Orient Bell Limited, a manufacturer of ceramic and vitrified tiles with a capacity of ~31 million square meters per annum, has reported results for the quarter ended December 31, 2021.This was a challenging quarter with a massive increase in manufacturing costs and a demand slow down post Diwali. The company stayed focused on its strategy and strengthened sales & distribution infrastructure. With a focus on fundamental benefits & improved execution, Orientbell was able to pass on 100% of the cost escalation to the customer.
As a result, the company continued to make rapid progress simultaneously on each of the three critical financial KPI’s:
1) Topline growth
2) Margin improvement
3) Focus on cash flows.
During Q3, the company successfully completed expansion project at Sikandrabad, adding 0.7 MSM p.a. capacity. Two other projects (1 each at its existing facilities at Sikandrabad, Uttar Pradesh and Dora, Gujarat) are on track and expected to be completed in Q1FY23 – the combined incremental volume potential being ~1.9 MSM p.a.
Another ‘Scale Up’ capex project aimed towards improving its footprint in South is underway at its existing facility at Hoskote, Karnataka (incremental capacity of 1.8 MSM p.a) and is expected to be completed by Q3FY23. These projects are largely being financed via internal accruals as the company continues to focus on working capital to generate cash flows for future expansion.
The uptick in real estate sector is a positive sign for the industry and OBL is confident to stay on track to steadily improve all operational metrics. On a consolidated basis (including OBL’s share of profit from Associates), PAT for Q3FY22 at Rs. 12.1 Crores vs Rs. 7.5 Crore in Q3FY21.
Strong focus on working capital management continued in the company, as Cash Conversion Cycle continues to be under 20 days. Net debt continues to stay below ZERO at Rs (-) 21.4 crore as on 31-Dec-2021.
Revenue from vitrified tiles improved to 45% vs. 41% in Q3FY21 and its marketing investments increased further – +50% vs. Q3FY21 and increased sequentially by ~30%. The manufacturer launched more than ~110 SKUs in Q3FY22 across existing and new product categories.
