Full Conference Call between Wipro Management and Analysts on Q4FY20 results and overall financial year. Listen in to the full transcript.
Wipro's Executive Committee and Management Team joined virtually on the call.
Key Highlights
- These are unprecedented times and I am proud of all the team has come together to keep processes going.
- Revenues in Q4FY20 grew 0.4% in constant currency terms within the guidance, and grew 3.9% for the full year in constant currency. In March as the Covid crisis deteriorated, key markets like US, UK, Europe, we saw accelerated impact to our systems.
- Our Rupee revenues 4.2% growth for this fiscal year. Expanded our IT services margins by 0.2% to 18.2% for the full year. That helped grow operating profit by 5.8%. Buyback got completed by September; other income grew 8% YoY.
- Effective tax rate was lower by 1.7% during this year. Overall net income YoY grew YoY at 8%. Because of reduction in outstanding shares due to buyback, growth in EPS FY20 was 11.2%. We have $3.4 bn dollars in net cash and $44.4 bn in gross cash. Better realizations overall. Good cash position to continue to look at opportunities.
- Our realization rate for this quarter was 73.95 compared to 72.09 from previous quarter
- Good year on operating cash flow and free cash flow. Operating cash flow as % of EBITDA of 81%, FCF as % of Net Income 81%. Slightly lower cash flows in last quarter. Some salary payments that happen once in a few years, which impacted some of our numbers by upto 30%.
- We quickly activated our covid management task force headed by our COO. The team consisted of leaders across our major verticals. Our topmost priority remains the safety and well-being of our people and stakeholders.
- We were able to move by early March most of our people globally to work from home. In India this started on March 15. This involved getting approvals from our customers as well. SLA performance has been stable.
- Demand environment: We are very much in the middle of the crisis. We already see budget reductions, discretionary spends, and requests for contract restructuring. Airlines, energy, oil and gas, auto, retail, travel and hospitality are experiencing immediate and deeper impact.
- Fashion retailers, home improvement retailers, restaurant businesses, department stores, are significantly affected right now. These businesses are cutting costs and trying to move to Omnichannel solutions.
- Struggling verticals: Oil and gas is hit due to oil price falling. Auto manufacturing is where both demand and supply have been disrupted. Retail except grocery stores is struggling. These have been highly impacted.
- Verticals where we are seeing opportunity: Communications, utilities. Banking is seeing some positive impact with refinancing, loans and grants, government support programs. With logistics customers we are seeing traction around supply chain management. While healthcare is seeing decline in elective health treatment, emergency and COVID response has resulted in some demand here particularly in hospitals.
- We have decided to temporarily suspend quarterly guidance, and will resume when we have some clarity on the length of the crisis.
- Focus is on defending revenues and increasing market share. We expect demands on working capital to increase, but believe we are comfortably placed.
- Saw some disruption in regular payment cycles from some customers. We had a good first two weeks in the quarter 1 now and we think we will see that normalize now.
- There are certain verticals where some organizations have a fundamental question mark on their business model. We are also getting a lot of requests on postponement of discretionary spend.
- We also see requests for higher efficiency in spending, which means lower revenue but also more opportunity. For example, there is a big demand in cloud infrastructure as more people work remotely. We have our own virtual desk offering, and that presents a big opportunity - we are seeing good traction here as businesses invest in remote collaborative working.
- There are ongoing a lot of conversations with a lot of clients on postponements, or reducing costs for the customers. It will be difficult to quantify exact number but this is concentrated in retail, travel, oil&gas, auto, hospitality.
- As bad if not worse than GST is our assessment of the impact on businesses. The focus of our customers has been to be up and running and ensure business functioning.
- A large portion of our business has become fixed price, locked in for 3-4 years.
Grasim Industries management held a call with analysts and investors to discuss the impact of COVID-19 on the business, and overall outlook. Click here to listen in to the full transcript.
Call participants: Mr. Dilip Gaur (MD), Mr. Kalyan Ram (CEO, Global Chemicals and Group Business), Mr. Jayant Dua (CEO, Chemical Division), Mr. Ashish Adukia (CFO)
Introductory Remarks from Ashish Adukia, CFO, Grasim Industries
Highlights from his remarks
We have been running many scenarios to evaluate the strength of our businesses. We will identify key focus areas:
1) Employee Safety: We started work from home for all our employees before the lockdown was announced. It has been very efficient and has not caused any hindrance in our work. Even the employee safety and government directives, we’ve stopped down some of our plants and some are running at low capacity utilization.
2) Liquidity: We have treasury of around Rs 2,000 crore in December 2019 and will be able to maintain a similar level of treasury by year end as well. We are not holding any specific financials on this call as we are yet to declare our last financials.
3) Third is Capex: As of today, we have put our large capex plans on hold. We are closely monitoring the situation. Because not to say, we are withdrawing all our Capex but we will take decisions on this Capex based on the lockdown situation as well on the demand outlook.
4) Fourth and the last focus area is cost management. We are deeply monitoring our costs and we are looking at different scenarios of lockdown to monitor our costs and we will evaluate ways to optimise them if required.
Updates and inputs from Dilip Gaur (MD)
As we all know the situation in the world is highly uncertain and very unpredictable. Therefore, it is extremely hazardous to make any guesses at this stage. What we have done, is we have maintained multiple recovery scenarios and developed the business continuity plan by stress testing our business against these scenarios.
Supply chain readiness is very important for our BCP because we have ensured that there is adequate material available in the pipeline because when our customers start, they don’t starve for the material. We also have got permission to run three out of our four factories from the government because we are a continuous process industry. One of the factories is already running. Therefore, we can ensure a vertical start-up when the demand resumes.
We have also made sure that we have adequate raw material available, enough stock, enough input material and because most of our factories are in townships where people live in the premises, it won’t be very difficult for us to get the workers. So, what we have done is we have also built up plans to run the factories with a flexible team because availability of workmen has to be constrained because of social distancing now.
We have put very strong SOPs and controlled hygiene and social distancing. We have built up a hygiene channel, dedicated buses to have our employees come to the office and a lot of other actions taken. So far, we have no cases at all anywhere at our units or townships. In terms of markets, globally all the textiles consuming and production centres are under lockdown state. The biggest consumers are the EU and USA. The biggest production centres are Turkey, Bangladesh, Pakistan, Indonesia are all in similar situations. There is no pull from the market right now. As the stores open, the demand will put up.
Inputs from Kalyan Ram, CEO, Global Chemicals and Business Group
Keeping in view the current situation of COVID, one of the strengths of Grasim is its products or significantly diverse range of industries. The products that we produce of various chemicals or fertilisers and insulators, we actually supply into the food industry, phosphoric acid, sugar refining. We supply into the water industry, essential household items, we supply into industrial continuous processing, pharmaceuticals, agriculture and raw materials in agro chemicals. Our own fertiliser plant supplies urea. We have one or two plants which are operational continuously in the lockdown. Couple of plants have not shut down at all. Several plants are running at lower levels and older plants have so far received permissions for starting in the next few days.
We really focused on ensuring our safety and health process are upgraded to the new reality. We have a very strong business continuity plan as of now because of the scenario test that we have done. We believe even if there are some more unpredictable changes, given we have global understanding of how our plants across East Asia, Europe are manufacturing. We are hoping for a lot more production to start in the coming days.
Jayant Dua (CEO Chemical Division)
Couple of our plants are running at 30-40% from Day 1. We have got permission to run our plants as and when the demands balance. From a customer perspective, aluminium never stopped, refineries never stopped, disinfectant is doing pretty well as there is large demand. We have been able to cater to largely all these demands on time. There is steady improvement in the supply chain. We expect that all our plants will be running by the end of this month.
COVID-19 Impact
The situation is very fluid right now. As you know, Chinese plants never stopped even when COVID was at the peak in China also. The Chinese plant is in a continuous process and that’s why they have been running those plants and building up of inventory. Post the normalcy in China, the demand hasn’t picked up the way it should have. The yearn capacity is running at a very low operational rate at less than 40%.
Until the consumer market opens, there will not be any demand so the Chinese plant is finding it difficult to sustain the operation. They are realising that they can’t keep building inventory and not sell. I think we are seeing some closures but it will be too early to say what will happen. So, it all depends how fast Europe and the US come back to normal because Chinese domestic demands have also not picked up the way we had expected. I see some rebalancing happening but it will take time.
Before the lockdown, the demand of yarn was very good. Only since the last 10-15 days, the European retailers started cancelling orders.
Torrent Power Management held a conference call with analysts on the business impact of Covid-19 lockdowns on the company, and potential impact on quarterly results. Listen in to the full call transcript here.
Key Highlights
- Part of the essential business category so Torrent Power is open and fully operational
- Challenges have started emerging with dues being deferred to 15th May, impacting collections. On the other hand, operations have to continue uninterrupted.
- We have sufficient liquidity to continue operations uninterrupted till end of June. We have also taken advantage of RBI moratorium for term loans.
- Gas based, coal based and renewables based generations: Financial performance of gas based plans will not be affected. We will see benefits of additional megawatts added, in Q1.
- Discoms are seeing large drop in demand during lockdowns. Current estimate for Q1 is that our PLF (Plant Load Factor) will fall by 10%.
- The negative impact of PLF will be in fuel gain incentives - incentives we earn will be lower due to lower volumes. Our OLM costs are likely to be lower also, which provides some offset.
Listen to the full call here.
