Stocks In Focus: Kesoram Industries Reports Net Loss, Margin Improves | BQ Prime - video Dailymotion

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#StocksInFocus | #KesoramIndustries' revenue rises 12%, margin improves but company continues to report net loss. In conversation with CEO P Radhakrishnan. #BQLive

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00:00 Hello and welcome to BQ Prime. A very good morning to all the viewers. I am Erul Dadya

00:05 and you're watching Stocks to Focus. Clearly, one company that reported numbers is Keso

00:10 Ram Industries. Revenues are up around 12% to 13%. EBITDA has seen a growth of around

00:16 30%, 32%. The losses have reduced as well. Joining us on the show to discuss more and

00:22 give us a strategy going ahead is Mr. P. Radhakrishnan, whole-time director and CEO at Keso Ram Industries.

00:28 Mr. Radhakrishnan, good morning and welcome to the show.

00:32 Good morning. Thank you.

00:34 Mr. Radhakrishnan, my first question coming to you is, has the number met your internal

00:41 expectations? Losses have reduced. And clearly, you know, previous quarter as well, you have

00:49 said that you're expecting to be back in the black soon.

00:52 Yes. Our numbers, we could have slightly done better on the realization front as well as

01:00 the volume front. But by and large, we are directionally going in the right direction.

01:07 For the whole year, we should be in the black if we go in this direction.

01:12 Okay. So, overall, if you see from the margins, yes, I have seen some bit of an improvement

01:21 that has come in this round. You were expecting the EBITDA to improve as well and from a per

01:29 ton basis. Where does it stand currently?

01:32 The EBITDA per ton currently stands at about 581 close to for the half year. We want to

01:43 move to between 650 to 700 is what we are targeting. Ideally, selling an 8 million ton

01:51 and somewhere around 650 is what our desire is EBITDA should be.

01:59 Okay. And in terms of the business segments as well, where are you seeing growth come

02:04 from going ahead between cement, the viscose rayon and the filament yarn?

02:11 So I see our subsidiary has got transparent paper and the yarn and parent mainstays cement.

02:21 We see a robust growth in cement, both on the retail segment as well as on the institutional

02:27 segment. And we also see a good traction of the rayon because it is a substitution for

02:33 silk as well as our transparent paper which is biodegradable and home compostable. It

02:40 is a replacement for plastic. Overall, we see good times ahead and things will improve

02:49 for Kesara.

02:50 Okay. And with that in mind, how is the capacity utilization looking like?

03:00 So clinker capacity is close to 94% around. So we can always scale up more the blended

03:09 cement we sell, better utilization of clinker we can do. That's where we should go for.

03:20 Without increasing or spending on capacity affects, we can go up to 8.5 to 9 million

03:27 sales.

03:30 Okay. And as you mentioned about the realization as well, was it lower say that range of 25

03:37 to 30 rupees per bag during the monsoon? And are you expecting a recovery from there taking

03:44 the way construction activities are picking up post-monsoon now?

03:48 Yeah, directionally it was lower because it's a monsoon quarter, but the volumes are robust,

03:53 the realizations were down, but it was compensated by cost largely. We expect the prices to go

04:03 up because for us as a company, the prices have doubled. So it is only logical the cement

04:11 price goes up and stabilizes. At least as I have said in the previous interviews too

04:18 that it should be about 80 rupees, 90 rupees per bag up. But we hope in Q3 and Q4, we will

04:25 be 30 to 40 rupees up from where we were in H4.

04:32 Okay. And in terms of cement sales, how much do you think you will be able to achieve in

04:39 terms of tons in FY24? Because clearly it's a record sale number in the first half, 3.73

04:46 million ton is what we've seen as compared to 3.19 in the same period last year. So would

04:52 it be right to say that, I mean, even if you go with the basic number, a double of 8 million

04:59 tons is what can be achieved or something higher than that is a possibility taking into

05:04 consideration that the construction activity will pick up?

05:06 Yeah, we are confident our guidance of 8 million ton, we should be able to achieve with a bit

05:13 of a stretch. So we are not saying now we will end up below 8 million tons. Our endeavour

05:20 is to achieve 8 million tons and it is reachable.

05:25 Okay. And as you've mentioned that you're not going to see a good amount of capex now

05:29 because the capacity is enough. What will that translate into if you have to look at

05:34 the full year EBITDA then?

05:37 So close to anywhere between 450 to, depending on the price, 450 to 500 crores of EBITDA

05:44 is what we should do. We should end up with.

05:48 Okay. And in terms of the packaging business, which is Cygnet, when do you expect it to

05:54 be cash positive?

05:57 From Q1 of FY25.

06:03 By then you would expect that business to be cash positive as well?

06:07 Yes.

06:08 Okay. Okay. And very lastly, you know, earlier we had been hearing that you will increase

06:16 capacity to almost 15 million tons, but that was in the next three to four years. Is that

06:22 plan on track currently? And if so, what will the spends look like?

06:27 So very much, we should get on the drawing board because it will be a brownfield. We

06:31 have adequate limestone reserves. We need to put up one more kiln and more spread with

06:38 the grinding units or mixing plant. That's the way we should go forward. So it's very

06:44 much on the radar. So the first priority is to sustainable level 8 million plus we should

06:49 say. And then we should refinance the existing high cost loan. Once these two are through,

07:00 then we will focus on how do we scale up our capacity.

07:06 Right. So my last question coming to you is we've spoken about what FY24 could look like,

07:13 but as a company, what's the next milestone that you want to achieve?

07:18 Two times a year, our debt should be somewhere between 1200 to 1200 crores. So if you have

07:28 a 500 crore company, our debt should be about 1000 crores.

07:32 Right. So any refinancing is planned in the second half?

07:38 Not substantial, but once the refinancing plans are afoot, probably we want to leap

07:44 from 19 percent to 11 to 12 percent interest. That's the way we are looking at. That will

07:51 bring in a saving of about 200 crores on the EBITDA itself. That will straight away increase

07:58 the cash availability for us.

08:01 Right. I think that's going to be a key one to monitor as well. Thank you so much, Mr.

08:07 Radhakrishnan, for joining us on the show and sharing the news. So clearly, that's the

08:11 management of KSORAM Industries and clearly very confident that they will probably get

08:18 into the black soon again in terms of FY24 as a year and lots of plans to improve performance

08:26 from here on as well as the balance sheet. That's all that we have on this session. Thanks

08:30 for watching. And lots more lined up on the other side. Please stay tuned to BQ Prime.

08:34 [MUSIC]

08:41 [END]

Stocks In Focus: Kesoram Industries Reports Net Loss, Margin Improves | BQ Prime

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