Stove Kraft Limited (STOVEKRAFT) Earnings Call Transcript & Summary

Thank you, [ Bhaskar ]. I welcome all members, directors and executives of Stove Kraft Limited to the 25th Financial Meeting of the company. This meeting is being held through video conferencing or other media-visual facility, in accordance with the circulars issued by the Ministry of Corporate Affairs and SEBI. The requisite quorum being present, I request Mrs. Shuba Rao Mayya, our Chairperson, to commence the proceedings.

Good morning. Welcome to the 25th Annual General Meeting of Stove Kraft Limited. It's a pleasure to connect with all of you through the virtual mode. I hope all of you are safe and in good health. The requisite quorum being present, I declare the meeting is properly constituted. I would like to introduce all of my colleagues on the Board of the company, myself, Shuba Rao Mayya and the Chairperson of the Board and Chairperson of the Stakeholders Relationship Committee. Then we have Mr. Rajendra Gandhi; [indiscernible] Mr. Natrajan Ramkrishna, Independent Director, Chairperson of Audit Committee.

Good morning.

Anup Shah, Independent Director, Chairperson of Nomination and Remuneration Committee. Anup?

Ma'am you can continue. Thank you.

Okay. Avinash Gupta, Independent Director, Chairperson of Risk Management Committee.

Hello.

Neha Gandhi, Executive Director, Chairperson of the Corporate Social Responsibility Committee.

Hi. Good morning to everyone.

And Sunita Rajendra Gandhi, Non-Executive Director; Mr. Ramakrishna, Chief Financial Officer; and Mr. Shrinivas, Company Secretary; Mohan Danivas; Sandeep Rodam, Statutory Auditors; and Pramod Esam, Secretarial Auditors, are also present at this meeting. I request Shrinivas, Company Secretary, to take us further. Thank you.

Thank you, Ma'am. Members may know that the register of directors [indiscernible] and their shareholdings and the ratio of contracts for [indiscernible] directors are interested, Certificate of Statutory Auditors for Stove Kraft ESOP scheme 2018 has been implemented as per SEBI, Share-based Employee Benefits and Sweat Equity regulations 2021 and necessary documents referred to in the notice are available on this section electronically during the AGM. Now, I will request our MD, Mr. Rajendra Gandhi, to address the shareholders.

Good morning, again. A warm welcome to the 25th AGM of Stove Kraft. I hope you and your loved ones are all safe and healthy. The fiscal year '23/'24 was a pivotal one for Stove Kraft, characterized by substantial growth in diverse business and consumer areas. We concentrated on increasing our retail footprint, broadening our product range, boosting manufacturing capabilities and enhancing operational efficiency, all when maintaining our dedication, innovation, quality and affordability. We expanded our product portfolio, launched new manufacturing units and increased backward migration to enhance business agility. Our committed efforts, combined with strong demand drove a 6.3% increase in revenue from the previous year, reaching INR 1,364 crore revenue. We achieved a key milestone by opening 117 new retail stores during the financial year. Our strategy is to enhance product offering and decrease reliance on imports led to higher profit margins and quicker turnaround of working capital. This resulted in 100 basis points increase in our EBITDA. The gross margins reached 36.9% driven by in-house production, faster product development and better sales realization. As a testament to our unwavering commitment to innovation, product quality and customer satisfaction, we were honored with the Retailer of the Year - [indiscernible] award at the Asia Retail Congress 2024 and received the Emerging Retailer of the Year title in kitchen appliances category. In a remarkable feat, we have launched new manufacturing units for water bottles, kettles, flasks, air fryers, electric rice cookers, hobs and ovens, allowing us greater control over supply cost and quality. In November, we commissioned a new warehouse, on a 3-acres plot of land adjacent to our registered office, with an investment of INR 17 crores and a capacity of 25,500 pallets. Recently, we also commissioned a 4-megawatt solar power plant on the roof of the new manufacturing facilities, at cost of INR 14 crores, which is expected to generate 6 million units annually and make 20% of our current power requirements. We are also in the process of building a fully automated cast iron foundry plant for cookware and a new mega plant for small appliances. Our growth is closely tied to our accessibility and consumer engagement. To capitalize on this, we have strategically broadened our reach across multiple channels, including general trade, modern trade, e-commerce, corporate sales and exports. We also launched several high aspirational products namely air fryers with the Air whirl technology and the jumbo gas stove range, the Pigeon Ultrafast Turbo chopper and the Cold Press juicer, all of which bolstered our market presence. We are pleased to inform that 90% of all Stove Kraft products are now probably made in India. During the financial year, we had 171 operational retail stores across 42 cities and 8 states in India. The overwhelming response has encouraged us to venture into North India and opened 12 stores in Delhi NCR region. We plan to open 25 to 30 new stores every quarter over the next 6 quarters. Additionally, our company-owned franchisee-operated store model presents an excellent opportunity to grow our retail presence, while maintaining healthy cash flows. Substantial marketing spends made in the year have strengthened the brand recall and boosted brand visibility for our brand Pigeon. Our exports contributed to 12.2% of our overall sales. The distribution network has also expanded remarkably over 128,842 outlets down stock Pigeon, helping us to reach an increasing number of prospective consumers and saving us towards sustainable growth. India is set to become the fastest-growing major economy, fueled by the cost-conscious aspirational middle class with growing purchase power, making it a key market for consumer businesses. Increased government spending is expected to boost rural demand, and better electrification is likely to drive demand for small appliances. In view of the same, we will remain dedicated to enhance our manufacturing capabilities, broaden our distribution network, improving quality, reducing costs and increasing operational efficiency, all in alignment with our vision to become a leader in kitchen appliances in India. To conclude, I appreciate our employees' dedication and hard work, which has been crucial to our success. I also extend my gratitude to our Board members for their invaluable guidance and acknowledge the continued support of our stakeholders, customers, channel partners, investors and the wider community. Finally, I thank all our shareholders for their confidence in the company. Thank you.

Thank you, sir. With the concurrence of members, I think the notice of 25th AGM financial statements, Board's Report and Auditors Reports as read. The members may note that auditors report do not contain any qualification, reservation or adverse remark. There are five items of ordinary and special business set out in Notice of AGM, which deal with one, adoption of Audited Financial Statements was the financial year ended 31st March 2024; declaration of dividend of INR 2.50 per equity share for the financial year '23-'24; reappointment of Mrs. Neha Gandhi, Executive Director, retiring by rotation; ratification of remuneration of cost auditors for the financial year ended 31st March 2025; reappointment of Managing Director, Mr. Rajendra Gandhi, for a period of 5 years. We wish to inform that company has provided the facility to cast the votes electronically on all above resolution as set out in the notice. Members who have not cast their votes yet electronically and who are participating in the meeting will have an opportunity to cast their votes during the meeting, through instaPoll/e-voting system provided by KFin. Members can click on Vote tab on video conference screen to avail this feature once the chairperson calls for e-voting. If any member desires to ask any question pertaining to any item of the notice, they may do so now. Members are requested to keep their questions brief and specific. The moderator will facilitate the questions on the video feature. Before we go with Q&A, here are some points to note for your convenience. Kindly turn on your video when you are projected on the broadcast screen. Kindly unmute yourself and proceed to ask the question. Please mention your name, [ Demat ] account number and location from where you are joining the meeting. Each shareholder will have 3 minutes for questions. Once you have asked the questions, you can continue to watch the proceedings. [ Bhaskar ], you can start the Q&A session.

Thank you, [ Shrinivasji ]. We have our first speaker, Mr. [ Vinay Vishnu Bhide ] from Mumbai. May I request Vinay Vishnuji to kindly unmute himself, switch on his webcam if he desires to do so and put forth his perspective, please.

Hello. Are you able to hear me?

Sir, we are able to hear you.

Fine. Let me turn on the camera also. Okay, fine. That should come on. Chairperson Shuba Rao Mayya.

Yes.

Managing Director, Mr. Rajendra Gandhi, Executive Director Neha Gandhi, madam, other distinguished directors present, company shareholders, good morning to all of you. At the outset, let me congratulate the company for having improved revenues from INR 1,283 crores to INR 1,364 crores. Revenues, of course, flat at around INR 35 crores. Return on equity has slightly gone down, but the debt equity ratio stands now steady. If I compare all the performance in this financial year, then the situation is that for the quarter 1, our profits have improved from INR 297 crores to INR 314 crores and net profit is steady at INR 8 crores. The questions that I would like to ask you, is that what is the position of new product launches this year in our entire portfolio? And how do you expect the current season to pair out, in terms of all our [ wide ] goods that we are selling? Otherwise, I think we have done most of the restructuring in the past years. So I support all the resolutions, and I thank you for giving the opportunity to speak. Thank you so much.

Thank you, Vinay.

Thank you, Vinayji. We will move on to our next speaker, Mr. Santosh Kumar Saraf. Mr. Santosh Kumar Saraf, you are requested to kindly unmute yourself, switch on your webcam if you desire to do so and put forth your perspective, sir.

Okay, sir, just a minute, if you allow me, I start my video. [Foreign Language]

Thank you, Mr. Santosh Kumar Saraf-ji for the records. Let me announce the name of the rest of the speakers who are not available at this point in time in the meeting. The registered speakers were Mr. Ramesh Shankar Golla from Hyderabad; Ms. Davinder Kaur from Delhi; Mr. K Bahrat Raj from Hyderabad, Ms. Celestine Elizabeth Mascarenas; and Mr. Aloysius Peter Mascarenas from Mumbai; Keshav Garg from Pune and Yusuf Yunus Rangwala from Mumbai. These are the gentlemen who -- and ladies who have registered themselves as speakers but are currently not available in the meeting. I hand it back to the Board to answer the rest of the questions that has been asked. Over to you Chairman, ma'am.

MD sir, you can just put light on the questions.

Thank you, first of all, for all the appreciation and accolades. The first question was on new product launch. We are continuously working on introducing more and more consumer-friendly Indian -- dedicated to the Indian community appliances. And also the strategy is to make these products in India. So we make them affordable. And there is a lineup for not only this 1 or 2 quarters. For the next few quarters, we have a huge lineup. I can only share with you that in the days to come, as we progress to become the leaders in this category in this country, we are launching a range of small appliances. In the immediate, we'll be commissioning our cast iron foundry, which is a completely automated foundry for cookware. It is only dedicated automated found in the country for cast iron cookware. We hope this will bring a lot of healthy cooking into the Indian families. On the employee count, of course, appreciate again, and thank you for appreciating the efforts of the employees. We are family of 6,500. I want to stand corrected if you have got this information of 2,200. The family is growing as we are increasing our manufacturing facilities. Of course, the employee count is also growing. On solar, we are already at 50% of our energy consumption is generated within the captive facilities that the company has invested in, both on solar and wind. On compliance, we are a fully compliant company. More so, it also is the confidence that I can give you is, we are continuously audited by the large U.S. retailers regularly, and we have been rated high and compliance to continue to be supplying them. On CSR, we currently -- we are completely investing our CSR funds into two schemes of government, which will definitely skill the future of India. So these schemes are called as and NAPS and NATS. And we bring in best graduates and undergraduates and train them within the facilities of Stove Kraft also absorbed within the facilities of Stove Kraft and also -- and once they are ready, they can perform anywhere in the manufacturing facilities. So our CSR, I can say, it is fully utilized to the best of the -- I mean the outcome from the investment, we assume is the best possible that we can do. I hope I'm able to answer all the questions that were raised. But if there are any questions any time, you can invite us. We'll definitely come back to you. Thank you again.

Bhaskar, you can just check the available -- next available speaker.

Shrinivasji, at this point in time, there is nobody who is available, who have registered themselves as a speaker shareholder. So you can conclude the event with the concluding remarks, please. Thank you.

Thank you. I thank our MD for responding to the queries of the shareholders. With this, we are over with Q&A. And for any other queries, you can always come back to us. Also to the relevant provisions of Companies Act and SEBI regulations from the company provided remove e-voting facility to its members, to enable them to cast their votes on all resolutions content contained in the 25th AGM. The aforesaid facility was arranged by a company through KFin Tech. The remote e-voting period commenced from 17th September, 9 a.m., and ended on 19th September 2024 at 5:00 p.m. During this period, members of the company holding shares as on cut out date that is 13th September were entitled to cast their or vote through e-voting facility. In across the provision of the Companies Act, the company is all providing e-voting facility to the members attending this AGM also. The Board of Directors has appointed Mr. [ Pramod Esem ], pairing him with Mr. [ Biswajit Ghosh ] of BMP and Company LLP, practicing company secretaries as scrutinizers to supervise the remote e-voting and the voting process. Further, on the receipt of consolidated import from scrutinizer, the results of the voting will be declared. I now request Mrs. Shuba Mayya, Chairperson, to declare the commencement of e-voting.

Thank you, Shrinivas. There are five resolutions proposed to be passed at the AGM. E-voting on the KFin platform will begin now and will be open for 15 minutes. Members who have not voted are requested to do so. I authorize Mr. Shrinivas, the company's Secretary, to declare the results of the voting and place it on the website of the company at the earliest. Thank you.

Thank you, ma'am. We are grateful to all our directors, shareholders and executives who joined us today through video conferencing. Thank you all for attending the meeting and the meeting is now concluded. Thank you very much.

Thank you.