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

Good morning respected Chairman, Directors, members of the company and other attendees. I welcome you all to the 65th Annual General Meeting of Talbros Automotive Components Limited. It is 11:00 a.m., and the requisite quorum is present through online log-in. As authorized, I call the meeting to order on behalf of our Chairman. It gives me pleasure to introduce the directors and other panelists attending today's AGM and they are Mr. Naresh Talwar, Chairman; joining from Gurugram; Mr. Umesh Talwar, Vice Chairman and Managing Director, also joining from Gurugram; Mr. Anuj Talwar, Joint Managing Director, joining from New Delhi; Mr. Navin Juneja, Director and Group CFO, joining from Amsterdam. He is Chairman of Stakeholders Relationship Committee; Mr. Anil Kumar Mehra, Chairman, Audit Committee, joining from New Delhi; Mrs. Kiran Sharma, scrutinizer joining from New Delhi; Mr. Aman Aggrawal, representative of statutory auditors joining from Faridabad; Mr. Manish Khanna, Chief Financial Officer; Mr. Sanjay Sharma, General Manager Accounts; and myself, Seema Narang, Company Secretary, joining from registered office of the company at Faridabad. Now I request the Chairman to kindly address the members.

Hello, everybody, Good morning. Dear shareholders and a very warm welcome to the 65th Annual General Meeting of your company. This is the third virtual AGM of the company in compliance with the guidelines issued by MCA to ensure safety of all shareholders. I do hope and pray that you and your families are staying safe and healthy in these challenging times and taking due precautions. During the financial year '21, '22, the automobile industry faced challenging times such as supply chain bottlenecks and semiconductor shortages. The pandemic impact caused lockdown restrictions by various states across the country, adversely affected the rural and the urban markets leading to a decline of 6% in the overall sales in the automobile industry. Furthermore, another course of the automobile sales getting affected is the tactical shift in the industry from internal combustion engines to the electric vehicle sales. Despite all these challenges, financial year '21 '22 has been a very good year for us. We reported a 30% increase in revenue to INR 577.24 crores and an EBITDA of INR 83.18 crores, an increase of 29% year-on-year. Our profit after tax was INR 44.89 crores, recording a staggering increase of 84%. During the financial year, we created significant value for our shareholders, and we have reduced our debt -- debt-to-equity has improved predominantly. This will help us provide higher retained earnings and also create higher returns for our shareholders. Going ahead, we are determined to achieve higher operational excellence, enhanced product quality, increase in customer base and wider geographical presence. We are emphasizing diversification to strengthen our business model, while fulfilling our stakeholders' expectations. With this brief note, I'm now going to request Mr. Anuj Talwar to further amplify on the highlights. Anuj?

Thank you, Chairman, sir. Dear shareholders, your company Talbros Automotive had an experience of over 65 years in the auto component industry. We are one of India's leading auto comp manufacturers with emphasis on design and development. We take proud -- take pride in saying that we are one of the most hedged auto comp companies in the country. We offer multiple product lines like gaskets, forgings, chassis, suspension, rubber components and we supply to each and every segment of the automotive industry, whether it is a 2-wheelers, 3-wheelers, passenger vehicles, heavy-duty commercial vehicles, light commercial vehicles, the agri industry and most recently, entered the off-highway and the construction industry. We also take -- I also would like to state that no one customer is more than about 10% of our annual turnover for the group, which goes to show the hedge portfolio and the flexibility that we have being in a cyclical industry. Also, this turmoil about IC engine or EV, we like to assure our shareholders that Talbros Automotive will be a part of every possible mobility solution that may come about, whether it is hydrogen, whether it is combustion engines, whether it's electric vehicles, we are there present in all segments. As the Chairman mentioned, '21, '22 was a very challenging year for the automobile industry. However, our company outperformed the market. And I think the operational efficiency of Talbros Automotive Components Limited. As mentioned to you earlier, I think being in a diverse product portfolio and across various segments ensure our growth. We also like to mention to you that exports now constitute about 25% of our group's turnover. This was an endeavor that we marked upon about 5 to 7 years back, as invest big time in technology, global automotive, Euro-VI norms, Euro-VII norms that enabled us to capture the global market. As Chairman mentioned, and I'll just repeat for the shareholders, for the year '21, '22 Talbros delivered a very robust financial performance. We recorded a growth of 30% in revenues to INR 577.24 crores and achieved an EBITDA of INR 83.18 crores, which is again an increase of 29%. Our profit after tax stood at INR 44.89 crores, recording a staggering increase of 84%. Let me just touch upon our various business lines. So you get a little flavor of what's really happening. As you know, we are the oldest manufacturer of gaskets in the country. Our market share along with our joint venture company, Nippon Leakless is at 50%. We invested in technologies to -- for Euro-VI norms, which enables us to export now to the world market. Our gasket business, which actually is our largest, grew at 35%, purely because we were able to put in more components in the heavy-duty space, which others could not by investing in technologies like BS-VI. In the gasket division, we have just entered into -- I want to supply a new product line called heat shields, which starts in the H2 of this year. This will enable our gasket division to enter the PV space by giving a component for NVH solutions to OEMs and this is a very futuristic product going forward. We have tied up with India's largest carmaker and the second largest carmaker for this particular product line. Our forging business performed extremely well, and this division for us is a pure outlier as it added exports almost 48% of its turnover globally. So that's quite an outlier for us as a group. The company also increased in revenue by about 21%, which was pretty healthy. During last financial year, we also installed a 2,500 ton press to try and increase the weight of our forging components to both domestic and global customers. This division is gaining a lot of traction globally by adding more and more customers as the Western world doesn't want to forge anymore. So automatically with the whole China-Plus-One strategy and the chaos and the turmoil in the world, we should be able to capture more business going forward. Our joint venture, Nippon Leakless Talbros was also able to develop a new PSS gasket for Hero and a lot of efforts were put in by the team to try and look -- to try and use local steel as you want to try and go away from imports in the long run. Coming to our 2 other joint ventures. One is Marelli Talbros Chassis Private Limited. This joint venture is predominantly for passenger vehicles. Here, we supply a plethora of suspension components, axle components, body-in-white components going forward. Here, we are proud to say that with Maruti and Tata for the components that we manufacture our market share with Maruti is 40% and the Tata Motors is 70%. From this joint venture, we are supplying to a lot of electrical vehicles in India, especially with Tata Motors. Our third joint venture company, Talbros Marugo Private Limited is relatively a small joint venture, but there's immense potential for this particular company, here we manufacture anti-vibration components, rubber components, again, for the passenger vehicle industry as well as some exports into Japan. We are very proud to say that in the current financial year, FY '23, the company has received new multiyear orders worth INR 400 crores for both domestic and the overseas market across all our divisions and segments. Out of this order book of INR 400 crores, almost 18% will be for the electrical vehicle space which is a buzz word today in the automotive industry. With this, I'd like to thank all our shareholders who have stood by us with through all the last 65 years. And we can assure you with the emphasis we are putting with our JV partners, investing in new technology, reducing debt, growing our companies in double digits, exploring the global market, adding new customers with your support, guidance and obviously, the guidance, the work of all our people at Talbros, we should get to newer heights. Thank you so much.

Thank you, sir. Chairman, sir, may I start with the proceedings?

Okay.

Okay. Thank you, sir. Dear members, the 65th Annual General Meeting of your company is being conducted through video conferencing in compliance with the directives issued by the Ministry of Corporate Affairs and the proceedings of this AGM shall be deemed to have been conducted at the registered office of the company. The company has taken all the requisite steps to enable the members to [Audio Gap] for enabling participation of the members at the EGM, remote e-voting and e-voting during the AGM. [Operator Instructions] Proceedings of this AGM are being recorded and will be available at the website of the company. As you are aware, the remote e-voting was open for 3 days from 9 a.m. on Friday, 23rd September 2022, till 5 p.m. on Sunday, 25th September 2022. The members who have not casted their votes on the resolutions through remote e-voting may cast their votes through e-voting module of NSDL, which is available and will remain open till 30 minutes after conclusion of this AGM. The members holding securities in dematerialized form have option to vote through their demat account maintained with the 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 the purpose, NSDL has been appointed. 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 the AGM. The company has already requested all members to update their e-mail IDs with the company or our Registrar and Share Transfer Agent, KFIN Technologies Private Limited or their depository participants to receive all statutory correspondences from the company. The electronic copy of the notice of 65th AGM,along with annual report for financial year 2021, '22, was sent to all members, whose e-mail IDs were registered with the company or depository participants. Also, the physical copy of the annual report for financial year 2021, '22, has been sent to members who have requested for the same. The notice includes following 13 items of business to be transacted at today's AGM. And with the permission of the members, the notice is being taken as read. Adoption of audited balance sheet, statement of profit and loss and cash flow statements, standalone and consolidated for the financial year ended 31st March 2022, and the reports of the Board of Directors and auditors thereon is on the first item of today's agenda. The second item is confirmation of interim dividend at the rate of 10% on fully paid up equity share capital for the financial year ended 31st March 2022. Item #3 is declaration of final dividend at the rate 15% on fully-paid up equity share capital for the financial year ended 31st March 2022. Item #4 is the reappointment of Mr. Varun Talwar as Director, who retires my rotation and being eligible offers himself for reappointment. Item #5 is reappointment of Mr. Anuj Talwar as Director, who retires by rotation and being eligible offers himself for reappointment. Item #6 is reappointment of M/s. J. C. Bhalla & Company, Chartered Accountants as Statutory Auditors of the Company for a second term of 5 years to hold office from the conclusion of 65th AGM of the company till the conclusion of the 70th Annual General Meeting. Item #7 is the appointment of Mr. Deepak Jain, as an Independent Director for the term of 5 years commencing from 29 December 2021 to 28 December 2026, not liable to retire by rotation. Item #8 is approval of material-related party transaction with M/s. QH Talbros Private Limited for sale/purchase of company's products, including but not limited to gaskets, forgings and other auto parts. Item #9 is approval of related party transactions with M/s. QH Talbros Private Limited for granting permission to use trademark of the company for sales and replacement market in consideration of royalty fee. Item #10 is approval of related party transactions with M/s. Nippon Leakless Talbros Private Limited Company, a JV company for sale/purchase of gaskets to each other. Item #11 is approval of related party transactions with M/s. Talbros Marugo Rubber Private Limited for sale/purchase of rubber, rubber compound and other chemicals and to do job work for each other. This is another JV company. Item #12 is approval of material-related party transactions with M/s. Talbros Indiparts Private Limited for sale of company's products in the aftermarket. Item #13 is ratification of the remuneration of M/s. Vijender Sharma & Company, appointed as cost auditors for the financial year ending 31st March 2023. I wish to further inform that statutory registers as required are available at NSDL portal and on company's website for inspection by any member who so desires. Standalone auditor's report is given on Page #91 to 99 of the annual report and the same is being taken as read with the permission of members since it does not contain any qualification or adverse remarks and is unmodified. There is no requirement to read it at this meeting. Dear members, the Board of Directors has appointed Mrs. Kiran Sharma, a practicing Company Secretary to scrutinize the e-voting process and to prepare the report on the results. Members may please note that the voting results will be declared after receiving scrutinizer report as per stipulated timelines. The result will also be available on the website of the company and will be intimated to stock exchanges. Now the members who have requested as speakers will be allowed to speak one by one. We humbly request the members to limit their speech up to 2 minutes so that fellow members who also wish to speak at the AGM get the equal opportunity. I request some members to speak as and when their name is announced. The first member on the speakers' list is Rahul Kumar Paliwal. Mr. Rahul Kumar Paliwal, you may speak now. I -- we are not able to hear from Mr. Rahul. So I move on to the next speaker. Mr. Sarabjit Singh. Mr. Sarabjit Singh, please speak if you are online.

Am I audible sir? Am I audible sir?

Yes. Yes. You are audible.

[Foreign Language]

Thank you, Manjit Ji. Now we move on to the next speaker, Mr. Ajay Kumar Jain. Mr. Ajay Kumar Jain?

[Foreign Language]

Thank you, Mr. Jain. The next speaker is Mr. Vimal Jain. Mr. Vimal Jain? I think he's not connected.

Hello. Can you hear me?

Yes. Mr. Vimal Jain.

Okay. Okay. I had not been unmuted by the moderator. I'm just...

Okay. Okay, sir. We can hear you now.

Yes. I'm Vimal Jain, joining this meeting from New Delhi. First of all, I would like to welcome the entire Board, the Chairman sir, MD sir, all the directors as well as the staff and management into the AGM. Sir, I would also like to thank you for providing us with the interim and final dividend, which has been declared. And my question is that sir, after the COVID-19 pandemic is receding and the impact of the Ukraine-Russia war is also getting less. And India is deemed to be the fastest-growing economy in the world, how is our -- it is expected that the automobile sector of our country will grow. And you know that the automobile sector is a major contributor to the GDP of our country. So how is our company planning to go way in the future in the short coming future as well as in the long term? Also, I would like to know that how was our company impacted during the Ukraine war especially because the Ukraine war has severely impacted this thing manufacturing sector. Also, it has reflected several things that how our company is lagging in the making of forged products. For example, many of our supplies were stopped due to the Ukraine war, and we had to be fully dependent on China and other countries for receiving the forged products in many, many sectors. So I would like to get the answer for these questions. Lastly, I would like to thank the secretarial department and the compliance department for allowing me to connect through this mode so that I could easily put up my questions. I would also like to wish you all the best for the future and hope that in the coming future, we'll get better returns from you. All the best.

Thank you. Thank you, Mr. Jain . The next speaker is Mr. Suresh Chand Jain. Mr. Suresh Chand Jain? I think we'll move on to the next speaker. Mr. Yashpal Chopra.

Am I audible?

Yes. Yes. Mr. Chopra. Yes, you are audible.

Yes. Myself Yashpal Chopra, speaking from Delhi. I'm a shareholder of the company for more than [ 40 ] years. I have seen the hospitality [Technical Difficulty] from the time of Mr. [indiscernible] and Talwar sir, and followed up with his legacy, we have followed up on the [indiscernible] and now that is in the hands of a dynamic and visionary person, our Talwar sir, Naresh Talwar Ji. And the team, Mr. Umesh Talwar, Anuj Talwar, and our CFO, Mr. Navin and our Company Secretary, Madam Seema Narang. So our company's management is excellent and that is shown in the performance of the company, which has been, I can call it excellent because in spite of a very, very bad time, the first quarter was impacted by corona [Technical Difficulty] production and all that. And last quarter was affected by [Technical Difficulty] [Audio Gap] and particularly in the gasket business that has [Technical Difficulty] for R&D team and along with our JVs, our friends from Japan, this has been [Technical Difficulty] leakproof means that use of ammonium has been made [Technical Difficulty] whereas we were earlier producing only axles, rear axle and front axle. Now we are producing, making the complete chassis. This is a matter of achievement for us and for that credit goes to our R&D as well as to our JVs. And we have got a very big order from Tata Motors for around 84% of our orders is from Tata Motors then we have our -- mainly our client, our Maruti. They are also very proud of us, our company. And the third JV that has provided shockproof vibrant rubber products this is a very big team. And I'm quite sure that the coming time is definitely very, very good for the company because there now is fear of corona as well as the fear of the war is no more for us and our production will grow terrifically [indiscernible] much sir, I got a 1 query that our -- our year-end dividend distribution policy is not as per the investors' benefit because that needs to be modified and particularly this year of Amrit Mahotsav, 75th year of independence and our company should have come out with some special dividend to celebrate that independence day again all that. And sir before I close, I must thank our corporate department under Madam, Seema Narang and the team and our CFO, for getting me a chance to express myself. I'm proud of the management. I'm proud of the team. And I wish you best of luck and I pray God for the positivity for all of you from the Chairman to the last man in the organization because that positivity is the strength of my company. Before I close, I have got only last one query, how much benefit we are getting out of the PLI scheme? So that is one of my query because I would like to be enlightened on that. Best of luck for the coming festivals ahead. Thank you very much.

Thank you, Mr. Chopra. The next member who has registered is Mr. Ashok Kumar Jain. Mr. Ashok Kumar Jain?

Next.

Mr. Ashok Kumar Jain?

I don't think he is there.

Yes. The next speaker is Mr. Praveen Kumar. Mr. Praveen Kumar?

Am I audible? Hello, am I audible ma'am?

Yes, yes. You are audible.

A very, very good morning to my respective Chairperson, well decorated esteemed Board of Directors and my co-fellow shareholders who joined this meeting online. Myself, Praveen Kumar, joining this meeting from New Delhi. Sir, I have a few observations which I love to share with entire house. [Technical Difficulty] Thank you very much for your deep in-depth speech. It's easy to understand in a language for a retail investor like me [Technical Difficulty] understand that. Sir, part of this organization, more than years and over the period of time when we used to meet physically always [Technical Difficulty] and I welcome the new [Technical Difficulty] to take this company into a newer higher [Technical Difficulty] all the resolutions [Technical Difficulty] which I love to share with the house, under your leadership sir, [indiscernible] of the company also decided by [Technical Difficulty] our company side, Madam Seema Narang and entire team to provide each and every information, which is vital for retail investors to believe in this company because of [Technical Difficulty] into this company and so it will be from big plan. So I'm very, very thankful to our peers and our entire team sir, for the brighter future. I have only one query, just tell us what is the road map over the next 2 years. And as I said, I pray to the God that He will bless the entire Board, so that He will take our company to the next level, and I love to thank the management for giving me this platform to share my view and express [Technical Difficulty] more than 2 decades. I wish all the very, very luck and all the very, very best. And I love to thank Seema Ji, for her excellent communication to the retail investor. We are always welcome and our voice will be heard. Thank you very much, ma'am. All the very, very best. Thank you.

Thank you, Praveen Ji. Thank you. The next speaker is Mr. Jay Abhishek. Mr. Jay Abhishek? Are you connected?

He is not there.

Okay. The next speaker is Mr. Ravi Kumar Naredi. Mr. Ravi Kumar? I think he's got some.

Anybody else?

Yes, there are a few more, sir. I'm just taking their names. Mr. Tony Bhatia.

Hello? [Foreign Language]

[Foreign Language]

Thank you. Thank you, Madam. Respected Chairman, eminent Board of Directors and my shareholders friends. Chairman [Foreign Language] So, you gave a such a amazing speech. [Foreign Language] such an amazing order book [Foreign Language] Tata Motors and this Maruti Limited, [Foreign Language] I am 100% sure, with God's grace,our company has got a very, very bright future. Now I'm coming to few points. Revenue from operations, this is INR 57,724.03 lacs against INR 44,419.72 lacs. Profit before tax, INR 4,852.60 lacs, profit after tax, INR 3,704.95 lacs against INR 3,360.80 lacs. Dividend, 10% interim [Foreign Language] and 15% final, total weighs to 25%, a good dividend Mr. Chairman. [Foreign Language] Gasket division sales is INR 374.55 crores, up by 35.10% and Forging division that is also up by 20.98%. JV, Nippon Leakless, Talbros, there is a slightly downfall 11.07%, Marelli Talbros Chassis [Foreign Language] there is a 32.40% higher. I'm happy. Talbros -- this Talbros Rubber, that is also on the higher side, 33.58%. Such a marvelous Mr. Chairman, [Foreign Language] I am a shareholder of this company since public issue or immediately after the public issue. Transferred to reserve, you have transferred a INR 50 lacs to general reserve, a good sign, Mr. Chairman. Corporate governance, you have shown in such a good manner for this credit that goes to Juneja, CFO and Company Secretary Madam, Seema [Foreign Language] I am thankful Mr. Chairman. [Foreign Language] Yes, Mr. Chairman [Foreign Language] next year, physical meeting [Foreign Language] Bosch, formerly known as Motor Industries Company Limited also met in Bengaluru [Foreign Language] I am a shareholder of Bosch Limited. JK Paper, JK Tyre [Foreign Language] Page number 42, sir, one more point, in 42, transfer of unpaid dividend to IEPF [Foreign Language] 6,931 shares [Foreign Language] IEPF as per new guidelines. [Foreign Language] today's share price is INR 450. It went up to INR 650 if I am not wrong, INR 650 [Foreign Language] With these words, once again, yes one more thing. I support the resolution number of 4 and 5. Anuj Ji and Varun Ji, I strongly support the resolution of 4 and 5. They are the pillar of the company. With this, once again, I support and seconded the balance sheet. God bless you, Mr. Chairman. Thank you, sir. Thank you.

Thank you, Bhatia Ji. Thank you. Next speaker is Mr. Bhupinder Singh Reen. Mr. Bhupinder Singh Reen? I'm told he is not online. Next speaker is Mr. Bhupinder Pal Bhutani. Mr. MP Bhutani?

Good morning to all and Jain sir. Firstly, I would like to convey my good wishes to all the Board members on this AGM. Sir, I am thankful to the management for giving me this opportunity to interact and put my queries before you. Sir, firstly, regarding e-notice and annual report, sir, we have received the annual port in time and found that all section has been covered in detail and transparent manner. I also appreciate the efforts of the management for taking safety steps of all the employees during the pandemic situation of second and third wave. Sir, as a member, I support all the item of the agenda. Sir. [Foreign Language] Is there any plan of our company to expand further into the South and Eastern region? Sir, greeting to each one of you. Happy Navratri.

Thank you.

Thank you so much.

[Foreign Language]

Thank you, Mr. Bhutani. The next speaker is Mr. Rahul Gupta. Mr. Rahul Gupta? I think he's not connected. The next speaker is Mr. Neeraj Jain. Mr. Neeraj Jain? He's not connected. So that's all. We have covered all the speaker shareholders, sir. I would like to inform Chairman, Sir.

Yes. What is the further step now? Is the Director of the company and CFO, Mr. Navin Juneja to respond at this moment or what?

So, I can say we have heard the observation of all the shareholders. And I think most of the information we are sharing on our quarterly IR meetings, and it has been recorded and is available on the website of the company. And regarding the other queries, if they have any specific query, they can write to Seema Narang. Of course, we'll consider the observation with our dividend, et cetera, we'll keep our mind and keeping the cash flow, et cetera, we will do the needful in future. And this -- what I'm to say is any specific query, they can write to Seema Narang. For general things, of course, we -- all the things are available in our quarterly meetings. We have with the IR people, to our shareholders, investors and everything recorded. They can go through that in the order book position, et cetera, our future outlook, everything is there. Thank you.

One of the queries was if we can have actual meeting physically. So this will depend upon the situation of the country as a whole, various dynamics and things like that. So if the things improve, we will obviously try and do that. It will all depend on how things are in September next year.

Yes, fair point.

Thank you, sir. With this, we come to the close of this annual general meeting, sir. I thank all the members for attending today's Annual General Meeting, and we thank all the members for their continued support to the company. I would like to inform that NSDL portal will remain open for the next 30 minutes for shareholders, if they want to cast their votes. Thank you, Chairman. I extend my hearty thanks to all the attendees for attending today's meeting. Members attending the meeting, the testimony of your interest and support to the company. We thank all of you, and we hope to see you next year also. Thank you, and all the best to all.

Thank you, everybody.

Thank you, everyone. Thank you.

Thank you.

Thank you.

Thank you.