GRAVITA — earnings call

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Prepared remarks

Moderator · Conference Operator

MR. SABRI HAZARIKA – EMKAY GLOBAL FINANCIAL

SERVICE. · Management

d~GRAVITA ~~ INDIA LIMITED termined to lead Gravita India Limited May 03, 2023

Moderator · Conference Operator

Ladies and gentlemen, good day, and welcome to Gravita India Limited Q4 and FY'23 Earnings Conference Call.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.

Should you need assistance during the conference call, please signal an operator by pressing ‘*’ then ‘0’ on your touchtone phone.

Please note that this conference is being recorded.

I now hand the conference over to Mr. Sabri Hazarika from Emkay Global Financial Service.

Thank you, and over to you, sir.

Sabri Hazarika

Good afternoon, ladies and gentlemen, and on behalf of Emkay Global Financial Services, I

Keshav: · So, post the CSG loan facility where do you see our consol cost of debt going forward?

And the Rs.

600 crore planned CAPEX, how much of it would be India centric and how much

So, post the CSG loan facility where do you see our consol cost of debt going forward?

That’s on a consol basis, right?

Moderator · Conference Operator

Thank you.

The next question is from the line of Vikash Vijayvargiya from Acorntree.

Please go ahead.

Vikash Vijayvargiya

One thing is there in the last Q4 presentation in FY'22 whatever the Vision Statement is there, it is the same there and you mentioned this is a Vision Statement of 2026.

But again, in this Q4 you mentioned the same line the Vision 2027.

Any specific reason is that repeated and the year has changed.

Moderator · Conference Operator

Thank you.

The next question is from the line of Dhaval Shah from Girik Capital.

Please go ahead. ..d~GRAVITA ~~ INDIA LIMITED termined to lead Gravita India Limited May 03, 2023

Dhaval Shah

Just two broad questions, so first is, taking the lead of about the current profitability and the total capacity which you are guiding by FY'26, is it safe to assume that -- utilization we will do around Rs.

900 crore of EBITDA, at the company level?

Moderator · Conference Operator

Thank you.

The next question is from the line of Nikhil Rungta from Nippon India Mutual Fund.

Please go ahead.

Nikhil Rungta

Couple of questions from my side, to start with on the debt side itself, if you can just, I mean you highlighted that you might come to the market for raising either equity or debt as well.

So, if I have to put in this way, what’s the maximum leverage that you will be comfortable with, that would be helpful?

Moderator · Conference Operator

Thank you.

The next question is from the line of John Shepherd from Batteries International.

Please go ahead.

John Shepherd

About the loan that’s been announced today --.

I appreciate you said it will help reduce overall borrowing cost and so on, but will it also be used to support the project in Oman with the Gravita Netherland which you are associated with the recycling project there?

Moderator · Conference Operator

Thank you.

The next question is from the line of Vaibhav from Enam Holdings.

Please go ahead.

Vaibhav

I think two questions, one if you could please give us some more color on this new CAPEX and the new verticals on the Rs.

200 crore that you all are spending just, I know you guys obviously are very clear on capital allocation and obviously you must be seeing some strong opportunity there.

So, if you could just give us some color on what this is and how you are all thinking of, what you are seeing?

Moderator · Conference Operator

Thank you.

The next question is from the line of Abhijit Sinha from Pi Square Investments.

Please go ahead. ..d~GRAVITA ~~ INDIA LIMITED termined to lead Gravita India Limited May 03, 2023

Abhijit Sinha

Could you just take us through how you plan to add these different verticals that we have in mind in the next three to four years in our Vision for '27.

And what will be the different yields between these segments?

Moderator · Conference Operator

Thank you.

The next question is from the line of Khush Nahar from Electrum PMS.

Please go ahead.

Khush Nahar

So, I had two questions, one was how is the progress on the shift that is going on from the unorganized to organized segment?

And second is, any particular reason for a volume growth, year-on-year to be 12% which seems a bit lower than our other quarters?

And next expected volume growth in the next two to three years?

Moderator · Conference Operator

Thank you.

The next question is from the line of Abhijeet Bora from Sharekhan by BNP Paribas.

Please go ahead.

Abhijeet Bora

In the segmental things there is item called turnkey projects, the earnings in that segment has a higher growth in this quarter around Rs.

9.6 crore, historically --?

Moderator · Conference Operator

Thank you.

The next question is from the line of Chirag from RatnaTraya Capital Partners.

Please go ahead. ..d~GRAVITA ~~ INDIA LIMITED termined to lead Gravita India Limited May 03, 2023

Chirag

Just I wanted to just clarify the volume growth again a little bit, this quarter has been a little slower than average.

Are there any one-off for any particular reasons here.

And also on an ongoing basis, I understand that pricing can change the profitability, the headline number is --; but can the volume growth also be a lot more volatile and if that is the case, why would that be?

Moderator · Conference Operator

Thank you.

The next question is from the line of Gunjan Kabra from Niveshaay.

Please go ahead.

Gunjan Kabra

I wanted to understand how much capacity are we expecting in the rubber recycling, how much capacity are we planning to install by FY'26 also?

And what kind of EBITDA per ton, do we see in this segment, in rubber recycling.

And also, in the new segments that we are targeting which is steel, papers, and lithium is of course earning was high, but steel and paper also, how much are we targeting EBITDA per ton?

Moderator · Conference Operator

Thank you.

The next question is from the line of Rohit from Vijit Global.

Please go ahead.

Rohit

My question was major overseas operations are from African countries like Ghana, Senegal, Mozambique, and Tanzania.

Are there any specific reasons to it, and what are your plans for expansion in these locations?

Moderator · Conference Operator

Thank you.

The next question is from the line of Sabri Hazarika from Emkay Global.

Please go ahead.

Sabri Hazarika

Just wanted to know that this new debt facility, you have already drawn it or it is right now it’s a facility now?

Moderator · Conference Operator

Thank you very much.

On behalf of Gravita India Limited, that concludes this conference.

Thank you for joining us, you may now disconnect your lines.

Thank you.

Questions and answers

Moderator · Conference Operator

Thank you very much.

We will now begin the question-and-answer session.

The first question is from the line of Keshav from RakSan Investors.

Please go ahead.

Keshav: · So, post the CSG loan facility where do you see our consol cost of debt going forward?

Our planned capacity expansion for the next two years are pretty substantial.

So, do you think we should grow at a much higher clip through FY'25 so FY'24 and FY'25, two years?