Visaka Industries Limited (509055) Earnings Call Transcript & Summary

[Foreign Language]

[Foreign Language]

Okay. Thank you, sir. Thank you.

Thank you, [ Chavda Ji ] and [ Ramesh ] Ji. We will answer you. Please go ahead.

Chairman, sir, Vivekanand Ji [Foreign Language] Thank you, sir.

Thank you, [ Kamal bhai ].

Sir, our next speaker is Shri [ Shrikant Johar Ji ]

Hello -- [Foreign Language] Respected Chairman, honorable of Board of Directors [Foreign Language]. Thank you, sir. [Foreign Language] Thank you, sir.

Thank you, [ Shrikant Johar Ji ].

Sir, our next speaker is Mr. [ Bharat H. Shah ] [Operator Instructions] [ Bharat Ji ], we cannot see you.

Please go to the next speaker.

Sir, he's -- Sir, [ Bharat ] sir is available. He's trying to switch on his camera. [ Bharat ] Ji, you can continue with the voice only. Yes. Yes. I can see you, but we cannot hear you, [ Bharat ] Ji. [ Bharat ] Ji can you speak something? [Operator Instructions] [ Bharat ] Ji, you have not done the echo testing, that is the reason you are not able to speak. [ Bharat ] Ji, if you can hear us, you please re-log in with echo testing and then try again. We have no other option except to put you on hold for another time. Thank you so much. Our next speaker is [ Sweksha Jain ] Ji. [Operator Instructions]

Yes. Can you hear me?

Yes. We can hear you.

Yes. I'm [ Hardik Jain ] here, [ Sweksha Jain's ] brother. So I'm attending this AGM for the first time. So some of my questions might be very basic just to understand the business in a better way. Firstly, in terms of CapEx, the Chairman mentioned that we started 1 facility of 50,000 tonne in January and 1 more in May. So if I see your Q4 presentation, our building products capacity was something like 982,000 tonne. So does that include this -- both the CapEx or after both these CapEx started, what will be the capacity in the building products? And is there any more CapEx underway for the next year or not? My second question is regarding the margin. So if I see your last 5-year performance, in Building Products, the margins vary from 8% to 18%. And in Synthetic Yarn, margins were in the range of 2% to almost 18%, 20%. So in both the division, what is the sustainable margins in the long term? That's my second question. Third question is regarding this ATUM panel, solar panel. So wanted to just understand, so we make the cement board, and we purchased the solar panel from outside and then make a product and sell. Or how does this happen? Or we made the photovoltaic cell in ourselves? So that's the second question. And regarding in this, what would be the per megawatt cost of our product? If you can elaborate that whether we use this product or the earlier -- what the other people make, we use that product? What would be the cost difference for a customer. My next question is regarding this charging station -- EV charging station, which others have also asked. So do we on our own managed this EV charging stations or we just are doing the EPC performance? So that is the question. And if you can just elaborate on metrics of one EV charging station, how much would be the CapEx and what kind of revenue it can generate? And my last question is regarding the yarn division. So we have done quite well. So our entire capacity is from the recycled PET bottles only or we use some other raw materials as well? And in terms of -- if it's entirely from a recycled PET bottle, so do we make the chips on our own or we purchase the chips from outside and just make the yarn? And has the prices of chips gone up recently very high. Those are my questions. Thanks for the opportunity.

Thank you, Mr. [ Jain ].

Our next speaker is Mr. [ A. Satyanarayana Sharma ]. [Operator Instructions] Mr. [ Satyanarayana Sahab ], are, you there? Sorry, sir, we are not getting any input from Mr. Mr. [ A. Satyanarayana Sharma ] sir. With this, we have completed calling out all the speaker shareholders. We are handing over proceedings back to the Board. Thank you so much.

And now Mr. Moderator, we also had an option for some of the shareholders attending this board meeting to raise some queries. Please try to open for any other shareholder to raise any questions.

Any other shareholder who wanted to raise any question, they may ask the question. May I request other shareholders to speak if you have any questions.

Yes. Now I think Vamsi should go ahead and start answering their questions? Vamsi?

Yes. So thank you, everybody, for giving this opportunity, and I welcome all of you to our 40th Annual General Meet. I think I wanted to show some pictures while we talk actually, but for some reason, it seems like they are unable to do that for us on this call. So I will give a small talk on what we have done and what we are trying to achieve and then go on to the questions that you all have asked. With regard to what we have been trying to create as a company, I think the leadership team at Visaka Industries has been sitting on a very strong foundation. The way we have built our business over the last 30, 40 years, has been built on the very strength of the people that are in our team. And that has enabled us to really change gears and shift over from what is traditionally known as a sunset industry to, today, we are looking at many of the sunrise industries that we are trying to be part of. If you take a look at all of our businesses that we've been into, traditionally, the cement roofing and the textiles, both of which were really dependent on the rural and the traditional markets, talking about the roofing and the textile part of it. But going forward, the company decided to look at opportunities where we can create and add value in terms of what is going to be in demand. For any company to be relevant, it is important to create products and solutions that are relevant for that date. And as we have rightly seen many companies which have perished, which have not taken the -- adopted new products to deliver, either through a way of innovation or through way of adopting changes in the existing lines, they have perished. So I think we are happy to have a very adaptable and a very excited, passionate team which takes on challenges to keep going forward. First off, I would like to thank all the stakeholders in Visaka for giving Vnext the opportunity and the time for it to show a considerable change and contribution to ATUM offline. Today, Vnext is growing almost at about 30% to 40% a year. Given the tough market conditions in spite of COVID situation where most industries and most products stood at standstill, Vnext Fiber Cement growth really took off in terms of its utility. What we have been talking for the last 10 years in terms of using the products due to having lightweight, fast construction, less labor. All of these points added to our concept in terms of what we could push for. And in terms of the growth that we can expect from Vnext, I think very soon, we'll be announcing another expansion for the boards product in terms of our market spread. And also, we'll be looking at healthy margins of around 15%-plus in another 2 to 3 years' time going by the way things are. The forward integration is what we look at, either in terms of Vnext, which leads me to talk about ATUM Solar Roof. ATUM Solar Roof, as you all are aware, is our bit of innovation from the base in terms of our roofing expertise. We really try to see how best we can look at our products and add value in terms of where we can go forward in terms of what the market doesn't have. As you all are aware, green energy and solar is of today's talk. Everybody is looking at how can we generate clean and green energy and also look at updating ourselves in terms of the product offering. I'm very happy to share with you all, as some of you have mentioned in the questions that we have got patent rights for ATUM Solar Roof in India, South Africa and in the United States of America. Patent pending in Europe and in China as we speak. It has been an incredible journey. Today, the product is spreading at a rapid rate. We are very happy to share with you that we have done installations in Thailand, in the Middle East. We are exploring markets in the African countries and South Africa, Australia. So really, the product is finding its fit. It's finding its marketplace in terms of using a roof which generates power. And quite simply, not following the traditional trend of manufacturing a commodity, I think our company is very specific in terms of picking and entering spaces where we can actually differentiate and add value in terms of innovation. In India, talking about the spread of ATUM, we are getting into very exciting places, like just to name a few, we are supplying to Serum Institute, the COVISHIELD vaccine makers. We're supplying Mahindra Life Resorts. We're supplying to Rainbow Hospitals, the Phoenix Group and Manipal Institute. So many as such where the product offtake is happening, the lift off and acceptance is very positive. And the way we look at it is the repeat orders that we are getting from existing clients, that itself is our statement, our testimony in terms of the proof of the product. And talking about growth-wise, really speaking in terms of our existing capacity, which is around 30 to 60-megawatt is what we can manufacture in our existing facility, we expect to touch that full capacity within 2 to 3 years is our target. So I think we are going in the right track. The adoption of our product is quite rapid. And we only need to keep adding valuable touch points in order to make the customer acceptance and their response better as we grow. Coming to the textile market. I must share a very interesting note here, where textile -- though we started in 1992, we -- just to give you a thought on how our company is innovating itself. We are looking at a very tough situation post GST and post COVID. That is why, as somebody mentioned, we hit very low margins in textiles because the market was completely shut. In fact, it was a very interesting situation where there was no offtake at all. The Mumbai market, which we depend heavily on, literally was in complete lockdown and completely shut. So we didn't have an opportunity to go forward in terms of sales. But post COVID, once the COVID situation normalize, we saw that there was a huge shift of -- huge offtake in our product. And what we did during the lockdown was we literally innovated ourselves. We launched 2 new products, which were virtually nonexistent in our product offering. That is the recycled yarn. That is contributing almost 20%, 25% of our textile sale today. And also battery separators, we're doing hardly 10, 20, 30 tonnes in the market. Today, that number also has gone up to almost -- to 20%, 25% of our complete offtake. So what I would like to share with you all is that your company is constantly innovating itself no matter the industry, no matter the product. There is always scope to re-innovate and come up with something new that seems fit for the market. That is the reason that we could achieve a good run just as COVID opened up for the textile market. Talking about the other ventures that we are looking at, be it via Vnext, leading on to ATUM Roof, or now ATUM Roof leading on to the charging stations. I know there's a lot of buzz in the market today about the whole electric mobility and the charging infrastructure. That really puts us in the right place today in terms of where we are heading as a country and as a world. Once we shift to electric mobility or the use of greener sources of power, we need to have a heavy dependency on green sources of power. And what I mean by that is, once the whole electric mobility shifts, the problem what U.S. is facing as of today, where a state like California has announced, by 2030, they would want to go full electric. They don't want any IC vehicles on road. People have started adopting green vehicles -- electric vehicles, I should say, not green vehicles, electric vehicles, at large. But the power source for all these electric vehicles unfortunately is now building up more on thermal based and other nonrenewable powers. That is where I think our true differentiation comes in again. We are creating a network of charging infrastructure where, in the country, we are the first guys to use ATUM as a solar roof, where the solar is powering our entire charging network. So charging infrastructure, if you really look at, we are seeing how best to propel the use of our own products in terms of its utility. All the charging stations are completely eco-friendly. They are powered by ATUM Solar Roof. And all the [indiscernible] and the full setup is built by Vnext boards, which has hardly 36 grams of carbon emissions, which is the lowest carbon emissions in the market for any building industry today. And in fact, we are one of the preferred products for getting LEED certifications and Green certifications in terms of construction in our country and across the world. Coming to a couple of points where -- our shareholders raised. In terms of the network, we had set up -- in our first phase, we set up 250 charging stations across the country. Where everybody is concentrating on the metros, we took a Tier 1 and Tier 2 route where the offtake of electric vehicles is actually very high in those areas. We have looked at -- in terms of Hyderabad and Telangana alone, we have 30. And across all the 30 -- 29, 30 states, we have almost covered up to 25 states as on today, where we have a minimum of 10 charging stations in each state in -- depending on the market and depending on the usage of stations. In terms of the investment and revenue model, I would like to take some more time to comment on that in terms of what we are actually deploying and show you what we are creating. So I don't want to give out any early information at this stage. Coming to the whole concept of yarn. There was a question on the yarn business. Where -- Are we looking at expansions? Yes, definitely. The yarn output has been very good. But being in the yarn business for the last 20, 30 years, we have always observed that the cyclical changes in terms of the market demand. So we are observing what best we can do and what product will give us the right mix in terms of our turnovers and margins. So we are definitely looking positively towards the textile as well. And coming to our installed capacity. Actually, our installed capacity is around 9 lakhs. That is pre-expansion -- the note was on pre-expansion. Post expansion, we will be around 11 lakhs in terms of our total building materials output. In terms of A.C., the traditional roofing, it is around 9 lakhs. And in terms of the boards, it is around 2.3, 2.5 lakhs. So overall, we'll be about 11.5 lakh tonnes in our capacity as on today. Talking about the margins. I think we have to be aware of the global scenarios that are in place, that was COVID and then back-to-back war. Unfortunately, our major sources of raw material do come from that area. Nevertheless, I think due to our constant R&D and our constant search for self-dependence, I think we will be happy to share with you that way before the whole Atmanirbhar concept took off, we were one of the first few guys to start working on indigenously developing our sources of raw materials. We are very independent that way, except for a couple, which happened to be teaching us a further lesson in terms of improving ourselves and be ahead of the game. With regard to the textile business and the A.C. business, I think going forward, we should be seeing healthy margins of around 15%. And that is what I think you can expect from us. In terms of ATUM. ATUM, as you know, it is where we've figured out how to fuse solar cells into our cement board, which is an eco-friendly board that we've prepared especially for this application. So it's not the traditional business. It's not the traditional panel that you see which is having a huge commodity-based market in a [indiscernible]. We are actually not competing in that space. We are looking more of having the -- how best to put it, a niche market for ourselves, like we've created for the textiles and for the boards business. And going forward, I think even in that material sources of self-dependence, I think, almost 90%, we are Made in India and self-dependent in that way. Coming to the textile yarn. We do buy recycled chips from suppliers like Reliance and others. We don't actually do the chip collection and recycling. We are more focused on getting the output done. So we actually -- we would be in the space where we convert chips into the yarn. So that is the actual value-add in the process of the product. And I think overall, I think I've answered most of the questions that were based. But just to give -- our company and the stakeholders an idea of where we are trying to head. There was a question on how sustainable is this growth. I think what point we need to understand is the growth of 20%, 25% this year has not come on accident or it has not been a sudden appreciation due to the market. In fact, I think, like I was saying, [ attacking ] our stakeholders, it has been the continuous effort of -- as a team to identify pockets where we can enter and find the right target market and find the right customer for our products. We are constantly working on what best product we can give in terms of value-add and in terms of how much realization, where eventually the customer does realize that, yes, instead of using a traditional product, there is a better alternative. Give it Vnext as a great example compared to the traditional plywood or the wet construction where people are appreciating the product widely. They are adopting the product today much more than what it was even 2 years ago. Just before the COVID hit, also the numbers are very higher up. I'm very happy to share, even the new expansion in -- our fourth plant in Udumalpet, is actually completely booked, and we are sold out month-on-month. We are already, as you know, in a hand-to-mouth situation, as we call it. And this has been because of the continuous strive that the team at our company is looking at, where to enter and how to create the next market. And likewise, with ATUM and now with the charging stations or maybe another product tomorrow, our company's focus will always be on how can we create spaces of growth and how can we add value to the market. And with that note, I would like to end my note. So thank you so much for giving me this opportunity to share my thoughts and answer your questions. Thank you.

Yes. Vamsi, have you answered all the questions in particular?

Yes. I've done that.

So are the shareholders happy? Is all their questions being answered? Or any further clarifications are needed? Please. One thing they wanted to know, what is the impact of the Russia-Ukraine war? I will put it like this. Mr. [indiscernible] raised this issue. If the Russian war prolongs further, we may get into some fiber supply situation difficulties. Right now, we are able to manage. We will be okay until the next month-end [Audio Gap] for some more shipments to take place to other ports, although it's expensive. So it's really -- for us also it's a war-like situation. Wherever possible, we are trying to pick up some quantities. So we are hoping for the [Audio Gap] But one thing which will happen after the situation of the fibers coming down inventory level, I think we are hoping that the war should get over in the next 2, 3 months. And if supplies restored again, that could be a very good time for the A.C. industry. I would not like to overspeculate, but let's wait and watch how the situation will go forward. So I think that is one of the things which is needed a [Audio Gap] clarity because that is also affect us if in case the war prolongs. So that was a good question. And I think rest of the points, Vamsi has answered fully. And regarding the growth for the charging stations, we just started it. We will slowly come to know. And we will give you more details in the coming days on what kind of revenues the charging stations will generate. And what will be the revenues and growth from these issues. And I'm glad that most of the shareholders said that the corporate social responsibility work is going on well. Mr. [ Chavda ] raised regarding this booster dose of vaccination. All our employees are double-dosed vaccine. We have ensured that all our employees are well vaccinated. So I think all questions are answered by Vamsi very well. And there is a question -- [ Ramesh ] said about the expansion of the textile unit. We are actually just expanded before the COVID. We are also seeing different opportunities. In case we get some opportunity in between of buying some more secondhand machines, we'll definitely do that and see what best can be done. Somebody mentioned that you wanted to be at -- [ Ramesh ] only mentioned about this, free from long-term debt. I think [ Ramesh ] should also understand that, although our debt went up, it's also gone up because we spent over INR 145 crores last year on the expansion of both the units. So we are -- the debt gearing from 0.25 has only gone up to 0.28. So that itself shows how much of internal accruals have been pumped into the company. Definitely, a company which is expanding will have some amount of debt. So don't worry. This company is very well controlled as far as management is concerned. So done, I think. All the questions are answered. Shall we now take up the next item on the agenda? And -- any queries in the chat box, Mr. Moderator?

No, sir. There is no query in the chat box. Thank you.

So there will -- now go to the next -- Vamsi has answered all the queries. Anybody wants to do some e-voting, please feel free to do it. So that is over. Now we come to the ordinary business of the 40th AGM. Okay? Point #1, to adopt the financial statement of the company for the financial year, March -- ended 31st March 2022, stand-alone and consolidated financial statements for the said financial year and reports of Board of Directors and auditors thereon. So we want some proposals and seconders. Mr. Ramakanth?

Sir, this is videoconferencing meeting so there will not be any proposal.

So Point #2, to confirm payment of interim dividend and declaration of final dividend for the financial year ended 31st March 2022. Point #3 in the agenda, to appoint a director in place of J.P. Rao, who retires by rotation, and being eligible offers himself for reappointment. Item #4, to reappoint M/s. Price Waterhouse & Co., Chartered Accountants LLP as statutory auditors of the company from the conclusion of the 40th Annual General Meeting of the company till the conclusion of the 45th Annual General Meeting of the company, to be held in the year 2027, and to fix the remuneration. Now coming to the special business. To reappoint G. Vamsi Krishna as Joint Managing Director, full-time key managerial personnel of the company for a period of 5 years effective from 6th [indiscernible] 2022, liable to retire by rotation. To ratify the remuneration of INR 165,000, exclusive of [indiscernible] expenses and applicable taxes as approved by the Board, sanctioned with the appointment of M/s. Sagar and Associates, Cost Accountants, Hyderabad, as cost auditors, to conduct the audit of the cost records of the company for the financial year ending 31st March 2023. So the [Audio Gap] business. Now I request Saroja, our Managing Director, to address the meeting and propose a vote of thanks.

I request Saroja Madam to kindly unmute yourself and then speak. Thank you.

Saroja? I think there must be some problem with her. Well, Vamsi, why don't you propose a vote of thanks?

Yes. I think -- yes, she's back.

Yes, yes. I think she's coming up. [Foreign Language] Please speak.

[Audio Gap] unmute.

I think there's some problem. Yes, Vamsi, I suggest you go ahead and propose a vote of thanks. I think she's unable to speak. Okay. Hello. I just spoke to Saroja. I think she's -- something is wrong with the mic. So Vamsi, please give the vote of thanks.

So thank you all for attending today's AGM. And I would like to once again reassure you that the company is on the right track. And we will make every effort to make the best possible decisions for the way forward. And it has been an excitingly great year in terms of the challenges we have faced. And any business that faces good challenges and comes out of it only proves that we are here for the long run. And our team has done an exciting -- a fantastic job in the turbulent times. And we all assure you that we will continue to do the same. Thank you to all the Board members, and to our Chairman, our Managing Director, and to all our stakeholders for attending today. Thank you.

So now I declare the meeting closed. Is it okay or anything -- any pending issues?

Sir, with your permission, can we begin with a 15 minutes video, a thank you -- [indiscernible] video and thank you video? If there is any other point?

No. There's no other point.

Right, sir. Sir, thank you so much. So we are playing our video. Thank you so much. And with this, any director or any official, they wanted to log off, they can log off. Thank you so much.