrol diesel there !ere tal2s of

19 ethanol 0ased engines is this .ossi0le in terms of engine

man"fact"red 0ased on 19 ethanolB

'unil .aila7ani $o 7 have to e:.lore that 7 have to e:amine that *"t !e have ca.a0ility to

offer vario"s f"el o.tions

Cintan 'et( +2ay so it is still !or2 in .rogress can 0e ready

'unil .aila7ani $orry cannot ans!er that &"st no! 0eca"se 7 have to e:amine it


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Cintan 'et( +2ay ,nd sir lastly on the .rice increase d"e to *$-7; !hat yo" e:.ect ne:t

year in terms of ado.tion across 7ndia from c"rrent say 19 to >9 vol"mes*$-7; com.liant and 0alance is *$-777 and !e ass"me that if there !ere no

vol"me gro!th ha..ens ne:t year then the *$-777 vol"mes !ill come !ill

transform to *$-7; !ill give "s some escalation in .rice and s"0se"ent o"r

vol"me !ill

'unil .aila7ani Yes so o0vio"sly the .rice !ill ha..en and it !ill definitely hel. "s to get a

gro!th in terms of vol"me yo" are right

Cintan 'et( $o any 0all .ar2 n"m0er or e:.ectation yo" have of conversion of *$-777 to

*$-7; in terms of .ercentages !ill also hel.

'unil .aila7ani $o no !e do not have any n"m0er 0eca"se this is still in .rocess and not all

across the 0oard *$-7; ado.tion !ill ha..en across the 7ndia there are cities

!ho are going thro"gh so it !ill 0e .hase so it a com0ination of the act"al

!e increase !e get and negotiation as !ell as the different cities !ho ado.t

these fo"r

Cintan 'et( $o if yo" can sho! more light say c"rrently aro"nd 1 odd .ercent or 1> odd

.ercent of o"r .ortfolio has 0een *$-7; and yo" e:.ect at least the 0ling of

that in ne:t year if !e can safely ass"me that 19 to 1>9 c"rrent and that

!ay at least that is the .oint 7 !anted to ma2e

'unil .aila7ani $o Chintan o0vio"sly the vol"me in *$-7; !ill go ". ne:t year right ho!

m"ch it !ill go ". !hat .ercentage !ill go ". it is very diffic"lt to calc"late

and give it yo" no! 0"t o0vio"sly it !ill 0e very very shar. increase in *$-7;

vol"mes

!o5erator( han2 yo" he ne:t "estion is from the line of Karshal %atil from

$hare2han %lease go ahead

/arsal .atil( $ir most of my "estions are ans!ered 0"t &"st !anted to have a flavor of

yo" on the a"to engines 0asically a short !hile ago !e &"st disc"ss that the

engines are also going into the .assenger car segment $o &"st !anted tohave a flavor !ith this ne! licensing and .ermits 0eing o.en ". do yo" see

s;ar in demand and something li2e thatB

'unil .aila7ani Yes these ne! licensees act"ally come in action !e certainly have 0"siness

/arsal .atil( +2ay $o may 0e initial s;ar is something that yo" are seeing right no!

0eca"se there !ere some ne!s in the media !hich s"ggested to!ards

o.ening ". of lac2 of licenses and all to!ards #aharashtra state and allB

'unil .aila7ani We also have the same ne!s 0"t !e do not 2no! 0eyond that


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/arsal .atil( +2ay $ir and &"st color on yo"r de0t side sir !o"ld !e contin"e to see

red"ced levels of de0t going ahead may 0e >1A->1@B

'unil .aila7ani here is no de0t act"ally 7 do not 2no!

'unil .aila7ani )o !e do not have any de0t

'unil .aila7ani Which de0t are yo" mentioningB

/arsal .atil( +2ay $ir 7 !as act"ally referring toe the interest cost and !anted to 2ind of

relate to that

'unil .aila7ani $o these !ill 0e not the interest cost 0"t some 0an2 charges et cetera

!o5erator( han2 yo" he ne:t "estion is from the line of Gagan hare&a from

Comgest 7ndia %lease go ahead

Gagan &are7a( 7s it .ossi0le to get a 0rea2-". of yo"r sales c"stomer !ise ho! m"ch !o"ld

0e %iaggio 0e ho! m"ch !o"ld ata and #=# 0eB

'unil .aila7ani 7t !ill 0e diffic"lt to share that 2ind of .ic2-".

Gagan &are7a( *"t is it .ossi0le to "nderstand %iaggio alone 0eca"se %iaggio has 0een a

significant c"stomer for yo"

'unil .aila7ani 7 thin2 it is very easy 7 !ill tell yo" yo" loo2 at the vol"mes of each of these

c"stomers that !ill give yo"

Gagan &are7a( *"t yo" !o"ld not 0e servicing the entire re"irements of each of these no

so

'unil .aila7ani We serve almost all the re"irements all the diesel re"irement hat gives

very very clear idea

Gagan &are7a( $econd yo" tal2 of an im.rovement in sales realiation leading ". to the *$-7; emission norms 0"t ho! m"ch of that !o"ld sort of slo! do!n to yo"r

o.erating line or .rofit line 0eca"se it co"ld 0e that the incremental

re"irement to com.ly !ith emission norms !o"ld re"ire yo" to increase

largely on 0ro"ght o"t or traded items if yo" co"ld may 0e ela0orate a 0it

and thisB

'unil .aila7ani $o certainly there are additional things to 0e done and ho.ef"lly !e

maintain o"r margin so since it is still !or2 in .rogress 7 cannot comment

0"t !e are ho.ing that !e maintain o"r margin

Gagan &are7a( *"t there is no sco.e to ta2e the margins ". 0eca"se of


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'unil .aila7ani $o !hen 7 am saying !e maintain o"r margins it means same 7 mean

maintain .ercentage margin a2ing ". !ill 0e very diffic"lt to commit0eca"se rather it is additional !or2 that !hich &"st additional !or2

Gagan &are7a( +2ay ,nd the dividend .ayo"ts that yo" have year-to-date given are

s"staina0le .ayo"t ratiosB

'unil .aila7ani hat de.ends on .rofita0ility so far if yo" see o"r .ast trac2 record !e are

doing good and then !e ho.e that !e sho"ld contin"e to do good do

0etter

Gagan &are7a( What !o"ld 0e the C,%EH re"irements for yo" going aheadB

'unil .aila7ani C,%EH re"irement !e &"st mentioned largely on acco"nt of emissioniing

and some


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'unil .aila7ani $o !e have no! .laced o"rselves in range of m"lti cylinder engine !hich are

act"ally s"ita0le for vario"s 2ind of vehicles incl"ding some cross overvehicles !hich is car segment $o in a !ay 7 do not 2no! !hat that ne!s 7 do

not remem0er 0"t then &"st to give o0&ectively that !e have range of

engines !hich !e can offer to com.lete $C; segment and to some of the

.assenger vehicle segment also

4argav 4u55a5ev( Yeah so 7 mean are these +E#s o2ay !ith the idea of o"tso"rcing engines

0asically the .assenger car +E#sB

'unil .aila7ani $o some of the +E#s do o"tso"rce even today and yo" m"st 0e a!are that

internationally it is .roven model to o"tso"rce engine and even in 7ndia

some of the +E#s are o"tso"rcing engines so it is not a ne! thing to.ro.ose

!o5erator( han2 yo" Ladies and gentlemen d"e to time constraint !e !ill 0e ta2ing

the last "estion from the line of #anish Goyal from E),# Koldings %lease

go ahead

!anis Goyal( $ir &"st !anted to get a sense on the aftermar2et sales is it entirely thro"gh

o"r dealer net!or2 or it is a com0ination of thro"gh +Es alsoB

'unil .aila7ani 7t is com0ination of 0oth

!anis Goyal( $o largely ho! many dealer net!or2 !e !o"ld 0e having e:cl"sively for

servicing sirB

'unil .aila7ani Ko! many dealersB

'unil .aila7ani $o !e give over 8 dealers across 7ndia and !e have more than 1 .l"s

a"thoried trade mechanics so !e s"..ly s.ares thro"gh o"r channel and

!e also s"..ly s.ares thro"gh "E' channel as !ellB

!anis Goyal( Yo" said 1

'unil .aila7ani ,"thoried trade mechanics

!o5erator( han2 yo" 7 no! hand the conference over to #r *arasia for his closing

comments

+arayan 4arasia( $o than2 yo" very m"ch for &oining this call We a..reciate yo"r time and

interest in the com.any han2 yo" very m"ch

!o5erator( han2 yo" very m"ch mem0ers of the management Ladies and gentleman

on 0ehalf of Greaves Cotton !e concl"de this conference call han2 yo" for

&oining "s and yo" may no! disconnect yo"r lines


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Documents

Transcript of Investor's Call [Company Update]