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00:00Welcome back, you are watching the small and mid cap show and in this segment we are also
00:12joined by Mr. Puneet Javeri who tracks the company very closely that is MM forgings and
00:18of course, we joined by Mr. Vidya Shankar Krishnan who is the vice chairman and managing
00:22director at MM forgings. Welcome to the show Mr. Krishnan, you know my first question to
00:27you is that you know for this quarter revenue was up roughly 3% net profit was also up 3%.
00:32You know I want to understand from your perspective your sense of how the quarter has gone by and
00:37how you are seeing FY25 shaping up.
00:41Yeah, hi, morning. We see this quarter passed rather you know somewhat range bound and as
00:52you are aware both revenue and profits have been at about 3% up. EBITDA has improved from
00:5917.4% to 19.4, 17.1 to 19.4 showing a very healthy improvement. We are on track towards
01:11reaching close to 20% EBITDA margins by end of this fiscal for sure.
01:17Well Mr. Krishnan, good morning sir and Puneet you are this side. Thank you so much for joining
01:23us today. I just wanted to start with you know continuing in this particular quarter
01:28you mentioned about DVS industry which is one of your key subsidiaries. I just wanted to talk
01:32about you know the business opportunity for this particular subsidiary. You have seen a good growth
01:38in this particular quarter for sales of about 15 odd percent. How are you seeing this particular
01:43opportunity for DVS specifically and can you tell us more about the capacity currently and
01:48the segments that it caters to? Okay, DVS is serving the NCV and tractor markets and as you
01:59are aware tractor markets are doing pretty strong though in Q1 it was a little bit duller but Q1 of
02:04this year for us was a lot better than Q1 of the previous year. So DVS did a little bit better in
02:11this year. So we expect DVS has a capacity of around 25,000 cranks and is currently clocking
02:18around 18 to 20,000 cranks a month as against a capacity of 25 to 28 depending upon the model mix.
02:27We are expecting that we will hit 25-28,000 cranks in the next nine months. So would that need any
02:36kind of capacity expansion going forward because you're around 20,000 cranks already and for
02:41this particular year can you quantify any kind of number that you're targeting for sales growth
02:45for DVS specifically because we've seen while tractors have done well CVs have you know pushed
02:50back the recovery in the second half of FY25 only. So for tractors specifically are you seeing a
02:55better Q2 because monsoons have also been better and any kind of sales quantification that you
03:00could give us for DVS any kind of target or range that you might have? Certainly, tractors have done
03:06very well in are doing reasonably well in Q2. Very strong. So July, August and September are
03:13expected to be strong months for tractors. DVS should do about 15% plus this year compared to
03:21the previous year. Right. Mr. Krishan, you know you've mentioned in one of your concourse that
03:27you're working on cost compression strategies to improve margins. Your margins have improved
03:31this quarter and moved to that 19% mark. I want to understand that whether this 19% mark is
03:37you know sustainable or do you see an upside from here? We see this around 20% mark to be
03:46sustainable. 19.4% should grow to around 20 close to 20 or about 20 and should be sustainable at
03:54those levels for sure. Okay and you know you're also targeting a revenue of roughly 3,000 to
04:005,000 crores is what you've guided. I want to understand that you know this isn't coming here
04:05so how quickly do you think will you get there that 5,000 crore mark? 5,000 is a little bit of
04:13a long way long shot but certainly we have a first mark of 2,500 crores in our site and that would
04:22depend upon markets largely. We have most of the products developed and final round of products
04:28being launched right now so depending upon volume growth in markets we should see first step 2,000
04:36then 2,200 then 2,500 crores all within the next two to three years. Well Mr. Krishnan I just wanted
04:43to take some focus on the heavy forging division now. You had mentioned that you know you've added
04:49in the last quarter you mentioned that added about 8,000 tonne mechanical press. In this particular
04:54quarter we've seen an update that you've added another 16,500 tonne forging press. So I just
05:00wanted to understand the focus of the company on this particular division and what's the current
05:05contribution that you're seeing of revenue to from this particular heavy forging divisions and
05:10is this more from an export opportunity for specifically for the heavy forging division?
05:16I also wanted to highlight this when it came to when I had the time. So we are focusing quite a
05:23bit on the heavy forging division as has been in the last few years and continuation of the same
05:31theme we have procured a 16,500 tonne press the largest of its kind in the world and obviously
05:37in India as well and commercial production will start in the next 12 to 15 months sometime in
05:44H1 of FY26. This press will enable us to produce forgings in the region of 150 to
05:56300 at least 150 to 250 kilograms, front axle beams, crank shafts and some railway products.
06:06This will launch us into the biggest league of forgings that are produced on
06:12mechanical presses globally. Mr. Krishnan, I also want to understand that your exports
06:18have shown growth in the past few quarters and right now it's 38 percent of your total revenue.
06:23So going forward by the end of FY25, what is the kind of mix that you're aiming at from the 38
06:30percent mark? Will it move upwards and are exports more margin accretive for you?
06:36First, we would expect exports to be range bound because global markets are a bit sluggish as we
06:46go on and FY25 rest of calendar 25, 24 is expected to be a sluggish year globally. However, with new
06:57products coming in etc. we should hold our ground. So exports in the range of 38 to 40 percent
07:04should be held. And yes, exports are a little bit more margin accretive than domestic.
07:14Just one final question, Mr. Krishnan. Last quarter when we spoke you didn't mention
07:20the acquisition of those two companies and handling the crank shaft machining facility
07:25that has been progressed and there was some slow progress in the last quarter. I just wanted to
07:30understand any kind of update on that and specifically on the export market you did
07:34mention a slowish calendar year 24. For 2025 is there something specific that you're looking at
07:40that might bring the growth because we've seen the North American truck orders on a month on
07:47month for the last couple of months come down now although they are looking at two years from
07:52whatever orders we get now. How are you seeing these two things going on? So specifically on
07:56the acquired companies and specifically on the export market and what do you think of the North
08:01American truck orders currently? DBS we already spoke about. The other company that we significantly
08:09acquired was Kafoma and Kafoma has been doing reasonably well with volumes from Kafoma slated
08:17to go from around 4,000 cranks a month comfortably to around 7,000 cranks a month over the next
08:25few quarters and the point is that Kafoma has been merged into MM Forgings.
08:33So that merger has been completed as of 1st of April and that was done on by about end of May
08:40and it's effective from 1st of April. So all the numbers that we're reporting includes Kafoma
08:45as part of MM Forgings. The crank shaft acquisitions are expected to do well.
08:51Going forward into the global markets, we would say that our customers are telling us that
08:59calendar year 25 is expected to be strong for the CV market because they have an EPA deadline coming
09:05up by end of 2025. So 2025 is expected to be a strong year for global MM and CV market. Mr.
09:14Krishan, well thank you so much for giving us those insights on MM Forging and thank you so much
09:20for taking our time and speaking with us at NDTV Profit.