Talbros Automotive Components Limited (505160) Earnings Call Transcript & Summary

Good morning, respected Chairman, directors, members of the company of Talbros Automotive Components Limited. It is 10:30 a.m. and requisite quorum is present through online login. I call the meeting to order on behalf of the Chairman. It gives me pleasure to introduce the directors and representatives attending today's AGM, and they are Mr. Naresh Talwar, Chairman; Mr. Umesh Talwar, Vice Chairman and Managing Director; Mr. Anuj Talwar, Joint Managing Director, all joining from New Delhi; Mr. Navin Juneja, Director and Group CFO, Chairman Stakeholders Relationship Committee joining from Gurgaon Corporate Office; Mr. V. Mohan, Chairman Audit Committee, joining from Mumbai; Mrs. Kiran Sharma, scrutinizer for today's AGM, joining from New Delhi; representative of statutory auditors joining from Gurgaon; Mr. Manish Khanna, Chief Financial Officer; and myself, Seema Narang, Company Secretary, joining from registered office of the company, Faridabad. Now I request the Chairman to kindly address the members.

Dear shareholders, a very good morning. It gives me great pleasure to welcome you to the 64th Annual General Meeting of the company. I do hope and pray that you and your families are safe and well in these challenging times. The COVID-19 pandemic has had an impact on the entire globe and has disrupted several businesses worldwide. I must thank our team who has worked endlessly and ran smooth operations across the country during this period. Our endeavor was continuity of operations with top most focus on health and safety of our employees. India's automotive sector, which was already combating a prolonged slowdown nationwide and lockdown to prevent the spread of the coronavirus made the entire industry standstill. COVID-19 led to supply chain disruptions and production halt even after the lockdown was lifted. The impact of this episode has put remarkable effects on the entire industry. And it has delayed the growth trajectory of the industry as a whole. However, constant efforts on exports, and given our hedge portfolio, we were able to clock a top line growth of 15.9% in this pandemic year. We remain very excited about Talbros' future given our constant efforts on enhancing our R&D capabilities to make us a global company. Before I conclude, I would like to take this opportunity to thank all my Board members, regulatory authorities, our management and employees, bankers and all the stakeholders for their unwavering guidance and support. Thank you and stay safe. Now I would request Mr. Anuj Talwar, Joint Managing Director of the company, to discuss the highlights of the performance of the company for the financial year 2021. Warm regards.

Thank you, sir.

Thank you, Chairman, for your guidance, motivation and support always. At first, I'd like to thank everybody at our company who has worked endlessly in a pandemic year with several lockdowns, statewide lockdowns. We ensured that all our customer lines were met. Every employee came to work. We had all safety protocols in place. The health of the employees was number one. I'd really like to thank them from the bottom of my heart who worked endlessly in these trying times. I would also like -- as Chairman mentioned, I would like to thank all stakeholders, our shareholders, who were stood by us for 64 years, and god willing, another 64 years. I would like to thank our Board of Directors, our bankers, everybody from the strategy team, our customers, our vendors, every single person who stood by us in these tough times. As Chairman mentioned to you, your company clocked a growth of 15.9% in a pandemic year. This was made possible based on our strategy of being a hedged auto component company in the global market. Today, your company supplies to every platform, 2-wheelers, 3-wheelers, passenger vehicles, trucks, agri, stationary engines, and now, electric vehicles, which is a buzzword going around. We have commenced supplies from our forging business line and our chassis business line for EVs, both domestically and to global OEMs. Being a hedged auto component supplier, we are not dependent on only 1 OEM. None of our OEMs are more than 8% to 10% of our revenue. Our focus have been on exports. We clocked exports revenue contribution at 25% in the last financial year, the highest ever. This will further go up in the coming years. Our investments in R&D and being a BS-VI-compliant company makes this possible. Here I'd like to give a special mention to our forging business, which is clearly an outlier, which supplies 50% to the global market and 50% domestic. That's leading from the front. Talking a bit about operations. Our net income in the last financial year stood at INR 453.2 crores, a growth of 15.9% in a pandemic year. Our EBITDA, we achieved an EBITDA of INR 64.6 crores, which is a growth of 50% over the previous year, and [ PAV ] stood at INR 24.4 crores last financial year. We are not -- we also did our transactional activity last year to reduce debt, which is our endeavor. We reduced debt by INR 18 crores. We sold off a land in Chennai, which is a vacant plant, and with that, reduced debt. A few strategic highlights only to mention to the shareholders: We signed up an exclusive contract with our partners in Japan called Sanwa packaging to make lightweight heat shields for the automotive market in India. This is a product which helps in reduction of noise, vibration and heat in the vehicle. Now that the cars in India are BS-VI-compliant, they have a lot of turbocharge engines. So this product will enhance the performance and reduce the emissions of the vehicles. We start -- we're hoping to start supplies January of next year. We also had an announcement last year that our group secured orders worth $31 million across our divisions, and this has already started to come into production. Electric vehicles, our company is supplying about INR 25 crores in revenue to the EV space, both domestically and globally. Our focus is now on the following: Is high growth rate being ahead of our peers, and at the same time, working on return ratios. You'll see that by high growth and reduced debt. Thank you so much for this opportunity, and I hand it over to Seema now.

Thank you, sir. Chairman, may I start with the proceeding? Dear members, the 64th Annual General Meeting of your company is being conducted through video conferencing in compliance with the directives issued by the Ministry of Corporate Affairs due to situation caused by COVID-19. For a smooth conduct of the meeting, members have been put in mute mode. For members who have preregistered to speak at the AGM, the audio and video will be open, and they will be requested to see as per speakers' list. Therefore, the query whatever, if any, will be answered by our Director and Group CFO, Mr. Navin Juneja. Proceedings of this AGM are being recorded and will be available at the website of the company later. As you are aware, the remote e-voting was open for 3 days from 9 a.m. on Friday, 24 September 2021 until 5 p.m. on Sunday, 26 September 2021. The members who have not casted their votes on the resolutions through a remote e-voting may cast their votes through e-voting module of NSDL, which is available and will remain open until 30 minutes after conclusion of this AGM. The members holding securities in dematerialized form have an option to go through their DMAT accounts maintained with depository participants. The company has taken all the requisite steps to enable the members to attend and vote at the meeting in a seamless manner. For this purpose, the company has availed the services of National Securities Depository Limited for conducting the meeting through videoconferencing and enabling participation of the members at the AGM, remote e-voting and e-voting during AGM. The relevant details for casting the votes and participation in AGM through video conferencing and all other relevant information has been provided in the notes to the notice of AGM. The company has already requested all members to update their e-mail IDs with the company or its registrar and transfer agent, [ Karvy ] Technologies Private Limited, or their depository participants to receive all statutory correspondence from the company. The electronic copy of the notice of 64th AGM, along with annual report for financial year 2020/'21, was sent to all members, whose e-mail IDs were registered with the company or depository participants. The notice includes following 7 items of business to be transacted at today's AGM, and ordinary resolution and the permission of members, the notice has been taken as read. The items of today's meeting are: Adoption of audited stand-alone and consolidated financial statements for the financial year ended 31st March 2021; declaration of dividend at 20% on paid up equity share capital for financial year ended 31st March 2021; reappointment of Mr. [ Varun Talwar ] as Director who retired by rotation, and being eligible, offers himself for reappointment; renewal of agreements with QH Talbros Private Limited for sale purchase of company's products; renewal of agreement with Talbros Marugo Rubber Private Limited for purchase, sale of rubber, rubber compounds, other chemicals and to do job work for each other; entering into business agreement with Talbros and Nippon Private Limited for sale of company's products in the aftermarket; and remuneration of cost auditors for financial year 2021, '22. I wish to further inform that register of members maintained under Section 88 of Companies Act 2013, register of contracts or arrangements in which directors are interested, maintained under Section 189 of the Companies Act 2013, register of directors and key managerial personnel maintained with under Section 170 of the Companies Act of 2013, and draft agreements and other documents reported in the notice of AGM are available at NSDL portal for inspection by members who so desire. Standalone auditor's report is given on Page #79 to 85 of annual report. And since it does not contain any qualification or adverse remarks and is unmodified, there is no requirement to read at this meeting. It is being taken as read. Dear members, the Board of Directors has appointed Mrs. Kiran Sharma, practicing company secretary, to scrutinize the e-voting process and to prepare the report on the results. Members will be [indiscernible] scrutinize the report as per stipulated timelines. The results will also be available on the website of the company and will be intimated to the stock exchanges. Now the members who have registered as speakers and who wish to speak at today's AGM, want to give their message, will be called one by one. We humbly request the members to limit their speech up to 2 minutes so that the members who wish to speak get equal opportunity. Please speak, members, when your name is announced. The first member requested as a speaker at today's AGM is Mr. [ Rahul Gupta ].

[Indiscernible]

Thank you Mr. Gupta. The next speaker we would like to request is Mr. [ M.P. Bhutani ].

[Indiscernible]

The next speaker on the line is Mr. [ Doti Bhatia ].

[indiscernible]

Thank you so much, Mr. [ Bhatia ] for your good wishes. The next speaker we would like to take on record is Mr. [ Pradeep Sood ]. Mr. [ Pradeep Sood ]? Mr. [ Pradeep Sood ], are you online? We are having -- I think he is not available online.

Can you hear the questions?

[indiscernible]

How will you answer them?

Yes, I think it's audible to them only.

Mr. [ Viksham Rawal ]. Mr. [ Viksham Rawal ], are you on the line? Unmute, please.

Hello? Am I audible?

Yes, Mr. [ Rawal ], please speak.

Good morning, everyone. [Foreign Language] So as the shareholders, we are very, very happy. And thank you. Thank you very much.

Thank you, Mr. [ Rawal ]. The next shareholder, if they're online, Mr. [ Ajit Jain ]. Mr. [ Ajit Jain ], are you online?

[Foreign Language]

Thank you very much, Mr. [ Jain ]. We move to the next speaker, Mr. [ Manjeet Singh ]. Mr. [ Manjeet Singh ], are you online?

Hello, am I audible?

Yes. Yes, Mr. [ Manjeet ]. Please speak.

[Foreign Language]

Mr. [ Manjeet ], your points have been noted. And we would like to answer as much as here, otherwise I will send you all replies. The next speaker who has requested is Mr. [ Chetan Chadha ]. Mr. [ Chadha ], are you online.

Can you hear me?

Yes, Mr. [ Chadha ], we can hear you. Please speak.

Thank you, Madam. Thank you for giving me the opportunity to join with you, madam. [Foreign Language]

Yes, Mr. [ Chetan ], all these figures are available on -- in the accounts, yes. What is your question, sir?

[Foreign Language]

Mr. [ Chetan ], [Foreign language].

Madam, I'm very sorry to say you, [Foreign language]. I don't understand that. [Foreign language]

The next speaker is Mr. Mr. [ Bhupender ]. Please unmute, Mr. [ Bhupender ]. Mr. [ Bhupender ], are you online? Mr. [ Bhupender ] is not online. Mr. [ Suresh Jain ], are you online? There are no more speaker requests to speak from shareholders. So with this, we have talked to all the shareholders who have requested to be heard at the AGM, sir. May I request our Director and Group CFO, Mr. Navin Juneja, to kindly respond to the points of the shareholders.

What are the points? The point is regarding reduction in salaries?

Yes, sir.

That is the point only?

Interest income has reduced.

Yes. Interest expense -- interest has come -- interest expense has come. [indiscernible]

Interest expenses.

Interest expense has come, yes.

Yes. This is from Mr.?

[ Manjeet Singh ].

Okay. Mr. [ Manjeet Singh ], regarding your query, regarding the reduction of salary, I want to state that when the pandemic was there last year in the March, pandemic started, and all the plants or factories were closed for 2 months. There was no business was there, everything was standstill. So management decided that keeping in view what the other industries are doing in the same belt and other auto components, keeping in view the -- other auto component companies we start -- we have decided to reduce our salaries from 10% onwards, started with managers up to MD level 30%. It means MD and GMD reduced their salary by 30%. Then next slab was 25%, then 15% for 6 months only. And it was reinstated back from 1st October. As a matter of fact, since the company has performed well, we have given the senior members incentive of 7.5% of their salary and [indiscernible]. This is -- so your question regarding the salary gap for the management is also there. Our MD, our GMD and our -- everybody reduced their salary by 30% in 6 months. Second query regarding interest has come down, yes it has come down because we have sold our Chennai property in the month of February, and we put all our money in reduction of debt. Debt has come down to INR 110 crores by the end of March. So that I think it will further come down going forward. Thank you.

Final question was on IEPF, sir.

IP?

IEPF, transfer of claimed and unclaimed dividend, transfer to IEPF.

Okay. Okay. Okay. As you know [indiscernible] to IPF accounting in terms of the provisions of the Companies Act '13 and the rules there of, I would like to inform that all the shareholders whose shares have been transferred to the IPF authority can claim back their shares from the IPF authorities, along with their dividends thereon by following the procedures as prescribed by the law. The company, as we always send reminders to people, sending reminders to all the shareholders whose shares have been transferred IEPF report they've been transferred. And as we give the ad to the [ newspaper ] also, and we have informed shareholders also. If any one [ should need ] any help to reclaim back their shares, they can get in touch with the company secretary who has been supervising [ investors also ]. Thank you.

Yes, sir. Thank you, sir. And 1 question on, sir, tax, why we are paying.

Last year tax is high because there are 2 taxes. One is income tax and one is capital gain. The capital gain of Chennai property is also part of that. So that's why the tax is high.

All right. Thank you, sir. Thank you. Chairman, with your permission, now I would like to thank all the members for attending today's AGM and continued support to the company. The voting portal through NSDL will remain open for the next 30 minutes for shareholders. And we propose thanks -- vote of thanks to the Chair for chairing today's meeting. And I extend my hearty thanks to all for attending today's meeting. Your presence at AGM is a testimony to your interest and support of the company. Thank you, management. Thank you, directors. Thank you Chairman, sir, and thank you, members of the company.

Thank you, all.

Thank you.

Thank you.