APL Apollo Tubes Limited (533758) Earnings Call Transcript & Summary

Good morning, dear shareholders. I am Vipul Jain, Company Secretary and Compliance Officer of your company. It gives me great pleasure to welcome all the members of the company to the 41st Annual General Meeting of APL Apollo Tubes Limited being held today through video conferencing in accordance with the applicable regulatory framework. We are joined today by Shri Ashok Kumar Gupta, Vice Chairman of the company; our esteemed Independent Director; Shri Dinesh Kumar Mittal; Madam Asha Anil Agarwal; Shri Rajeev Anand; Shri H.S. Upendra Kamath; Shri Dukhabandhu Rath and Shri Rakesh Sharma are also present. From the executive team, we have Mr. Deepak Kumar, Director, Operations; and Shri C.K. Singh, Director and Chief Operating Officer. Shri Chetan Khandelwal, Chief Financial Officer of the company is also present. The proceedings of this AGM can be deemed to be conducted at the registered office of the company. The proceedings are being recorded and the summary of the proceedings will be made available on the website of the company. Dear shareholders, the company has taken all the necessary and feasible steps to facilitate participation of the members in this AGM and enable them to exercise their voting rights. All the members participating in this AGM through video conferencing have by default been placed on the mute mode by the host to avoid any disturbance arising from background noise and to ensure the smooth and seamless conduct of the meeting. Members facing any difficulty may contact the CDSL team through the details provided in the notice of the AGM. The statutory registers and other required documents as stated in the notice of the AGM are available for inspection electronically by the members. Dear shareholders, since Shri Sanjay Gupta, Chairman and Managing Director of the company, could not join this meeting due to certain exigencies. It is proposed that Shri Ashok Kumar Gupta, Vice Chairman of the company, who's present in this meeting through videoconferencing be elected as a Chairman of the meeting. I request now the host to initiate the polling on the same so that the members present in this meeting may express their assent to the proposal. Host, kindly initiate the polling on the election of the Chairman.

Done, sir. Sir, 12 shareholder has voted and all are in favor.

Okay. Let's wait for 1 for minute. What is the status on the votes?

Sir, 14 shareholders has voted and all are in favor.

Sure. It is noted that the members present have consented to the proposal. And hence, it is declared that Shri Ashok Kumar Gupta is elected as the Chairman of this AGM. Now I welcome Shri Ashok Kumar Gupta, sir, to the meeting and request him to preside over the 41st Annual General Meeting of the company. We welcome you, sir. Sir, the participation of members from video conferencing is being recorded for the purpose of the quorum. And as per the circular of the Ministry Affairs, the desired quorum for the meeting is present, sir. And I request you to call the meeting to the order.

Okay. Go ahead. Go ahead. .

Sir, you have to actually introduced the directors and welcome the members.

Okay. I should introduce them?

Yes, sir.

Okay. So we -- I welcome all the members to this AGM. And let me introduce my Board to you. So we have with us Shri D.K. Mittal, who is Independent Director of our Board; Shri Upendra Kamath, who is also an Independent Director; Madam Asha Anil Agarwal, she is also an Independent Director, a very distinguished one; Mr. Dukhabandhu Rath, he is an Independent Director; and Mr. Rajeev Anand. I think that's all the directors who are present. Apart from that, we have executive directors also in this meeting. Mr. C.K. Singh, who is sitting in the conference room and Mr. Deepak Goyal, he's also sitting in the conference room. They are our executive directors who are present in the meeting. Apart from this, any other -- Mr. Chetan Khandelwal, who is our CFO, he is also present. So I welcome all our executives as well as independent directors to this meeting and all our shareholders. You may continue, Vipul.

Sure, sir. Sir, for the information of the members present, the representatives from our statutory auditors, the Secretarial auditors and the cost auditors have also joined this meeting. And the Board of Directors had appointed Mr. Jatin Gupta as Practicing Company Secretary, who is the scrutinizer. He's also joined the meeting through VC. So I welcome all the members on the -- to this 41st Annual General Meeting of the company. Sir, I confirm that the quorum is present, so we can go ahead with the meeting, sir. Sir, the annual report for the financial year 2025, '26, along with the notice convening this AGM was sent on 21st of August 2026 through electronic mode to all the members whose e-mail addresses were registered with the company and other persons entitled to receive the same as applicable as per the statutory regulations. The annual report and the notice are available on the website of the company and the website of the stock exchanges. The notice is also available on the website of CDSL. Since the meeting is being conducted virtually, hence, there is no requirement to provide facility to the members to appoint proxies. In accordance with the provisions of the Companies Act 2013 and SEBI listing regulations, the company has provided the facility to its members to exercise their right to vote by electronic means, both through remote e-voting and e-voting during the AGM. Accordingly, all the resolutions set out in the notice shall be put to vote through electronic means and there shall be no voting by show of hands at this meeting. The remote e-voting facility was provided to the members to cast their votes electronically on all the resolutions set out in the notice. The remote e-voting commenced at 10 a.m. on Saturday, September 12, 2026, and concluded at 5:00 p.m. on Monday, September 14, 2026. The company is also providing the facility of e-voting during this AGM for those members who have not cast their votes through remote e-voting. Members who have not already cast their vote electronically and are participating in this meeting will have an opportunity to cast their vote through e-voting system provided by CDSL during the meeting and for 15 minutes after the conclusion of this meeting. Now I will request the Chairman, sir, to address the shareholders.

Thank you, Vipul. Dear shareholders, it's my privilege to welcome you all to the 41st Annual General Meeting of APL Apollo Tubes Limited today. We are very fortunate that we have a very able leadership team in our company. You're all aware that the last financial year '25-'26, was a particularly difficult year economically for India as well as globally. Apart from normal economic challenges, we had an issue of tariffs, which troubled us throughout the year. We had energy shortages. We suffered significant supply chain issues. Prices of raw materials, finished goods were very volatile. And on top of that, we had a certain war. As I mentioned, we are really fortunate. And we are fortunate because we have a very, very strong, able leader, our Chairman, Mr. Sanjay Gupta, who has been able to take a very decisive action at the appropriate time and a very capable team in APL Apollo Tubes consisting of Mr. Vinay, Rahul, Rohan and our executives, Mr. Deepak Goyal, Anubhav, Chetan, C.K. Singh and many others. It's because of this able leadership that despite the challenges faced by the industry as a whole, steel industry and steel pipe industry in particular, this year was a landmark year for APL Apollo Tubes in our journey. You would have seen that we have delivered our strongest financial and operational performance while operating in such a difficult environment. Once again, your company, APL Apollo has demonstrated that a strong business model, disciplined execution and a clear focus with a drive to take risk can enable you to deliver exceptional results despite the economic challenges you may face. You would have noticed that we have achieved a record sales volume of about 3.5 million tonnes. And for your information, this is the highest for any steel pipe makers in the country. And globally also, it is perhaps among the first top 5 producers. I think this is a remarkable feat considering that India is still a developing economy. This volume is about 11% growth year-on-year. Our revenues from operations accordingly reached an all-time high and an all-time high I mentioned of about INR 23,000 crores. At a point of time, it was a dream. And on top of that, our EBITDA increased by 50%, while PAT increased by 59%. So you see the kind of achievement which your team has been able to get despite the economic challenges. Today, our EBITDA is about INR 5,160 per tonne. This EBITDA last year was a growth of 36% over the previous year. This performance demonstrates that your company, APL Apollo Tubes is no longer only a scale-driven, volume-driven business. We are increasingly becoming a margin-led, brand-led, return-focused business. Over the years, our objective has been clear, which can be seen from our results to transform structural steel tubes from a largely commodity-based product into a branded value-added category. And in that direction, I must say the financial year '26 was a very, very important step and a big milestone. Our strategy of premiumization through dual brand strategy, that is having a premium brand, having a normal brand. With APL Apollo being positioned as a premium brand and [indiscernible] SG being positioned as a value brand allowed us access across the entire market segments. So we now cater not only to the normal segments, but also the premium segment as well as the economical segments. Apart from focusing on the different aspects of the market, we have been having a special emphasis on operational efficiency, product mix, discipline in procurement to take care of the cash flows and better capacity utilization. You see all these factors help us in improving our profitability. Our capacity utilization crossed 70% last year, while peak utilization in our manufacturing network was almost 95%. This gives us a significant operating leverage. So as and when demand improves, we are able to cater to the demand and not left in a stock-out situation. And you would have calculated that our return on capital employed has crossed 37% against our own internal benchmark of 35% and industry average of perhaps 20%, 25%. You see we have been able to achieve these results -- as usual, because our growth strategy has always been guided by our principle, growth must create value, not merely volumes. And this has enabled us during the year, financial year '26 to have near 0 net working capital. Again, I must say this is a very big plus for any industry, and we are one of those. Not only we are net 0 net working capital, we are having net cash surplus of about INR 1,500 crores, which was only INR 300 crores the previous year. So you'll see on all financial parameters, operational parameters, market parameters, our team led by Shri Sanjay Gupta is doing exceptionally well. And this performance of INR 1,500 crores surplus is a remarkable improvement and reflects our strategy of cash and carry business model. This enables a very good working capital management and financial discipline. And because we have the surplus, we can pursue our expansion plans without compromising on our return objectives. And as you are aware, we don't stay here. We don't stop here. We are expanding. We're increasing our manufacturing capacity to ensure that APL Apollo is ready for the next decade when the demand will further go up, Indian steel demand and demand for steel pipe is likely to continue to grow up. Currently, we have a capacity of around 5 million tonnes, and we are now trying to see that how can we reach a capacity of 8 million tonnes. Our expansion will strengthen our presence in an area of Eastern India, where we have a limited presence currently and allow us to enter into emerging markets closer to customers. Apart from geographical expansion, we are also expanding in our products. We are expanding into heavy structural tubes, roofing solution, specialized products as well as geographically export markets. As I mentioned, we not only add tonnes, we're adding geographies, product, application and right returns. And our focus is not only on business. Business is definitely a focus, but more than that, our focus has been our environmental footprint. I'll just inform you that today, we are having about 58% of our total electricity consisting of renewable electricity. So that is a way forward we are doing for clean energy, taking care of environment as well. So as I mentioned, we are looking at operational improvements, operational efficiency. We are looking at expansions. We are looking at cash flows, and we are also looking at our own environment. So with this background, as we enter financial year '27, our confidence in the country, in our long-term structural opportunity and within our own leadership and our team remains strong. We have the capacity, we have the distribution, the brand name, as you know, Amitabh Bachchan being our ambassador, a good product portfolio, perhaps anything in steel pipe is within our portfolio and a strong balance sheet to participate meaningfully in the opportunity which the country is providing us today. Our priorities in the coming year will continue to be increase our volumes, improve our margins, expand our product portfolio, increase the capacity, enter new applications as well as mentioned geographies within India and outside India, continue to have our strong balance sheet and most importantly, create superior returns for our shareholders. We are building APL Apollo not only for next year or next 5 years, but we are building APL Apollo so that it can lead the structural steel industry for several decades. Dear shareholders, I must tell you that the past 4 decades has been a remarkable journey for the company. What started as a modest manufacturing business has evolved into India's leading branded structural steel tube company. Last year has shown us what APL Apollo can achieve when scale, innovation, execution and financial discipline come together. And I firmly believe that our best days are still to come. India's infrastructure story is entering a new phase. You will be seeing how much investment the government is doing, how much government is promoting private sector to invest in infrastructure. So when infrastructure booms, steel booms, steel pipes booms, and we will be there at the forefront to make use of this transformation. And I must share with you that we have a very capable independent directors here on our Board who have been guiding us at every step, right from performance to future to compliances, every step. And for that, I must thank the members, the Board members, independent director, Shri D.K. Mittal, Shri Upendra Kamath, Madam Asha Anil Agarwal, Mr. Dukhabandhu Rath, Mr. Rakesh Sharma as well as Mr. Rajeev Anand. I must thank all of them. They have been really guiding us at every step in every Board meeting and apart from the Board meeting. On behalf of the Board, I sincerely thank our shareholders for their continued trust and confidence and our employees, our very capable team, our customers whom we depend a lot and our distributors who are our lifeline, our suppliers, our bankers, our business partners for the unwavering support. The first 40 years built APL Apollo. The next decade will define how far we can take it. Thanks once again to all my colleagues on the Board as well as to my management team, my team at APL Apollo and my shareholders for your time. Thank you so much.

Thank you, sir. Now we'll proceed with the formal agenda item of this meeting. Since the notice convening the 41st Annual General Meeting and the annual report containing the audited standalone and consolidated financial statements of the company, together with the reports of the Board of Directors and the auditors thereon for the financial year ended 31st March 2026 have already been circulated to all the members, the same are taken as read. The statutory auditor's report and the secretarial auditor report do not contain any qualification, reservation, adverse mark or disclaimer. Accordingly, with the permission of the members, the same are also taken as read. I shall now take up the items of business set out in the notice of this AGM and briefly read out the particulars of the respective resolutions. So sir, now with the permission of the Chairman, I can take up the agenda item, sir.

Yes, please.

Item 1 of the business in notice, sir. Item #1, the first item of business is to receive, consider and adopt the audited financial statements of the company, both consolidated and stand-alone for the financial year ended 31st March 2026, along with the reports of the Board of Directors and the auditors thereon. The resolution is proposed to be passed as an ordinary resolution. The next item of the business is to declare a final dividend of INR 8.50 per equity share of INR 2 each, which is 425% of the face value for the financial year ended 31st March 2026. The resolution is proposed to be passed as an ordinary resolution. The next item of business is to appoint Shri Ashok Kumar Gupta, who retires by rotation and being eligible, offer himself for reappointment. The resolution is proposed to be passed as an ordinary resolution. The next item of business is to appoint Shri Rahul Gupta, who retires by rotation and being eligible, offers himself for reappointment. The resolution is proposed to be passed as an ordinary resolution. The next item of business is to ratify the remuneration of the auditors of the company, M/s. Sanjay Gupta & Associates Acountants. The resolution is proposed to be passed as an ordinary resolution. The next item of business is to reappoint Mrs. Asha Anil Agarwal as Non-Executive Independent Director of the company. The resolution is proposed to be passed as a special resolution. The next item of the business is to reappoint Shri Hosdurg Sundar Kamath Upendra Kamath as an Independent Director of the company. The resolution is proposed to be passed as a special resolution. The next item of business is to reappoint Shri Rajeev Anand as Non-Executive Independent Director of the company. The resolution is proposed to be passed as a special resolution. The next item of the business is to reappoint Shri Dinesh Kumar Mittal as Non-Executive Independent Director of the company. The resolution is proposed to be passed as a special resolution. The next item of business is to approve the extension of the benefit of Apollo Tubes Limited Stock Appreciation Rights Scheme 2019 to the employees of associate companies. The resolution is proposed to be passed as a special resolution. The necessary background and the rationale in respect of the above resolutions have already been provided in the explanatory statement annexed to the notice of this AGM. Sir, with the permission of you, we can now take up the queries and comments of the members.

Sure. We can now take up the queries.

We shall now invite those members who have registered themselves as the speaker to express their views. So I request the host to unmute the registered speaker shareholders one at a time. Their video may also be enabled subject to their consent. I request the speaker shareholders to confine their remarks and queries to the business of the meeting and as far as possible, limit their comments to 1 to 2 minutes so that we provide an opportunity to all registered speaker shareholders. So host, I request you to kindly unmute Mr. Narender Singh Chauhan. Mr. Chauhan, I request you to please unmute yourself and ask your query.

[Foreign Language]

Thank you Mr. Chauhan. Host, now I request you to unmute another speaker shareholder, Mr. Arun Kumar Bopanna.

Sir, currently, he is not available in the meeting.

So I request you to unmute speaker #3, Ankur Chanda.

So I request to Mr. Chanda to ask your query.

[Foreign Language]

Host, now I request to unmute another shareholder, Mr. Gagan Kumar.

So I request to Mr. Gagan to unmute yourself and ask your query.

Good morning, Mr. Chairman, Board of Directors and fellow shareholders. Myself, Gagan Kumar, I'm joining this meeting from Delhi. First of all, I would like to mention that I had requested for a hard copy of annual report, which I received well in time, and I'm very happy to share that I do not have any question pertaining to accounts as each and every aspects of balance sheet is very much clear, sir. So my 1 or 2 general queries for today's AGM are that what is our strategy to maintain or to enhance our margin as raw material costs are going up day by day. And as our promoter holding is around 28%, so can you expect any buyback from the management in the coming time to announce the same? And thank you so much for the increase in the dividend. In 2022, the dividend was INR 3.50 and in 2023, it was INR 5. And 2026, it is now INR 8.50 means 2-year dividend combined. So thank you for the increased dividend and hope to see a healthy growth in the business and as well as in the size of the company. It would be unfair on my part without mentioning higher corporate governance under the leadership of our CFO, CS and entire secretarial team, not at the time of AGM or EGM. If we have any query throughout the year, we can connect the CS and we will promptly reply. Thank you for this kind of CS and dynamic team. Thank you.

Host, I request to unmute Mr. Yashpal Chopra.

Sir, currently he is not a meeting.

Unmute another shareholder Mr. Manjit Singh.

[Foreign Language]

Host, now I request to unmute next speaker shareholder Mr. Vinod Agarwal.

I request to Vinod to ask your query.

Yes. Respected Chairman for today's meeting, Ashok Gupta; CFO, Chetan Khandelwal; CS, Vipul Jain; and Director, Deepak Kumar. Good morning and regards to everyone, sir. The company has performed very, very good [Foreign Language], which is 59% higher than was there last year. [Foreign Language] I'm seeing on the short- and long-term basis, we are growing at 15% over 5 years, 10 years. And 2 years we have grown CAGR, sales volume and EBIDTA [Foreign Language]. This is the pyramid of growth model which you have done. And we are Increasing our capacities also, 8 million tonnes, without putting up a new plant also, only by de-bottlenecking. [Foreign Language] That also gives us margins from 5 million tonne to 8 million tonne, [Foreign Language]. And keep on doing the good work.

Host, kindly unmute next speaker, Mr. Chetan.

Sir, currently, he is not available in the meeting.

Okay. The next one is Kishan Lal Chadda.

Sir, currently, he is also not available in the meeting.

Okay. Mr. Himanshu Anilbhai Trivedi.

Yes, yes. Good morning, all of you. Respected Chairman, and other Board of Directors sitting over there. Myself Himansu Trivedi from Gujarat. Firstly, thankful To our Company Secretary, Vipul Jain, who is sending soft and hard copy of the AGM notice well in advance, which is pool of information, which is easy to follow, easy to understand. So I'm thankful to you, your entire secretary. Report is nicely prepared. All corporate governance, all parameters cover the AGM notice. Chairman, sir, given the opening remarks, the pool of informative and excellent speech. So I have all my questions answer majority we cover. And guidance and is very excellent from Vipul Jain, sir. So I'm very appreciate dedicated services as a secretary department is the leadership. I don't have much concern because I have full faith on Board and they're working. As a speaker, I have a few questions. What expenses we have to expense in advertisement during current financial year? And how much state we supply our product and which state is most profitable in this market. And let me know in how many countries we supply our products. I wish good luck and bright future for coming financial and coming festival. Thank you.

Speaker, kindly unmute next speaker, Mr. Ashok Kumar Jain.

We request Mr. Ashok Kumar Jain, please ask your query.

Good morning, Chairman, sir and Vice Chairman, sir, Board of Directors and my co-fellow shareholders. I Ashok Kumar Jain, joined the AGM from Delhi. First of all, thanks to our company secretary and the team for providing an opportunity to express my view in front of the management. And I also thank to our Vice Chairman, Ashok Gupta, for excellent speech. In his speech, he explained the company's current and future performance and also tell us the future plan of the company to increase the revenue of the company, sir. They give us an excellent result during the financial year and their hard work give us a new height of the company. Sir, on my single request, I received a hard copy of annual report. Most of my queries covered under Vice Chairman, sir, speech and from the annual report, sir. Sir, my query what impact in our input cost of the product with U.S. and Iran war sir. And sir [indiscernible] consider bonus for coming days, sir? I support all the resolutions. Thank you.

Our next speaker shareholder Mr. Yusuf Yunus Rangwala. Host, kindly unmute next speaker Mr. Yusuf Yunus Rangwala.

[Foreign Language]