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Financial Highlights for FY20

6/29/2020

Kamdhenu Limited, India’s largest manufacturer and seller of branded TMT Bars, in the retail segment, has declared its Audited Financial Results for the Quarter and Full Year ended 31st March 2020.
 

Particulars (Rs. Crores) Q4 FY20 Q4 FY19 Y-o-Y FY20 FY19 Y-o-Y
Royalty Income 22.2 23.8 -6.8% 94.2 84.0 +12.0%
Franchisee Volumes (in Lakh MT) 5.8 6.4 -8.7% 24.0 22.8 +5.4%
Profit Before Tax (PBT) – Steel Business 6.7 11.3 -40.9% 37.3* 39.0 -4.4%

*Excluding Exceptional Items
 

  • The Board of Directors of the Company have recommended a dividend of Rs. 0.50 per share for face value of Rs.10 per share for FY19-FY20 (5% of Face Value of Rs. 10 each)
  • The Company has recouped its business strategy by reducing B2B Trading Sales and focus on improving efficiencies in Own Manufacturing and on franchisee-based business model which have led to increased better efficiencies
  • We have increased our sales from own manufacturing by 4% to Rs. 334.2 crores for FY20
  • Steel Business contributed 77% of Revenues whereas 23% is from the Paint Business for FY20

Update on CoVID Situation
  • The Company has restarted operations at Steel & Paint factory at Bhiwadi and Chopanki both located in Rajasthan post the unlock of CoVID pandemic lockdown
  • Supply has started as per the order booking and available workforce since May 2020
  • Company has resumed effective operation of more than 60% at steel TMT manufacturing units
  • Company is adhering to all safety precautions at all offices and manufacturing units in terms of social distancing, sanitization, wearing of hand gloves and thermal temperature checking of all employees at factories and offices

Update on Scheme of Arrangement

The Company has acquired 100% shareholding stake at face value in Kamdhenu Ventures Limited, whereby Kamdhenu Ventures Limited has become a wholly owned subsidiary company of the Company. Further, Kamdhenu Colour and Coatings Limited being a wholly owned subsidiary company of Kamdhenu Ventures Limited, has become a step down subsidiary of the Company.

It is hereby pertinent to mention that Kamdhenu Ventures Limited and Kamdhenu Colour and Coatings Limited was incorporated by the promoters of the Company to give effect to the proposed Scheme of arrangement of multiple entities*. The Board of Directors of the Company in its meeting held on 31st January 2020 has approved this proposed Scheme of arrangement, subject to the requisite regulatory approvals. The Company has already filed an application with the Stock Exchanges for their approval and observation on the said scheme of arrangement.

Rationale of the Proposed Arrangement
 
  1. The proposed amalgamation will simplify and streamline the shareholding structure of the Transferee Company.  The Scheme will enable to remove multiple layers of the holding companies in tune with the Government policy
  2. The amalgamation will result in significant reduction in multiplicity of legal and regulatory compliances which at present is required to be made separately by the Transferor Companies and the Transferee Company

Rationale for the proposed Demerger of Paint Business of Kamdhenu Limited into Kamdhenu Colour and Coatings Limited are, inter alia, as follows:
 
  1. It will impart better management focus, will facilitate administrative convenience and will ensure optimum utilization of various resources by these Companies
  2. The proposed demerger will provide scope for independent expansion of these businesses. It will strengthen, consolidate and stabilize the business of these Companies and will facilitate further expansion and growth of their respective businesses
  3. The proposed demerger will enable the Transferee Company and the Resulting Companies to raise necessary funds, invite strategic investors, employ specialized manpower, etc., for the respective businesses
  4. Tremendous operational efficiencies will be achieved by operating these two businesses as independent entities

* Multiple Entities include Kamdhenu Concast Ltd, Kamdhenu Overseas Ltd, Kamdhenu Paint Industries Ltd, Kamdhenu Infradevelopers Ltd, Kamdhenu Nutrients Pvt Ltd, Kay2 Steel Ltd, Tiptop Promoters Pvt Ltd

Commenting­­­­­­­ on the results and performance, Mr. Satish Kumar Agarwal, Chairman & Managing Director said:

“FY20 has been a challenging year for the Indian Steel industry. The Industry faced challenges with slowdown in the economy, weak demand for steel, huge imports of steel and lastly the Covid-19 pandemic which led to shutdown of operations of all steel companies. Despite this challenging business environment, we have increased our volumes by 6% to 24 lakh tonnes for FY20.

Our business has been impacted temporarily during nationwide lockdown in the months of March, April and May and it will be reflected in the revenue and profitability of the Company to some extent. Our facilities have resumed operations and we are hopeful that the business environment improves in the 2nd quarter and we get back to normalcy in the second half of the year. We are currently working at 60% capacity and the ramp up is increasing on a daily basis.

Since this situation is exceptional and changing dynamically, the Company is not able to gauge with certainty, the future impact on its operations. However, the Company is confident about adapting to the changing business environment and responds suitably to fulfil the needs of its customers.

Our Company has managed to achieve Royalty income of Rs.94.2 crores during this Financial Year except the sales which did not happen in the last week of March 2020 due to nationwide lockdown. We have been able to leverage our Brand created through our large distribution and marketing strength.

Recently, the Government imposed anti-dumping duty on certain steel products imported from China, South Korea and Vietnam.  This positive move shall boost the domestic steel manufacturers.

After a decline in FY2020, the demand for steel is likely to rebound with a double-digit growth in 2021. As stalled projects both in construction and infrastructure along with capital expenditure plans are coming back on track, demand for steel is likely to cover ground. Government spend in infrastructure and railways is a significant driver of demand. Affordable housing and rural development can improve construction activity further. Capex plans of manufacturers which are put on hold would come back on stream driving a robust demand of steel and its products.

Post the fire at the Paint Factory, we outsourced production from third party manufacturers and ensured the quality standards too. Currently, our paint plant is operational, and we expect normalcy to resume soon. For the year, the Company clocked revenues of Rs. 226 crores from the paint business.

We are constantly striving to improve our cost efficiencies and are conscious of product development and we are fully committed for the same. We believe in taking challenges heads on and prepared to adjust to these changing times as the business requires”
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