Steel Strips Wheels : Transcript of Analysts/Institutional Investor Meet/Con. Call

"Steel Strips Wheels Limited

Q1 FY2023 Earnings Conference Call"

July 22, 2022

ANALYST: MR. AMIT HIRANANDANI - SMIFS LIMITED

MANAGEMENT: MR. DHEERAJ GARG - PROMOTER & MANAGING DIRECTOR - STEEL STRIPS WHEELS LIMITED

MR. MOHAN JOSHI - EXECUTIVE DIRECTOR - STEEL STRIPS WHEELS LIMITED

MR. NAVEEN SOROT - CHIEF FINANCIAL OFFICER - STEEL STRIPS WHEELS LIMITED

MR. PRANAV JAIN - DEPUTY GENERAL MANAGER (FINANCE) - STEEL STRIPS WHEELS LIMITED

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Steel Strips Wheels Limited

July 22, 2022

Moderator:Ladies and gentlemen good day and welcome to Steel Strips Wheels Limited Q1 FY2023 Post Results Conference Call hosted by SMIFS Limited. 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 operator 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. Amit Hiranandani from SMIFS Limited. Thank you and over to you Mr. Hiranandani!

Amit Hiranandani: Thank you Michelle. Good evening everyone. On behalf of SMIFS Limited I welcome you all to Q1 FY2023 Conference Call of Steel Strips Wheels Limited. We are pleased to host the senior management of the company. Today we have with us Mr. Dheeraj Garg - Promoter & MD of the company; Mr. Mohan Joshi - Executive Director; Mr. Naveen Sorot

• CFO; and Mr. Pranav Jain - DGM (Finance). We will start the call with initial commentary from the management and then we will open the floor for Q&A. Now I hand over the call to the management team. Over to you Sir!

Naveen Sorot:Thanks Amit and good evening to everybody. I will probably start with a brief on the financials for the Q1. In terms of the total income that we earned in Q1 is 1016 Crores as against 680 Crores that we did in Q1 last year. On this the EBITDA that we earned is 109 Crores versus 100 Crores that we did in Q1 last year. PBT we achieved 71 Crores in current quarter versus 62 Crores same quarter last year. PAT of 48 Crores versus 51 Crores same quarter last year. Again the important thing to note out here is in Q1 last year we had a gain from inventories wherein in current quarter there is no such gains which are there in the P&L per se. In terms of capacity utilization across the facilities that we have Dappar is around 84% utilized, Chennai is 56% utilized, Chennai's truck line is 51% utilized, Jamshedpur is 70% utilized and the alloy wheel plant which is Mehsana plant is around 86% in terms of utilization. One of the things which has picked up nicely for us for the last two years is the alloy wheel sales this quarter we have almost seen the sale of around 280 Crores in alloy wheels. Now we can start with the Q&A round on this.

Moderator:Thank you very much. We will now begin the question-and-answer session. The first question is from the line Rohit Suresh from Samatva Investments. Please go ahead.

Rohit Suresh:Good evening Sir, thank you for the opportunity. I had a couple of questions on the export front if you could just give me some details on the exposure that we have is it moved to the US or to the Europe any numbers you could give on that sense exposure?

Mohan Joshi:Would you like to understand the current juncture or would you like to expect go through the future?

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	Steel Strips Wheels Limited
	July 22, 2022
Rohit Suresh:	Current and even the future is possible both would be good.
Mohan Joshi:	So last year I think we did close to 830 Crores worth of exports for all the segments and this
	year what we have recently assessed the situation is that it is looking like it is going to be
	lower by 25% to 30% given the pressure of inflation in the various economies and some bit
	of recessionary pressures are coming in. The second feature is obviously the war-led impact
	coming on Europe as well as in US. So in front of this 828 and 830 Crores we anticipate
	this year to be finishing the financial year at close to 600 to 650 Crores. We have started our
	exports in the aluminium wheels business in this financial year and within that the gap will
	be pushed up to lower the gap alloy wheel will help us to sort of cover up for the lost
	opportunity that we have in the steel wheel business because one quarter has already passed
	on we anticipate this alloy segment to grow aggressively going towards Q2 to Q4 and we
	will end up at close to 600 to 650 Crores of exports this financial year.
Rohit Suresh:	I was trying to understand of the 600-650 Crores how much will be to the US and how
	much will be to Europe that is what I want to know?
Mohan Joshi:	Predominantly right now also in the previous year we had European exports being lesser
	than the US exports and the proportion of that is not frankly available immediately, but we
	can share it offline also, but in FY2022-2023 US will further dominate the export region in
	terms of the share of business and it could be roundabout 65:35 kind of a business coming
	in from US to Europe.
Rohit Suresh:	Of the 65% in Europe are we also exporting alloy wheels?
Pranav Jain:	65% in US.
Rohit Suresh:	Yes, 65% in US apart are we only supplying to the CV segment or are we also doing alloy
	wheels that we are going to export alloy wheels to Europe?
Mohan Joshi:	In steel wheel business we are supplying to the trailer market, the caravan market, the
	recreational vehicle market, and the classic type truck market. In the alloy business we are
	again catering to the aftermarkets, which is for traders which are smaller PV vehicles which
	are being used for the aftermarket segment.
Rohit Suresh:	Right now we do not have any alloy wheels export to the US and the European countries?
Mohan Joshi:	We have started the exports of alloy wheel business from this financial year March is when
	we started and this is happening for both US and Europe and we anticipate this financial

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Steel Strips Wheels Limited

July 22, 2022

year to do closer to a number of close to say 80 to 90 Crores worth of alloy wheel business on export side for both the continents.

Rohit Suresh:Just to summarize basically the demand is more to the alloy wheel segment rather than the PV segment right so that is how we should move into FY2023 right?

Mohan Joshi:Alloy wheel business from the export side will remain close to 15% of the total business and maximum 20% of the business for FY2022-2023 and balance will be all steel wheel business.

Rohit Suresh:Got it, great Sir. Secondly I want to ask on the motors business side the new segment that we are entering into who will be our biggest competitors in India like-to-like comparison is good?

Mohan Joshi:As we talk about motors I think this industry is fairly very, very nascent right now and there are more than 5000 startups which are trying to work out in this and predominantly over next 12 months to 18 months there will be any formidable player which will be left out because of fund crunch or any of those reasons. I think reliability will play the biggest role, we feel that going forward five to six players in this segment will be competing with each other and with the EV penetration going very, very hard for the two-wheeler segment we anticipate that 20%, 25% in the two-wheeler segment which is bike as well as scooter will get converted into EV segment over the next two years which I think is going to be a predominant and very formidable kind of a target for the industry to produce motors to the reliability. So if you talk about the competition it is going to be in MAHLE, it is going to be in Nidec, in terms of other guys like Sona Comstar, Bosch, so these are some of the names which are there where we are going to be competing against.

Rohit Suresh:One last question was the AMW acquisition is it expected to come through this year?

Pranav Jain:We feel that this is going to be coming in this financial year maybe towards the Q3 and it is on track.

Rohit Suresh:Great, thank you so much and wishing you all the very best. Thank you.

Moderator:Thank you. The next question is from the line of Agastya Dave from CAO Capital. Please go ahead.

Agastya Dave:Thank you for the opportunity. One or two questions. One is can you give me the aggregate volumes for last financial year and also for this year, number of pieces in aggregate Sir.

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