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Moderator
Ladies and gentlemen good morning and welcome to the Q3 FY 11Results Conference Call of TRF Ltd hosted by Emkay
Global Financial Services. As a reminder all participant lines will be in the listen-only mode and there will be an opportunity for
you to ask questions at the end of today’s presentation. If you should need assistance during the conference call please signal
an operator by pressing * and then 0 on your touchtone telephone. At this time I would like to hand the conference over to Mr.
Pritesh Chheda of Emkay Global Services Ltd. thank you and over to you sir.
Pritesh Chheda
Thanks Farah. Good morning everybody. On behalf of Emkay Global I welcome everyone to Quarter 3 FY 11 a conference
call of TRF Ltd. I even welcome the management of TRF Ltd. Today we have Mr. Sudhir Deoras – Managing Director of TRF
Ltd and Mr. Ashim Roy – CFO of TRF Ltd. First the management will give their outlook on the company for the entering
Quarters and the analysis for the Quarter 3 performance and thereafter we will open the call for Q&A. Over to you Mr. Deoras.
Sudhir Deoras
Thank you, I hope you can hear me well. Very good morning to everybody. I'm going to give you general picture of the
company and talk to you about the overall situation in coming Quarters, number wise discussion we can do and you can ask
questions Ashim is also on the line, Mr. Ashim is our CFO. To begin with let me tell you that as you are all the aware that in
Quarter two we had difficulties in one of our division you are all the aware of. I had addressed informed you all what had gone
wrong but we have worked on those difficulties in the sense whatever hit we wanted to take, we have taken in Quarter 2 but
things are now under control as far as that particular division’s performance is concerned. We are now moving in the right
direction I believe so. As far as other two divisions are concerned BMHE and BMHS also performed well. If you look at Quarter
3 performance as compared to Quarter 2 performance it looks very nice obviously. But also I must mention that if you look at
this year's Quarter 3 performance compared to last year's Quarter 3 performance it doesn't look that exciting. The reason is
very simple we being largely project company and as you are aware of till the projects reach threshold limits we cannot take
top-line and bottom-line into consideration. Last year in 3rd Quarter we had reached threshold limit of a big contract
Raghunathpur and that is how Quarter 3 looked very good but Quarter 4 has comedown. But this year things are different, in
Quarter 4 we are heading to reach threshold limit of two major contracts and we believe that Quarter 4 is going to be very
good Quarter for the company.
Overall this is a picture as far as order books are concerned it is okay but we would be happy to have more orders but
unfortunately last Quarter or so even more of that we have seen especially NTPC bids, they are not opening. Every time they
are getting postponed. The reason being given to us are that there is some issue between the Railways who have specified
the type of wagon tipplers or the capacity of wagon tipplers and NTPC is not sure that it is a right time to do that. So something
is happening within NTPC and Railways and we believe that the result is well. And maybe this Quarter the bid might start. But
as of now maybe last four months or so no bids have been open while there are many bids in the pipeline as far as TRF is
concerned. We have focused a lot in manufacturing and we are now driving on manufacturing of plant productivity. Last
Quarter was good we have improved the sales in the last Quarter. Because we believe that in manufacturing the strength is
always there and we intend to do drive more and more. In the past we have talked about we are investing some money in
open yard fabrication etc. the progress is good and also we are moving in line with our plans. This is a picture overall Bulk
Material Handling Business. As far as our Auto Application business is concerned it is also moving as per plans. We had
mentioned that York will drive Indian operations because that's where the growth is and I'm happy to tell you that we have
been doing good business in India. York is putting up their manufacturing unit which should be up and going certainly by April
in next 3 months time that would strengthen York's performance further in India. As far as international market is concerned
Australia has improved but last month there has been a slowdown thanks to all those flooding, etc in Australia. But I think that
all is a temporary phenomenon. As far as Tata DLT is concerned the trailer manufacturing company in India that is also doing
well. In terms of Tata motors numbers are now looking up and we have projecting better numbers next year. And AAA which is
our Fixed Body Auto Application business in Lucknow, there also the numbers are moving, we have commissioned that
sometime in August and the plant is now doing well and there also the numbers are moving. So one and all we believe that we
are moving in the right direction and coming Quarters should be certainly better Quarters than what we have seen in the
immediate past. With that I leave it to Pritesh whatever next the questions etc., thank you very much.
Pritesh Chheda
Farah we will start the Q&A.
Moderator
Sure sir. Ladies and gentlemen we will now begin with the question and answer session. Our first question is from the line of
Kamlesh Kotak of Asian Market. Please go ahead.
Kamlesh Kotak
Sir could you give us the breakup of the three Auto subsidiaries, AAA, DLT and York?
Sudhir Deoras
Ashim would you like to give those numbers?
Ashim Roy
Okay I will give you the nine-month numbers of the Auto subsidiaries. York turnover is around 176 Crores, DLT turnover is 93
Crores and AAA turnover is 16 Crores and then there is an elimination of around 20 Crores of intercompany transactions 266
Crores.
Kamlesh Kotak
And what is the status of the profitability about the three because it seems the three have not contributed significantly to the
overall profitability. So where is the drain coming from?
Sudhir Deoras
As of now York is doing well, it is making good money. Tata DLT is also making money. DLT is lagging behind the targets and
AAA is of course we have just started so this year we are going to book some losses there. There is another angle when we
look at those numbers and Ashim you may correct there in terms of TRF Singapore. Ashim would like to comment on that?
Ashim Roy
Yeah TRF Singapore during this year this acquisition expenses, we are charging of almost and the interest on acquisition
which is charged off so you will find the consolidated numbers to be net of those acquisition expenses and the interest charged
off which is almost to the tune of 2.50 Crores. And this will continue for another 3 to 4 months maybe from the next year you
will find that there will be not be any - unless you go for new acquisition this acquisition expenses which are one time is coming
in this to the tune up to 2 Crores to 2.50 Crores which has brought down the consolidated number significantly.
Kamlesh Kotak
So how much is yet to be return off on that front?
Ashim Roy
Around another 2 Crores.
Kamlesh Kotak
Okay and as we enter now in the year FY 12 could you get us some sense about what could be sustainable margins for this
Automotive business?
Sudhir Deoras
This is question which I have always if you want to use the term I have ducked but I'm not ducking really because I do not want
to say something and then in our next Quarter you will think that you have been misguided. Then I always said that let us get
the grip of the business but I cannot keep saying that for two years. But let me tell you in February we are going to have
detailed meetings with every subsidiary to plan out our 11-12 business plan, some homework has already started. But
sometime early March we are going to give it final shape. 7th March actually is the date which we have fixed to finalized annual
business plan of TRF and it subsidiaries and I promise that from the next Quarter I would be in the better position to talk about
profitability and EBIDTA of these businesses. Now that you have some patience for sometime I wish that you endeavor in this
patience for another Quarter.
Kamlesh Kotak
Okay and sir lastly what is the order book of this core business?
Ashim Roy
It is around 1870 Crores to be precise
Kamlesh Kotak
And how is competitive scenario shaping up because we see many players are now jumping in the fray and in that prospective
how is our BOP initiative panning out?
Sudhir Deoras
You are right actually speaking BOP business is something which we had said which we have foreseen it is an important
initiative which company must take because that is where a lot of orders are coming up and getting finalized. Our team is
already operating, the Department has been established is operate from Calcutta and they have already made two bids for
BOP business. So we are already in the game and let us hope that we will continue to getting some orders and coming
Quarters. We are already in the process.
Kamlesh Kotak
Okay sir thank you.
Moderator
Thank you. Our next question is from the line of Chinmay Gandare from Asit C Mehta. Please go ahead.
Chinmay Gandare
Sir could you give some details on the Media ongoing project apart from our two NTPC which are just going on, other projects
on which you have booked the revenue during this Quarter?
Sudhir Deoras
Let me tell you that the major new projects if I use the term are the three NTPC projects which we won from the last Quarter of
the last year onwards. One was Barh, Mauda and Vindhyachal. Barh and Mauda progress has happened because they were
the earlier projects and that is where we are expecting to cross the threshold limits in this Quarter. Vindhyachal is in the design
stage and as other old big projects are concerned one was that famous Raghunathpur and the Delhi one, the Jhajjar one.
Jhajjar is now reaching the end and Raghunathpur is Ashim how much is Raghunathpur done?
Ashim Roy
It has done 65%.
Sudhir Deoras
65% so moving all right. One good news which I thought I must share with you because people mostly have forgotten is one of
that project Shadeed Steel which we had taken, which was taken over by Jindals and since Jindal took it over immediately
they signed a requisition of services and we have been able to made some good break through. In fact that plant is already
operative as far as first line is concerned and we hope that we finish that work quickly. So that was good relief to the company
and money is coming in and so on.
Chinmay Gandare
How much of the money and how much of our project is completed till now and revenue booking has started for the project?
The revenue booking for that project has started again?
Ashim Roy
Which project?
Chinmay Gandare
Shadeed project.
Ashim Roy
Yeah it has started again and it is almost 90% complete.
Chinmay Gandare
Okay and regarding the margins this time you did not book the margins for the two ongoing projects and NTPC projects
because of the revenues was not booked. But in Q4 we are expecting them to reach the threshold limit and in the last Quarter
you were saying that they are not in very good rather very attractive or the margins you normally get. So what kind of margins
are we targeting for Q4 considering that the margin contribution from those projects would also be there?
Sudhir Deoras
Ashim would you like to comment on this?
Ashim Roy
It is going to be low; it is the project business where the margins we said seem to be lower than last year’s project.
Chinmay Gandare
If you could just give a ballpark number?
Sudhir Deoras
I do not know why, I will rather refrain from commenting on the ballpark number but it is going to be 2 % to 3% less in project
business compared to last year.
Chinmay Gandare
Okay and one last question you said you are spending on the open yard fabrication. So what is the current year Capex that
your targeting and also for the next year?
Sudhir Deoras
Current year’s Capex will be around 17 to 18 Crores and next year it is around 15 to 16 Crores not on the open yard, the open
yard totally is around 16.50 Crores. This will come in other item.
Chinmay Gandare
Okay so this is for the MHE right?
Sudhir Deoras
Mostly yes it is for the MHE and York and others are spending on their balance sheet which is Pune plant and all.
Chinmay Gandare
Okay thank you sir.
Moderator
Thank you. Our next question is from the line of Ranjeet Shivram from B&K Securities. Please go ahead.
Ranjeet Shivram
Sir in your segmental breakup your product business showing growth of 52% while your project business is showing a decline
of 42% so I figure out from this that the margin improvement in this Quarter has commenced basically because of this. So
going forward how do you see this mix of products and projects?
Ashim Roy
Yes you are right this decline in the project business is volume wise because that last year as Mr. Deoras said one of the
project intercross the threshold and almost more than 100 Crores came from single project which will happen in Quarter 4.
This year two projects will be crossing threshold that is the reason for drop in project business and obviously product business
the contribution and the margins are better in product business and if you heard Mr. Deoras in his opening address that driving
the product business more and time to get a better yield out of it.
Ranjeet Shivram
Okay because even in your capital employed in the project business we had the product. The product business being capital
employed projects have increased while in projects it has decreased. So it is a strategic shift by the company or is it just for
this year?
Ashim Roy
If you see the capital employed. There mostly it is happening because of this working capital because CapEx fixed assets
investment generally takes place in the product business and it is continuing in the product business. In project business you
do not have to invest much on fixed assets. Most of the equipments are available on hire and that is the route the company is
following for the last 8 to 10 years and so there is no shift in that. The capital employed movement is because of working
capital mainly.
Ranjeet Shivram
Okay and this raw Material as a percentage of sale it has decreased drastically to 29% this Quarter from 54% on a year-onyear
perspective and 55% on Q-on-Q perspective, what could be the reason?
Ashim Roy
Two things, one is because of the improved product business there is the raw Material increase will take and the second thing
is in projects like Barh, Mauda where lot of raw Material infusion is taking place this stage. But in those projects it has gone
into the inventory increase but you will find that there is a big increase in inventory compared to last year as also last year
same Quarter.
Ranjeet Shivram
Okay because I have calculated this number including that increase decrease in inventory so that is what I was trying to figure
out that why this raw material has decreased drastically? You mean to say that because in product business you do not
require much of raw material.
Ashim Roy
I was saying so because on Quarter to Quarter it is 88 minus 45, 88 is the consumption of raw material and 45 is the increase
in inventory whereas last year it was 99 Crores consumption and 17 Crores decrease in inventory.
Ranjeet Shivram
Okay as a percentage of sales?
Ashim Roy
As a percentage of sales this will go up because again the product business is growing.
Ranjeet Shivram
Okay the percentage of sales, raw material is comparatively less compared to project business, just to get the higher
understanding of that?
Ashim Roy
No where you will have to add both together and take because in project business is payment to sub-contractor is also a direct
input. We will have to and these two for project business and in product business per se raw material will be higher than
project.
Ranjeet Shivram
Okay thank you sir I will comeback for further questions.
Moderator
Thank you. Our next question is from the line of Ankit Babel from PINC Research. Please go ahead.
Ankit Babel
Sir couple of questions. First what was the order inflow in the 3rd Quarter?
Sudhir Deoras
Virtually nothing. No project order has come in Quarter 3, am I right Ashim.
Ashim Roy
Yeah you are right.
Ankit Babel
Okay what can we expect in the coming Quarter or the current Quarter of this 4th Quarter?
Sudhir Deoras
As you are aware when we talk about the order book and order position we generally talk about project orders, I hope that is
clear we do not deal with products …continues. But as far as projects are concerned unfortunately nothing has got finalized
because no bids are getting opened. Quarter 4 also there was something which was to come up early January, they positioned
it by another 15 days so we are only hoping that at least two of NTPC's projects will open up in this Quarter and going by our
history hopefully we'll able to win one of them. And I think that is what the hope is. But as far as the private players are
concerned we are in touch. We are constantly in touch with Tata steel for their Kalinga Nagar project, not sure by March they
will finalize the order or not. But that is one big thing on which we are working on. I mentioned earlier that we are already in
this BOP business, right now our team is today travelling to meet a private player who is putting our plant in Maharashtra with
our BOP proposal. So we are doing that work and we are hoping that some order we pick up in this Quarter but NTPC is
delaying the opening up of their bids due to issue between them and railways as I told you. As I would say a little set back but
we are hoping that we will be okay by end of the year. Because again I do not see this order book whatever we have today
1800 Crores, it is good enough for whatever our plans of FY11-12 but my worry is for the next year, so I'm thinking about
FY12-13. And that is why we will be happy to book at least a large order in this year.
Ankit Babel
So this NTPC order would-be worth how much sir?
Sudhir Deoras
They are all now, these NTPC orders are somewhere between 300 and 400 Crores as a kind of size of orders we work for.
Ankit Babel
And this Kalinganagar project of Tata steel?
Sudhir Deoras
Kalinganagar is very fluid; we are talking to them on many things. There could be if they go with packages, there is a different
scene altogether but overall raw Material business of Kalinganagar project would be anywhere 800 to 900 Crores. But
obviously every thing they are not going to put all eggs in one basket; there are still one or two more players. But that is the
kind of size of the business which we're talking about.
Ankit Babel
Okay and sir do you still maintain your guidance for FY 11 that is project 650 Crores, product 250 Crores excluding the inter
segmental and subsidiary that 400 Crores turnover, so 1200 Crores overall on the consolidated business?
Sudhir Deoras
Ashim.
Ashim Roy
There maybe a little less in BMHS and altogether Rs1200 Crores but it would not go below maybe 1100 Crores but it will be
something between 1100 and 1200 Crores.
Ankit Babel
Sir do we expect the 4th Quarter in terms of profitability also to be very good because since we are reaching the threshold
limits in two large projects and that would lead to better absorption of your overheads so the margins and the 4th Quarter would
be better than the 3rd Quarter?
Sudhir Deoras
I know you continuously analyze our performance and you know better than me but let me tell you that yes Quarter 4 has to be
better than any Quarter of the year Because of the simple reason that we are reaching the threshold limits. So that has to be,
in absolute number it has to be better.
Ankit Babel
And last question. I know it's too early to ask but just a fair idea that in FY 12 what kind of growth are we expecting the order
inflows considering the first nine-month performance of this year and a brief expectation in the 4th Quarter. What kind of growth
can be expected in the FY 12 in order inflows?
Sudhir Deoras
We are looking at least 25%.
Ankit Babel
And this is considering that the NTPC and the Kalinga Nagar project would ultimately get decided?
Sudhir Deoras
Yeah there are many things, we are not only banking on one NTPC, one Kalinga Nagar, I told you there are BOP thing in the
process. There are many things but we know what bids we are making but I would not like to talk about various bids what we
made but overall the picture is that there are some good projects in the pipeline and we hope depending on, timing is the issue
that when do they open up. But we see in the next financial year order books will increase.
Ankit Babel
Okay fine thank you so much sir.
Moderator
Thank you. Our next question is from the line of Ranjeet Shivram from B&K Securities. Please go ahead.
Ranjeet Shivram
Sir I just wanted the breakup of order book like in terms of products and projects.
Ashim Roy
240 Crores is the product order book as of today, around 15.6 is order book.
Ranjeet Shivram
Okay the tax rate has been reduced again any particular reason?
Ashim Roy
Actually we go by the overall-. There is no particular reason. No severe addition and deletion. It fluctuates little when you take
the overall percentage annual average applied for the Quarter and the 2nd Quarter results also got some aberration.
Ranjeet Shivram
And we are not expanding our capacity in power related equipment while when you look in to the Macro picture the power is
one of the area where initially the companies are expanding and putting up plant but we are putting our money into auto
business of York. So how do we see this going forward say in 2 to 3 years’ time how do you see like this we are putting money
into auto will that affect the power growth?
Sudhir Deoras
No let me clarify, both the things are happening. As of today we are about two clear businesses one is what we call Bulk
Material Handling Business and Auto Application business. After acquiring Auto Application Business as you know they have
shown their own growth, this York is putting over plant in Talegaon or Tata DLC is putting a plant in Pune it is all coming from
their own balance sheet they are using the many. We are not funding the money from here. Our money is certainly, we have
clearly planned what we want to do in BMHE business. Power business is a big game as far as we are concerned. That is why
we are going into whole of balance of planned business which I explained earlier. So there is no compromise, this is not this or
that. Both the business will grow and BMH business will get expanded from clearly the original core business from core
company TRF and our subsidiaries are using their own money in their own way. There is no compromise as far as growth
plans of BMH business concerned specially the power business where we are now going for balance the planned business.
Ranjeet Shivram
Okay and just if you want to put a growth figure for your order book for the next year?
Sudhir Deoras
I just said maybe about 25%.
Ranjeet Shivram
Okay thank you sir.
Moderator
Thank you. Our next question is from the line of Nidhi Agarwal from ShareKhan. Please go ahead.
Nidhi Agarwal
Sir I have a question on the order book. How much of the order book is having price variable clause?
Ashim Roy
Most of these project orders from NTPC are having price variation clauses. Almost 80% of present order book of projects.
Nidhi Agarwal
Okay and sir how much is NTPC's contributing to our order book?
Ashim Roy
As of today around 1200 Crores.
Nidhi Agarwal
And how much will be from Tata Steel?
Sudhir Deoras
Tata Steel one order of 100 Crores we are doing in Jamshedpur itself they are within the same model also expanding the plant
to 10 million. But we are now looking at the bigger thing hopefully Kalinga Nagar will see the light of the day and we are hoping
that we will be able to do some big project in the next financial year.
Nidhi Agarwal
Okay sir that answers my question. Thanks a lot for taking my question sir.
Moderator
Thank you. Our next question is from the line of Kamlesh Kotak of Asian Market. Please go ahead.
Kamlesh Kotak
Sir our interest costs has gone up significantly even year-on-year and Q-on-Q. So how much is our debt on the books?
Ashim Roy
Interest cost you will agree that it is going up because of two reasons one is as compared to last year that interest rates are
hardening. And secondly the borrowing level is also high a little because of this increased activity so both have contributed.
Kamlesh Kotak
So how much is our debt on standalone and consolidated basis?
Ashim Roy
Debt standalone as of today is around 206 Crores and consolidated is 294 Crores.
Kamlesh Kotak
And debtors level of both the companies?
Ashim Roy
Debtors, standalone debtors 86 Crores.
Kamlesh Kotak
Okay and consolidated?
Ashim Roy
Consolidated debtors is 406 Crores
Kamlesh Kotak
Alright sir. Thank you.
Moderator
Thank you. Our next question is follow up from line of Chinmay Gandare from Asit C Mehta. Please go ahead.
Chinmay Gandare
Could you throw some light on the pricing pressure on the industry like last time when you got those NTPC orders last January
as compared to that right now how is the pricing between the two? When you bid for the orders is that still at lower margins
and when do we expect the same to ease out?
Sudhir Deoras
Let me tell you that I foresee clear pressure on the margin. The reason is very simple. If you look at this financial year 2010-11
and if I only look at coal handling plant where we have been operating as of now the total orders finalized were just about 4 or
5 orders in coal handling plant. The order which two of them we got I think L&T got some thing some Petro got and so on. Now
obviously everybody else is now I suppose dried up, they are all looking for new orders. And as the new orders will start
coming up the first aim the people would be having as I hope I believe to get some orders quickly. So that is going to be a
pressure I can clearly foresee for next clearly 6 to 9 months. I see a pressure on margins which has to be very competitive and
we need to work very hard in terms of not only estimating the project cost side but also in execution and then in cost control
and so on. But short answer is yes, I see pressures on margins.
Kamlesh Kotak
NTPC is doing a bulk tendering for 16x11 megawatts project so when do you see the BOPs and coal handling one and ash
handling one order getting released for you?
Sudhir Deoras
We have been constant in touch with NTPC and as I said there are many orders in the pipeline, many tenders in the pipeline
but there is some issue with Railways in terms of design of wagon tipplers. I think railways are talking about higher capacity
wagon tipplers and so on. And NTPC has its own views. Now that is where we have been informed by NTPC that there are
delays in opening of this tender but I hope that this quarter all those matters will get resolved after all how long they can keep
postponing and they have the targets to meet.
Kamlesh Kotak
Okay thank you sir.
Moderator
Thank you. Our next question is from the line of Rahul Gajare from Edelweiss. Please go ahead.
Rahul Gajare
Sir two questions from my side. One is the order book that we have, could you tell me what is execution period of this?
Sudhir Deoras
They are all anywhere between 2 to 3 years.
Rahul Gajare
Okay but a large part of that would be in FY12 or larger part will be in FY13?
Sudhir Deoras
The orders what we have today large part would be in the next financial year not FY13.
Rahul Gajare
Okay sir my second question is on the BOP side. Which a product that we are already manufacturing and which are the
products that we either have tie ups or are looking at getting into?
Sudhir Deoras
Generally speaking there are four major sub-projects in our BOP projects, largest is coal handling plant which we are doing
100%. Then we have ash handling plant for which we have tie up, then we have water treatment and civil area which is also a
tie up and also in terms of electrical and also environmental thing, etc. As far as we are concerned we will be managing the
whole project. We will be doing coal handling plant, for the rest thing we will have a consortium partners because please
understand to begin with we need to also get qualified to be a BOP player. As of today as a consortium partners you can do as
long as your network is of sub-limit and we have done the project of 300 Crores and so on. All that we qualify. So but now we
want to get qualified for BOP so we will start with consortium network and as we move in that path we will decide what else we
would be doing in house.
Rahul Gajare
Okay sir thank you very much.
Moderator
Thank you. Our next question is from the line of Sushil Choksi from Rosy Blue Securities. Please go ahead.
Sushil Choksi
Sir you continuously address that the margins are going to be low but are you specifically talking about the project division?
Sudhir Deoras
Yes I am talking about the project division.
Sushil Choksi
And not on the product division and what Ashim answered to one of the questions that margins will drop by 200 to 300 bps is
specifically related to the project not product?
Sudhir Deoras
Yeah.
Sushil Choksi
Now can you breakup the order book which you mentioned of 1800-1900 Crores between products and projects?
Sudhir Deoras
Products is around 240 and balance in project business is 1570.
Sushil Choksi
Now this product 240 we are running a run rate of approximately 60 Crores a Quarter right now?
Sudhir Deoras
Yeah.
Sushil Choksi
And looking forward with AFTA acquisitions in UK, I suppose that some value addition and new initiatives should start bearing
fruit is on our new contracts in India?
Sudhir Deoras
Yeah that is a product oriented.
Sushil Choksi
So where do you see this 60 Crores quarterly run rate on products heading towards?
Sudhir Deoras
As I was trying to tell you that we intend to now really drive manufacturing more but whatever we have planned in terms of the
coming year we are looking at 70 to 75 Crores per Quarter that is kind of target we would like to set as I said next year
business plan will yet to finalize but that also depends on the numbers on which would like to work on and also we do not want
to stop there. We want to come out with things in terms of expanding our manufacturing base and do much better in coming
years.
Sushil Choksi
Okay now it's a clear strategy that we want to do value addition where manufacturing is concerned and bring reasonable
margin which we're holding right now between 18 to 20% depending on quarter-on-quarter where products are concerned. So
when we blend standalone India margin whether we achieved 1100 or 1200 Crores in the current year and I'm quite sure that
vision 2013 stands?
Sudhir Deoras
Yes it does.
Sushil Choksi
And subjectivity maybe more related to BOP so the BOP margins can be low and I understand the project margins can be low.
Sudhir Deoras
BOP will bring in top-line growth but margins will be obviously lower because we have to share it with others but it also brings
in ease in little working capital in terms of percentage of sale. That is an advantage of BOP. So BOP margins will certainly
lower than just in coal handling plant.
Sushil Choksi
If I just came back from what we have achieved and if the damage is not done in the second Quarter, this year itself we would
have been reasonably well off going by the current Quarter assuming this 4th Quarter is going to give you a turnover in the
range of 250 to 350 Crores I do not know where you end up with in the project division and I am assuming the product is going
to run-rate at 60 So what we now need to focus is going back to Auto. So lots of money, lot of questions have been asked, the
capital employed and the money is being poured into auto division. I want to know where we stand on the manufacturing
aspirations of York and DLT in India.
Sudhir Deoras
Well let me tell you there are two things happening in this business and this has to be understood. As far as York is concerned
we are looking at ending this year 55 million USD business the top-line. And that is with India operations very low-key which
we are doing in Jamshedpur because as I had explained to you before they put up a new plant, we are utilizing part of
Jamshedpur TRF facility where they can assemble something and carry on with the activities. But the plant which we are now
putting up in Talegaon should be ready by early April and start functioning straightaway. Now that is going to give a big thing to
York in terms of the Indian operations, the Indian market, profitability all that is going to help. The York is clearly on its way to
work. What we had thought about except the set back what we got after we acquired the company economy downturn
happened and so on. But we clearly see great numbers. I'm also very pleased to tell you that next year York would sell more
axles to non Tata Motors Companies. In other words whatever Tata Motors want through Tata DLT trailers they will be
supplied by them. But they would have created markets of non-Tata companies with their selling the market, they have put up
their distribution set up and they are continued to grow. So York is very much in line with what we would likely to do. As far as
Tata DLT is concerned as you all know Tata DLT makes trailers only for Tata Motors, it is devoted to Tata Motors. And the
Tata Motors number in the last Quarter went down because of the Euro-III norms or Bharat-III norms whatever they wanted to
do and the component supplier were failing to supply them so they have not been able to come out with large number of prime
movers and that is where we suffered. But we have been in touch with Tata Motors top management team. Quarter 4 numbers
they have promised to improve and they are talking about bigger numbers as far as next financial year is concerned. To meet
this Tata DLT is also putting up a new facility which we are hoping to complete sometime in May, may be May of next year.
But in the meantime they continue with our present set up in Pune. Also we continue to import DLT chassis from Sri Lanka and
which helps in pushing the numbers of Tata DLT. So that is something which is happening. DLT has also started a new thing
this year in fact we just started that I thought I must share with you. DLT as you know is an expert in port trailer business which
brings in good revenues and good margins. But going by the numbers and the volumes we need to also be in the road trailers.
Now road trailers every country or every region makes its own road trailers, so making road trailers in DLT and exporting to
other country the freight becomes a very big issue. So we have hit upon a model what we're doing in India for example they
are sending chassis because six chassis we can put in one container so our freight gets neutralized or averaged out. So we
are doing a similar thing with just done a deal in Kenya where one of assembly unit we have sent out chassiss. Similarly the
under gears could also be directly dispatch there and we assemble there and sell in that part of Africa. A similar model in
coming year 2011-12 in we intend to in Middle East and also in India. So due the plans of these businesses and I believe that
they are in line with what we thought about except that we got the set back in between because of the economic downturn. But
overall I am quite positive about auto application business.
Sushil Choksi
Am I to assume that the current margins which we are achieving is mainly because we are using manufacturing bases on ad
hoc basis depending on demand supply at various locations and the coal manufacturing operation once we put up, not only
will we be able to guide but we will be at a reasonable pace from the money which we are involving on the totality basis?
Sudhir Deoras
You are right that's what it is.
Sushil Choksi
Okay. This second question you mentioned that you have been able to come out of the Shadeed problem and things are going
better. We have some receivables on that entity, has that entire receivables being fructified?
Sudhir Deoras
Absolutely. Ashim would you confirm?
Ashim Roy
The entire due money has been paid in fact they have released a part of the retention money which we told them because of
the delay the company was suffering and which helped us in handing the equipments faster so that the first line is
commissioned. So they are paying all the dues.
Sushil Choksi
Okay going back to our project division in India, right now we have bulk business coming out of NTPC, we are anticipating
TISCOs order for the current expansion at two locations. Other than these two and NTPC, can you highlight how much of
tendering we are in process in the market right now?
Sudhir Deoras
As of today we must have the pipeline where we have made bids, etc., could be anywhere between 1500 Crores to 2000
Crores and we are not counting the Kalinga Nagar, etc. That is future still there is no tender out. But whatever tenders are out I
think we are somewhere between 1500 to 2000 Cores.
Sushil Choksi
Does it include anything on Ultra Mega which we were trying to work on that's a separate issue?
Sudhir Deoras
The Reliance which we are working for the last two years, we have been trying to work with them, with Reliance nothing
finalized, some time you read the newspaper that now they are going to China. Sometimes they are saying they will talk to
India so Reliance is just not making a progress that was only Ultra Mega on which we were working on.
Sushil Choksi
Sorry to shift back again to your DLT York. Based on your current expansion what would be the capacity operational for the
next year?
Sudhir Deoras
The plant which York is putting up in Talegaon on one shift operation we were reproducing 24000 axles per year and it can be
straightaway scaled up the second line which will put up and then operate in two shifts it can be scale up to 96,000 or we say
basically 100,000 axle capacity we are building in Talegaon. As far as DLT is concerned as of today the capacity is 3000
trailers per year and the new facility will have over a period of time when we operate two shifts, etc., it can produce 6000
trailers. That is the kind of capacity which we're putting up. In fact when we put up the 6000 capacity we want to operate in the
small places where we operate in Pune. Let me also tell you that we are now looking at or these companies are looking at
hiring some assembly facilities even in Jamshedpur. Because lots of prime movers come out of Jamshedpur plants and they
would like to have the trailers next door. So there also York in any case is already there with us and Tata DLT is also looking a possibility of putting on assembly unit in Jamshedpur. We tried to do that with one of the local parties when we are trying to
build that model.
Sushil Choksi
Do you anticipate the second shift operation whether it is axle or DLT getting into mode in the next financial itself for that will
take little longer time?
Sudhir Deoras
I think by end of the next financial year we will need that kind of capacity and by end of the next financial we should start
operating second shift also.
Sushil Choksi
What kind of investment are we envisaging in between DLT and York in India?
Sudhir Deoras
As far as York is concerned they have taken rented sheds and land so they have not bought in land and sheds which cost lot
of money and as far as equipment is concerned they are putting up about Rs 10 Crores to Rs 12 Crores in equipment as far as
York is concerned. As far as DLT is concerned even before we went into that company they have already acquired the land in
Pune. So land was already in hand and now they are putting up the shades and the facility. I think they are going to invest
about 30 Crores in that particular deal because land is already done for about 10-12 Crores.
Sushil Choksi
Assuming that you are talking about capacity assuming two shift basis not one shift basis or that could be additional
expenditure?
Sudhir Deoras
No I am talking about capacity which could be scale up to two shifts.
Sushil Choksi
Okay thank you, you answered all my questions.
Pritesh Chheda
I have a question. Just from the previous question only, in DLT what is the current production run rate and what is the target
run rate in DLT for next year? Same is for York Talegaon, what should be the target production for FY 12 and if you could give
us for Tata DLT what is the current capacity and the current production rate?
Sudhir Deoras
I am giving you broad numbers. I have just mentioned a little while earlier this year we are hoping to hit about $55 million worth
of business from York USD I'm talking about and next year I see clearly a possibility of crossing $80 million USD business only
from York. That is a kind of thing what is happening in York. We have done lot of thing which I explained to you about India
facilitate etc. I have not touched upon the Chinese manufacturing which is also happening for York, it was happening earlier
also but we have stabilized that Chinese facility also. So that is a kind of numbers what we are talking.
Pritesh Chheda
The 80 million target in York includes the benefit from York Talegaon?
Sudhir Deoras
Its York worldwide numbers, so we are certainly $80 million USD plus. As far as Tata DLT is concerned let me focus on Tata
DLT which is operating from India. As of today we can anytime produce with the help of DLT chassis coming in about 250
trailers a month otherwise 3000 trailers a month.
Pritesh Chheda
Say for nine-month of current year FY 11, how much would we be doing?
Sudhir Deoras
I think we are actually doing because of the help from DLT, etc., this year as far as the trailers business is concerned will be
doing about 4000 plus.
Pritesh Chheda
Okay in any case you are over utilizing of your capacity?
Sudhir Deoras
No what we're doing is since we own DLT Tata we are able to bring synergy and play about it in numbers.
Pritesh Chheda
Okay and this should hit 6000 trailers straightaway in FY 12 once the capacity comes in?
Sudhir Deoras
Yeah what we intend to do is as of today we are hoping that we will do at least 5000 trailers for Tata motors only and I'm not
counting the other markets where DLT sells, etc., but we should be aiming to reach somewhere closer to that number.
Pritesh Chheda
But then the 5000 numbers, does that get captured in Tata DLT currently?
Sudhir Deoras
It will get captured in Tata DLT, part of it would be DLT sales to Tata DLT and Tata DLT to Tata Motors.
Pritesh Chheda
Okay then for Tata DLT what is the current capacity and what expansions are we taking there?
Sudhir Deoras
I told you we are putting the plant which will start of with the capacity of 3000 trailers and then if we operate two shifts when we
go to 6000 trailers and looking at the end of the next financial year which would start operating the second shift also.
Pritesh Chheda
Okay so when you say 3000 trailers additional it is basically DLT India plus Tata DLT?
Sudhir Deoras
No, I am talking about Tata DLT new plant in India which is putting over 3000 capacity of plant to begin with.
Pritesh Chheda
Okay and it originally had 3000?
Sudhir Deoras
Yeah in three units’ unorganized sector type manufacturing so we did not have our own real plant. We are operating in small
places so we are bringing in some methods to that plants.
Pritesh Chheda
Okay so that means DLT has 3000 trailers expansion, Tata DLT is 3000 trailers expansion.
Sudhir Deoras
No DLT expansion is already seen in Sri Lanka. Sri Lanka capacity is already available that's why they have started pushing
this chassis into India with Tata DLT to support their India production.
Pritesh Chheda
Okay so when we say 3 to 6 it is actually Tata DLT?
Sudhir Deoras
Yeah you are right.
Pritesh Chheda
So there is no expansion in DLT?
Sudhir Deoras
DLT had already gone even before we acquired them.
Pritesh Chheda
Okay and for AAA automotive, the tipper body and what is the capacity that plant has commenced operations?
Sudhir Deoras
Yeah AAA has commenced operations and we are now looking at that plant also to produce with minimum 6000 bodies in next
financial year.
Pritesh Chheda
Okay and what is the capacity there?
Sudhir Deoras
As of today it is about 6000.
Pritesh Chheda
When do you think and what is your call on the order finalization is now in the system especially in the MHE space considering
the current business involvement and what kind of visibility or order do you see in the near term, in the current business
involvement?
Sudhir Deoras
I would be happy to hit upon at least one order of 400 Crores kind of order size in this Quarter because that would help us in
the financial year 2012-13. You have a point because if you remember last year by end of the year we hit upon two orders
which are now coming to threshold limit in Quarter 4. So Quarter 4 of previous year helps you Quarter four of this year, this is
the kind of time limit that we're talking about. So I am looking forward to at least one order if it comes through. But I just gave
you the complete picture about what is happening, how NTPC bids are getting delayed and so on. But we are trying to work
out as I said we are trying to work with lot of private companies who are interested in BOP. Our teams are meeting them;
offering them our offers and so on. So we are trying our best but the way things are and I think bids might open in the 1st
Quarter in the next financial year.
Pritesh Chheda
Okay and in terms of the 11th plan ordering for the BOP segment and sub-components within BOP has most of the orders
been placed and we actually should be looking at 12th plan now or there are some order which are still which is left under the
11th plan itself?
Sudhir Deoras
No there are many in 11th plans are left behind but last three-months somehow there is no activity and as I was telling these
are the 11th plan orders which has planned.
Pritesh Chheda
Okay and these are the sub-components within the BOP or it would also be composite BOP orders?
Sudhir Deoras
Both.
Pritesh Chheda
Okay thank you sir. Farah.
Moderator
Thank you. Our next question is from the line of Sushil Choksi from Rosy Blue Securities. Please go ahead.
Sushil Choksi
Sir, can you highlight what is the current realization of DLT and York in global markets and India market?
Sudhir Deoras
Sushil I think you were there, sometime earlier I talked about that as far as margins of this businesses are concerned I will be
in a better position.
Sushil Choksi
I am not looking at margins at all. I am just looking at product realization per axle and per trailer because global market
average is a 50% to 70% higher than India that is what I was assuming till the last con-call.
Sudhir Deoras
No I do not think so. Ashim would you have some numbers to talk about?
Ashim Roy
No, I do not have this comparison of similar product between global and India because the products that DLT sells outside are
mostly port trailers which are quite significantly higher than road trailer prices. Maybe it is 70% to 80% higher whereas the road
trailer is around…
Sudhir Deoras
Sushil I will give you some idea with a broad numbers. For road trailers, a set of three axles is sold. The three axle trailers, it
gets York about lakh of rupees or maybe little more than that. That is one part and as far as road trailers in India is concerned
and depending on who made them, they are ranging anywhere from 5 lakh to 8 lakh. So that is the picture as far as road
trailers and the axles in Indian market are concerned. I do not think that York gets much higher margins from all over the
world. It is a very interesting market as far as York is concerned, like Korea which is very small market, very few numbers but
the margins gives you very high. Australia also gives you good margins. Country to country the margins are significantly
different. And China market doesn't give you virtually any margin because anybody is buying any axle. But overall picture if I
talk about India realization numbers which I talked about I think that should be considered as an average number.
Sushil Choksi
Okay I'm happy to receive it as and when you have the final numbers.
Sudhir Deoras
Yes you will hear from me in coming month.
Sushil Choksi
Okay thank you sir.
Moderator
Thank you.
Pritesh Chheda
Farah, are there any other questions?
Moderator
No further questions at this time.
Pritesh Chheda
We will wind up the call. On behalf of Emkay Global I thank management of TRF for taking out time and addressing investor
queries on Quarter 3 number and also giving a strategic outlook for future Quarters. I also time all the participants for attending
the call. Over to you Mr. Deoras, if you have any closing remark.
Sudhir Deoras
No nothing really but let me tell you that we continue to be positive as far as our business is concerned both bulk material
handling business and the auto application business. Because we continue to see the-, I do not have to reemphasize that in
both area India is growing and we have no reason to think that we cannot encash this opportunity. We have been silently
working on many things, you have heard about capacity building, capability building, hiring new people and so on. And it will
certainly pan in good stead as far as we're concerned. So with that positive note I would like to mention to investing community
that please continue to have trust in your company. Yes we have seen a setback but we being Tatas we took it boldly and
straightaway, we did not want to play it around or hide or spread it over two Quarters that is not the way we operate. So we
have gone through that, we have taken that pain but I think it is good for every company to take that hit and stand up and start
fighting with it. So that's what we are and we assure you that good days are ahead. Thank you very much.
Pritesh Chheda
Thank you Mr. Deoras, thank you Mr. Roy.
Sudhir Deoras
Thank you.
Moderator
Thank you. On behalf of Emkay Global Services that concludes this conference call. Thank you for joining us and you may
now disconnect your lines.
Note: 1.This document has been edited to improve readability.
2. Blanks in this transcript represent inaudible or incomprehensible words.
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Moderator
Ladies and gentlemen good morning and welcome to the Q3 FY 11Results Conference Call of TRF Ltd hosted by Emkay
Global Financial Services. As a reminder all participant lines will be in the listen-only mode and there will be an opportunity for
you to ask questions at the end of today’s presentation. If you should need assistance during the conference call please signal
an operator by pressing * and then 0 on your touchtone telephone. At this time I would like to hand the conference over to Mr.
Pritesh Chheda of Emkay Global Services Ltd. thank you and over to you sir.
Pritesh Chheda
Thanks Farah. Good morning everybody. On behalf of Emkay Global I welcome everyone to Quarter 3 FY 11 a conference
call of TRF Ltd. I even welcome the management of TRF Ltd. Today we have Mr. Sudhir Deoras – Managing Director of TRF
Ltd and Mr. Ashim Roy – CFO of TRF Ltd. First the management will give their outlook on the company for the entering
Quarters and the analysis for the Quarter 3 performance and thereafter we will open the call for Q&A. Over to you Mr. Deoras.
Sudhir Deoras
Thank you, I hope you can hear me well. Very good morning to everybody. I'm going to give you general picture of the
company and talk to you about the overall situation in coming Quarters, number wise discussion we can do and you can ask
questions Ashim is also on the line, Mr. Ashim is our CFO. To begin with let me tell you that as you are all the aware that in
Quarter two we had difficulties in one of our division you are all the aware of. I had addressed informed you all what had gone
wrong but we have worked on those difficulties in the sense whatever hit we wanted to take, we have taken in Quarter 2 but
things are now under control as far as that particular division’s performance is concerned. We are now moving in the right
direction I believe so. As far as other two divisions are concerned BMHE and BMHS also performed well. If you look at Quarter
3 performance as compared to Quarter 2 performance it looks very nice obviously. But also I must mention that if you look at
this year's Quarter 3 performance compared to last year's Quarter 3 performance it doesn't look that exciting. The reason is
very simple we being largely project company and as you are aware of till the projects reach threshold limits we cannot take
top-line and bottom-line into consideration. Last year in 3rd Quarter we had reached threshold limit of a big contract
Raghunathpur and that is how Quarter 3 looked very good but Quarter 4 has comedown. But this year things are different, in
Quarter 4 we are heading to reach threshold limit of two major contracts and we believe that Quarter 4 is going to be very
good Quarter for the company.
Overall this is a picture as far as order books are concerned it is okay but we would be happy to have more orders but
unfortunately last Quarter or so even more of that we have seen especially NTPC bids, they are not opening. Every time they
are getting postponed. The reason being given to us are that there is some issue between the Railways who have specified
the type of wagon tipplers or the capacity of wagon tipplers and NTPC is not sure that it is a right time to do that. So something
is happening within NTPC and Railways and we believe that the result is well. And maybe this Quarter the bid might start. But
as of now maybe last four months or so no bids have been open while there are many bids in the pipeline as far as TRF is
concerned. We have focused a lot in manufacturing and we are now driving on manufacturing of plant productivity. Last
Quarter was good we have improved the sales in the last Quarter. Because we believe that in manufacturing the strength is
always there and we intend to do drive more and more. In the past we have talked about we are investing some money in
open yard fabrication etc. the progress is good and also we are moving in line with our plans. This is a picture overall Bulk
Material Handling Business. As far as our Auto Application business is concerned it is also moving as per plans. We had
mentioned that York will drive Indian operations because that's where the growth is and I'm happy to tell you that we have
been doing good business in India. York is putting up their manufacturing unit which should be up and going certainly by April
in next 3 months time that would strengthen York's performance further in India. As far as international market is concerned
Australia has improved but last month there has been a slowdown thanks to all those flooding, etc in Australia. But I think that
all is a temporary phenomenon. As far as Tata DLT is concerned the trailer manufacturing company in India that is also doing
well. In terms of Tata motors numbers are now looking up and we have projecting better numbers next year. And AAA which is
our Fixed Body Auto Application business in Lucknow, there also the numbers are moving, we have commissioned that
sometime in August and the plant is now doing well and there also the numbers are moving. So one and all we believe that we
are moving in the right direction and coming Quarters should be certainly better Quarters than what we have seen in the
immediate past. With that I leave it to Pritesh whatever next the questions etc., thank you very much.
Pritesh Chheda
Farah we will start the Q&A.
Moderator
Sure sir. Ladies and gentlemen we will now begin with the question and answer session. Our first question is from the line of
Kamlesh Kotak of Asian Market. Please go ahead.
Kamlesh Kotak
Sir could you give us the breakup of the three Auto subsidiaries, AAA, DLT and York?
Sudhir Deoras
Ashim would you like to give those numbers?
Ashim Roy
Okay I will give you the nine-month numbers of the Auto subsidiaries. York turnover is around 176 Crores, DLT turnover is 93
Crores and AAA turnover is 16 Crores and then there is an elimination of around 20 Crores of intercompany transactions 266
Crores.
Kamlesh Kotak
And what is the status of the profitability about the three because it seems the three have not contributed significantly to the
overall profitability. So where is the drain coming from?
Sudhir Deoras
As of now York is doing well, it is making good money. Tata DLT is also making money. DLT is lagging behind the targets and
AAA is of course we have just started so this year we are going to book some losses there. There is another angle when we
look at those numbers and Ashim you may correct there in terms of TRF Singapore. Ashim would like to comment on that?
Ashim Roy
Yeah TRF Singapore during this year this acquisition expenses, we are charging of almost and the interest on acquisition
which is charged off so you will find the consolidated numbers to be net of those acquisition expenses and the interest charged
off which is almost to the tune of 2.50 Crores. And this will continue for another 3 to 4 months maybe from the next year you
will find that there will be not be any - unless you go for new acquisition this acquisition expenses which are one time is coming
in this to the tune up to 2 Crores to 2.50 Crores which has brought down the consolidated number significantly.
Kamlesh Kotak
So how much is yet to be return off on that front?
Ashim Roy
Around another 2 Crores.
Kamlesh Kotak
Okay and as we enter now in the year FY 12 could you get us some sense about what could be sustainable margins for this
Automotive business?
Sudhir Deoras
This is question which I have always if you want to use the term I have ducked but I'm not ducking really because I do not want
to say something and then in our next Quarter you will think that you have been misguided. Then I always said that let us get
the grip of the business but I cannot keep saying that for two years. But let me tell you in February we are going to have
detailed meetings with every subsidiary to plan out our 11-12 business plan, some homework has already started. But
sometime early March we are going to give it final shape. 7th March actually is the date which we have fixed to finalized annual
business plan of TRF and it subsidiaries and I promise that from the next Quarter I would be in the better position to talk about
profitability and EBIDTA of these businesses. Now that you have some patience for sometime I wish that you endeavor in this
patience for another Quarter.
Kamlesh Kotak
Okay and sir lastly what is the order book of this core business?
Ashim Roy
It is around 1870 Crores to be precise
Kamlesh Kotak
And how is competitive scenario shaping up because we see many players are now jumping in the fray and in that prospective
how is our BOP initiative panning out?
Sudhir Deoras
You are right actually speaking BOP business is something which we had said which we have foreseen it is an important
initiative which company must take because that is where a lot of orders are coming up and getting finalized. Our team is
already operating, the Department has been established is operate from Calcutta and they have already made two bids for
BOP business. So we are already in the game and let us hope that we will continue to getting some orders and coming
Quarters. We are already in the process.
Kamlesh Kotak
Okay sir thank you.
Moderator
Thank you. Our next question is from the line of Chinmay Gandare from Asit C Mehta. Please go ahead.
Chinmay Gandare
Sir could you give some details on the Media ongoing project apart from our two NTPC which are just going on, other projects
on which you have booked the revenue during this Quarter?
Sudhir Deoras
Let me tell you that the major new projects if I use the term are the three NTPC projects which we won from the last Quarter of
the last year onwards. One was Barh, Mauda and Vindhyachal. Barh and Mauda progress has happened because they were
the earlier projects and that is where we are expecting to cross the threshold limits in this Quarter. Vindhyachal is in the design
stage and as other old big projects are concerned one was that famous Raghunathpur and the Delhi one, the Jhajjar one.
Jhajjar is now reaching the end and Raghunathpur is Ashim how much is Raghunathpur done?
Ashim Roy
It has done 65%.
Sudhir Deoras
65% so moving all right. One good news which I thought I must share with you because people mostly have forgotten is one of
that project Shadeed Steel which we had taken, which was taken over by Jindals and since Jindal took it over immediately
they signed a requisition of services and we have been able to made some good break through. In fact that plant is already
operative as far as first line is concerned and we hope that we finish that work quickly. So that was good relief to the company
and money is coming in and so on.
Chinmay Gandare
How much of the money and how much of our project is completed till now and revenue booking has started for the project?
The revenue booking for that project has started again?
Ashim Roy
Which project?
Chinmay Gandare
Shadeed project.
Ashim Roy
Yeah it has started again and it is almost 90% complete.
Chinmay Gandare
Okay and regarding the margins this time you did not book the margins for the two ongoing projects and NTPC projects
because of the revenues was not booked. But in Q4 we are expecting them to reach the threshold limit and in the last Quarter
you were saying that they are not in very good rather very attractive or the margins you normally get. So what kind of margins
are we targeting for Q4 considering that the margin contribution from those projects would also be there?
Sudhir Deoras
Ashim would you like to comment on this?
Ashim Roy
It is going to be low; it is the project business where the margins we said seem to be lower than last year’s project.
Chinmay Gandare
If you could just give a ballpark number?
Sudhir Deoras
I do not know why, I will rather refrain from commenting on the ballpark number but it is going to be 2 % to 3% less in project
business compared to last year.
Chinmay Gandare
Okay and one last question you said you are spending on the open yard fabrication. So what is the current year Capex that
your targeting and also for the next year?
Sudhir Deoras
Current year’s Capex will be around 17 to 18 Crores and next year it is around 15 to 16 Crores not on the open yard, the open
yard totally is around 16.50 Crores. This will come in other item.
Chinmay Gandare
Okay so this is for the MHE right?
Sudhir Deoras
Mostly yes it is for the MHE and York and others are spending on their balance sheet which is Pune plant and all.
Chinmay Gandare
Okay thank you sir.
Moderator
Thank you. Our next question is from the line of Ranjeet Shivram from B&K Securities. Please go ahead.
Ranjeet Shivram
Sir in your segmental breakup your product business showing growth of 52% while your project business is showing a decline
of 42% so I figure out from this that the margin improvement in this Quarter has commenced basically because of this. So
going forward how do you see this mix of products and projects?
Ashim Roy
Yes you are right this decline in the project business is volume wise because that last year as Mr. Deoras said one of the
project intercross the threshold and almost more than 100 Crores came from single project which will happen in Quarter 4.
This year two projects will be crossing threshold that is the reason for drop in project business and obviously product business
the contribution and the margins are better in product business and if you heard Mr. Deoras in his opening address that driving
the product business more and time to get a better yield out of it.
Ranjeet Shivram
Okay because even in your capital employed in the project business we had the product. The product business being capital
employed projects have increased while in projects it has decreased. So it is a strategic shift by the company or is it just for
this year?
Ashim Roy
If you see the capital employed. There mostly it is happening because of this working capital because CapEx fixed assets
investment generally takes place in the product business and it is continuing in the product business. In project business you
do not have to invest much on fixed assets. Most of the equipments are available on hire and that is the route the company is
following for the last 8 to 10 years and so there is no shift in that. The capital employed movement is because of working
capital mainly.
Ranjeet Shivram
Okay and this raw Material as a percentage of sale it has decreased drastically to 29% this Quarter from 54% on a year-onyear
perspective and 55% on Q-on-Q perspective, what could be the reason?
Ashim Roy
Two things, one is because of the improved product business there is the raw Material increase will take and the second thing
is in projects like Barh, Mauda where lot of raw Material infusion is taking place this stage. But in those projects it has gone
into the inventory increase but you will find that there is a big increase in inventory compared to last year as also last year
same Quarter.
Ranjeet Shivram
Okay because I have calculated this number including that increase decrease in inventory so that is what I was trying to figure
out that why this raw material has decreased drastically? You mean to say that because in product business you do not
require much of raw material.
Ashim Roy
I was saying so because on Quarter to Quarter it is 88 minus 45, 88 is the consumption of raw material and 45 is the increase
in inventory whereas last year it was 99 Crores consumption and 17 Crores decrease in inventory.
Ranjeet Shivram
Okay as a percentage of sales?
Ashim Roy
As a percentage of sales this will go up because again the product business is growing.
Ranjeet Shivram
Okay the percentage of sales, raw material is comparatively less compared to project business, just to get the higher
understanding of that?
Ashim Roy
No where you will have to add both together and take because in project business is payment to sub-contractor is also a direct
input. We will have to and these two for project business and in product business per se raw material will be higher than
project.
Ranjeet Shivram
Okay thank you sir I will comeback for further questions.
Moderator
Thank you. Our next question is from the line of Ankit Babel from PINC Research. Please go ahead.
Ankit Babel
Sir couple of questions. First what was the order inflow in the 3rd Quarter?
Sudhir Deoras
Virtually nothing. No project order has come in Quarter 3, am I right Ashim.
Ashim Roy
Yeah you are right.
Ankit Babel
Okay what can we expect in the coming Quarter or the current Quarter of this 4th Quarter?
Sudhir Deoras
As you are aware when we talk about the order book and order position we generally talk about project orders, I hope that is
clear we do not deal with products …continues. But as far as projects are concerned unfortunately nothing has got finalized
because no bids are getting opened. Quarter 4 also there was something which was to come up early January, they positioned
it by another 15 days so we are only hoping that at least two of NTPC's projects will open up in this Quarter and going by our
history hopefully we'll able to win one of them. And I think that is what the hope is. But as far as the private players are
concerned we are in touch. We are constantly in touch with Tata steel for their Kalinga Nagar project, not sure by March they
will finalize the order or not. But that is one big thing on which we are working on. I mentioned earlier that we are already in
this BOP business, right now our team is today travelling to meet a private player who is putting our plant in Maharashtra with
our BOP proposal. So we are doing that work and we are hoping that some order we pick up in this Quarter but NTPC is
delaying the opening up of their bids due to issue between them and railways as I told you. As I would say a little set back but
we are hoping that we will be okay by end of the year. Because again I do not see this order book whatever we have today
1800 Crores, it is good enough for whatever our plans of FY11-12 but my worry is for the next year, so I'm thinking about
FY12-13. And that is why we will be happy to book at least a large order in this year.
Ankit Babel
So this NTPC order would-be worth how much sir?
Sudhir Deoras
They are all now, these NTPC orders are somewhere between 300 and 400 Crores as a kind of size of orders we work for.
Ankit Babel
And this Kalinganagar project of Tata steel?
Sudhir Deoras
Kalinganagar is very fluid; we are talking to them on many things. There could be if they go with packages, there is a different
scene altogether but overall raw Material business of Kalinganagar project would be anywhere 800 to 900 Crores. But
obviously every thing they are not going to put all eggs in one basket; there are still one or two more players. But that is the
kind of size of the business which we're talking about.
Ankit Babel
Okay and sir do you still maintain your guidance for FY 11 that is project 650 Crores, product 250 Crores excluding the inter
segmental and subsidiary that 400 Crores turnover, so 1200 Crores overall on the consolidated business?
Sudhir Deoras
Ashim.
Ashim Roy
There maybe a little less in BMHS and altogether Rs1200 Crores but it would not go below maybe 1100 Crores but it will be
something between 1100 and 1200 Crores.
Ankit Babel
Sir do we expect the 4th Quarter in terms of profitability also to be very good because since we are reaching the threshold
limits in two large projects and that would lead to better absorption of your overheads so the margins and the 4th Quarter would
be better than the 3rd Quarter?
Sudhir Deoras
I know you continuously analyze our performance and you know better than me but let me tell you that yes Quarter 4 has to be
better than any Quarter of the year Because of the simple reason that we are reaching the threshold limits. So that has to be,
in absolute number it has to be better.
Ankit Babel
And last question. I know it's too early to ask but just a fair idea that in FY 12 what kind of growth are we expecting the order
inflows considering the first nine-month performance of this year and a brief expectation in the 4th Quarter. What kind of growth
can be expected in the FY 12 in order inflows?
Sudhir Deoras
We are looking at least 25%.
Ankit Babel
And this is considering that the NTPC and the Kalinga Nagar project would ultimately get decided?
Sudhir Deoras
Yeah there are many things, we are not only banking on one NTPC, one Kalinga Nagar, I told you there are BOP thing in the
process. There are many things but we know what bids we are making but I would not like to talk about various bids what we
made but overall the picture is that there are some good projects in the pipeline and we hope depending on, timing is the issue
that when do they open up. But we see in the next financial year order books will increase.
Ankit Babel
Okay fine thank you so much sir.
Moderator
Thank you. Our next question is from the line of Ranjeet Shivram from B&K Securities. Please go ahead.
Ranjeet Shivram
Sir I just wanted the breakup of order book like in terms of products and projects.
Ashim Roy
240 Crores is the product order book as of today, around 15.6 is order book.
Ranjeet Shivram
Okay the tax rate has been reduced again any particular reason?
Ashim Roy
Actually we go by the overall-. There is no particular reason. No severe addition and deletion. It fluctuates little when you take
the overall percentage annual average applied for the Quarter and the 2nd Quarter results also got some aberration.
Ranjeet Shivram
And we are not expanding our capacity in power related equipment while when you look in to the Macro picture the power is
one of the area where initially the companies are expanding and putting up plant but we are putting our money into auto
business of York. So how do we see this going forward say in 2 to 3 years’ time how do you see like this we are putting money
into auto will that affect the power growth?
Sudhir Deoras
No let me clarify, both the things are happening. As of today we are about two clear businesses one is what we call Bulk
Material Handling Business and Auto Application business. After acquiring Auto Application Business as you know they have
shown their own growth, this York is putting over plant in Talegaon or Tata DLC is putting a plant in Pune it is all coming from
their own balance sheet they are using the many. We are not funding the money from here. Our money is certainly, we have
clearly planned what we want to do in BMHE business. Power business is a big game as far as we are concerned. That is why
we are going into whole of balance of planned business which I explained earlier. So there is no compromise, this is not this or
that. Both the business will grow and BMH business will get expanded from clearly the original core business from core
company TRF and our subsidiaries are using their own money in their own way. There is no compromise as far as growth
plans of BMH business concerned specially the power business where we are now going for balance the planned business.
Ranjeet Shivram
Okay and just if you want to put a growth figure for your order book for the next year?
Sudhir Deoras
I just said maybe about 25%.
Ranjeet Shivram
Okay thank you sir.
Moderator
Thank you. Our next question is from the line of Nidhi Agarwal from ShareKhan. Please go ahead.
Nidhi Agarwal
Sir I have a question on the order book. How much of the order book is having price variable clause?
Ashim Roy
Most of these project orders from NTPC are having price variation clauses. Almost 80% of present order book of projects.
Nidhi Agarwal
Okay and sir how much is NTPC's contributing to our order book?
Ashim Roy
As of today around 1200 Crores.
Nidhi Agarwal
And how much will be from Tata Steel?
Sudhir Deoras
Tata Steel one order of 100 Crores we are doing in Jamshedpur itself they are within the same model also expanding the plant
to 10 million. But we are now looking at the bigger thing hopefully Kalinga Nagar will see the light of the day and we are hoping
that we will be able to do some big project in the next financial year.
Nidhi Agarwal
Okay sir that answers my question. Thanks a lot for taking my question sir.
Moderator
Thank you. Our next question is from the line of Kamlesh Kotak of Asian Market. Please go ahead.
Kamlesh Kotak
Sir our interest costs has gone up significantly even year-on-year and Q-on-Q. So how much is our debt on the books?
Ashim Roy
Interest cost you will agree that it is going up because of two reasons one is as compared to last year that interest rates are
hardening. And secondly the borrowing level is also high a little because of this increased activity so both have contributed.
Kamlesh Kotak
So how much is our debt on standalone and consolidated basis?
Ashim Roy
Debt standalone as of today is around 206 Crores and consolidated is 294 Crores.
Kamlesh Kotak
And debtors level of both the companies?
Ashim Roy
Debtors, standalone debtors 86 Crores.
Kamlesh Kotak
Okay and consolidated?
Ashim Roy
Consolidated debtors is 406 Crores
Kamlesh Kotak
Alright sir. Thank you.
Moderator
Thank you. Our next question is follow up from line of Chinmay Gandare from Asit C Mehta. Please go ahead.
Chinmay Gandare
Could you throw some light on the pricing pressure on the industry like last time when you got those NTPC orders last January
as compared to that right now how is the pricing between the two? When you bid for the orders is that still at lower margins
and when do we expect the same to ease out?
Sudhir Deoras
Let me tell you that I foresee clear pressure on the margin. The reason is very simple. If you look at this financial year 2010-11
and if I only look at coal handling plant where we have been operating as of now the total orders finalized were just about 4 or
5 orders in coal handling plant. The order which two of them we got I think L&T got some thing some Petro got and so on. Now
obviously everybody else is now I suppose dried up, they are all looking for new orders. And as the new orders will start
coming up the first aim the people would be having as I hope I believe to get some orders quickly. So that is going to be a
pressure I can clearly foresee for next clearly 6 to 9 months. I see a pressure on margins which has to be very competitive and
we need to work very hard in terms of not only estimating the project cost side but also in execution and then in cost control
and so on. But short answer is yes, I see pressures on margins.
Kamlesh Kotak
NTPC is doing a bulk tendering for 16x11 megawatts project so when do you see the BOPs and coal handling one and ash
handling one order getting released for you?
Sudhir Deoras
We have been constant in touch with NTPC and as I said there are many orders in the pipeline, many tenders in the pipeline
but there is some issue with Railways in terms of design of wagon tipplers. I think railways are talking about higher capacity
wagon tipplers and so on. And NTPC has its own views. Now that is where we have been informed by NTPC that there are
delays in opening of this tender but I hope that this quarter all those matters will get resolved after all how long they can keep
postponing and they have the targets to meet.
Kamlesh Kotak
Okay thank you sir.
Moderator
Thank you. Our next question is from the line of Rahul Gajare from Edelweiss. Please go ahead.
Rahul Gajare
Sir two questions from my side. One is the order book that we have, could you tell me what is execution period of this?
Sudhir Deoras
They are all anywhere between 2 to 3 years.
Rahul Gajare
Okay but a large part of that would be in FY12 or larger part will be in FY13?
Sudhir Deoras
The orders what we have today large part would be in the next financial year not FY13.
Rahul Gajare
Okay sir my second question is on the BOP side. Which a product that we are already manufacturing and which are the
products that we either have tie ups or are looking at getting into?
Sudhir Deoras
Generally speaking there are four major sub-projects in our BOP projects, largest is coal handling plant which we are doing
100%. Then we have ash handling plant for which we have tie up, then we have water treatment and civil area which is also a
tie up and also in terms of electrical and also environmental thing, etc. As far as we are concerned we will be managing the
whole project. We will be doing coal handling plant, for the rest thing we will have a consortium partners because please
understand to begin with we need to also get qualified to be a BOP player. As of today as a consortium partners you can do as
long as your network is of sub-limit and we have done the project of 300 Crores and so on. All that we qualify. So but now we
want to get qualified for BOP so we will start with consortium network and as we move in that path we will decide what else we
would be doing in house.
Rahul Gajare
Okay sir thank you very much.
Moderator
Thank you. Our next question is from the line of Sushil Choksi from Rosy Blue Securities. Please go ahead.
Sushil Choksi
Sir you continuously address that the margins are going to be low but are you specifically talking about the project division?
Sudhir Deoras
Yes I am talking about the project division.
Sushil Choksi
And not on the product division and what Ashim answered to one of the questions that margins will drop by 200 to 300 bps is
specifically related to the project not product?
Sudhir Deoras
Yeah.
Sushil Choksi
Now can you breakup the order book which you mentioned of 1800-1900 Crores between products and projects?
Sudhir Deoras
Products is around 240 and balance in project business is 1570.
Sushil Choksi
Now this product 240 we are running a run rate of approximately 60 Crores a Quarter right now?
Sudhir Deoras
Yeah.
Sushil Choksi
And looking forward with AFTA acquisitions in UK, I suppose that some value addition and new initiatives should start bearing
fruit is on our new contracts in India?
Sudhir Deoras
Yeah that is a product oriented.
Sushil Choksi
So where do you see this 60 Crores quarterly run rate on products heading towards?
Sudhir Deoras
As I was trying to tell you that we intend to now really drive manufacturing more but whatever we have planned in terms of the
coming year we are looking at 70 to 75 Crores per Quarter that is kind of target we would like to set as I said next year
business plan will yet to finalize but that also depends on the numbers on which would like to work on and also we do not want
to stop there. We want to come out with things in terms of expanding our manufacturing base and do much better in coming
years.
Sushil Choksi
Okay now it's a clear strategy that we want to do value addition where manufacturing is concerned and bring reasonable
margin which we're holding right now between 18 to 20% depending on quarter-on-quarter where products are concerned. So
when we blend standalone India margin whether we achieved 1100 or 1200 Crores in the current year and I'm quite sure that
vision 2013 stands?
Sudhir Deoras
Yes it does.
Sushil Choksi
And subjectivity maybe more related to BOP so the BOP margins can be low and I understand the project margins can be low.
Sudhir Deoras
BOP will bring in top-line growth but margins will be obviously lower because we have to share it with others but it also brings
in ease in little working capital in terms of percentage of sale. That is an advantage of BOP. So BOP margins will certainly
lower than just in coal handling plant.
Sushil Choksi
If I just came back from what we have achieved and if the damage is not done in the second Quarter, this year itself we would
have been reasonably well off going by the current Quarter assuming this 4th Quarter is going to give you a turnover in the
range of 250 to 350 Crores I do not know where you end up with in the project division and I am assuming the product is going
to run-rate at 60 So what we now need to focus is going back to Auto. So lots of money, lot of questions have been asked, the
capital employed and the money is being poured into auto division. I want to know where we stand on the manufacturing
aspirations of York and DLT in India.
Sudhir Deoras
Well let me tell you there are two things happening in this business and this has to be understood. As far as York is concerned
we are looking at ending this year 55 million USD business the top-line. And that is with India operations very low-key which
we are doing in Jamshedpur because as I had explained to you before they put up a new plant, we are utilizing part of
Jamshedpur TRF facility where they can assemble something and carry on with the activities. But the plant which we are now
putting up in Talegaon should be ready by early April and start functioning straightaway. Now that is going to give a big thing to
York in terms of the Indian operations, the Indian market, profitability all that is going to help. The York is clearly on its way to
work. What we had thought about except the set back what we got after we acquired the company economy downturn
happened and so on. But we clearly see great numbers. I'm also very pleased to tell you that next year York would sell more
axles to non Tata Motors Companies. In other words whatever Tata Motors want through Tata DLT trailers they will be
supplied by them. But they would have created markets of non-Tata companies with their selling the market, they have put up
their distribution set up and they are continued to grow. So York is very much in line with what we would likely to do. As far as
Tata DLT is concerned as you all know Tata DLT makes trailers only for Tata Motors, it is devoted to Tata Motors. And the
Tata Motors number in the last Quarter went down because of the Euro-III norms or Bharat-III norms whatever they wanted to
do and the component supplier were failing to supply them so they have not been able to come out with large number of prime
movers and that is where we suffered. But we have been in touch with Tata Motors top management team. Quarter 4 numbers
they have promised to improve and they are talking about bigger numbers as far as next financial year is concerned. To meet
this Tata DLT is also putting up a new facility which we are hoping to complete sometime in May, may be May of next year.
But in the meantime they continue with our present set up in Pune. Also we continue to import DLT chassis from Sri Lanka and
which helps in pushing the numbers of Tata DLT. So that is something which is happening. DLT has also started a new thing
this year in fact we just started that I thought I must share with you. DLT as you know is an expert in port trailer business which
brings in good revenues and good margins. But going by the numbers and the volumes we need to also be in the road trailers.
Now road trailers every country or every region makes its own road trailers, so making road trailers in DLT and exporting to
other country the freight becomes a very big issue. So we have hit upon a model what we're doing in India for example they
are sending chassis because six chassis we can put in one container so our freight gets neutralized or averaged out. So we
are doing a similar thing with just done a deal in Kenya where one of assembly unit we have sent out chassiss. Similarly the
under gears could also be directly dispatch there and we assemble there and sell in that part of Africa. A similar model in
coming year 2011-12 in we intend to in Middle East and also in India. So due the plans of these businesses and I believe that
they are in line with what we thought about except that we got the set back in between because of the economic downturn. But
overall I am quite positive about auto application business.
Sushil Choksi
Am I to assume that the current margins which we are achieving is mainly because we are using manufacturing bases on ad
hoc basis depending on demand supply at various locations and the coal manufacturing operation once we put up, not only
will we be able to guide but we will be at a reasonable pace from the money which we are involving on the totality basis?
Sudhir Deoras
You are right that's what it is.
Sushil Choksi
Okay. This second question you mentioned that you have been able to come out of the Shadeed problem and things are going
better. We have some receivables on that entity, has that entire receivables being fructified?
Sudhir Deoras
Absolutely. Ashim would you confirm?
Ashim Roy
The entire due money has been paid in fact they have released a part of the retention money which we told them because of
the delay the company was suffering and which helped us in handing the equipments faster so that the first line is
commissioned. So they are paying all the dues.
Sushil Choksi
Okay going back to our project division in India, right now we have bulk business coming out of NTPC, we are anticipating
TISCOs order for the current expansion at two locations. Other than these two and NTPC, can you highlight how much of
tendering we are in process in the market right now?
Sudhir Deoras
As of today we must have the pipeline where we have made bids, etc., could be anywhere between 1500 Crores to 2000
Crores and we are not counting the Kalinga Nagar, etc. That is future still there is no tender out. But whatever tenders are out I
think we are somewhere between 1500 to 2000 Cores.
Sushil Choksi
Does it include anything on Ultra Mega which we were trying to work on that's a separate issue?
Sudhir Deoras
The Reliance which we are working for the last two years, we have been trying to work with them, with Reliance nothing
finalized, some time you read the newspaper that now they are going to China. Sometimes they are saying they will talk to
India so Reliance is just not making a progress that was only Ultra Mega on which we were working on.
Sushil Choksi
Sorry to shift back again to your DLT York. Based on your current expansion what would be the capacity operational for the
next year?
Sudhir Deoras
The plant which York is putting up in Talegaon on one shift operation we were reproducing 24000 axles per year and it can be
straightaway scaled up the second line which will put up and then operate in two shifts it can be scale up to 96,000 or we say
basically 100,000 axle capacity we are building in Talegaon. As far as DLT is concerned as of today the capacity is 3000
trailers per year and the new facility will have over a period of time when we operate two shifts, etc., it can produce 6000
trailers. That is the kind of capacity which we're putting up. In fact when we put up the 6000 capacity we want to operate in the
small places where we operate in Pune. Let me also tell you that we are now looking at or these companies are looking at
hiring some assembly facilities even in Jamshedpur. Because lots of prime movers come out of Jamshedpur plants and they
would like to have the trailers next door. So there also York in any case is already there with us and Tata DLT is also looking a possibility of putting on assembly unit in Jamshedpur. We tried to do that with one of the local parties when we are trying to
build that model.
Sushil Choksi
Do you anticipate the second shift operation whether it is axle or DLT getting into mode in the next financial itself for that will
take little longer time?
Sudhir Deoras
I think by end of the next financial year we will need that kind of capacity and by end of the next financial we should start
operating second shift also.
Sushil Choksi
What kind of investment are we envisaging in between DLT and York in India?
Sudhir Deoras
As far as York is concerned they have taken rented sheds and land so they have not bought in land and sheds which cost lot
of money and as far as equipment is concerned they are putting up about Rs 10 Crores to Rs 12 Crores in equipment as far as
York is concerned. As far as DLT is concerned even before we went into that company they have already acquired the land in
Pune. So land was already in hand and now they are putting up the shades and the facility. I think they are going to invest
about 30 Crores in that particular deal because land is already done for about 10-12 Crores.
Sushil Choksi
Assuming that you are talking about capacity assuming two shift basis not one shift basis or that could be additional
expenditure?
Sudhir Deoras
No I am talking about capacity which could be scale up to two shifts.
Sushil Choksi
Okay thank you, you answered all my questions.
Pritesh Chheda
I have a question. Just from the previous question only, in DLT what is the current production run rate and what is the target
run rate in DLT for next year? Same is for York Talegaon, what should be the target production for FY 12 and if you could give
us for Tata DLT what is the current capacity and the current production rate?
Sudhir Deoras
I am giving you broad numbers. I have just mentioned a little while earlier this year we are hoping to hit about $55 million worth
of business from York USD I'm talking about and next year I see clearly a possibility of crossing $80 million USD business only
from York. That is a kind of thing what is happening in York. We have done lot of thing which I explained to you about India
facilitate etc. I have not touched upon the Chinese manufacturing which is also happening for York, it was happening earlier
also but we have stabilized that Chinese facility also. So that is a kind of numbers what we are talking.
Pritesh Chheda
The 80 million target in York includes the benefit from York Talegaon?
Sudhir Deoras
Its York worldwide numbers, so we are certainly $80 million USD plus. As far as Tata DLT is concerned let me focus on Tata
DLT which is operating from India. As of today we can anytime produce with the help of DLT chassis coming in about 250
trailers a month otherwise 3000 trailers a month.
Pritesh Chheda
Say for nine-month of current year FY 11, how much would we be doing?
Sudhir Deoras
I think we are actually doing because of the help from DLT, etc., this year as far as the trailers business is concerned will be
doing about 4000 plus.
Pritesh Chheda
Okay in any case you are over utilizing of your capacity?
Sudhir Deoras
No what we're doing is since we own DLT Tata we are able to bring synergy and play about it in numbers.
Pritesh Chheda
Okay and this should hit 6000 trailers straightaway in FY 12 once the capacity comes in?
Sudhir Deoras
Yeah what we intend to do is as of today we are hoping that we will do at least 5000 trailers for Tata motors only and I'm not
counting the other markets where DLT sells, etc., but we should be aiming to reach somewhere closer to that number.
Pritesh Chheda
But then the 5000 numbers, does that get captured in Tata DLT currently?
Sudhir Deoras
It will get captured in Tata DLT, part of it would be DLT sales to Tata DLT and Tata DLT to Tata Motors.
Pritesh Chheda
Okay then for Tata DLT what is the current capacity and what expansions are we taking there?
Sudhir Deoras
I told you we are putting the plant which will start of with the capacity of 3000 trailers and then if we operate two shifts when we
go to 6000 trailers and looking at the end of the next financial year which would start operating the second shift also.
Pritesh Chheda
Okay so when you say 3000 trailers additional it is basically DLT India plus Tata DLT?
Sudhir Deoras
No, I am talking about Tata DLT new plant in India which is putting over 3000 capacity of plant to begin with.
Pritesh Chheda
Okay and it originally had 3000?
Sudhir Deoras
Yeah in three units’ unorganized sector type manufacturing so we did not have our own real plant. We are operating in small
places so we are bringing in some methods to that plants.
Pritesh Chheda
Okay so that means DLT has 3000 trailers expansion, Tata DLT is 3000 trailers expansion.
Sudhir Deoras
No DLT expansion is already seen in Sri Lanka. Sri Lanka capacity is already available that's why they have started pushing
this chassis into India with Tata DLT to support their India production.
Pritesh Chheda
Okay so when we say 3 to 6 it is actually Tata DLT?
Sudhir Deoras
Yeah you are right.
Pritesh Chheda
So there is no expansion in DLT?
Sudhir Deoras
DLT had already gone even before we acquired them.
Pritesh Chheda
Okay and for AAA automotive, the tipper body and what is the capacity that plant has commenced operations?
Sudhir Deoras
Yeah AAA has commenced operations and we are now looking at that plant also to produce with minimum 6000 bodies in next
financial year.
Pritesh Chheda
Okay and what is the capacity there?
Sudhir Deoras
As of today it is about 6000.
Pritesh Chheda
When do you think and what is your call on the order finalization is now in the system especially in the MHE space considering
the current business involvement and what kind of visibility or order do you see in the near term, in the current business
involvement?
Sudhir Deoras
I would be happy to hit upon at least one order of 400 Crores kind of order size in this Quarter because that would help us in
the financial year 2012-13. You have a point because if you remember last year by end of the year we hit upon two orders
which are now coming to threshold limit in Quarter 4. So Quarter 4 of previous year helps you Quarter four of this year, this is
the kind of time limit that we're talking about. So I am looking forward to at least one order if it comes through. But I just gave
you the complete picture about what is happening, how NTPC bids are getting delayed and so on. But we are trying to work
out as I said we are trying to work with lot of private companies who are interested in BOP. Our teams are meeting them;
offering them our offers and so on. So we are trying our best but the way things are and I think bids might open in the 1st
Quarter in the next financial year.
Pritesh Chheda
Okay and in terms of the 11th plan ordering for the BOP segment and sub-components within BOP has most of the orders
been placed and we actually should be looking at 12th plan now or there are some order which are still which is left under the
11th plan itself?
Sudhir Deoras
No there are many in 11th plans are left behind but last three-months somehow there is no activity and as I was telling these
are the 11th plan orders which has planned.
Pritesh Chheda
Okay and these are the sub-components within the BOP or it would also be composite BOP orders?
Sudhir Deoras
Both.
Pritesh Chheda
Okay thank you sir. Farah.
Moderator
Thank you. Our next question is from the line of Sushil Choksi from Rosy Blue Securities. Please go ahead.
Sushil Choksi
Sir, can you highlight what is the current realization of DLT and York in global markets and India market?
Sudhir Deoras
Sushil I think you were there, sometime earlier I talked about that as far as margins of this businesses are concerned I will be
in a better position.
Sushil Choksi
I am not looking at margins at all. I am just looking at product realization per axle and per trailer because global market
average is a 50% to 70% higher than India that is what I was assuming till the last con-call.
Sudhir Deoras
No I do not think so. Ashim would you have some numbers to talk about?
Ashim Roy
No, I do not have this comparison of similar product between global and India because the products that DLT sells outside are
mostly port trailers which are quite significantly higher than road trailer prices. Maybe it is 70% to 80% higher whereas the road
trailer is around…
Sudhir Deoras
Sushil I will give you some idea with a broad numbers. For road trailers, a set of three axles is sold. The three axle trailers, it
gets York about lakh of rupees or maybe little more than that. That is one part and as far as road trailers in India is concerned
and depending on who made them, they are ranging anywhere from 5 lakh to 8 lakh. So that is the picture as far as road
trailers and the axles in Indian market are concerned. I do not think that York gets much higher margins from all over the
world. It is a very interesting market as far as York is concerned, like Korea which is very small market, very few numbers but
the margins gives you very high. Australia also gives you good margins. Country to country the margins are significantly
different. And China market doesn't give you virtually any margin because anybody is buying any axle. But overall picture if I
talk about India realization numbers which I talked about I think that should be considered as an average number.
Sushil Choksi
Okay I'm happy to receive it as and when you have the final numbers.
Sudhir Deoras
Yes you will hear from me in coming month.
Sushil Choksi
Okay thank you sir.
Moderator
Thank you.
Pritesh Chheda
Farah, are there any other questions?
Moderator
No further questions at this time.
Pritesh Chheda
We will wind up the call. On behalf of Emkay Global I thank management of TRF for taking out time and addressing investor
queries on Quarter 3 number and also giving a strategic outlook for future Quarters. I also time all the participants for attending
the call. Over to you Mr. Deoras, if you have any closing remark.
Sudhir Deoras
No nothing really but let me tell you that we continue to be positive as far as our business is concerned both bulk material
handling business and the auto application business. Because we continue to see the-, I do not have to reemphasize that in
both area India is growing and we have no reason to think that we cannot encash this opportunity. We have been silently
working on many things, you have heard about capacity building, capability building, hiring new people and so on. And it will
certainly pan in good stead as far as we're concerned. So with that positive note I would like to mention to investing community
that please continue to have trust in your company. Yes we have seen a setback but we being Tatas we took it boldly and
straightaway, we did not want to play it around or hide or spread it over two Quarters that is not the way we operate. So we
have gone through that, we have taken that pain but I think it is good for every company to take that hit and stand up and start
fighting with it. So that's what we are and we assure you that good days are ahead. Thank you very much.
Pritesh Chheda
Thank you Mr. Deoras, thank you Mr. Roy.
Sudhir Deoras
Thank you.
Moderator
Thank you. On behalf of Emkay Global Services that concludes this conference call. Thank you for joining us and you may
now disconnect your lines.
Note: 1.This document has been edited to improve readability.
2. Blanks in this transcript represent inaudible or incomprehensible words.
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