Beardsell Sep-17

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Questions and Answers

What is one primary reason for Beardsell's success in business operations?

  • Use of traditional construction methods
  • Focus on international markets
  • Commitment to timely delivery (correct)
  • Innovative marketing strategies

What significant model has Beardsell launched to enhance its business?

  • Vertical integration model
  • Franchisee/authorized licensee model for Quikbuild (correct)
  • Online delivery service model
  • Direct sales approach

Which technology emphasis is being encouraged by the PM for constructing affordable homes?

  • 3D technology (correct)
  • Modular design
  • Traditional masonry
  • Prefab technology

Why are entry barriers considered high in the market related to Beardsell's business?

<p>High capital investment requirements (C)</p> Signup and view all the answers

What is a strategic focus area for Beardsell concerning clients and projects?

<p>Clients with assured payment terms and good margins (A)</p> Signup and view all the answers

What was the major factor causing delays in client orders during Q1 FY18?

<p>Implementation of GST (C)</p> Signup and view all the answers

Which project indicates Beardsell Limited's entry into new geographical regions?

<p>IIT Jammu project for partition walls (D)</p> Signup and view all the answers

What is the approved order pipeline amount for Quikbuild?

<p>Rs. 100 million (B)</p> Signup and view all the answers

What program was launched to enhance the implementation of Quikbuild?

<p>Authorized contractor/licensee program (B)</p> Signup and view all the answers

What significant action was taken regarding land and building at MIDC, Patalganga?

<p>An MOU was signed for its sale (D)</p> Signup and view all the answers

What is the main benefit of Quikbuild's design in terms of project timelines?

<p>It reduces timelines of projects compared to traditional RCC structures. (A)</p> Signup and view all the answers

Which application is suitable for Quikbuild's sandwich-panel based cold storage?

<p>Marine, fruits, and pharmaceutical items (A)</p> Signup and view all the answers

What is a key feature of the affordable housing provided by Quikbuild?

<p>Earthquake resistance. (D)</p> Signup and view all the answers

Which type of housing projects can benefit from Quikbuild's modular housing solutions?

<p>Worker and student housing. (A)</p> Signup and view all the answers

What is a notable quality of the Quikbuild panel in construction projects?

<p>It brings uniformly high quality to construction projects of any size. (D)</p> Signup and view all the answers

How does Quikbuild facilitate energy efficiency in their site offices?

<p>By allowing for dismantling and re-use in different locations. (C)</p> Signup and view all the answers

What amount in enquiries is Quikbuild currently negotiating?

<p>Rs 1,000mn. (D)</p> Signup and view all the answers

Which characteristic helps Quikbuild structures to be suitable for remote area construction?

<p>Lightweight and modular design. (C)</p> Signup and view all the answers

When is the steel fire-rated/clean room door manufacturing expected to start?

<p>Q3 FY18 (D)</p> Signup and view all the answers

What is the expected yield on the commercial paper issuance?

<p>7% (A)</p> Signup and view all the answers

What impact will GST have on the prefab industry according to the content?

<p>It is expected to benefit established players. (D)</p> Signup and view all the answers

How much is the commercial paper proposed to be issued for?

<p>Rs. 10 cr (B)</p> Signup and view all the answers

When is the Supa subsidiary unit's profitability expected to equal all other EPS units combined?

<p>By Q1 FY19 (D)</p> Signup and view all the answers

What technology is the PM reviewing for house construction?

<p>3D construction technology (A)</p> Signup and view all the answers

What was a notable challenge faced in the first five months of the fiscal year?

<p>Delay in order placement (A)</p> Signup and view all the answers

What is the expected increase in unit volumes for the Supa subsidiary by Q4 FY18?

<p>50% (B)</p> Signup and view all the answers

What was the impact on revenue for Q1 FY18 compared to Q1 FY17?

<p>Decreased by 14% (C)</p> Signup and view all the answers

What is one primary benefit mentioned for housing projects?

<p>Reduced labor cost (A)</p> Signup and view all the answers

What is one significant positive impact of the GST mentioned by Bharat Anumolu?

<p>Shift to the organised sector (A)</p> Signup and view all the answers

How much did the EBITDA decrease from Q1 FY17 to Q1 FY18?

<p>By 89% (A)</p> Signup and view all the answers

What does the Quikbuild system reduce in construction?

<p>Construction complexity (D)</p> Signup and view all the answers

What was the primary reason for the decline in topline performance in Q1 FY18?

<p>Postponement of orders by customers (D)</p> Signup and view all the answers

Which factors are noted as increasing revenues in the Packaging & Molded Products Business?

<p>Strong customer relationships and new clients (A)</p> Signup and view all the answers

What is a significant growth driver for the Packaging & Molded Products Business?

<p>Increased EPS requirements by institutional customers (C)</p> Signup and view all the answers

What is the status of project cancellations as noted in the prefabricated buildings performance?

<p>No project cancellations occurred (D)</p> Signup and view all the answers

What was the reported profit after tax (PAT) change from Q1 FY17 to Q1 FY18?

<p>Decreased by 144% (B)</p> Signup and view all the answers

Which innovation is Beardsell known for in the packaging sector?

<p>Cost-effective and shock-resistant EPS packaging (B)</p> Signup and view all the answers

Which business segment did Bharat Anumolu express optimism about?

<p>Prefab and Packaging (A)</p> Signup and view all the answers

What strategy has helped keep profit margins under control?

<p>Introducing new product variants (C)</p> Signup and view all the answers

What was the performance in terms of EBIT for Q1 FY18 compared to Q1 FY17 in the prefabricated business?

<p>Decreased by 71% (D)</p> Signup and view all the answers

What type of packaging solution has Beardsell designed for electronics?

<p>Anti-static packaging (B)</p> Signup and view all the answers

What is expected to happen over the next 2-3 years in the Packaging & Molded Products Business?

<p>Expected increase in sales due to rising demand (D)</p> Signup and view all the answers

What was the status of the order pipeline for Quikbuild as of September?

<p>Exceeding Rs. 100 million (B)</p> Signup and view all the answers

Which customer relationship has contributed significantly to revenue growth?

<p>Long-standing relationships with major brands (B)</p> Signup and view all the answers

How did the overall market sentiment trend in September regarding order placement?

<p>It saw a good uptick (B)</p> Signup and view all the answers

What challenge is identified due to the complexity of the Packaging & Molded Products Business?

<p>High entry barriers for new market players (A)</p> Signup and view all the answers

Flashcards

Quikbuild

A system that allows for the quick and efficient construction of buildings using prefabricated components.

Pre-fab

A building system that uses prefabricated components, which are manufactured off-site and then assembled on-site.

Authorized Contractor/Licensee Program

A sales strategy where a company grants rights to build, sell, and service their products to independent businesses.

J&K Project - IIT Jammu

A building project with a specific focus on prefabricated construction, resulting in faster construction times.

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Entry into New Geographies

Expanding into new geographical areas to reach a wider market and increase customer base.

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A1+(SO) Rating

A credit rating assigned by CRISIL, indicating high creditworthiness and low risk associated with the company's commercial paper issuance, leading to potentially lower interest rates.

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Commercial Paper (CP)

A short-term debt instrument issued by companies to obtain funds for working capital requirements, typically with maturities less than a year.

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Issuing Commercial Paper to Reduce Interest Costs

A financial strategy used to reduce the interest expense associated with borrowing by replacing higher-interest loans with lower-interest commercial paper.

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Goods and Services Tax (GST)

A tax levied on goods and services, aiming to simplify tax structures and promote organized businesses.

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Prefabrication in Construction

Prefabrication in construction refers to building components constructed off-site, allowing for faster construction and reduced on-site labor. It is particularly relevant in the context of affordable housing.

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Pradhan Mantri Awas Yojana

A government scheme aimed at providing affordable housing solutions to diverse income groups, promoting accessible and comfortable homes for citizens.

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3D Construction Technology

A cutting-edge construction technology involving using advanced digital tools for building designs, allowing for precise construction and rapid project completion.

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Progressive Outlook

The company's belief in its ongoing business growth and positive market prospects, indicating a strong financial position and future strategy.

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Franchisee/Authorized Licensee Model

A strategy where a company grants rights to build, sell, and service their products to independent businesses, allowing for faster expansion and market reach.

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Timely Delivery

The ability to quickly and efficiently deliver products or services to customers, which is crucial for success in competitive markets.

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Pre-fabricated Structures

The use of pre-fabricated components, which are manufactured off-site and assembled on-site, helps to reduce construction time and costs.

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Assured Payment Terms & Good Margins

Focus on projects with guaranteed payments and high profit margins, ensuring the company's financial stability and sustainability.

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3D Technology for Construction

Implementing 3D technology in construction allows for faster design and construction, leading to more affordable housing options.

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Prefabricated Buildings

A business strategy that leverages pre-fabricated components to build structures rapidly and efficiently. This approach can reduce construction time and costs, while also improving quality control and consistency.

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Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

The amount of money a company makes after deducting all expenses, including the cost of goods sold, operating expenses, and taxes. It is a crucial metric for measuring a company's profitability.

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Formalization

The process of transitioning from informal to formal economic activities, often driven by regulatory changes like the implementation of the Goods and Services Tax (GST).

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Capex Deferment

The delay in the implementation of large capital projects, such as infrastructure development, due to factors like uncertainty about new regulations or economic headwinds.

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Economic Downturn

A period of economic downturn characterized by decreased spending and production, often triggered by external factors like economic policy shifts.

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Revenue from Operations

A revenue stream earned from the provision of goods or services, typically the primary source of income for a business.

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Networth

The total value of a company's assets minus its liabilities, representing the owners' share of the business.

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Profit and Loss (P&L) Statement

A financial statement that summarizes a company's financial performance over a specific period, typically a quarter or a year. It presents key metrics including revenue, profit, and expenses.

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Quikbuild's Focus

Quikbuild focuses on building affordable, prefabricated housing solutions that prioritize speed and efficiency.

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Reusability of Quikbuild Panels

The prefabricated panels used by Quikbuild are designed to be adaptable and can be reused in different locations.

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Earthquake Resistance in Quikbuild Housing

Quikbuild's prefabricated housing is designed to withstand earthquakes, offering added safety and stability.

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Lightweight Materials in Quikbuild Construction

Quikbuild utilizes lightweight materials in their construction, resulting in faster and more efficient assembly.

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Quikbuild's Geographic Focus

Quikbuild's focus on southern states suggests an expansion tactic targeting specific geographic markets.

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Sandwich-Panel Design in Quikbuild

The Quikbuild panel uses a sandwich-panel design with superior insulation properties, ideal for diverse applications.

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Applications of Quikbuild's Cold Storage

Quikbuild's prefabricated cold storage solutions are designed for various purposes, including storing marine products, fruits, pharmaceuticals, and perishable items.

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Versatility of Quikbuild Modular Housing

Quikbuild's modular housing solutions offer flexibility and diverse applications, suitable for student housing, worker housing, refugee housing, and military accommodations.

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Quikbuild System

A construction method that combines masonry, insulation, plastering and utilities into a single process, minimizing construction complexity and costs.

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Structural Integrity

The ability of a product to withstand harsh weather conditions like earthquakes, hurricanes, and high winds, ensuring structural integrity.

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Revenue

The revenue earned from selling goods and services to businesses and individuals.

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EBIT (Earnings Before Interest and Taxes)

The profit earned by a company after deducting all expenses from its revenue.

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Commercial Paper

A type of short-term debt instrument used by companies to raise cash for working capital, typically with maturities of less than a year.

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Study Notes

Company Information

  • Company name: Beardsell Limited
  • Registered office: 47, Greams Road, Chennai - 600 006, India
  • Telephone numbers: 2829 32 96, 2829 09 00
  • GSTIN: 33AAACB1429P2ZP
  • CIN No.: L65991TN1936PLC001428
  • Email: [email protected]
  • Website: www.beardsell.co.in
  • Branches: Ahmedabad, Bangalore, Chennai, Coimbatore, Hyderabad, Kochi, Mumbai, New Delhi, Visakhapatnam
  • Listing manager (NSE): National Stock Exchange of India Limited, Exchange Plaza, Bandra Kurla Complex, Bandra (E), Mumbai-400 051
  • Listing manager (BSE): BSE Limited, PJ Towers, Dalal Street, Mumbai-400 001
  • Scrip codes: BEARDSELL (NSE), 539447 (BSE)

Q1 FY18 Earnings Presentation

  • Date: September 2017
  • Key topics covered: Q1 FY18 performance, business overview, growth drivers, financial overview, pre-fab business highlights, environmental overview, managing directors' comments, financial overview, p&l snapshot (q1 fy18, q1 fy17), balance sheet snapshot (as on 30th June 2017), business overview -pre-fabricated buildings, pre-fabricated business, packaging & molded products business, driving organizational growth, financials - income statement, financials - balance sheet performance, contact details

Business Highlights (Q1 FY18)

  • Government orders continued in Q1, but implementation started later
  • Delays in orders due to GST implementation
  • Pre-fab business gaining traction
  • Quikbuild order pipeline exceeds Rs. 100 million
  • Expansion and deepening relationships with consumer durable players (Godrej, Haier)
  • Subsidiary unit in Supa, Maharashtra expected to increase profitability
  • Company entered J&K, Uttarakhand, and Madhya Pradesh, starting a factory in Delhi
  • MOU signed for sale of land and building at MIDC, Patalganga for Rs 80 million
  • CRISIL rating for CP issuance: A1+(SO)
  • Proposals to issue commercial paper for Rs. 10 cr, with an expected yield of ~7% return, replacing cash credit account

Environment Overview

  • GST is expected to be positive for the prefabricated industry, enabling better market access
  • Affordable housing is exempt from GST, making it less expensive
  • ITC now available for prefabricated products, leading to tax reduction
  • Speeding up Pradhan Mantri Awas Yojana construction, with emphasis on 3D technology in 25 major cities
  • Large government and private sector inquiries are in progress

Managing Directors' Comments

  • Challenges in the first 5 months due to order placement delays impacted by the implementation of GST.
  • Positive outlook for GST's long-term economic impact
  • Order placement improved in September, with optimism for the momentum continuing into the second half of the year
  • Organized sector growth is a positive factor

Financial Performance (Q1 FY18)

  • Revenue: Rs 381 million (Q1 FY18), down 14% from Rs 443 million (Q1 FY17)
  • EBITDA: Rs 5 million (Q1 FY18), down 89% from Rs 46 million (Q1 FY17)
  • PAT: Rs (7) million (Q1 FY18),down 144% from Rs 16 million (Q1 FY17)
  • Topline impact due to deferment of capex due to demonetization and GST implementation
  • Reconciliations between results under IGAAP and Ind AS: summarized
  • Balance sheet snapshot (as on June 30, 2017):
    • Networth: Rs 406 million
    • Fixed Assets: Rs 423 million
    • Cash & Investments: Rs 69 million
    • Net Debt: Rs 86 million

Packaging & Molded Products Business (Overview)

  • Revenue: Rs 162 million (Q1 FY17), Rs 157 million (Q1 FY18)
  • EBIT: Rs 28 million (Q1 FY17), Rs 7 million (Q1 FY18)
  • Strong relationships with leading consumer durable players (e.g., Haier, Godrej)
  • Increased revenue consistent with existing large accounts
  • Started flexible foam business (seat cushions, other custom flexible PU products)

Growth Drivers

  • Prefab business, 20 years of operations: time-bound delivery, high entry barriers, consistent margins
  • Quikbuild business expansion: franchisee/licensee model; government acceptance
  • Isobuild: gaining acceptance in government agencies, creating follow-on orders
  • Emphasis on 3D construction technology for affordable housing projects in smart cities
  • Focus on clients and projects with assured payment, good margins, and southern states presence
  • Organizational growth drivers: turnkey projects, raw material immunity, processing costs, underutilized capacity, rising government requirements, and Isobuild

Pre-fabricated Product Offerings

  • Cold storages: sandwich-panel construction
  • Affordable housing: Value-oriented, earthquake resistant
  • Modular housing: Student, worker, refugee, military personnel housing
  • Site Offices: re-usable, energy efficient

Completed Projects - I & II

  • Images of completed pre-fabricated projects are presented

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