Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Orient Bell Ltd (BOM:530365, Financial) achieved a 4% growth in volumes despite sluggish domestic demand and postponed exports.
- The company maintained its gross margins through cost-saving initiatives, including a smart fuel mix and rate negotiations.
- Net sales increased by 2.8% year-over-year, reaching INR147.2 crores.
- The GVT (Glazed Vitrified Tiles) portfolio saw significant growth, with a 54% increase over the previous year's Q1.
- The company's marketing efforts, including a TV campaign and investments in news channels, have driven brand awareness and contributed to a 50% increase in brand awareness.
Negative Points
- The quarter experienced top-line pressure due to sluggish domestic demand and postponed exports.
- Higher trade discounts were necessary to stay competitive, impacting the overall ASP (Average Selling Price).
- The company reported a PAT (Profit After Tax) loss due to higher marketing spends and increased depreciation and finance costs.
- Working capital requirements increased to support ongoing sales initiatives.
- The Dora GVT plant is not yet operating at expected utilization levels, indicating room for improvement.
Q & A Highlights
Q: Can you provide an update on the new subsidiary focused on trading and exports?
A: The subsidiary aims to cater to markets we previously couldn't reach. Despite a temporary dip in exports due to increased ocean freights, we expect this to be a short-term challenge. The subsidiary will help us trade more and leverage our new GVT plant at Dora and the Proton JV in Morbi.
Q: How have fuel costs impacted your operations this quarter?
A: Fuel costs have remained relatively flat sequentially. We've managed to keep costs down through efficient fuel mix strategies, including the use of alternative fuels in our spray dryer operations, resulting in a slight cost reduction.
Q: What is the current demand outlook for the industry?
A: The first quarter was slow due to elections and other factors, but demand is picking up. We expect Q2 to be better, supported by some capacity shutdowns in Morbi for maintenance and low demand.
Q: How are the marketing campaigns impacting your brand awareness and sales?
A: Our marketing campaigns have increased brand awareness by 50% and significantly boosted website traffic. This has helped us maintain ASPs and grow our GVT sales by 54% year-on-year.
Q: What is the status of the Proton facility and its impact on exports?
A: The Proton facility is primarily intended for exports, but we are still testing the waters. The additional capacity will help us cater to both domestic and export markets as needed.
Q: How are channel partners responding to current market conditions?
A: Channel partners were down-stocking due to price drops, but with recent gas price increases and upcoming shutdowns in Morbi, we expect them to start stocking up again in anticipation of improved demand.
Q: What are your plans for CapEx this year?
A: Currently, there are no new CapEx plans on the table. However, we are open to future investments in greenfield projects, M&A, or brownfield expansions if they align with our strategic objectives.
Q: How is the performance of your patented antibacterial tiles?
A: The antibacterial tiles are targeted at the institutional market, particularly healthcare. While it's a slow process, we are actively working on getting them specified in new projects.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
