Shakti Pumps (India) Limited (531431) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Shakti Pumps (India) Limited Q2 and H1 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rohit Anand from Ernst & Young. Thank you, and over to you, sir.

Thank you, and good afternoon, everyone. Before we proceed, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risks that could cause future results performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. To take us through the financial results and the key development and to answer your questions today, we have the senior management of Shakti Pumps (India) Limited, represented by Mr. Dinesh Patidar, Managing Director; Mr. Ramesh Parida, Executive Director, Exports; Mr. Dinesh Patel, Chief Financial Officer; and Mr. Ravi Patidar, CS and Compliance Officer. We will start the call with brief overview of the past quarter by Mr. Dinesh Patidar, followed by a Q&A session. I will now hand over the call to Mr. Patidar. Over to you, sir.

Thank you, Rohit. [Foreign Language] Over to Dinesh Patel.

Thank you, sir. This is Dinesh Patel, CFO of Shakti Pumps (India) Limited. With regards to the financial highlights for the Q2 and H1 FY '23, our revenue from operations stood at INR 2,163 million in Q2 FY '23 as compared to INR 3,690 million in Q2 FY '22. In H1 FY '23, the revenue was INR 4,708 million as against INR 5,253 million in H1 FY '22. EBITDA was INR 124 million in Q2 FY '23, with an EBITDA margin of 5.8%. For H1 FY '23, EBITDA was at INR 338 million, with an EBITDA margin of 7.2%. The company reported profit after tax of INR 19 million in Q2 FY '23 and INR 106 million in H1 FY '23. This is all from my side. With this, we can now open the floor for question and answers.

[Operator Instructions] The first question is from the line of [ John Kumar ] from Credit Suisse.

Yes. So I have a couple of questions. My first question is on raw material costs. So if I see -- for a couple of quarters, I mean the raw material cost was almost very near to the sales. But when I look into this quarterly results, again, the raw material cost has been reduced by almost 1 by 2. So I mean sales was around 21-something, and raw material cost was somewhere around 12-something. So how do we manage to do that? Can you explain on that? Can we have the same further quarters as well?

It is very clear because this [indiscernible], major portion is 60% of the -- your major question, right, of our solar pricing [ here ]. [Foreign Language]

Okay. Yes. And my second question is on, I mean, KUSUM 2, the discussion with the central government. When are you hoping to get the update from the central government on [ early quotes]?

Yes, [ John ], it is very, very million-dollar question. Really, I appreciate this question. Because see, in our end, whatever my head and my team have this production capacity, production quality, marketing and installation. [Foreign Language]

The next question is from the line of Punit Mittal from Global Core Capital.

Just 1 or 2 questions. If [ Hamara ] [indiscernible] sales [Foreign Language] almost [ 2.5x ] so INR 428 crores, and they [indiscernible] INR 1,200 crores. But profit -- or operating margin [indiscernible]. So operating leverage [indiscernible], even though [ Hamara ] revenues improved or they...

Yes. [Foreign Language]

All right. [Foreign Language]

Actually, the [Foreign Language]

So [ Bilal, ABI, Hamara, Kusuma Kunj ] [Foreign Language] because we are waiting the government [indiscernible] information [Foreign Language] price increase cutoff.

Yes, perfectly right. Because [Foreign Language].

So secondly is [Foreign Language]. So naturally, prices change [Foreign Language].

[Foreign Language] $35 million per order rate. This means [indiscernible] for $6 billion [Foreign Language], $8 million at the Uganda government [Foreign Language].

Okay. The last question, [Foreign Language] to get new, just like the Uganda government. But this may put your expected orders [indiscernible]?

[Foreign Language]

Just last question, Dinesh, if I can. [Foreign Language] expected [Foreign Language] execution [Foreign Language]. [Foreign Language] 68,000 execute for [Foreign Language] or just say up to 12,000 [Foreign Language] orders sold [Foreign Language]. But it seems like [Foreign Language].

[Foreign Language] or maybe order [Foreign Language].

The next question is from the line of [ Nira Vashar ] from LM Securities.

[indiscernible] government, so you are expecting a price hike by Jan 2023. So to get bigger orders apart from the KUSUM Scheme, [indiscernible] strategy for non-KUSUM orders or [indiscernible] as a non-KUSUM are ahead.

Yes. [Foreign Language]

So sir, [Foreign Language].

Yes, [Foreign Language].

Okay. So sir, [Foreign Language].

[Foreign Language]

Okay, sir. Sir, H2 [Foreign Language]. So we have to wait for the government for the clarification on the pricing, right?

Right. Definitely.

Sir, after raw material [indiscernible] outlook, solar panel, the prices come away, it has been stabilized.

Yes, so [Foreign Language].

Okay. Okay, sir. Let's see while we wait for the clarity on the government pricing. We are waiting for that. [ All right ], sir.

[Foreign Language]

The next question is from the line of Hardik Vyas from The Economic Times.

Sir, [ may I ask a ] question [Foreign Language] price hike request [Foreign Language] 3%, 6%, 10% [Foreign Language].

[Foreign Language]

Okay. [Foreign Language] So then we will be making -- we'll be comfortable selling those INR 12,000 in the inventory or even more that we may be manufacturing going ahead? [Foreign Language]

Correct.

[Foreign Language] up in the system this year. We are comfortable selling whatever volume we want to sell?

[Foreign Language]

Okay. Okay. [Foreign Language]

Yes, we'll put it.

Okay. [Foreign Language] on volumes [Foreign Language]. Is there a number of [ forms ] [indiscernible] export year on?

[Foreign Language]

Okay. Or domestic and nonsolar are selling we have will be...

[indiscernible] numbers. [Foreign Language]

The next question is from the line of Forum Makim from Equitree Capital.

Sir, [indiscernible] -- hello?

Forum, we can't see your audio clearly. Please increase the volume or use the handset mode.

Hello, is this better?

It's better.

Yes. Sir, [Foreign Language].

Can you repeat your question?

Sir, Q2 [Foreign Language] KUSUM [Foreign Language].

Yes, yes, yes. [indiscernible] Q2, 95.

On non-KUSUM?

[Foreign Language]

Okay, sir. [Foreign Language] price revision [Foreign Language] 3.15 lakh [Foreign Language], 8 lakh [Foreign Language].

[Foreign Language]

[indiscernible] be existing orders are [indiscernible]?

[Foreign Language]

[Foreign Language] execution [Foreign Language].

[Foreign Language]

[Foreign Language]

Yes. Yes.

Okay. So sir, the 20%, 25% price hike [indiscernible], will it be enough to cover our raw material price increase [indiscernible] solar panels?

[Foreign Language]

Okay. Sir, but the Q2 to Q3 methods, will the price come to [Foreign Language]...

[Foreign Language]

Got you. [Foreign Language] 8 lakh pumps [Foreign Language] execution time line [Foreign Language].

[Foreign Language]

[Foreign Language] orders [Foreign Language]

[Foreign Language]

[Foreign Language] but demand [Foreign Language]

Demand, so [Foreign Language].

Right, sir. So [Foreign Language] execution time line [Foreign Language] 8 lakh pumps [Foreign Language].

[Foreign Language] pricing [Foreign Language].

Okay, sir. Sir, a [indiscernible] question [Foreign Language] balance of 23,000 [indiscernible] 20,000, 25,000 pumps [Foreign Language].

Right, right.

[Foreign Language] orders execute [Foreign Language].

Right, right.

[Foreign Language]

[Foreign Language] Uganda [Foreign Language] $1 million [Foreign Language] Uganda [Foreign Language]. You see, Uganda [Foreign Language] $1 million [Foreign Language] $1 million [Foreign Language].

[Foreign Language]

[Foreign Language]

Okay. And sir, on Q3 [Foreign Language] KUSUM [Foreign Language] orders [Foreign Language] Uganda [Foreign Language]. So Q3, [Foreign Language] outlook [Foreign Language]. What is our plan?

[Foreign Language] outlook [Foreign Language] outlook [Foreign Language]. So the outlook [Foreign Language]. For the outlook, [Foreign Language].

The next question is from the line of [ Mischal S. ] from Svan Investments.

This is Sachin Kasera here. Sir, [Foreign Language] quarter [Foreign Language] cash expectation [indiscernible]?

[Foreign Language] 6% price per solar [Foreign Language] state government subsidy. [Foreign Language]

[Foreign Language]

[Foreign Language]

So [Foreign Language]

[Foreign Language]

Okay. Okay. [Foreign Language]

[Foreign Language]

Sorry [Foreign Language] expectation, ballpark [Foreign Language] of revenue.

[Foreign Language]

Sir, sorry [Foreign Language].

[Foreign Language]

[Foreign Language] Uganda [Foreign Language].

[Foreign Language]

[Foreign Language]

[Foreign Language]

[Foreign Language] export [Foreign Language] second half [Foreign Language].

[Foreign Language]

Ladies and gentlemen, due to time constraint, we will take that as the last question. I would now like to hand the conference over to the management for closing comments.

Thank you. [Foreign Language] shareholders [Foreign Language] shareholders [Foreign Language]. Thank you very much.

Thank you. Ladies and gentlemen, on behalf of Shakti Pumps (India) Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.