Kansai Nerolac Q4FY21 Conference Call Transcripts | Yadnya Investment Academy

Published on 24 May 2021
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Management Participants:

Mr. harishchandra meghraj bharuka – vice chairman and managing director - kansai nerolac paints limited

Mr. anuj jain – executive director - kansai nerolac paints limited

Mr. prashant pai – director (finance) - kansai nerolac paints limited

Mr. jason gonsalves – director – (corporate planning, it & materials) - kansai nerolac paints limited

KNPL Digital stakeholder:

Focused on the digital connect; lot of applications were launched
SAATHI app - dealer can place the order directly on their mobile to the company. salesmen can make an order without visiting. They can also view their statement and whatever information they need.
PRAGATI app - application for influencer through which they can connect all painter through a digital mode.
Nerolac is now fully digitalized as far as billing is concerned or billing from vendors are concerned.
Mobile enabled SAP app for employees.

Subsidiaries & Key outcomes (2020-21):

Domestic

Perma:

Issue - Lockdowns impacted projects in Q1

Outcome -Topline growth 4.2%, EBITDA % increased to 13.3 from 9.7

Nerofix:

Issue - JV operations started in Dec 19 Lockdowns had more impact on Retail segment.

Outcome - EBITDA% at 3.1, Expansion in Distribution

Marpol:

Issue - Demand erosion in Auto segment

Outcome - Topline Growth % at -1.9, EBITDA % at 9.8

International

Nepal:

Issue - Demand Erosion in Q1 & Q2, Liquidity issues

Outcome -Topline Growth % at – 20; EBITDA % increased to 18 from 16.1

Bangladesh:

Issue - Severe Impact of Covid in Q1, High Interest Costs

Outcome - Sales bounced back from Q2; Topline Growth % at 15; EBITDA % improved to 6.1 from 2.9, Equity infusion in FY 20-21

Sri-Lanka:

Issue - Working Capital Issues, H1 also affected by Lockdowns, Distribution Issues

Outcome - Equity Infusion in FY 20-21; Topline growth % at 20; Losses reduced, Shift to Distributor Model

Standalone financial result Q4FY21:

Net revenue grew from Rs 9880 crores in Q4FY20 to Rs 13305 crores in Q4FY21 which is approximately 35%.
PBDIT grew from Rs 1278 crores in Q4FY20 to Rs 2034 crores in Q4FY21 which is approximately 59%.
PAT grew from Rs 715 crores in Q4FY20 to Rs 1279 crores in Q4FY21 which is approximately by 79%.
EBITDA growth is 59% and net profit has grown by 79%.
However, for the entire year, the net revenue is still negative by 5%. It was Rs 49432 crores in FY20 to Rs 46900 crores in FY21.
PBDIT grew from Rs 7816 crores in FY20 to Rs 8331 crores in FY21 which is approximately 6.6%.
PAT decreased slightly from Rs 5354 crores in FY20 to Rs 5311 crores in FY21 which is approximately by -0.8%.
EBITDA is positive by 6.6%. PAT is marginally positive if we exclude the write down

Consolidated financial result Q4FY21:

EBITDA grew from Rs 127 crores in Q4FY20 to Rs 205 crores in Q4FY21 which is approximately 61%.
net profit grew from Rs 65 crores in Q4FY20 to Rs 124 crores in Q4FY21 which is approximately by 91%.
Net revenue grew from Rs 10801 crores in Q4FY20 to Rs 14596 crores in Q4FY21 which is approximately 35%.
PBDIT grew from Rs 1342 crores in Q4FY20 to Rs 2135 crores in Q4FY21 which is approximately 59%.
However, for the entire year, the net revenue is still negative by 4%. It was Rs 52800 crores in FY20 to Rs 50743 crores in FY21.
PAT grew from Rs 654 crores in Q4FY20 to Rs 1236 crores in Q4FY21 which is approximately by 89%.
PBDIT grew from Rs 8045 crores in FY20 to Rs 8633 crores in FY21 which is approximately 7.3%.
PAT grew from Rs 5158 crores in FY20 to Rs 5257 crores in FY21 which is approximately by 1.9%.
Tax has improved by 89%, which indicates that performance of subsidiaries has done well.

Operating and Free Cashflow:

Both operating cash flow as well as free cash flow we have improved.
Operating cash flow has gone up by Rs.400 Crores and free cash flow has improved by Rs.542 Crores.
The company’s cash position excluding the investment in the subsidiaries is Rs.740 Crores

Dividend:

The Board has decided to increase the normal dividend, which is about 33% pay-out of 315 against 315 of last year 325 and 200% as we can say centenary dividend, which has been declared as a special dividend. With this total pay-out is working out to be about 47% to 48%.

Business focus:

Decorative: business focus is on improving the market share in decorative segment. Planning to gain MS through new Distribution Models.
Automotive: In automotive, the company been able to gain market share. The company will continue to focus on technology and service to improve the market share and service levers. Focus on Price Increases to maintain profitability.
Performance Coating: Improve Profitability through Focus on Niche Segments.
Powders: In powder coating segment, the company has been able to expand into few new areas like rebar coating and pipe coating. They are planning to Increase MS and profitability through premium & niche segments.
ARF: Increase MS in Retail Expansion. focus will be on improving the market share.

Strategic Concentrated Investment:

The company is focusing on R&D, Amritsar factory has totally gone digital, The company is focusing on creating differentiated products, implementing new distribution models, Exploring new areas like construction chemicals, adhesives premium Wood Finishes.

The company is exploring new opportunities (New Segments, New Geographies, Technology, Inorganic Opportunities).

Expansion of partnerships:

KNP and Kansai Japan: