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Surya Roshni Ltd
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Ladies and gentlemen, good day, and welcome to Surya Roshni Limited Q1 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Raju Bista, Managing Director at Surya Roshni Limited. Thank you, and over to you.
Yes. Good evening. Thank you. One again, on behalf of Surya Roshni Limited, I extend a warm welcome to everyone for joining us today. On this call, we are joined by Mr. Tarun Baldua, ED and CEO of Steel Operations; Mr. Jitendra Agrawal, CEO of Lighting & Consumer Durables; our CFO and Company Secretary, Mr. Bharat Bhushan Singal; and SGA, our Investor Relations adviser. I hope everyone had an opportunity to go through the financial result, press release and even investor presentation, which has been uploaded on the stock exchange as well as on our company website. The company registered a marginal revenue growth of about 2% during the quarter due to lower steel prices and economic headwinds. For the quarter, EBITDA and PAT grew by 65% and 166%, respectively, on year-on-year basis. This was largely driven by value-added products once again and better volume offtake and lower raw material prices.
During the quarter, company focused on innovation of new edge product premiumization, strengthening its reach with dealers and distributors and expanding its market presence in the rural and semi-urban market through marketing and advertising campaigns. The company has been judicious, very careful in the budgeting and capital allocation, resulting in lean and very healthy balance sheet, we firmly believe that our growth will be sustainable with a comfortable working capital cycle and balance sheet position. Company also witnessed a healthy improvement in gross margin due to enhanced product mix. Over the past few years, company has placed its emphasis on reducing the debt during the quarter also, the debt reduced by INR 171 crores and the debt to equity ratio stood at 0.12x. With this, the company intends to become debt-free by next financial year.
Coming to Lighting & Consumer Durables business, company registered a revenue growth of 11.5%, which was driven by favorable business environment for both B2B and B2C segments. Also during the quarter, company executed various renowned projects, which led to a growth of 27% in Professional Luminaire Lighting with multiple upcoming government and private infrastructure CapEx. We are confident that our Professional Lighting division is poised to reap significant benefits from this cycle. This division has and will continue to build a strong order book in FY '24.
EBITDA for the quarter stood at INR 33 crores, registered a growth of about 52% and EBITDA margin, which is very important, stood at 8.8%. And earlier, same year-on-year it was about 6.48%. This improvement was supported by better product mix, backward integration, attributable to the PLI scheme and premiumization. With this, we expect our margins to improve further. With the anticipation of the upcoming festival season, the company has taken proactive steps to enhance its product offering in Consumer Durables segment by introducing a diverse area of items tailored to meet the preferences and need of consumers.
We strongly believe that these endeavors will not only augment to our market presence, but also contribute significantly to enhancing our brand equity. The CapEx under the PLI scheme is ongoing as per the plan, which has benefited the company in lowering the cost due to backward integration nature of the CapEx. The company also reduced its replacement cost now at 4.17%, reflecting a significant reduction from 4.57% last year on the same quarter. The company has been making sustainable investment to enhance its in-store excellence, in-store product display and in-house merchandising for customers. Concurrently, efforts has been directed towards strengthening interactions with the dealer, distribution and electrician through a series of campaigns. In FY '24 company plans to double the advertisement spend cost from the current level, which will in turn help to build brand visibility and increase the market share.
With this, the company plans to enhance the outreach program through various ATL and BTL campaigns. The company will also strengthen the semi-urban and urban distribution networks, which is now one of the largest in the industry. Now moving to the Steel Pipe and Strip business. Due to lower steel price throughout the quarter, the company top line remained almost flat. Nonetheless, we expect raw material costs to stabilize over the next couple of months. But the company increased its volume by 20% in the quarter with domestic business increases by 27% and export business increasing by 7% in volume and we expect the overall performance to accelerate towards H2 FY '24 as a lot of infrastructure projects, whether it is private or a public, will pick up execution pace post the monsoon season.
EBITDA was INR 83 crores during the quarter of steel business showing a 70% increase and EBITDA per tonne of INR 4,388 per tonne. Volume premium product and a diversified product mix drive this performance. Company has witnessed a steady order inflow in API pipe and other value-added products from oil and gas, CGD, water transportation sector as well as export market. With this, the order book is above INR 500 crores as of June 30, 2023. The Board of Director has approved a CapEx of about INR 45 crores, mostly for the cold rolling modification and a small amount of about INR 5 crores for the PVC business. While CapEx for large-dia pipe like Anjar and GP, CR cold pipe in Hindupur is ongoing. With this CapEx plan in coming years -- in the coming years, the company anticipates this segment to achieve revenue growth of about 10% to 12%.
Lastly, we remain confident about the opportunity that lie ahead of us. The company is focusing on geographical expansion, innovation, efficiency enhancement, infrastructure and human capital to deliver the best class solution to our customers. And lastly, there is a small announcement of splitting of existing equity share to enhance the liquidity in the capital market to widen the shareholder -- small shareholder base and to make the share more affordable to retail investors. The Board has approved subdivision of 1 equity share of face value of INR 10 each into 2 equity shares of face below of INR 5 each. So now I will like to request our CFO, Mr. B.B. Singal to share his thoughts.
Thank you respected MD, sir, and a very good evening to all participants on the call. The company's revenue reported a sustained growth momentum during this quarter. Revenue stood at INR 1,875 crores, a growth of 25 -- 22% year-on-year basis. The quarter EBITDA and PAT grew by 65% and 166%, respectively on a year-on-year basis to INR 116 crores and INR 59 crores, respectively. EBITDA margins improved by 235 basis points to 6.2%. In Lighting & Consumer Durables, for this quarter, the revenue stood at INR 374 crores, a growth of 11.5% on year-on-year basis. EBITDA and PBT stood at INR 33 crores and INR 26 crores, a growth of 52% and 88% Y-o-Y, respectively. This revenue growth can be attributed to the PLI scheme, backward integration and the increased demand for value-added products.
In the Steel Pipes and Strips segment during first half of financial year '24, the company's EBITDA and PBT grew by 70% and 237% to INR 83 crores and INR 55 crores, respectively. EBITDA per metric tonne stood at INR 4,388 compared to INR 3,103, a robust growth of 41% year-on-year basis. As of June 30, '23, the company has reduced debt by INR 171 crores and continues to remain long-term debt-free. Debt equity reduced to 0.12x as on June 30, '23. The company continued to maintain positive cash conversion cycle. The working capital days stood at 64 days during first quarter. Working capital days for Lighting & Consumer Durables stood at 63 days in first quarter, while Steel Pipes and Strips working capital days at 64 days in first quarter. As on June 30, '23, return on capital employed improved by 750 basis points from 8.2% to 15.8% and return on equity, ROE, improved by 680 basis points from 5.7% to 12.5%. With this I conclude the presentation, and we can now open the floor for further questions and answers.
[Operator Instructions] The first question comes from the line of [ Shriansh J. from SwanWestern ].
Sir, can you help me with the EBITDA per tonne for the year as well what is your guidance on that and the growth that we can expect in the Steel business?
Yes, thank you. [Foreign Language]
Okay. [Foreign Language] steel prices obviously have corrected. So would you attribute all of that steel to steel prices only [Foreign Language]?
[Foreign Language] Otherwise, it could have been INR 5,400 per tonne EBITDA. [Foreign Language]
[Foreign Language] we will expand our distribution brand, brand is strong distribution expansion [Foreign Language] to expand your distribution and to get that growth so according to you what will be the top 2, 3 things that you will have to do to gain market share or to grow your business in that segment?
[Foreign Language]
[Foreign Language] any plans for demerger sir? [Foreign Language]...
[Foreign Language]
[Operator Instructions] Next question comes from the line of Bhavesh Chauhan from IDBI Capital.
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
Okay. [Foreign Language] Sir, in terms of volume growth [Foreign Language] specially they grow north of 15%. [Foreign Language]?
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
[Foreign Language]
Sir, I appreciate. Sir, lastly [Foreign Language]?
[Foreign Language]
[Operator Instructions] Next question comes from the line of [ Rohit Mehra with SK Securities ].
So the first question is, what kind of growth we are -- are we seeing in the Lighting business for financial year '24?
[Foreign Language]
Okay. And what products have we launched for a [indiscernible] and what kind of growth do we expect in second half?
So see, launching of product is a regular process. In fact, lighting [Foreign Language] So it's a regular ongoing process. [Foreign Language]
[Operator Instructions] Next question comes from the line of [ Viraj Shah from Shah Investments ].
Sir, how is the steel export book performing? Are we receiving any orders?
Steel [Foreign Language]?
Steel export.
Export business is growing. In fact, we have added several new countries also. I will not name here publicly but Western side [Foreign Language] So it is growing. [Foreign Language].
Understood. Sir, for DFT plant, what kind of revenue are we expecting?
So DFT [Foreign Language].
Okay. Understood.
[Foreign Language]
Okay. Sir, overall capacity utilization [Foreign Language]?
If we consider for all the plants, Tarun Baldua here, then capacity utilization on an average is 72% for last -- this quarter.
Okay, okay, no worries.
Otherwise, on an average 78% to 80% capacity utilization [Foreign Language].
[Operator Instructions] Next question comes from the line of Chintan Patel with Abans Managers.
[Foreign Language]?
[Foreign Language]?
Yes, segment-wise.
[Foreign Language]
[Foreign Language]
[Foreign Language]
Okay. [Foreign Language]...
[Foreign Language]
These are other industries dragging the growth, sir?
Which are?
Other industry dragging the growth except oil and gas?
[Foreign Language] so trade is a regular business, export is a major chunk and the third one is API oil and gas sector. So mainly, we are into trade, export and API business and followed by cold rolling, which contributes about another 11%, 12%. So majorly, these are the 4 segments.
[Operator Instructions] Ladies and gentlemen, as there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to Mr. Bharat Bhushan Singal for closing remarks.
[Foreign Language] Thank you, everyone, for joining us today on this earning call. We appreciate your interest in Surya Roshni Limited. I sincerely once again, thank you to our MD and the CEOs for sparing their valuable time and addressing queries faced by participants who attended the call. For any further queries, you can contact SGA, our Investor Relations advisers.
Thank you. On behalf of Surya Roshni Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
Thank you very much.