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In Conversation With Rupesh Mehta, Promoter, Chairman and Managing Director, Macpower CNC Machines LTD

Rupesh Mehta, Chairman and Managing Director of Macpower CNC Machines Ltd, discusses the company's strong financial performance in recent quarters. He cites their large order backlog, growing demand from key industries, and efforts to increase production capacity as factors that will help the company continue its revenue growth trajectory and achieve operating leverage gains over the next 3-5 years. Mehta also notes cost control measures like inventory management and supply contracts that will help protect margins amid rising input costs.

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61 views3 pages

In Conversation With Rupesh Mehta, Promoter, Chairman and Managing Director, Macpower CNC Machines LTD

Rupesh Mehta, Chairman and Managing Director of Macpower CNC Machines Ltd, discusses the company's strong financial performance in recent quarters. He cites their large order backlog, growing demand from key industries, and efforts to increase production capacity as factors that will help the company continue its revenue growth trajectory and achieve operating leverage gains over the next 3-5 years. Mehta also notes cost control measures like inventory management and supply contracts that will help protect margins amid rising input costs.

Uploaded by

Naresh Borana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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In conversation with Rupesh Mehta,

Promoter, Chairman and Managing


Director, Macpower CNC Machines
Ltd
Armaan Madhani / 21-Feb, 2022 
/ Categories: Trending, Interviews

Rupesh Mehta, Promoter, Chairman and Managing Director of Macpower CNC Machines
Ltd expects margins to keep improving year on year as they keep growing

The quarter ended September 30, 2021 was the company’s best ever quarter
on all fronts. Q3 also witnessed good growth YoY. What factors have
contributed the most to help you outperform?
Macpower CNC Machines is in the business of manufacturing and selling
CNC machines i.e. computerised numerically controlled machines. These
machines are used across industries for metal-cutting. Hence, our products
are majorly used in key sectors such as automobiles, engineering,
aerospace, defence, pump and valves manufacturing, agriculture, die mould
and general engineering, amongst others. Post the second wave of the
pandemic subsiding, the business momentum came back to normalised
levels. Our revenue jump in Q2 was led by two key factors: (1) a strong
order book at Rs 126 crore at the beginning of the quarter and (2) spill-over
effect of Q1 in Q2 due to lower shop floor activity at our and customers’
end due to high infection rates. So, the right measure would be to look at
H1FY22 as a whole as we aim to better our performance in H2FY22 versus
H1FY22 on the back of unexecuted order book of Rs 145 crore as on
December 31, 2021.
As you would have already seen, in our 9M performance for FY22 we have
achieved revenue of Rs 135 crore, which is close to our highest ever
revenue of Rs 140 crore achieved in the past. We are confident of achieving
new milestones every year on all fronts. From a longer term perspective,
our past efforts for backward integration, continued efforts for better
allocation of resources and enhancing our capacities has not only been
instrumental in our revenue growth but has also allowed better operating
leverage in our business which will hold us in good stead for the next 3-5
years. This is also backed by strong demand in the market, growing
traction of companies’ products, the NEXA initiative, new higher value
defence and government sector orders.
 
The company has witnessed robust order inflows over the last few months.
Can you share your outlook on the overall order book and execution? 
Our order book as on December 31, 2021 stood at Rs 145 crore, which is
1.7 times of H1FY22 revenue and 1.1 times of 9MFY22 revenue. Our NEXA
group has also been instrumental in helping us get regular large orders (in
value terms) for our new HMC and VTL machines. We have continued to
witness 10-20 per cent higher order inflows versus our execution and we
hope to achieve our highest ever machine execution in FY22 versus any
other year in the past. A strong order book, led by industry growth and
demand, as well as gradually increasing capacities from 100 machines per
month to 125 machines per month by end of FY23 will also translate into
good growth. However, the only dampener to our expectation could be any
further wave of the pandemic impacting businesses and availability of
manpower on our and customers’ shop floors.
 
With the spike in commodity inflation, input costs are surging for companies
across the board. Are you implementing any cost rationalisation measures to
safeguard profit margins?
We already have 3-4 months’ inventory of major components to balance
out any input cost increase. Moreover, rate contracts with major suppliers
have also helped us to rationalise input cost increase. Also, increased
prices of machines in a balanced way without hampering sales growth has
been done by major machine tool manufacturers across the board. Further,
our cost structure is one of the most efficient versus any of our
competitors due to our location advantage as well as our focus on
continuously working on shop floor efficiencies. This has allowed us to
generate strong cash flows in our business and keeps it debt-free since
long years. We intend that the company should continue as debt-free in the
coming years also.
 
As you continue working towards de-bottlenecking existing capacities along
with a burgeoning order book, when do you expect significant operating
leverage to play out?  
We cannot comment on future events as it is price-sensitive information.
However, we can say that backward integration will play a pivotal role to
leverage cost-effectiveness through which higher profitability can be
achieved. We expect margins to keep improving year on year as we keep
growing. Gradually increasing our capacities, improvement in our capacity
utilisation, higher execution of machines, increasing mix of high-end
machines and developing skilled manpower will play a significant role in
our growth strategy. We are looking for sustainable and profitable growth.

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