Questions across 6 calls

Kushal Desai

Firm not listed in source transcripts

Apar Industries Limited

Apar Industries Limited CC-Nov25.pdf · 2025-10-30

My apologies. I don't know. The line seemed to have some trouble and dropped. So, as I was explaining that there are actually now the US tariff situation is a bit complicated to understand. So, let me spend a minute and explain. So, there is something called Section 232 in which strategic products are included from US economy perspective. And that includes three metals which is aluminum, copper and steel. So, the duty on these irrespective of the country from which the metal is be ing imported is attracting a duty of 50%. So, if a product lands there with a value of $100 and it has $40 of metal, then that $40 will attract a duty of 50%. And the remaining $60 will attract a duty based on the reciprocal rate of duty. So, what we were saying here is that India actually has, we have gained to some extent because it is normalized to the extent of the metal portion and the disadvantage is to the extent of the non- metal portion, which is anywhere between in the case of conductors is probably around 30% is a non-metal portion of the value of the goods. Whereas in the case of cables, it could be as high as 50% of the value of the goods. So, there is this disadvantage that still exists at the moment. But because the metal portion is equalized, the overall impact is a bit lower. So, does that answer your question, Umesh?

So, there are two parts to it. One is, I mentioned in the opening remarks that because metal prices have suddenly shot up, people have stopped ordering at the moment because their product will be more expensive. A lot of customers are in a wait and watch mode to see if the price is actually correct downward for the metals, in which case they would end up placing new orders. So, the order inflow has not been cancelled, but it's on hold in many instances. The second part of your question is, whether it's going to have an effect on gross margins? The answer to that is no, because we run a completely hedged book. So, we do not take on the risk of the metal. That risk is sitting with customers and on a back -to-back basis we end up taking the positions on the metal.

Apar Industries Limited CC-Jun24.pdf · 2024-07-30

But Maulik, on a ha lf year basis, you're looking at almost INR5,000 crores if you had to, there was more finalization that took place in the Q4 and then because of the elections and the state electricity boards are actually been running a little bit behind us, it was mentioned in the opening remarks. Our sense is that the domestic market otherwise is fairly strong.

So, it's conductor -- aluminum-based products are included in that, but the total range of products is going into many categories, including a whole lot of gears it goes into your photovoltaic cells, etcetera, etcetera. And the increases have been between 20- 25 percentage points.

Apar Industries Limited CC-Mar24.pdf · 2024-05-14

So in terms of capacity expansion, Mohit, we are continuing as per our plan during last year and through various interactions we had through the whole QIP process, all our documents out there. We were talking about doing INR350 crores to INR400 crores capex year-on-year. So that program still remains pretty much on track. And we are investing on the Conductors, side on our rod making alloying capability, metal treatment stranding as well as on the premium product side, expanding our CTC, that's the corporate transposed conductors going to transform us. So we're expanding that capacity as well as the bus bars and rods. So our expansion is going on. We fundamentally see that the long-term growth drivers remain intact. And some of these projects are getting delayed because the expected rate reductions haven't taken place announced by the Fed. There has been expectations that there would have been 3 reductions now, it's down to possibly one or none. So there is a little bit of a wait and watch, given that many of these projects are leveraged. But otherwise, the growth driver still seems to us to be pretty much intact. So we are going ahead with these capacity expansions. Also, we need to keep in mind that getting best-of- class equipment today has significantly longer lead times compared to what it was 2 or 3 years ago.

So on the Conductor side, there are basically -- if you look at transmission lines, there are 2 opportunities. One is new transmission lines that are being built to evacuate power from the new power-generating location. So for example, there's there 3 sets of 10 gigawatts each solar power coming up. And you'll have transmission lines evacuating power from there. So one growth is coming from the addition of new transmission lines. The second area of growth for us is coming through the reconductoring of existing lines. So for example, if you see there has been a -- power has been growing at almost 8% of your CAGR. And we are expecting that in the month of June, the government has announced that India could have the highest shortfall of power in its history because consumption is increasing. So as a consequence, reconductoring projects will also come up. They have been happening, but they will also continue. The third thing is that in the mix that we have of our Conductor division, we also do the copper transposed conductors for transformers. And you may go through the earlier earnings calls that we have had, we've explained that when you're building a transmission line today, the investment that's happening in the substation has almost gone up to 50% of the total transmission line, which used to be about 30%, and off that the transformer is a very major portion. So transformer demand has been growing, and we supply 2 products into the transformer. One is the copper transposed conductors, which come from the Conductor division, which also has been growing. And in fact, in the INR 350 crores capex, we are putting in a substantial capex for growing the copper transposed conductors. And of course, the other area is transformer oil, which, as you heard in my opening remarks, that after a long time, we are seeing strong double-digit growth over like 12%, 15% year-on-year, and we expect that growth to continue in this year. On the distribution side, which is primarily the Cables, you have drivers coming from the addition of infrastructure in the Indian Railway, from Defence, from the renewable energy sources, which is both solar and wind, where APAR has a significant presence. And then there is also the government schemes, which are there for strengthening of the last mile, which is the RDSS, etcetera, where the cables are going in along with the metering solutions to moving to digital meters and reducing losses and theft. So these are like primarily the segments, where we would see the growth coming.

Apar Industries Limited CC-Dec23.pdf · 2024-01-30

There is a statistic that sort of indicates what the trend of this is going to be that if you see quarter-on-quarter the delta and power consumption that the growth in power consumption in India has been increasing. And in the last quarter, it touched almost 9-point-some percent over the previous year. So as this trend takes place, the opportunities for reconducting with HTLS line is going to continuously increase. A number of tenders have been lined up, but you will have a small period due to maybe the Indian election from where awarding of some of these tenders may get delayed by a couple of months, but the trend is very positive.

So, Mohit, the Indian market remains very strong, as you mentioned. And that's how when there has been a slowdown in the US market was completely picked up by demand in the domestic market. What is interesting for us is that the transition has happened from using aluminium conductors, which are still reinforced, which is at the bottom of the value chain. It has moved to the next level, which is the AL- 59 alloy-based conductors. So that has clearly made the Indian market more interesting for manufacturers like us because there is a higher technology involved in providing those products, the competitive intensity is lower. And we see this trend -- it's already become now the default product. So, in the domestic market, you'll see less and less of the ACSR and AL-59 becoming standard. So, in the next few years, because if you have such a strong growth on the renewable energy front, the transmission line requirements are also going to be very strong. And as we said in the previous calls, because AL-59 has become the standard, and it's a win-win situation both for manufacturers like us as well as for the end owners of the line. The competitive intensity has reduced because many players who have not invested in alloying capability and technology where today are not relevant and they either shut down their businesses or reduced the amount of business that they do in conductors, especially on the transformation side.

Apar Industries Limited CC-Sep23.pdf · 2023-10-26

The inquiries Mohit is quite strong both in the transmission side as well as from the cable side, there are a number of corridors which have been announ ced, transmission corridors and in addition to that, given the general level of activity that is h appening in electrification, t he cable requirements also have been quite strong.

Freight rate correction has already happened and we spoke about it quite extensively in the last board call that the correction of freight rate has started from the beginning of our financial year from about March, April onwards so fundamentally after that freight rates have been in a certain rang e, s o freight rate is factored in today as we price the product in fact in many cases customers have shifted to an FO B purchase because they were seeing that freight rates were kind of correcting and falling. So there are customers who have actually shifted from DDP to an FOB business so they are more control on the freight. So what we are looking at today is basically just quoting freight on a spot basis.

Apar Industries Limited CC-Sep24.pdf ·

The percentage would be a similar sort of percentage because the base in FY '24 was lower. But then as you move into FY '26, etcetera, you will have a much higher base, so the percentage will fall off. Ramesh Iyer: And also, we look at more profitability -- so we'll have to see how the export market pans out in the second half of the year. And wherever the more returns are there, that's where we'll focus our volumes. Moderator: Next question is from the line of Naman Parmar from Niveshaay Investments. Naman Parmar: Yes. So firstly, I wanted to understand any new product on the pipeline on the transformer oil or oil division like data center air cooling, like that? Kushal Desai: So we have developed a bunch of products and tested it in the labs and within our facilities for data center cooling, but we haven't yet been able to get a site to be able to do field trial and field testing. And it's not just the oil, but it's the full system. That means there are many levels which require to be aligned in order to do that. However, on the transformer oil side, we have developed and launched a synthetic transformer oil. And so that's a very high-performance transformer oil, better biodegradability, a very high flash point without sacrificing the cooling characteristics and the insulation characteristics of the oil as well as the life of the oil. It's significantly more expensive. It's almost 3.5 to 4x the price of a mineral oil. But it will find its way into special needs and special applications. Naman Parmar: So it will find its application majorly in renewable or in both the transformers?

In renewables, the Indian railways are looking at it as they build -- they use traction transformers which requires higher insulation characteristics as well as a higher operating temperature. Plus in renewables, it will find its way into offshore either wind or solar on water, where in case there is a spillage, you need better biodegradability. So we've developed the product. We've got it approved at a few places and have started now commercially bidding on business. Naman Parmar: Okay. And secondly, on the margin side, you have correctly said that the export has been decreasing over domestic in all the segments, so it has impacted your margin. But also on the raw material side, if you see aluminum, copper and all that prices may have increased in the quarter 2, so which has also impacted your margin. So what do you expect in the coming quarters, it will be sustainably -- you will be able to stabilize the margin? Or how much your contract used to have a price escalation clause? Ramesh Iyer Aluminum and copper does not affect us much in the cable business because we run a 100% hedge book. We do MTO. So the moment we get an order, we do a back-to-back hedging. So to the extent of aluminum and copper prices going up and down, we have a hedged position. So that does not affect materially our P&L. The margins are down, yes. But as explained, export volumes are down. And exports have higher margins than the domestic margins. So as domestic mix is higher in the first half of the year, so we saw EBITDA margin shrinking a bit. But as you see export volume again increasing sequentially and hopefully, in the second half of the year, the export volumes will be better than the first half, we can see margins going up again to what it used to be earlier.