Ice Make Refrigeration Ltd (ICEMAKE) Q1 FY23 Earnings Concall Transcript

Ice Make Refrigeration Ltd (NSE:ICEMAKE) Q1 FY23 Earnings Concall dated Aug. 17, 2022

Corporate Participants:

Chandrakant P. Patel — Chairman & Managing Director

Ankit Patel — Chief Financial Officer

Nikhil Bhatt — Vice President of Strategy

Mandar Desai — ICE MAKE REFRIGERATION LIMITED

Analysts:

Aryan Rana — Aaryana Matasco — Analyst

Vinay — Individual Investor — Analyst

Nikhil Chaudhary — Chrys PMS — Analyst

Zaki Mehta — Individual Investor — Analyst

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Chinmay Shah — Individual Investor — Analyst

Alisha Mahawla — Envision Capital — Analyst

Nilesh Mehta — NSR — Analyst

Vishal Darji — Ice Make — Analyst

Presentation:

Operator

Good afternoon, ladies and gentlemen. I am Lizan, the moderator for this conference call. Welcome to the Investor and Analyst Conference Call of Ice Make Refrigeration Limited arranged by Aaryana Matasco, Emerging Company Reputation Management and communication service provider to discuss the financial results for Q1 FY23. [Operator Instruction]

I now hand the conference over to Mr. Aryan Rana from Aaryana Matasco. Thank you, and over to you, sir.

Aryan Rana — Aaryana Matasco — Analyst

Thank you, Lizan. Good evening to all of you, and thanks for joining this conference of Ice Make Refrigeration Limited to present and discuss the financial results for the quarter ended 30th June 2022.

Ice Make as a key player in the industry is in the forefront in catering for the cooling requirements of various industries. The company serves large number of varied clients and customers by producing innovative cooling and refrigeration solutions. The industries like dairy, ice cream, food processing, horticulture, agriculture, pharmaceuticals, food chain, logistics, hospitals, hospitalities and retail among others. The company has a basket of 50 plus refrigeration and cooling solution products manufactured under five business verticals like cold room, commercial refrigeration, industrial refrigeration, transport refrigeration and ammonia refrigeration.

We have mailed the resource to you. I hope you have received the same and we have also has uploaded this on our website icemakeindia.com and the stock exchanges.

Before I proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and the other factors. It must be viewed in conjunction with our business risks that could cause future results, performance or achievements from what is expected or implied by such forward looking statements.

To discuss the results and address the queries of investors, we have with us the management represented by Mr. Chandrakant P. Patel, Chairman and Managing Director; Mr. Nikhil Bhatt, Vice President, Strategy; Mr. Ankit Patel, CFO of the company and other key management from the Ice Make Refrigeration Limited.

We will start the call with CMDs remark, followed by financial highlights of the quarter, business and industry outlook update, and then we will open the floor for the Q&A session.

With that said, I will now handover the call to Mr. Patel. Over to you sir, thank you.

Chandrakant P. Patel — Chairman & Managing Director

Good afternoon ladies and gentlemen. I Chandrakant Patel, CMD of Ice Make Refrigeration Limited, warmly welcome you all to the Earning Conference Concall to discuss the financial result of Q1 FY23.

As you may have noted, Ice Make has been able to post strong financial performance driven by strong growth with aggregate demand. The pace of growth recorded in the previous quarter continued in Q1 FY23, with business and economic activities returning to. As a result, the demand for all our product has increased as compared to previous year. You may be aware that the company has introduced the first branded solar cold room, SOLOPerifresh, including more than 50 of our product already in the market. We are getting strategic initiative and innovative range benefits from that.

The company has completed its biggest ammonia-based cold room project of 4,700 metric ton butter cold storage facility on turn-key basis set up in Panchmahal dairy. The company has also recently partnered with Smart Farm project and Jeevan Rekha Parishad, a non-profit organization and self-help group in Odisha and installed 10 metric ton solar cold storage, which will help the farmer to increase the shelf life of their produce and helping to prevent spoilage.

Glad to inform you that participation in the 7th Ice Make dealer Conference held on 4th and 5th August, has almost doubled due to increasing demand for the company product. The economy and industrial activity continue to improve. Product enquires and order inflow continue to be good for our product. We remain optimistic about growth in FY23. Moderation in commodity price will help us to improve margin.

Further Mr. Ankit Patel will provide financial details and Mr. Nikhil Bhatt will give business updates. Then we will organize question and answer. Thanks.

Operator

Should we open up for questions?

Ankit Patel — Chief Financial Officer

Just wait for a while.

Operator

Sure, sir.

Ankit Patel — Chief Financial Officer

And let me complete. Good afternoon to all of you.

There is strong demand in the end market lead by the recovery in the economy and industrial activity, which helped Ice Make to post strong growth in revenue and profitability. During the quarter, the company’s total sale jump by 100% compared to identical quarter last year. Our consolidated revenue in Q1 FY23, stood at INR64.85 crores compared to INR32.44 crores in previous Q1 FY22. That is significant improvement in Company’s profitability as against EBITDA loss of INR11 lakhs in previous Q1 FY22. The company recorded EBITDA of INR5.36 crores for the quarter under consideration.

Higher revenue, better realization and control over fixed overhead resulted in strong growth and operating profits. During Q1 FY23, our EBITDA margins stood at 8.26%. During the Q1 FY23, the company posted profit after tax INR3.10 crores compared to INR83 lakhs loss in previous Q1 FY22. In the current quarter, financial cost is managed well. In spite of increase in rate of borrowings, the company is confident that it will be able to control finance cost due to strong advances from customers and efficient working capital cycle. We feel that the company may achieve EBITDA percentage may be in the range of 8 to 9% for the complete financial year FY23.

In the beginning of the year, the company estimated topline around INR250 crores, for the financial year. But if similar thing continues, we may achieve topline around INR275 crores or may be near to INR300 crores as we are looking forward for the same.

Thank you. Thank you very much. Over to Mr. Nikhil.

Nikhil Bhatt — Vice President of Strategy

Yeah, very good afternoon.

I would like to update from the business strategies as well as the industry outlook. First, as for the various market reports for the global cold market side and its annual compound rate what is the consolidated changes achieved to be 13% to 15% for the next five years. The market is benefited significantly from the stringent vision governing the production and supply of temperature sensitive products. The industry is poised for the unprecedented growth over the decades due to growing production [Indecipherable] in the emerging economies like ours. Moreover, rising automation and refrigerated warehouse is also projected to boost the demand further.

Also rising consumption of frozen foods in emerging markets such as India, Nepal, Sri Lanka and various others in Africa, Middle East etc., where Ice Make is focused on growing its market shares. It is particularly driving the frozen food segment. Another significant segment is warehousing which falls under the

Chiller segment, are used to store fresh fruits and vegetables, eggs, dry fruits, milk and dehydrated foods and others. Changing consumer preferences to ready to cook meals due to the pricing awareness about the convenience enhancing will boost the frozen segment growth. Moreover, consumers preferred frozen food owing to the ease of use, terms of packing techniques and support for microwave cooking. This is also likely to play a key role in segment development.

I would also like to highlight some strategic priorities for our company in FY23 that will be a more focusing on the increasing topline, maintaining margin, ensuring consistent growth at about 25% to 30%, emphasizing geographical expansion of business and implementing capacity wise expansion

For further capital expenditure in future.

Okay. Thank you.

Ankit Patel — Chief Financial Officer

Now over to — we can start our question-and-answer session.

Questions and Answers:

Operator

Thank you. [Operator Instruction The first question is from the line of Vinay, an individual investor. Please go ahead.

Vinay — Individual Investor — Analyst

Yeah. Hi. Good evening. Congrats on the decent set of numbers. I majorly have three questions. The first question would be I wanted to understand why are we more of moving into lower margin business with regard with ammonia being a 10% gross margin business and then the SOLO segment being more of a tender driven side of business where the orders come from government while we have — on the cold room side, we already have a 30% — 28% to 32% on the cold room and then your industrial and commercials. So, what is the objective with regards to going down the line with regards to margins there by impacting the business as a whole so, even if your growth is strong may be your profitability gets impacted? Hello?

Operator

Hello, sir. We are not able to hear you.

Ankit Patel — Chief Financial Officer

Hello.

Operator

Yes sir. Please proceed.

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Vinay — Individual Investor — Analyst

[Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Vinay — Individual Investor — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Vinay — Individual Investor — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech] So that is our primary strategy. [Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

Understood. [Foreign Speech]

Ankit Patel — Chief Financial Officer

May be around INR44 crores.

Vinay — Individual Investor — Analyst

Understood. [Foreign Speech]

Ankit Patel — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Nikhil Chaudhary from Chrys PMS. Please go ahead.

Nikhil Chaudhary — Chrys PMS — Analyst

Yeah. Hi, sir. Thank you for the opportunity and congratulations on descent numbers. [Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Nikhil Chaudhary — Chrys PMS — Analyst

Understood. Understood. Okay, okay. [Foreign Speech] Understood. Understood. [Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

[Foreign Speech]

Nikhil Chaudhary — Chrys PMS — Analyst

[Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

[Foreign Speech]

Nikhil Chaudhary — Chrys PMS — Analyst

Okay. Okay. [Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

[Foreign Speech]

Nikhil Chaudhary — Chrys PMS — Analyst

Hello?

Operator

Ladies and gentleman, the line from the management has got disconnected. Please stay connected while we reconnect the management.

Ladies and gentleman, thank you for patiently holding. We now have the line for the management reconnected. Over to you, sir.

Ankit Patel — Chief Financial Officer

Sorry for the inconvenience.

Nikhil Bhatt — Vice President of Strategy

Hello. [Foreign Speech]

Nikhil Chaudhary — Chrys PMS — Analyst

[Foreign Speech] Thank you so much sir, and wish you all the best.

Ankit Patel — Chief Financial Officer

Thank you.

Nikhil Bhatt — Vice President of Strategy

Thank you.

Operator

Thank you. The next question is from the line Zaki Mehta, an Individual Investor. Please go ahead.

Zaki Mehta — Individual Investor — Analyst

Yes. Can you hear me now?

Ankit Patel — Chief Financial Officer

Yeah, you are audible.

Zaki Mehta — Individual Investor — Analyst

Congrats to Chandrakant and the team of Ice Make for such a strong performance in the first quarter sir. If I understood right sir, if the economic brings are in our favor, Ice Make could — according to you do maximum topline of INR300 crores with a 9% EBITDA? Is it right sir in terms of if all things going alright. That was my question number one, sir.

Question number two is product specific in regard to solar prices. Sir, can this product be categorized also to stop the wastage, the large wastage of vegetables and fruits due to lack of transportation infrastructure from the farmers and does this product sit into that category or can [Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Zaki Mehta — Individual Investor — Analyst

[Foreign Speech]

Chandrakant P. Patel — Chairman & Managing Director

[Foreign Speech]

Zaki Mehta — Individual Investor — Analyst

[Foreign Speech]

Chandrakant P. Patel — Chairman & Managing Director

[Foreign Speech]

Zaki Mehta — Individual Investor — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Zaki Mehta — Individual Investor — Analyst

Thank you. Thank you sir, and best wishes for you for the year sir. Thank you.

Ankit Patel — Chief Financial Officer

Thank you.

Operator

Thank you. The next question isfrom the line of Arvind Kothari from Niveshaay Investment Advisory. Please go ahead.

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Congratulations on the excellent set of numbers sir. [Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Okay. [Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Got it. Got it. Got it.

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Fantastic. [Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Correct.

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Okay.

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Okay. Okay. Okay. [Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Chandrakant P. Patel — Chairman & Managing Director

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Okay. Okay.

Chandrakant P. Patel — Chairman & Managing Director

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Got it, sir. Got it. [Foreign Speech]

Chandrakant P. Patel — Chairman & Managing Director

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Got it, sir.

Chandrakant P. Patel — Chairman & Managing Director

[Foreign Speech]

Arvind Kothari — Niveshaay Investment Advisory — Analyst

Got it, sir. Got it, sir. Thank you so much, sir. [Foreign Speech] Thank you.

Operator

Thank you. The next question is from the line of Chinmay Shah, an Individual Investor. Please go ahead.

Chinmay Shah — Individual Investor — Analyst

Can you hear me now?

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Chinmay Shah — Individual Investor — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Chinmay Shah — Individual Investor — Analyst

Okay. Understood, understood. That’s all from my side. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Alisha Mahawla from Envision Capital. Please go ahead.

Alisha Mahawla — Envision Capital — Analyst

Hi, sir. Good evening. Thank you for taking my question. [Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech]

Chandrakant P. Patel — Chairman & Managing Director

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Alisha Mahawla — Envision Capital — Analyst

[Foreign Speech] Thank you.

Ankit Patel — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Nilesh Mehta from NSR. Please go ahead.

Nilesh Mehta — NSR — Analyst

Good evening, sir.

Ankit Patel — Chief Financial Officer

Good evening.

Nilesh Mehta — NSR — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Nilesh Mehta — NSR — Analyst

[Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

[Foreign Speech]

Nilesh Mehta — NSR — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Nilesh Mehta — NSR — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Nilesh Mehta — NSR — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Nilesh Mehta — NSR — Analyst

[Foreign Speech] Okay, sir. That’s it from my side. Thank you so much, and all the very best. Thank you.

Ankit Patel — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Vishal Darji from Ice Make. Please go ahead.

Vishal Darji — Ice Make — Analyst

Hello, sir.

Ankit Patel — Chief Financial Officer

Hello.

Vishal Darji — Ice Make — Analyst

Am I audible?

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Vishal Darji — Ice Make — Analyst

Congratulation team Ice Make, sir. [Foreign Speech]

Nikhil Bhatt — Vice President of Strategy

Thank you. Thank you.

Vishal Darji — Ice Make — Analyst

Hello?

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Vishal Darji — Ice Make — Analyst

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Vishal Darji — Ice Make — Analyst

Okay. [Foreign Speech]

Chandrakant P. Patel — Chairman & Managing Director

[Foreign Speech]

Ankit Patel — Chief Financial Officer

[Foreign Speech]

Vishal Darji — Ice Make — Analyst

Okay. Okay. This is from my side. Thank you so much and congratulations, sir.

Ankit Patel — Chief Financial Officer

Thank you.

Nikhil Bhatt — Vice President of Strategy

Thank you.

Operator

Thank you. Ladies and gentlemen this was the last question. I now hand the conference over to the management for their closing comments.

Mandar Desai — ICE MAKE REFRIGERATION LIMITED

Good afternoon, everyone. On the behalf of Ice Make Refrigeration Limited, I Mandar Desai, Company Secretary and Compliance Officer of the company would like to thank you for attending the conference call. Have a nice day ahead. Thank you very much. Thank you.

Operator

[Operator Closing Remarks]