Capital Goods-Dissecting

cycle & Finding winners

VP Meet 2019
Kumar Saurabh, Dhiraj Dave, Ankit Gupta, Dhwanil Desai
Disclaimer: Stocks discussed are only for educational purpose and not a recommendation

6/23/2019 1
Capital Goods Industry

1 Constituents and Sub-sector

2 Sector Insights

3 Separating Wheat from Chaff: Sector and Sub-Sector Analysis

4 Stock Ideas, Valuation Concerns, Scenario Planning : Some Interesting Experiments

2
Capital Goods Industry:
Constituents and subsectors

6/23/2019 3
1 BSE Classification and our focus area
Construction & Companies engaged in construction of industrial properties. Includes civil engineering companies and large-
Engineering scale contractors. Also includes manufacturers of large pipes.

Manufacturers of power generating equipment and other heavy electrical

Heavy Electrical
equipment including power turbines, transmission towers, heavy electrical
Equipment
Electrical machinery intended for fixed-use and large electrical systems
Equipment
Others Electrical Manufactures of electric cables and wires and other electrical components or
Equipment equipment not classified under Heavy Electrical Equipment

Construction, Manufacturers of ships, trucks, buses, rolling machinery, earth-moving and

Agricultural & CV construction equipment, bulldozers, farm machinery such as tractors etc.
Manufacturers of industrial machinery and components. Includes manufacturers of presses, machine tools,
Industrial
Machinery compressors, diesel and petrol engines, pollution control equipment, elevators, escalators, insulators,
Machinery condensers, pumps, casings, roller bearings and other metal fabrications

Other Industrial Manufacturers of consumables like fasteners, refractory, welding equipment,

Goods electrodes, bearings etc.

Manufacturers of civil and military aerospace and equipment and parts or products
Aerospace
Aerospace & thereof
Defense
Defense Manufacturers of Defense equipment, Defense electronics and parts
4
1 BSE Classification and our focus area
Segment Count Indicative List

Industrial Machinery 59 Cummins, ISGEC, Forbes, KIRLOSKAR BROTHERS, LMW, Grevaes Cotton,
Elgi, GMM Pfauder, Stovec, Eimco, Affordable Robotic Schaeffler,
KENNAMETAL, HONDA SIEL, TIMKEN, INGERSOLL-RAND, The Anup
Engineering, DHP INDIA LTD.,
Other Electric Equipment 29 Honeywell, polycap,Havels,Apar, KEI, Finolex, V-Guard, HBL Power, Ram
Ratan Wire, Genus Power, Kirloskar Electric, Birla Cable
Construction & Engineering 22 L&T, HCC, Welspun, RVNL, Maharastra Seamless, Techno electric,
Ratanmani, Texmeco, Power mech, ITD, Ramki, Technofab
Other Industrial Goods 20 Graphite, AIA, HEG, Ador Welding, ESAB, Apcotex, SKF, Vesivius, SNL
Bearning, Orient refractories, Permanent Magnet
Other Industrial Products 19 Bharat Forge, Mahindra CIE, Grindwell, Ramkrishna Forging, Nelcast,
Orient Abrasives, Carborundum
Heavy Electric Equipment 18 BHEL, Siemens, KEC, Kalpataru, ABB, CG Power, Thermax, Voltamp,
Scheindler, Triveni Turbine, GE Power, Inox Wind, T&R, TD Power
Defense 5 BEL, Astra Microwave, Bharat Dynamics, Apollo Microsystsem, Sika
Interplant
Aerospace 2 HAL, Taneja Aerospace
5
Sector Insights:
1. Based on business cycles and gross capital formation
2. Overall reading and analysis

6/23/2019 6
2 Industry: Imports heavy with low Cap. utilisation
Segment Market Domestic Import % 3 Year 3 Yr Export 3
Size Demand Demand Exporte CAGR Production Yr CAGR
(2014-15) d CAGR

Machine Tools 9267 43% 57% 7% -7.6% -0.5% 16.0%

Textile 12308 63% 35% 5.1% 9.6% 17.4%
Machinery
Earthmoving 21671 56% 43% -7.1% -1.9% 17.8%
Mining &
Construction
Equipment
Heavy Electrical 157522 36% 26% -5.8% 0.3% 16.1%
Equipment
Plastic 3620 37% 23% -0.8% 5.8% 10.8%
Machinery
Process Plant 24149 54% 41% -0.2% -1.6% 14.8%
Machinery
Dies, Moulds & 15100 22% 20% -0.3% 3% -0.3%
Press Tools
Printing 19,579 33% 9% 8.0% 9.7% 9.0%
Machinery
Metallurgical 2750 94% 88% -12.3% -1.0% 15.5%
Machinery
Food Processing 15,600 35% 17% 4.4% 5.4% 14.0%
machinery

7
2 GFCF and Capacity Utilization

40% 84 1600
Number
83 of Respondants Capacity Utilisation RBI
GFCF/GDP
35% 82 1400

30% 80 1200
80
2004-05 Series 2011-12 Series
25% 1000
78 78
78
20% 800
76 76
76 75 600
15% 75 75 75 75
74
400
10%
72 200
5%
70 0
0%
1950-51
1953-54
1956-57
1959-60
1962-63
1965-66
1968-69
1971-72
1974-75
1977-78
1980-81
1983-84
1986-87
1989-90
1992-93
1995-96
1998-99
2001-02
2004-05
2007-08
2010-11
2012-13
2015-16
2018-19
Gross Fixed Capital Formation (GCFC) as a per cent of GDP is considered as indicator of investment in Economy.
Increase in GCFC/GDP indicate growth in economy, which would normally happen when industry has reached
optimum capacity utilisation. While RBI survey indicate utilisation being higher than 70 almost for last 11 years, and
GFCF/GDP above 30% for last decade, still we did not see growth in capex.

8
 2 Insights from Data

• GDP numbers, RBI Capacity utilization giving a sense of revival of

Capex cycle, we have still not noticed major jump in capex. Even

Economists are projecting revival of “short term” for last 24

months, we still need to see major capex growth. The critical

question is “when” capex would revive rather then “why”.

• Even sector-wise capacity utilization is giving indication about

likely revival in capex very soon.

9
2 But this time it may be different !!!

Industry Unit FY99 FY09 FY18 Peak value Peak Year

Automobile Rs Bn 24 121 228 228 FY18
Cement mn tpa 8 27 16 41 FY10
FMCG Rs Bn 10 66 77 77 FY18
Steel mn tpa 0 6 7 13 FY13
Pharma Rs Bn 1 90 148 191 FY17
Infrastructure Rs Bn 3 265 89 1022 FY12
Telecom Rs Bn 12 259 368 548 FY18
Power BTG Order 3,763 30,891 1,980 36,516 FY08
Refining mn tpa 43 29 9 43 FY00
New Areas ???

Source: MOST BSE 200 Companies analysis of Capex

10
2 Some insights from following the sector
• To counter the downtrend in the domestic markets, few companies:
o Expanded their international business and increased their geographical presence
– reduced cyclicality associated with domestic markets

o Expanded the product basket and entered new segments

• Few of the MNC companies are seeing shift in manufacturing from their
parents/other international subsidiaries to the Indian counterpart

• Difficult to extrapolate one or two year’s good performance when the entire industry
is in doldrums. Also, unlike infrastructure companies which have 2 – 3 year’s of
order book, many companies in the sector have less than one year of order book

11
Separating Wheat from Chaff

6/23/2019 12
 3 Research Approach

384 BSE List

296 BSE bhav copy Price Available

Also, removed: 242 > 10 Rs Stocks

• Super cyles – HEG, Graphite
• Pure B2C – Havells, V-guard,
Polycab
Non Construction & Engineering had lot of pure road
Segment Count 209 infra companies – Selectively removed
Industrial Machinery 59
Other Electric Equipment 29
Construction & Engineering
Other Industrial Goods
22
20
174 Revenue and Market Cap could be tracked. Known
companies missing – 19 were manually collected
Other Industrial Products 19
Heavy Electric Equipment 18
Defense 5
135 Final companies selected based on data availability and few
more filters (D/E<5 or >0 removed, ROCE>-30% or < 200%)
Aerospace 2 13
 3 Sub-Sector Analysis: ROCE
Avg. ROCE 2003-08 vs 2009-12 vs 2013-18 ROCE
50 50
45 45 45
40 40 40 41
39
35 35 36 35 35
30 30 31 30
29 32 29
27 28 24 27
25 23 23 26
25 25 24 27 21 24 25
23 19 27 20 24
20 19 25
19 19 22 22
20 19 18 20 21 17 20
19 19 23
17 21 15
15 19 20 13 17 16 13 17 13
15 19 16 15 16 16
14 14 10 11 14
12 16 13
10 11 14 14 12 14 11 14
10 14 9 14
9
5 10
5
0 2
Construction Heavy Industrial Other Other Other 0
&amp; Electrical Machinery Elect.Equip./ Industrial Industrial 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Engineering Equipment Prod. Goods Products
Construction &amp; Engineering Heavy Electrical Equipment Industrial Machinery
2003-08 Avg 2009-12 Avg 20013-18 Avg Other Elect.Equip./ Prod. Other Industrial Goods Other Industrial Products

• 2003-08 were golden years and 2013-18 average is >40-50% lower for most of sub-segments from peak
• Post 2014, numbers have fallen to one of lowest in last 15 years with ROCE across all sub-segments at all time low
• “Other Industrial Goods” looks best and has shown improvement
• “Other Industrial Products” though at low on latest 5 year basis, improving year after year since 2016
14
 3 Sub-Sector Analysis: Debt to Equity
Avg. D/E 2003-08 vs 2009-12 vs 2013-18
Debt Equity
1.4
2.0 1.8
1.2 1.8 1.7
1.6 1.7
1.6 1.7
1.0 1.5
1.5
1.4 1.4
0.8 1.3 1.1 1.1 1.1
1.2 1.2 1.1 1.0 1.0
1.0 1.0 1.0
0.6 1.0 1.0 0.9 1.1
1.0 1.0
1.0 0.9
0.8 0.8 0.8 0.8 0.8 0.8 0.8 0.7 0.7
0.4 0.9 0.8 0.7 0.8 0.7 0.6 0.7
0.8
0.6 0.6 0.7 0.6 0.6 0.6 0.6
0.5 0.6 0.5 0.5 0.5
0.2 0.6 0.5 0.6 0.4 0.5 0.6 0.4 0.5
0.4 0.4 0.5 0.4 0.5 0.4 0.5
0.3 0.3 0.4 0.4
0.3 0.3 0.5 0.3 0.5 0.5
0.4 0.3 0.5
0.3 0.3
0.0 0.2
0.1 0.1
Construction Heavy Industrial Other Other Other 0.1
0.0
&amp; Electrical Machinery Elect.Equip./ Industrial Industrial
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Engineering Equipment Prod. Goods Products
Construction &amp; Engineering Heavy Electrical Equipment Industrial Machinery
2003-08 Avg 2009-12 Avg 20013-18 Avg
Other Elect.Equip./ Prod. Other Industrial Goods Other Industrial Products

• Most of sub-sectors except “Heavy Electrical Equipment” has used this period to reduce D/E
• “Other Industrial Goods” has always remained asset light. “Industrial Machinery” comes 2nd
• “Construction & Engineering”, Other Industrial Products” ,“Other Electric Equipment” has relatively been debt heavy

15
 3 Sub-Sector Analysis: Gross Asset Turns
Avg. Gross Asset Turns 2003-08 vs 2009-12 vs Gross Asset Turns
2013-18
10.0
7.0
9.0
6.0 8.0 8.6
8.1
5.0 7.0
6.7 6.5
6.0 6.6 6.5 6.0
4.0
5.9 5.4 5.4 5.4
5.0 4.9 4.9 5.0
4.8
3.0 4.4 5.1 5.1
4.0 4.1 4.1 3.9
4.4 4.5 4.5
3.6
3.5 3.6 3.6 3.4 3.6
3.4 3.3 4.2 3.7 4.2 3.6 3.5 4.2 4.2
2.0 3.0 3.2
3.6 2.8 2.8 2.9 2.9
2.6 2.7 2.5 2.6 2.5 2.6
3.0 3.0 2.4 2.3 2.5 2.5
2.4 2.4
2.0 2.0 2.3 2.1
1.0 1.9
1.5 1.6
1.5 1.4 1.2
1.0
0.0
Construction Heavy Industrial Other Other Other 0.0
&amp; Electrical Machinery Elect.Equip./ Industrial Industrial 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Engineering Equipment Prod. Goods Products
Construction &amp; Engineering Heavy Electrical Equipment Industrial Machinery
2003-08 Avg 2009-12 Avg 20013-18 Avg
Other Elect.Equip./ Prod. Other Industrial Goods Other Industrial Products

• Industrial machinery and other industrial product have low gross asset turns
• Other electric equipment and other industrial goods have higher gross asset turn and has improved continuously
• Heavy electrical equipment is at its lowest gross asset turns

16
 3 Sub-Sector Analysis: Profitability %
PBIDTM
Avg. PBIDTM % 2003-08 vs 2009-12 vs 2013- 25
18
21
20 20 21 20
18 19
1817 17 17
16 16 17 16
1615 16 16 16
15 1515 15 15
16
1414 14 15 14
14 14 14 14
13 13 13 14 13 13
12 12 14 13 12
13 13 12
11 13 12 11 13 1112 11 11
10 12 10 10
10 10 11 10 11 10 10
11
10 10 10 10
8 9 9 9

6 5
4
2
0
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Construction Heavy Industrial Other Other Other
&amp; Electrical Machinery Elect.Equip./ Industrial Industrial Construction &amp; Engineering Heavy Electrical Equipment Industrial Machinery
Engineering Equipment Prod. Goods Products Other Elect.Equip./ Prod. Other Industrial Goods Other Industrial Products
Series1 Series2 Series3

• Margins have fallen for all sub-sectors

• Other industrial goods has highest margin and fall has been lower
• Other industrial products has highest margin fall

17
3 How far operations from Peak
0%
-70% -60% -50% -40% -30% -20% -10% 0%

GAR – Difference % between 2018 and ATH -5%

PBITDM – Difference % between 2018 and ATH

-10%

-15%
Construction &amp;
Engineering
-20%

-25%

Industrial Machinery -30%

Other Industrial Goods
Other Elect.Equip./ Prod.
Other Industrial Products -35%
Heavy Electrical Equipment
-40%

• All sub-sectors are down rom peak margins

• Construction & Engineering least away from all ATH on both metric
• Other Industrial products and heavy electric equipment are far from their ATH on both metric
• Other Industrial goods and other electric equipment are close to ATH GAR but still far away from ATH margins
• Even though C&E and IM remains underperformer, not much expected in operating leverage
18
 3 Sub-Sector Analysis: Growth Signs
3 Year Revenue CAGR Trend
50%

• Bottom was created 40%

41%
37%
33% 32%
30% 34%
between 2015 to 2017 20%
24% 30%
25%
18% 18% 17%
14% 19% 14%14% 15% 21% 15% 16%
across subsectors
14% 13%
10% 12%
10%
6% 7% 5% 6% 7% 6%
5% 4% 4% 5%
1% 2% 3%
0% 7% 1% 1% 1% 0% 0% 1%
• Heavy electric equipment
0% 0% -1%
-4% -2%
-3% 2%
2005 2006 2007 2008 2009 2010 2011 2012 2013
0% 2014 2015 2016 2017 2018
-10% -4% -4%
-6% -6%
had highest delta Construction &amp; Engineering Heavy Electrical Equipment Industrial Machinery
Other Elect.Equip./ Prod. Other Industrial Goods Other Industrial Products
• Other industrial goods
3 Year PBIDTM CAGR Trend
recovered its margin fall in 70%
60%
2012 itself and revenue fall 50%
45%
in 2015
40%
43% 42% 34%
30% 40% 32% 39% 31%
29% 34% 35%
26%
23%22%
• Other electric equipment 20% 28% 21%
14% 12%
18%20%
21%
13%
10% 11% 8% 9% 10%
7% 8% 5%
4%
and other electric goods 0% 3%
2005 2006
3%
2007 2008 2009
2%
-1%
2010-8% 2011
-2%
8% 2%
2012
-2% -2%
2013
1%
-4% -6%
2014-7%
0%
2015-6%
1%
2016 2017 1%
2018
1%

-10% -10% -2%

had good run in last 3 years

-15%
-20% -11%
-15%
-19%
-30%
-27%
-40%
19
 3 Sub-Sector Analysis: Summary
Sub-sector ROCE D/E GAR PBITDM 3 Year 3 Year GAR Delta PBITDM
Sales PBITDM Delta
CAGR CAGR

Construction & Poor financials, medium growth,

12 .9 3.2 15.7 10 10 -20% -17%
Engineering some scope for operating leverage

Heavy Electric Average financials, growth missing

16 .8 4.4 11.0 2 1 -51% -37%
Equipment but scope for operating leverage

Industrial Average financial, growth missing

14 .5 2.6 12.5 1 1 -21% -29% and some scope for margin
Machinery improvement
Other Electric Average financial, good growth and
Equipment 13 .8 5.4 10.5 16 31 -2% -32% some scope for margin
Products improvement

Superior financial, good growth and

Other Industrial
24 .4 5.8 16.0 18 12 -4% -30% some scope for margin
Goods improvement

Other Industrial Poor financials, medium growth but

11 .9 2.3 12.7 4 12 -65% -34%
Products high scope for operating leverage

Despite of image being a cyclic industry, there are few sub-sector/companies who
have maintained respectable ROE, ROCE and leverage with or without growth
20
What we find attractive in sector

6/23/2019 21
 3 Research Approach
Sub-Sector Level Analysis
Company Sector Sub-Sector Level
Sector Level
ROCE Mapping,
Aggregation of
Charts and
Filtering and Trend Analysis,
Key Ratios – by
Outlier Heatmaps –
Year, 4-5 Year
Company-Year Cycle features,
Gross Block Turns Removal
Average
Peaks, Bottom

Debt Equity
Sector Quantile Ranking
PBIDTM % Distribution and Sorting Companies on
Top Quantile companies into strength of
Company quantiles ratios in worst
Identification times (2013-18)
PBIDTM Delta
4-5 Year Avg Buckets: 2003-08, 2009-12, 2013-2018
Subsector Average 22
 4 Sub-Sector and Stock Attractiveness
Sub-Segment Company Name Poor financials, medium
Man InfraConstruction Ltd. growth, some scope for
Construction & Engineering operating leverage
Ratnamani Metals & Tubes Ltd.
GE Power India Ltd. Average financials, growth
Siemens Ltd. missing but scope for
Heavy Electrical Equipment
Triveni Turbine Ltd. operating leverage
VOLTAMP TRANSFORMERS LTD
Cummins India Ltd.
DHP INDIA LTD
GMM Pfaudler Ltd. Average financial,
Greaves Cotton Ltd. growth missing and
Industrial Machinery some scope for
HONDA SIEL POWER PRODUCTS LTD
margin improvement
Lakshmi Machine Works Ltd.
SCHAEFFLER INDIA LTD
• Other notable companies: Anup Engineering, STOVEC INDUSTRIES LTD
Average financials,
Solitaire machine, Kennametal, Esab Finolex Cables Ltd. growth missing but
Other Elect.Equip./ Prod. HONEYWELL AUTOMATION INDIA LTD scope for operating
Apar Industries Ltd. leverage
AIA Engineering Ltd.
• Average ROCE of 2013-18 must be > 10% Morganite Crucible (India) Ltd.
Superior financial,
good growth and
• Average Debt Equity of 2013-18 must be < 1 Other Industrial Goods ORIENT REFRACTORIES LTD some scope for
• Percentile within top 40% SKF INDIA LTD margin improvement
SNL BEARINGS LTD
Grindwell Norton Ltd. Poor financials,
Sub-sector financial nature Other Industrial Products medium growth but
Pritika Auto Industries Ltd.
high scope for
Good Average Poor
operating leverage 23
 4 Honeywell Automation
• 75% owned Indian subsidiary of Honeywell group with dividend in three segment Process Solutions,
Building Solutions and Global services.
• Positives:
o FY18 AR: Introduced Honeywell Connected Plant – an IIoT-based unified suite of software applications
o Sales to parent has increased significantly from 14% in CY05 to 37% in FY18.
o Increased share of exports has relatively insulated company from domestic industrial activity
• Negatives
o Very high valuation PE 61 times (June 18 2019, mean PE of 56 times over 22 years)
o Multiple group companies, High dependence on promoter
o Delay in Capex cycle

24
 4 Why Honeywell Trade at such PE?
40
IIP Growth Honeywell Sales Growth
35
30

• Despite operating in Cyclical industry, Honeywell has 25

20
shown consistent growth 15
10
5
• Consistent Higher ROE and ROIC, comparable to 0

FMCG companies

• Mean PE over Last 22 years is around 56 Times PE

25
Why after 30% up move, it may
still be a good buy?: A thought
experiment

6/23/2019 26
2 Esab India: What if..pendulum swings?

27
 2 Esab India: Scenario Analysis..

Esab Enterprise Value: 1542

FY 22 with 10% CARG top line growth FY 22 numbers with 15% CARG Growth
FY19 Actual numbers @ 12% EBIDTA
EBIDTA margin of 18% in FY 22 EBIDTA margin of 22% in FY 22
FY 19 FY 22 FY 22
Revenue 672 Revenue 894 Revenue 1022
EBIDTA 79 EBIDTA 161 EBIDTA 225
Other Income 16 Other Income 13 Other Income 15
Depreciation 11 Depreciation 13 Depreciation 15
Interest 0 Interest 0 Interest 0
PBT 84 PBT 161 PBT 225
PAT 58 PAT 113 PAT 158
RoIC 51% RoIC 72% RoIC 86%

28
2 Kennametal…How it is playing out already??

29
 TD Power – Can it turn around this time?

• Diversified from a largely steam based generator manufacturer to

hydro and gas based generators and traction motor manufacturer

• Penetrated into export markets – Reduced cyclicality associated with

domestic markets
• Added reputed clients including – Alstom (for traction motors –
received 750 crore order from it) Rolls Royce and Caterpillar
30
 TD Power – Cont…
• Taking various measures to reduce costs including winding down of
EPC business
• Continues to maintain healthy balance sheet with net cash of ~70
crore as on March 31, 2019 despite buy back of 30 crore in FY19
• Many competitors in the export markets shutting capacity
permanently – Large players like GE and Siemens have shut capacity
in Europe in both energy and turbine segment
• Traction motors supply to start from FY20 onwards. FY20 – 45 crore,
FY21 onwards – 100 crore per year
• Order inflow increasing with uptick in orders from steam generators
in domestic and export markets

31
TD Power – Projections

32
Apar Industries

• Order book at Rs 3,020 crore, up 2.5 x from

Rs 1,209 crore in FY18.

• Includes Rs 571 crore order book from

Railways for Copper Conductors (new
product) New order inflow of Rs 5,454 crore
in FY19, up 134% YoY. Includes Copper
conductor orders of Rs 1,147 crore from
Railways.

• Revenue up 53% YoY. Exports contributed

40% of revenue.

• EBITDA per MT, up 14% YoY to reach Rs

8,960.

33
 Apar Industries
• Revenue up 22% YoY. Exports contribution at 33%.
Volumes up 11% YoY to reach 4.3 lakh KL driven by both
exports and domestic markets.
• Strong demand from automotive industry reflected in
higher volumes of Automotive Oil (up 24% YoY to reach
41,228 KL), Industrial Oils (volumes up 24% YoY) and
Rubber process oils (volumes up 14% YoY).
• Automotive Oils and Industrial Oils contributed 21%
• Hamriyah plant’s capacity utilisation at 62%, volume EBITDA per KL post adj. declined 32% YoY to Rs 2,998 mainly impacted by
inflationary pressure on account of Base Oils, Rupee depreciation, packing materials and additive costs.
• Profitability restored in March 2019, better margins expected in FY20.

• Revenue up 51% YoY to reach Rs 1,684 crore

• Power cables revenue up 44% YoY, driven by focus on Solar,
EPC/ Utilities and Railways.
• Elastomeric & E-beam cables’ revenue up 35% YoY with good
demand from solar, railways and defence.
• Telecom cables/OFC revenue up 112% YoY with orders from
BBNL, BSNL and Reliance Jio in the year.
• EBITDA (post adj.*) up 78% YoY. EBITDA margin, post forex
adjustment, up at 11.3% versus 9.6% in FY18 34
Apar Industries
• 2300 Cr Market Cap, 400+ Cr cash profit at peak margin, currently 225 cr cash profit at multiyear low margin
• Raw material margin pressure
• Power cost went up and has been resolved (non-availability of grid power and relied in digital)
• Asset turns has scope to grow further
• FY 20 focus is more on profitability than growth. 3% is the number management told may be possible
• Rs 150 cr capex planned

35
Thank You

6/23/2019 36