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Financial Performance • Total income: INR 23.34 crores • EBITDA margin: Nearly 10% • PAT: INR 1.01 crores • Emphasis on resilience and strategic investments
Strategic Plans • Expansion of product offerings and regional presence • Increase in distribution channels • Focus on recycled plastic demand and establishment of a plastic upcycling plant • Goals for capacity utilization and working capital optimization
Q&A Highlights • Sustainability of EBITDA Margin: Expected improvement with geographical expansion and production scaling. • Sales Breakdown: Over 36,000 online orders; ranked number one on Amazon. • Product Innovation: Ongoing efforts to refresh product line. • Recycling Capabilities: Challenges acknowledged, but optimism for improvements in the latter half of the year. • Capital Expenditure Funding: Exploring various funding options for significant expansion, especially in recycling.
Market Insights • Quarterly Volumes: Increased capacity in post-consumer plastic recycling from 300 tons to nearly 600 tons. • Market Growth: 15% organic growth in the plastic furniture market; stable demand in existing and new markets. • Logistics Costs: Managed competitively through optimized shipping volumes.
Raw Material Costs • Stability in raw material costs for virgin polymers (INR 90 to INR 100 per kg). • Utilization of 70% post-consumer recycled material and 30% virgin polymer. • Focus on scaling operations and enhancing production capacity.
Marketing and Branding • Current low marketing spending; plans to increase branding efforts with a brand ambassador. • Conservative approach to spending while aiming for effective marketing strategies.
Production Capacity Goals • Current recycling capacity: 260-270 tons per month; goal to double to 15,000 tons over the next few years. • Incremental investments in machinery and molds planned. • Commitment to debottlenecking processes to increase capacity to 600 tons per month.
Challenges and Future Outlook • Need for better technology and understanding among local entrepreneurs for post-consumer plastic recycling. • Expansion of facility to 55,000 square feet for increased production. • Invitation for participants to visit the factory for firsthand experience.
AVRO India Limited Q4 FY23 Earnings Conference Call Summary
Company Performance • Date of Call: May 26, 2023 • Chairman: Sushil Kumar Aggarwal • Revenue Growth: 26.29% in FY23 compared to the previous year • Total Income: Rs. 82.34 crores • EBITDA: Rs. 8.61 crores • Profit After Tax: Rs. 4.16 crores
Key Factors for Success • Strategic investments and cost control • Establishment of a plastic up-cycling unit (operational since December 2022) • Plans to significantly expand recycling capacity in the next two years
Market and Product Strategy • Growing demand for plastic furniture • Diversification of product range • Optimization of working capital and sales channels (both online and offline)
Competitive Landscape • Discussion on competitive strengths of major brands in the plastic furniture industry • AVRO's unique three-year guarantee and lower pricing strategy • Focus on enhancing brand visibility through BTL marketing
Recycling Operations • Shift to post-consumer recycled plastic for cost savings • Projected 20% savings in raw material costs • Expansion plans to increase production capacity from 8,000 metric tons annually to 1,000 metric tons monthly by FY24
Financial Outlook • Estimated CAPEX for expansion: Rs. 30-40 crores • Low long-term debt and potential funding from investors or internal accruals • Current internal consumption of produced materials: 700-800 metric tons monthly
Challenges and Future Growth • Decline in quarterly profits due to increased production costs and muted consumer demand • Ongoing optimization of the recycling plant affecting production capacity • Plans for geographic expansion and maintaining product quality
Investor Inquiries • Discussion on the expected 20% margin from the recycling plant • Plans for a warehouse in South India to cater to growing online orders • Current consumption of polymers: 30% virgin, 70% recycled
Commitment to Sustainability • Abundant availability of recycled plastic in India • Plans to increase processing capacity from 300 to 2,500 metric tons • Focus on reducing environmental pollution
Future Projections • Confidence in revenue and margin targets for the next three years • Importance of enhancing distribution and branding for market presence • Emphasis on effective raw material procurement for competitive pricing
Conclusion • Encouragement for continued collaboration and contribution to the company's mission • Closing remarks from the moderator
Submission Details • Date of submission: February 15, 2023 • Conference call date: February 13, 2023 • Compliance: Submitted transcript to National Stock Exchange of India and BSE Limited as per SEBI regulations • Host: Kirin Advisors • Format: Listen-only mode with a Q&A session
Financial Performance Highlights • Q3 FY '23 Results: • Total income increased by 11% for the quarter • Total income increased by 37% for the nine-month period • Total income reported at INR 21.82 crores • Profit After Tax (PAT) increased by 138% • Revenue Sources: • 15% of revenue from online sales (Amazon, Flipkart)
Growth Drivers and Future Outlook • Key Growth Factors: • High demand during the festive season • Successful implementation of a new recycling plant • Future Expectations: • Anticipated strong growth in FY '24 • Planned investment of INR 5 to 10 crores for expansion • Focus on in-house recycling to improve production efficiencies
Challenges and Strategies • Challenges: • Declining margins due to lower capacity utilization and increased overheads • Rising costs and volatile commodity prices • Mitigation Strategies: • In-house recycling of post-consumer plastics to stabilize costs • Addressing Extended Producer Responsibility (EPR) regulations
Recycling and Production Capacity • Current Capacity: • 300 metric tons of recycled plastics • Plans to increase capacity significantly by FY '24 • Recycling Practices: • Current production capacity for recycled plastic: 7,000 to 8,000 tons • Anticipated growth to 10,000 to 12,000 tons • Strong demand for recycled plastic from other manufacturers
Competitive Landscape and Marketing Strategy • Market Positioning: • Competing with larger brands (Nilkamal, Supreme) by offering products at 40% lower prices • Logistics and Marketing: • Utilizing existing warehouses to reduce costs • Small sales team and trained distributors to enhance visibility and sales
Conclusion • Emphasis on expanding reach and product offerings while maintaining competitive pricing • Open invitation for further communication and suggestions for growth