Beardsell Dec-17

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Questions and Answers

What has been a significant growth driver for Beardsell Limited during the quarter?

  • Delay in client orders due to GST implementation
  • Reduction of manufacturing costs
  • Government orders continuing during the quarter (correct)
  • Increase in the number of employees

What project marks Beardsell's entrance into new geographies?

  • IIT Jammu project for partition walls (correct)
  • The Quikbuild factory in Delhi
  • Gurgaon office development
  • Madhya Pradesh villas project

What amount of Quikbuild orders is currently being negotiated?

  • Rs. 50 million
  • Rs. 150 million
  • Rs. 100 million (correct)
  • Rs. 75 million

Which statement describes the reason for delays in orders from clients?

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

What has been approved by CPWD and various state PWDs?

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

What has contributed to Beardsell's business success in the last 20 years?

<p>Commitment to timely delivery (A)</p> Signup and view all the answers

What is a significant challenge in the business landscape described?

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

What strategic model did Beardsell launch to enhance project implementation?

<p>Franchisee/authorized licensee model (C)</p> Signup and view all the answers

Which technology emphasizes the construction of affordable homes in smart cities?

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

What characteristic of Isobuild projects has been advantageous for Beardsell?

<p>Acceptance in government agencies (A)</p> Signup and view all the answers

What is a primary benefit of using the Quikbuild system in construction projects?

<p>Enhances structural integrity for high wind conditions (B)</p> Signup and view all the answers

Which factor contributes to the reduced costs in the housing project?

<p>Lower raw material and construction equipment costs (D)</p> Signup and view all the answers

What strategy has Beardsell employed to maintain consistent margins in their packaging business?

<p>Introduce new product variants instead of raising prices (A)</p> Signup and view all the answers

What is the expected outcome for institutional customers over the next three years?

<p>Expansion of production capacities (A)</p> Signup and view all the answers

Which type of packaging innovation has Beardsell recently developed?

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

What has been a significant change reported in Beardsell's revenue from Q2 FY17 to Q2 FY18?

<p>Strong increase in revenue from established clients (B)</p> Signup and view all the answers

Why are there high entry barriers in the packaged products market?

<p>Complexity of the business (C)</p> Signup and view all the answers

What is a predicted trend in sales for EPS products in the near future?

<p>New client additions from previously untapped sectors (A)</p> Signup and view all the answers

What unique packaging solution has Beardsell developed for electronics and ordinance items?

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

What is a major focus area for Quikbuild's growth?

<p>Southern states (C)</p> Signup and view all the answers

Which of the following is NOT a key feature of Quikbuild's affordable housing?

<p>High maintenance costs (D)</p> Signup and view all the answers

Which application is specifically mentioned for the sandwich-panel based cold storage?

<p>Marine products (D)</p> Signup and view all the answers

What benefit does the Quikbuild panel bring to construction projects?

<p>Consistently high quality (A)</p> Signup and view all the answers

What type of housing is considered part of Quikbuild's modular housing solutions?

<p>Student housing (D)</p> Signup and view all the answers

What characteristic of Quikbuild's site offices enhances their usability?

<p>Energy efficiency (D)</p> Signup and view all the answers

Which benefit is highlighted for Quikbuild panels compared to RCC built structures?

<p>Shortened project timelines (B)</p> Signup and view all the answers

What aspect of Quikbuild's housing projects contributes to affordability?

<p>Lightweight materials (C)</p> Signup and view all the answers

What was the percentage decrease in revenue for Q2 FY18 compared to Q2 FY17?

<p>27.9% (C)</p> Signup and view all the answers

What factor largely impacted the deferment of capital expenditure (capex) by customers?

<p>Demonetisation and GST implementation (B)</p> Signup and view all the answers

What was the percentage change in PAT for H1 FY18 compared to H1 FY17?

<p>-136.2% (C)</p> Signup and view all the answers

What strategic step is being taken to improve margins in the packaging business?

<p>Reduction in operational costs (A)</p> Signup and view all the answers

What is the expected order finalization timeline for Quikbuild inquiries?

<p>By end of December 2017 (B)</p> Signup and view all the answers

What was the total revenue from operations reported for the quarter ended September 30, 2017?

<p>381 Rs million (D)</p> Signup and view all the answers

What main area of business is the company optimistic about, according to Bharat Anumolu?

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

Which financial category saw a decrease of 86.4% for H1 FY18?

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

What caused the marginal hit in revenues for the pre-fabricated business?

<p>Customers postponing orders (C)</p> Signup and view all the answers

How much is the total expected value of Quikbuild projects in negotiation?

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

What was the trend in the company's total comprehensive income for the quarter ended June 30, 2017?

<p>A decrease of 14 Rs million (C)</p> Signup and view all the answers

What challenge did the company face in reporting its financial results?

<p>Conversion between IGAAP and Ind AS (D)</p> Signup and view all the answers

Which customer approach is expected to increase revenue for the packaging business?

<p>Loyalty incentives for existing customers (B)</p> Signup and view all the answers

What is one of the key growth drivers in the packaging business?

<p>Bid for turnkey projects from governmental bodies (D)</p> Signup and view all the answers

Which financial metric shows the highest improvement from FY14 to FY17?

<p>Net Profit (A)</p> Signup and view all the answers

What benefit contributes to the healthy growth of pre-fabricated buildings?

<p>Rising acceptance in residential and commercial spaces (C)</p> Signup and view all the answers

In the financial overview, which year had the lowest EBITDA figure?

<p>FY14 (D)</p> Signup and view all the answers

What aspect helps to mitigate the impact of raw material price volatility?

<p>Larger customers negotiating flat processing charges (C)</p> Signup and view all the answers

What was the net sales figure for FY17?

<p>Rs 1,904.3 million (A)</p> Signup and view all the answers

Which asset category showed a significant increase in value from FY14 to FY17?

<p>Tangible Assets (A)</p> Signup and view all the answers

What was the trend in Earnings Per Share (EPS) from FY14 to FY17?

<p>Increase over the years (D)</p> Signup and view all the answers

What factor contributes to the underutilized capacity in the packaging business?

<p>Room for meeting higher demand without additional capital expenditure (D)</p> Signup and view all the answers

What does the term 'Isobuild' refer to in the packaging context?

<p>Steel sandwich panel business (D)</p> Signup and view all the answers

In FY15, what was the net profit recorded?

<p>(Rs 1.0 million) (D)</p> Signup and view all the answers

What characterizes the interest expenses in the financial overview?

<p>Fluctuated significantly across the years (B)</p> Signup and view all the answers

Which fiscal year showed a significant improvement in EBITDA Margin?

<p>FY17 (C)</p> Signup and view all the answers

What indicated the company's improving balance sheet performance?

<p>Rising current and non-current assets (C)</p> Signup and view all the answers

Flashcards

Pre-fab Implementation Delays

Government order continues during the quarter, but implementation started in the 2nd quarter. Delays in orders by clients due to the implementation of GST.

Quikbuild Market Expansion

Quikbuild is now approved by CPWD and various state PWDs. Orders exceeding Rs. 100 million are being negotiated.

Expansion into New Geographies

Beardsell Limited has entered new geographies like Jammu, Uttarakhand, and Madhya Pradesh for pre-fab construction projects.

New Factory in Delhi

Beardsell is building a factory in Delhi to cater to Quikbuild projects in North India.

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Sale of Land & Building

Beardsell has sold land and building assets at MIDC, Patalganga for Rs. 100 million.

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Timely Delivery's Importance for Success

Delivering projects on time is crucial for success. By consistently meeting deadlines, Beardsell demonstrates its commitment to customer satisfaction. This reliability also helps them stand out in a market with few competitors.

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Benefits of Prefabricated Structures for Business

Prefabricated structures are a cost-efficient way to build, offering significant advantages over traditional methods. Beardsell recognizes this and leverages its expertise in this area to cater to its customers' needs.

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Quikbuild's Franchising Model for Expansion

Quikbuild's franchise/license model enables the company to expand its reach by partnering with other businesses. This strategy helps accelerate growth and capitalize on market opportunities.

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Government Recognition for Isobuild Projects

Isobuild's projects are gaining popularity with government agencies, which often leads to further orders. This signals a growing trust in the company's products and services.

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Prioritizing Profitable Projects with Assured Payment

Beardsell strategically focuses on projects with reliable payment terms and high profit margins. This financial prudence ensures a sustainable business model.

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Quikbuild

A type of construction that uses pre-made panels to build structures quickly and efficiently.

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Sandwich Panel

A type of building material that is used in Quikbuild structures. It consists of two sheets of metal with insulation in between.

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Cold Storage

A type of structure built using sandwich panels, providing superior insulation for storing perishable goods.

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Affordable Housing

A type of housing made using Quikbuild techniques, often with cost-effectiveness and earthquake resistance in mind.

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Modular Housing

A type of housing that can be easily assembled and disassembled, making it ideal for temporary or movable situations.

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Site Offices

The use of Quikbuild techniques for building offices on construction sites.

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Dismantle and Reuse

Refers to the fact that Quikbuild structures can be taken apart and rebuilt in a different location.

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Energy Efficient

A key advantage of Quikbuild structures, referring to their efficient use of energy.

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Prefabricated Buildings

A type of building construction where components are pre-made in a factory and then assembled on-site. This method can be faster and more efficient than traditional construction.

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Profit and Loss (P&L) Statement

The financial statement that shows a company's revenues and expenses over a period of time.

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EBITDA

A measure of profitability that takes into account operating expenses.

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Profit After Tax (PAT)

The net income after taxes are deducted.

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Networth

The total value of a company's assets minus its liabilities.

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Net Debt

Total money owed by a company to its creditors.

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Deferment of Capex

The postponement of capital expenditures (investments in long-term assets) by customers.

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Goods and Services Tax (GST)

A tax levied on goods and services.

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Prefab Business

A business that specializes in producing prefabricated buildings.

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Capex Cost

The cost of producing or manufacturing a product.

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Cost Reduction Steps

The process of reducing costs to improve profitability.

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Earnings Before Interest and Taxes (EBIT)

The earnings from operations before interest and taxes are deducted.

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Business Prospects

The process of making predictions about the future performance of a business.

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Low Cost Housing

A type of housing built for people with low incomes.

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What is the benefit of the Quikbuild system?

The Quikbuild system combines masonry, insulation, plastering, and utilities into a single, simplified process, minimizing construction complexity and costs.

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What is a key focus for Beardsell's Packaging & Molded Products business?

Beardsell focuses on cost reduction strategies to improve profit margins in its Packaging & Molded Products business.

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How does Beardsell grow its Packaging & Molded Products business?

Beardsell's Packaging & Molded Products business has grown by leveraging strong relationships with major consumer durable companies like Haier and Godrej.

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How does Beardsell manage margins in its Packaging & Molded Products business?

Beardsell's Packaging & Molded Products business offers new product variants instead of price increases to keep margins under control.

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What are the market characteristics of Beardsell's Packaging & Molded Products business?

Beardsell's Packaging & Molded Products business has high entry barriers due to its complexity, resulting in fewer market players and stable margins.

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What is a key growth driver for Beardsell's Packaging & Molded Products business?

Beardsell's Packaging & Molded Products business is expected to benefit from increased production capacities by institutional customers over the next three years.

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What is another growth strategy for Beardsell's Packaging & Molded Products business?

Beardsell's Packaging & Molded Products business is actively targeting new clients in previously untapped sectors, contributing to growth.

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What are the ongoing growth drivers for Beardsell's Packaging & Molded Products business?

Beardsell's Packaging & Molded Products business is seeing consistent volume increases alongside the introduction of new product variants, driving growth.

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What are key factors contributing to Beardsell's Packaging & Molded Products business growth?

Beardsell's Packaging & Molded Products business has achieved growth by focusing on aggressive marketing and cost advantages compared to competitors.

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What is Beardsell's core strength in the packaging industry?

Beardsell is recognized for its innovation in packaging design and development, creating cost-effective and shock-resistant EPS packaging solutions.

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Packaging Solutions

The business focuses on creating intricate packaging solutions for various major consumer goods companies, ensuring safe and secure transportation of their products.

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Growth Drivers: Pre-fabricated Buildings

The Packaging business is seeing growth due to increasing demand for prefabricated buildings in both residential and commercial sectors.

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Packaging Benefit: Immunity from Price Volatility

The company benefits from a stable pricing environment, as large clients often secure fixed processing rates for their packaging needs.

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Packaging Benefit: Underutilized Capacity

The company leverages its existing capacity to meet higher demand without incurring additional capital expenditure (capex) costs.

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Growth Driver: Rising Government Requirements

Government regulations drive the demand for Isobuild, a steel sandwich panel product, used in various construction projects.

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Revenue Source: Sales of Packaging

The company earns a substantial portion of its revenue from sales of packaged goods to various companies.

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EBITDA Margin

The company's profitability is represented by EBITDA, a financial metric indicating earnings before interest, taxes, depreciation, and amortization.

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EBIT Margin

Profitability is measured by EBIT, which indicates earnings before interest and taxes.

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Interest Expense

The company's expenses related to borrowing money are reflected in the 'Interest' expense, listed on the company's income statement.

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Earnings Per Share (EPS)

The company's earnings per share (EPS) reflect the profit earned per share of stock held by investors.

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Balance Sheet

The company's assets, including tangible and intangible ones, are outlined on the balance sheet, providing a snapshot of the company's resources.

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Tangible Assets

Tangible assets, such as buildings, machinery, and equipment, are listed on the balance sheet, representing physical items owned by the company.

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Work in Progress

Work in progress refers to projects or products that are currently under development and not yet complete.

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Financial Performance Analysis

The company's financial performance is analyzed through various financial metrics to assess its success and future prospects.

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Contact Information

The company's contact details, including phone number, email address, and names of key contacts, are provided for outreach purposes.

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Study Notes

Company Information

  • Company: Beardsell Limited
  • Registered Office: 47, Greams Road, Chennai - 600 006, India
  • GSTIN: 33AAACB1429P2ZP
  • CIN No.: L65991TN1936PLC001428
  • Email: [email protected]
  • Website: www.beardsell.co.in
  • Branches: Ahmedabad, Bangalore, Chennai, Coimbatore, Hyderabad, Kochi, Mumbai, New Delhi, Visakhapatnam

Financial Year 2017-2018 Q2 & H1 Earnings Presentation

  • Presentation date: December 2017
  • Investor brief from Citigate Dewe Rogerson Communications Private Limited, enclosed for Q2 FY 2017-2018 earnings presentation

Disclaimer

  • Forward-looking statements in the document are subject to risks and uncertainties (government actions, local politics, economic developments, technological risks).
  • Beardsell Limited is not responsible for actions taken based on these statements and has no obligation to update them.

Content

  • Q2 & H1 FY18 Performance
  • Business Overview
  • Growth Drivers
  • Financial Overview

Business Highlights

  • Prefab: Government orders continue, implementation started in Q2; Quikbuild approved by CPWD and various state PWDs; Quikbuild orders exceeding Rs. 100 million; Launching authorized contractor/licensee programs; expanding steel fire-rated/clean rooms; Karad facility to supply steel parts for existing appliance customers.
  • Packaging: Steady performance with deepening relationship with consumer durable players (Godrej & Boyce, Haier); Expansion expected from subsidiary unit in Supa(Maharashtra), with volume increase of 50% by Q4FY18 and profit equal to other EPS units.
  • New Geographies: J&K project, IIT Jammu, Uttarakhand villas, Madhya Pradesh villas; Quikbuild projects in the North Indian region in Delhi.
  • Sales of Land and Building: Sale of land and building at MIDC, Patalganga, Rs. 80 million completed as of November 2017. Profit of Rs. 25.3 million to be booked in Q3 FY17.
  • Commercial Paper: Issued commercial paper to Indiabulls Liquid Fund - Rs. 10 crore @ 8% to reduce interest costs for working capital.
  • Appointment of CFO: V.V. Sridharan appointed as Chief Financial Officer.

Environment Overview

  • Prefab: GST expected to positively impact an organized player like Beardsell; Affordable housing exempt from GST; ITC available for all pre-fab products; 3D construction technology in 25 major cities to speed up construction under Pradhan Mantri Awas Yojana.

Managing Director's Comments

  • Challenges in the past couple of months; expects order booking to be healthy.
  • Large order win expected in January 2018 for at least one low-cost housing project by April 2018; technical parameters are met and strong references exist.
  • Packaging business growth is healthy; cost reduction steps to improve margins.
  • Optimistic about Prefab and Packaging businesses.

Financial Overview (Q2 FY18)

  • Revenue: Rs. 359 million (-27.9% QoQ)
  • EBITDA: Rs. 9 Million (-84.7% QoQ)
  • PAT: (Rs. 10) million (-140% QoQ)
  • Topline impacted due to deferment of capex by customers because of demonetization and GST implementation.

Financial Overview (H1 FY18)

  • Revenue: Rs. 739 million (-21.5% YoY)
  • EBITDA: Rs. 15 million (-86.4% YoY)
  • PAT: (Rs. 17) million (-136.2% YoY)
  • Topline impacted due to deferment of capex by customers because of demonetization and GST implementation.

Financial Reconciliation (Q2 FY18)

  • Reconciliation of results between previous GAAP and Ind AS accounting principles, showing revenue, profit before tax and profit after tax figures (with different ending dates)

Balance Sheet Snapshot (as of September 30, 2017)

  • Networth: Rs. 391 million
  • Fixed Assets: Rs. 420 million
  • Cash & Investments: Rs. 56 million
  • Net Debt: Rs. 85 million

Pre-fabricated Business

  • Revenue: Q2 2017: 245.3 million , Q2 2018: 180.6 million, H1 2017: 453.6 million, H1 2018: 330.1 million
  • EBIT: Q2 2017: 31.6 million, Q2 2018: 14.4 million, H1 2017: 62.6 million, H1 2018: 24.4 million
  • Comments: Marginal revenue hit due to customer postponements and project cancellations. West Africa project in pipeline for Q4 FY18; Own machinery for Quickbuild started; Quikbuild enquiries in negotiation stage; significant orders expected by end of December 2017.

Pre-fabricated Buildings (Growth Drivers)

  • Business Operations: 20-year history; focused on efficient, timely delivery.
  • **Market Entry Barriers:**High barriers resulting in fewer competitors.
  • Expertise: Using customized market needs with good delivery model in South India.
  • Quikbuild Business: Maintaining its momentum, with Rs. 1,000 million in enquiries.
  • Growth Drivers: Growing awareness of cost-effectiveness, franchisee model start-ups for scale-up, successful implementations for Isobuild, focus on 3D technologies, customer projects /assurance of payment terms and southern state focuses.

Pre-fabricated Product Offerings

  • Cold Storages: Sandwich-panel based, superior insulation for Marine, Fruits, Pharma, Perishable items.
  • Affordable Housing: Value-oriented, quake-resistant, lightweight materials.
  • Modular Housing: Student, worker, refugee housing, military housing.
  • Site Offices: Dismantlable, energy-efficient, for remote areas.

Benefits for Housing Projects

  • Low Cost: Reduced labor and material costs.
  • Fast Implementation: Time-efficient design, production, transportation, and erection.
  • Uniform Quality: Structural integrity, earthquake resistance and high winds.
  • Simple Construction: Consolidation of masonry, insulation, plastering, utilities thus reducing construction complexity.

Completed Projects

  • List of completed project images (I & II).

Business Overview (Packaging & Molded Products)

  • Revenue: Q2 2017: 218 million , Q2 2018: 163.7 million, H1 2017: 433.8 million, H1 2018: 371.3 million
  • EBIT: Q2 2017: 31 million, Q2 2018: 10.5 million, H1 2017: 59.1 million, H1 2018: 20.8 million
  • Comments: Strong relationships with consumer durable players; Cost reduction strategies; Increasing revenues from large customers and new flexible foam business.

Packaging & Molded Products Business (Growth Drivers)

  • High-value/bigger ticket-size customers; New product variants instead of price increases.
  • High entry barriers due to business complexity.
  • Increasing demand and quality service sales expected in the near future.
  • Aggressive marketing and cost advantages.
  • Institutional customer expansion expected over following 3 years.

Packaging & Molded Products Business

  • Company innovations in packaging design and development.
  • Providing cost-effective & shock-resistant EPS packaging solutions.
  • Anti-static packaging for electronics & explosives.
  • Safe & secure transportation solutions for top consumer durable companies.

Driving Organizational Growth

  • Pre-fabricated Buildings: Bidding on turnkey projects from private and government bodies.
  • Packaging: Immunity from raw material price volatility; underutilized capacity; and negotiation for flat processing for larger clients
  • Pharma, Electronics & Specialty: Government requirements for Isobuild (steel sandwich panel) business.

Financial Overview (Income Statement)

  • Figures for FY14, FY15, FY16 and FY17 for Net Sales, EBITDA, EBITDA Margin, EBIT, Interest, Tax Expense, Net Profit and Earnings per Share. Consolidated figures for the later years.

Financial Overview (Balance Sheet Performance)

  • Figures for FY14, FY15, FY16 and FY17 for Equity and Liabilities (Shareholders’ fund; long term borrowings and provisions), Assets (Tangible assets; WIP; Goodwill; current investments, loans etc); and Current liabilities (short term borrowings, trade payables, current liabilities, provisions etc.).

Contact Details

  • Contact information (phone numbers, emails) for Gavin Desa and Rabindra Basu of CDR India.

Thank You

  • Thank you message included.

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