"After a decline in FY2020, demand for steel is expected to rebound with a double-digit growth in 2021"
Sunil Kumar Agarwal, director, Kamdhenu, speaks on the company's initiatives
What is the extent of your footprint in India? Tell us about your expansion plans.
Kamdhenu TMT is the largest TMT selling brand in India in the retail segment, having more than 75 franchisee units and more than 11,500 dealers and distributors out of which 7,500 are exclusive for our steel business. Kamdhenu Group is truly a one stop construction material solutions company, wherein we deal with a variety of products including but not limited to TMT Bars, Structural Steel, Color Coated Sheets, and Decorative Paints etc. We are also planning for expansion in India as well as globally. Our wide range of products catering to various kinds of structural, aesthetic and luxury requirements in construction is doing brisk business and growing.
How has the COVID-19 pandemic impacted your operations and how has been the recovery so far?
The announcement of lockdown due to the COVID-19 pandemic had an immediate impact on our operations as factories and offices had come to a grinding halt. Everyone is impacted by the lockdown and we had zero sales in the last week of March 2020. The wholesale lockdown had an impact on our revenue as well as profitability. With the nation gradually easing lockdown measures we have slowly restarted operations in line with directives received from government authorities from time to time. We are now operating at about 60% of capacity and ramping up. We will achieve normalcy and operate at full capacity soon.
What has been the biggest impact on the closure of plants/activities during the lockdown?
As manufacturer of construction materials, the closure of construction sites and the ensuing logistical and labour problems has a direct impact on us. We have worked hard to overcome most of the challenges to restore production to about 60 percent of pre lockdown and very soon we expect to achieve a 100 per cent return to pre-covid levels in manufacturing of construction materials.
Your thoughts on the various fiscal and monetary reliefs announced by the government?
After a decline in FY2020, the demand for steel is expected to rebound with a double-digit growth in 2021. The recent move of the government to impose anti-dumping duty on certain steel products imported from China, South Korea and Vietnam is a positive one and will act as a much needed catalyst to boost the domestic steel industry. As the lockdown eases, stalled projects both in construction and infrastructure along with capital expenditure plans are coming back on track and demand for steel is likely to recover lost ground. Government spend in infrastructure and railways is a significant driver of demand and the push for self-sufficiency will boost government spending. Affordable housing and rural development can improve construction activity further. Capex plans of manufacturers which were on hold are expected to come back on stream driving a robust demand of steel and its products. Overall we are very bullish on the India growth story and feel we will leave the impact of Covid-19 soon behind us.
How has the company performed in Q4 and FY20?
The company has managed to achieve royalty income of Rs 94.2 crores during this financial year and we have been able to leverage our brand created through our large distribution and marketing strength. Considering the serious challenges facing the industry, our Board of Directors have recommended a dividend of Rs 0.50 per share for face value of Rs 10 per share for FY19-FY20. We have also increased our sales from own manufacturing by 4% to Rs 334.2 crores for FY20 and steel business contributed 77% of revenues whereas 23% is from the paint business for FY20. However, Q4 PAT has fallen to Rs 2.31 crores from Rs 5.88 crores of the same period of last year.
What is the future outlook of the company?
We have a very bullish outlook for our company despite the challenges posed by the pandemic. Construction activities have started picking up as as lockdown measures are being relaxed. Projects that have been abandoned during the lockdown are being restarted and with subsequent phases of unlocking the economy, the pace of construction activities have also accelerated. With dedication and hard work we are looking for new higher target and new achievement in our group and I am sure that we will achieve our new goal.