Greaves Cotton Limited (501455) Earnings Call Transcript & Summary

Good afternoon, and welcome to the 101st AGM of the company, video conferencing. Before we hand it over the mic to the Chairman to take the proceedings, some formal announcement, the facility for participants of at AGM is to video conferencing and/or other audio, vision means made available to the shareholders on a first come first serve basis. The company has also provided with the webcast facility with the live proceedings of this AGM. The company has provided the question-and-answer session starts with the permission of the chair. We'll announce the name of the shareholder who has registered themselves may speak to shareholder one by one. Thereafter, the speaker, a shareholder will be unmuted by the host and the speaker shareholders requested to put on the video option by ticking the shareholder is requested to minimize any noise in the background and should keep the question short and to the point, due to positive of time, each shareholder will get maximum 3 minutes. During the minute, if any shareholder faces an issue, he or she may contact the helpline number mentioned in the notice of the meeting. Now we will request the Chairman to start the meeting. Thank you.

Okay. Thank you, Atindra. Ladies and gentlemen, and all those connected online. I now declare the meeting open. And I extend to you a very warm welcome to this 101st. Quorum is present, as has still been confirmed to be by NSDL. Before we start the meeting. So I call it to order. Before we -- before I make some remarks about performance and the current situation and the possible future, I want to introduce all of you to the new Independent Director with effect from May 28, 2020. He is a veteran of the Indian automotive industry and responsible for putting Hyundai firmly on the Indian Auto map. He also worked with Tata Motors. So presently Subhu manages a boutique strategy advisory firm. The other gentleman is Mr. Mohanan Manikram, appointed as an Executive Director with effect from November 5, 2019. Mohanan is professional with 30 years -- over 30 years of experience in auto, farm machineries, engines and genset. And he has considerable experience in manufacturing technology strategy, and quality management, product development, et cetera. So he is in the employment of the company and we welcome Mohanan and Subhu on the Board. Now, I have an important announcement to make at this meeting, and I would like to inform everybody that Mr. Nagesh Basavanhalli, our Managing Director for the last 4 years, will now move into a new role as Vice Chairman of the company as an additional director with effect from tomorrow, 14th of August, and in his new role, Mr. Basavanhalli will provide strategic direction to Greaves in a nonexecutive capacity. So I welcome him to the Board as an additional director. And we wish him all the best in this new role. Thank you, Nagesh. Welcome. We also then -- [ Venkata ] Raman will now be appointed as an Executive Director, again, in the capacity of an additional director to the Board with effect from tomorrow, August 14. Mr. Venkata Raman comes with a diverse industry experience, both nationally and internationally. And he comes with an impressive track record of delivering and is going to have joined the meeting from their respective locations and the representatives of the statutory auditors and the secretarial auditors have also joined this meeting. Authorizations have been received from INR 12,67,49,177 equity shares of INR 2 each of the company, and this is about 54.82% of the company's equity share capital. Since the meeting is being held through video conferencing and other audio visual means. Physical attendance of members is dispensed to it. And accordingly, there is no requirement for appointment of proxies. The register of Directors and key managerial personnel and their shareholding and the register electronically if they so desire. And you can get in touch with Mr. -- the Company Secretary. I now proceed further in the agenda of the meeting. The notice convening the meeting has already been circulated to the shareholders. And with your permission, therefore, I am taking the same as read. Mr. Basu, can -- do we need to have confirmation from everybody that we're taking it as read.

So since the statutory orders report and the Secretary an auditors report, do not contain any qualifications, observations or comments on financial transactions or matters which have any adverse effect on the functioning of the company. So with your permission, may i also take that as read.

Okay. As the Chairman's speech. So welcome to Greaves Partners for 101 AGM from me and the Board. And even though it's 101st. It's the first 1st ever held through web-enabled platform. So welcome, therefore, to the new normal. COVID-19 may have disrupted and changed the lives of millions of us around the globe. But here at GCL, at Greaves Cotton, once again, our company has demonstrated its ability to adapt, be agile and convert adversity into opportunity. There are a few significant examples of this attribute and significant achievements during the pandemic. Agreements with all our auto 3-wheeler OEMs for offtake of our new BS-VI diesel engine. The second one, launch on the new genius Smart Genset, this is only such product in the market and with such a strong performance assurance. Launch of a new electric scooter called Magnus Pro by Ampere, a sleek and modern design with a higher speed and range and competitively priced. And most importantly, which is expected scheme at Ranipet, which has had a 100% uptick by the workers at a fair compensation. This will reduce annual operating costs substantially. And last but not the least, since the opening up or from the lockdown, we have till date, onboarded another 38 dealers with new showrooms in different locations around the country to showcase Ampere products and offer other Greaves products and services. So unless I give you on the wrong impression, it isn't and hasn't been all roses and champagne. The main negative impact of COVID on Greaves Cotton's financial performance has been the reduced COVID cases around the country is a constant reminder of the virus' presence, and this continues to have a negative impact on shared mobility, which in turn is mainly responsible for the adverse Q1 of FY '21 results. Recovery is expected and will happen. The pace being dictated by India's ability to learn and adapt when we are doing our best to participate in this through the development and sale of relevant products and primarily in the electric mobility range. Post the lifting of the total knockdown, Ampere has become the clear #2 player in the electric scooter market with a current market share of just over 20% and is on track to become the #1 player in the country in the near future. The results of a FY 2020 and Q1 FY '21 are available to all-in the public today. And my comment here is that despite the drop in revenue and profit in FY '20 and the loss in the first quarter of the year, this year and notwithstanding the INR 227 crores that we spent on the share buyback completed not too long ago. The company continues to have a healthy cash position, current financial year as the situation slowly, but surely improves around the country. The Board and the management firmly believe is that the company is on the right track with a very bright future and are committed to delivering it. I thank all Greaves' stakeholders for their support and encouragement and assure them that we strive to do our best to create value for them all. Thank you. That's the end of my -- voting. So I think perhaps take up or will describe the voting, and then to take up the resolutions.

Yes. Sure, sir. So the company had provided the facility for electronic voting, which began at 9 a.m. on August 10, 2020 and ended at 5 and otherwise not barred but from doing so, shall be eligible to vote through voting system at the AGM. The voting on all the resolutions mentioned in the notice of this meeting will be conducted through e-voting system during the AGM following the principle of one share, one vote. Members who have voted remotely voting will be eligible to attend the AGM. However, they will not be eligible to vote at the AGM. The reference of e-voting matters in this regard is made on the NSDL portal. The facility of e-voting at the AGM will be available only till the conclusion of this meeting. The shareholders who did not cast their both remote voting mode and now complete it through voting during the AGM. Mr. Sunny Gogiya was appointed as the scrutinizer for remote e-voting will also act as a scrutinizer for voting through AGM. So this is about the e-voting. Now over to you for the questions. We will continue. They can parallelly do the voting. The shareholders can parallelly do the voting.

On each resolution. So I don't -- we don't have to wait for each resolution to see the number of votes, et cetera. We just carry on, right?

Right, sir.

Yes. Okay. So we have received requests from some members correctly -- correct Atindra, please keep your comments brief gentlemen, ladies, whoever is coming to speak and not take more than a couple of minutes, 3 minutes to ask your questions. So after the completion of the questions and comments, if anything, either Nagesh or I will respond to this. Thank you now. Can anybody -- should we take up the resolutions or should we ask for the questions first.

Whatever suits you, sir, I think there, we have received 3 speakers request. I think I will just call out the name. I can see the...

Let's deal with their requests first then we will take up the resolutions.

Mr. [ Kotecha ] has been...

Sir, this is the 101st AGM, which is always consider auspicious, 101 is always considered as auspicious in Hinduism, sir. Yesterday was Janmashtami, so happy Janmashtami to all of you. Sir, I just wanted to know whether the quorum is present today, is the quorum present, because I have not said that the quorum is present or not today in the e-meeting?

Yes, sir, we started with the quorum being present, and that's how...

Okay. I was late then. Sir, I just wanted to know, our power Greaves agri, Greaves retail, Greaves global. Now, nowhere is the name cotton included anywhere. So I don't really change the name of the company from Greaves Cotton to Greaves Engines or Greaves power or something of that sort, because then that will give you a true reflection of our business, sir. That is the first thing which I would suggest, sir. Second is, sir, I would like to know, basically, the first quarter results, I was just going through just 2 minutes ago. And I find that the first quarter results are the worst that we have got in the last 10 years, sir. Because the sales volume are -- it has come down to INR 147 crores. And we have incurred a loss in the before tax and after-tax and even EPS is showing a negative thing. And in the segmental wise also, both our engines and electricity mobility, both are showing losses. Now I think this is a big, big setback. It is alarming situation, sir. So what are the plans and the strategies to get out of it? That I would like to know. I would also like to know our 3 subsidiaries are there. And sir, can you give me some idea about what was the relearning and the delearning experience during this COVID period? And any staff members have been affected by the COVID-19? Staff or workers? And what is the next phase of growth? Because I think whatever you have envisaged in the analyst meet earlier during the year and today also, by seeing the results of the first quarter. I actually am very disappointed, sir, because in spite of having a so nice board, we have got Mr. Kewal Handa on the Board. I mean you have got some good new leaders on the Board also. And I think you should take the intelligence of all these board members to see how the company is back on track and we should be able to, again, come back on track and then what period you think that we should be back on track? Again, sir, the last question is on August 4, 2020, we have given VRS to all our employees at Ranipet. I mean what are the charges that is going to appear into Q2 reserves for the charges of the VRS. And Ranipet, would like to know how many service centers we have made during the year, for of our engine parts after each year after each market? And how many are profitable on a stand-alone basis. I wish you all the best. I will not take more time, sir. And remaining questions, I'll write to the Company Secretary for answers to get the answers from him. And again, sir, I really wish you -- I wish that the company is back on track. And since I would like to -- I missed your first few remarks about the BS-VI that you must have told, so can you explain a little bit more about BS-VI.

Maybe Mr. [ Kotecha's ] questions can be taken up right now because there are only 3 people. So we don't need to way to aggregate and maybe some of the questions that he asked that must be on the minds of others as well. Is the -- sorry?

Yes. So Nagesh, you want.

Yes, when I finish, I will ask the next person to take it up. So let me finish my -- I surely, I want to assure all main areas. And in a pandemic situation where mobility was so drastically curtailed is to practically be frozen around the country, it is only to be expected that all products and services relating to this area are going to be harshly impacted and that's precisely. And we are not in any distressed situation, as far as cash is concerned, we've managed pretty conservatively and pretty well. And we certainly hope to see the current financial year and positive and certainly not reflect the Q1 position. Having said that, I'll ask Nagesh to take up any questions regarding the strategy and how you come back on track and in terms of.

Yes. Thank you, Chairman. To answer your questions, I think there was 1 global pandemic that happened, called Mr. COVID. And unfortunately, for all of us, that was the reality. April and May was a washout, not only for us, but for a lot of the Indian manufacturing industry. Our supply chains came back in June. And in August. But again, like the Chairman pointed out, shared mobility will be impacted short term. Cargo segment is showing promises, other areas like non-auto engines and agri is showing some green shoots. So our intention is, and you also asked a question about cash balance and cash burn, obviously, to conserve cash. If you look at where we started a year ago now is all launched. Slowly those products are getting out as soon as their dealerships are open. So the general impression is, the markets have received our BS-VI engines well. We're just hoping that the demand improves, the dealerships open across. We are also seeing that only about 70% to 75% of our dealers partners are open as we speak. Because some cities are up or some cities are closed, even now in. And that is -- so the 100% of the dealers are still not up and running. So Q1 has been a prime quarter for all of us. Rest assured that your company is doing everything we can, cutting costs, conserving cash, focusing on the strategic things in the future, making sure that the next couple of quarters look more robust. Thank you.

I think that it costs, et cetera. I don't know if I can give the details of exactly what the cost, but let's just say that what will be the recovery of what was expected? It was a fair compensation. I've already said that in my speech.

Yes. So I think we -- as part of the BS VI, we were able to consolidate all of our requirements of the engine requirements at Aurangabad. And having said that though, we booked out with our union INR 25 crores. And at the end of the base in terms of the Board and the management team are thinking about next steps in terms of what we do with the lines in terms of either monetizing or what would be the next step? So the bargain able areas of the Ranipet plant, we have reached an agreement. The exact amount is about INR 17 crores is what we have provisioned for about INR 25 crores, but INR 17 crores is what has been agreed on. And we will continue to look at all options. To monetize or look at other options as we go forward. And we'll come back as and when we are ready on Ranipet. But definitely, like the Chairman said, when you look at year-over-year, that will have a fundamental structural impact on the bottom line.

Okay. Is that fine? So let's move to resolutions. And I now move resolution relating to item #1, which pertains to adoption of the audited annual stand-alone and consolidated financial statements and reports there on to be asked as a ordinary resolution. We need to have a proposal and a seconder.

Sir, that is also not require legally because of the virtual AGM.

So why is just a proposal for a resolution?

Yes. So they will just vote, and then we will publish the results.

All right. Resolution number two, I'm going to hand this over to Mr. Singhal.

As far as our Director is based by rotation, which, in this case, is Mr. Karan Thapar, who retires by rotation and being eligible offers himself for reappointment.

Thank you, Arvind.

So I take the resolution is approved. Over to you, Mr. Chairman, once again?

Arvind, that's the thing that today, there will be a resolution approval or not will come as a result of the electronic voting. I'll take up the next one. The third 1 is the reappointment of the statutory auditor, which also needs to be passed as important resolution. The fourth resolution -- sorry, resolution relating to item 4 on the notice, pertains to the appointment of Mr. Mohanan as an Executive Director of the company. This also needs to be passed as an ordinary resolution. Number #5 pertains to the appointment of Mr. Subhu Venkata Rama Behara as an independent director, also to be passed as an auditor. #6, pertains to reappointment Ms. Sree Patel as an independent director. This needs to be passed by special. #7 is the reappointment. So these are the resolutions we have proposed today and the results of the remote e-voting on these as well as the voting on the AGM will be declared within 48 hours from the conclusion of this meeting, as described in the website of the company and submitted stock exchanges where we are listed. Here from NSDL and that the voting has been completed.

So the voting thing will continue up to 15 minutes after this closure. So -- and then we will announce the results within 48 hours.

So can we now -- do we have to wait for the voting to be over or can we close.

Yes, we can close the meeting. The voting will continue for another 15 minutes.

Fine. All right, in that case, I declare that the meeting is closed. Thank you all very much, and thanks to all my colleagues on the Board and the management team and everybody who has joined us over video. I hope all of you remain safe and healthy.

Thank you.

Good-bye.

Thank you.

Thank you.