Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Carysil Ltd (BOM:524091, Financial) reported a 42% year-on-year increase in total income, reaching INR 202 crores.
- The company successfully raised INR 125 crores through a QIP, which will be used to expand manufacturing capacity and support brand-building initiatives.
- Carysil Ltd (BOM:524091) has achieved significant growth in the US and UK markets, with increasing demand from existing customers.
- The company has appointed Mr. Rajesh Nair to lead overseas development, targeting new markets like Turkey, Australia, Vietnam, and Korea.
- Carysil Ltd (BOM:524091) is focusing on social media marketing campaigns to reach younger demographics and deepen market penetration.
Negative Points
- The company faces ongoing challenges due to high inflation, interest costs, and geopolitical issues.
- There has been a marginal impact on EBITDA margins due to increased export freight costs and container availability issues.
- The domestic market demand remains muted, with only a 16% growth year-on-year, which is below expectations.
- The company's debt remains high, with consolidated net debt standing at INR 272 crores as of June 30, 2024.
- Realization per unit for quartz sinks has seen a decline, attributed to product mix changes and higher freight costs.
Q & A Highlights
Q: Can you explain the volatility in gross margins? Is it due to changes in product mix?
A: The volatility is primarily due to a mix of product changes and higher freight costs, particularly related to the Red Sea crisis. However, our U.S. sales have remained consistent.
Q: Regarding the QIP, what will the INR 125 crores raised be used for?
A: The funds will be allocated to expanding manufacturing capacity, acquiring new molds, increasing sponsoring business, and setting up new assembly lines. This will support our growth and brand-building initiatives.
Q: What is the outlook on debt reduction for this year and next year?
A: The focus is on using the QIP funds for growth rather than debt reduction. Any debt reduction will come organically from our cash flow.
Q: How is the primary demand for quartz sinks looking now that inventory issues are behind us?
A: The demand for quartz sinks remains strong, and we are optimistic about future growth. We are currently at a run rate of INR 800 crores and expect this to improve further.
Q: Can you provide more details on the new contracts with Howdens UK and Reis Australia?
A: These are new contracts that will bring fresh revenue to the company. While we can't disclose exact numbers due to confidentiality, they are significant and will help build our planned capacity.
Q: What is the strategy for entering new markets like Turkey and Australia?
A: We are focusing on a B2C strategy, promoting our brand, and building our distribution network. This includes setting up our own infrastructure and teams in these regions.
Q: How do you see the margin outlook given the current challenges?
A: Despite the challenges, we are confident that new strategies and premium product lines will help improve our margins. We are also moving more towards FOB contracts to mitigate freight costs.
Q: What is the plan for the India business, and how do you see it growing?
A: We aim to grow the India business to INR 300 crores in the next five years. We are expanding our product range, distribution channels, and using QIP funds to support this growth.
Q: Are there any plans for inorganic growth in the near future?
A: While we are currently focusing on organic growth, we remain open to inorganic opportunities if they arise. We are being cautious and vigilant given the global challenges.
Q: Can you provide an update on the CapEx plans and their implementation?
A: Phase 1 of our CapEx plan is complete, and we have started production with a capacity of 50,000 faucets per year. Phase 2 is under implementation, and we will provide more details in the coming quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
