Setco Automotive

- The company has taken enabling power for QIP (Qualified Institutional Placement) last year and may utilize it as opportunities arise for fund raising through equity within the next 2 years. (Page 16) - The main requirement for QIP would be potentially to fund Phase II of Lava Cast and working capital needs; specific timing and amount will be decided based on business conditions. (Page 16, 15) - They plan to invest around Rs 100 crores for Phase II of Lava Cast; current CAPEX for Setco Automotive is about Rs 25-30 crores annually. (Page 15, 6) - For CAPEX funding, they expect to finance through a combination of bank loans and internal accruals. For example, for a Rs 40 crore CAPEX, about Rs 30 crore would be bank loan and Rs 10 crore from internal funds, without necessarily increasing overall debt. (Page 6) - No significant new large equity dilution is planned immediately, and the company is waiting for better results before deciding on valuation or timing. (Page 13, 16) - They expect some dilution within the next 2 years, but no concrete timeline or quantum discussed. (Page 15)

- Setco Automotive typically invests around ₹25-30 crores annually in CAPEX for machinery upgrades, tooling, and expansions; major CAPEX expected to start next year due to renewed sales growth. - Lava Cast Phase I CAPEX was about ₹175-180 crores; Phase II requires approximately ₹100 crores to double capacity. - No additional CAPEX for Lava Cast unless proceeding with Phase II. - Funding strategy includes bank loans where typically 75% of CAPEX is debt-funded (e.g., ₹30 crores loan for ₹40 crores CAPEX), matched by loan repayments to keep overall debt stable or reducing. - QIP (Qualified Institutional Placement) enabling resolution in place to raise funds as needed, primarily expected within next 2 years to support working capital and Phase II of Lava Cast. - No further investment planned in TransStadia by Setco Automotive. - Future equity dilution possible within 2 years to augment working capital and fund growth initiatives.

- The company aims to achieve a milestone of ₹1000 crores in standalone sales by FY19 or FY20, excluding Lava Cast. - Growth is expected from current customers and multiple segments including commercial vehicles (CV), after-market business, tractors, and exports. - The commercial vehicle sector is anticipated to grow in double digits due to government infrastructure investments, road sector growth, mining activity, and a good agricultural harvest cycle. - Tractor clutch business targets 20-25% market share of a possible 300,000 units annually. - LCV segment is a focus, with recent development for ICV clutches; expected growth in this category. - Lava Cast subsidiary will contribute additional volumes post Phase II expansion. - New export markets like the US are expected to start supplying from Q4, though initial turnover will be limited. - Despite demonetization impact, the company anticipates 8%-12% topline growth for FY17 and expects recovery by mid-December.

- FY17 growth expected at 8%-12%, down from earlier 20%-25% projections due to demonetization impact but no spillover expected into FY18. (Page 16) - EBITDA margin in the first half FY17 was low at around 13.1%, considered one of the lowest in five years; scope for improvement is indicated. (Page 11) - Long-term goal to reach ₹1000 crores revenue by FY19 or FY20 with better margins possibly exceeding 17-18%. (Pages 12, 14) - Lava Cast subsidiary expected to contribute with sustainable EBITDA margins of over 15% and ROC of 20%+ by FY19. (Page 15) - Internal consumption and operational efficiencies expected to expand EBITDA margins by 1.5%-2%. (Page 18) - Interest cost currently high but expected to remain stable or decline as EBITDA grows and debt levels stabilize. (Page 12)

- No specific details on the exact current or expected order book value were provided in the discussed pages. - Harish Sheth mentioned continuous engagement with OEM customers, with no rescheduling of orders reported as of the conversation. - Despite demonetization impact concerns, no cutback in production or order cancellations were communicated. - The company expects a good pickup in orders till March-end following GST and BS-IV norms implementation. - For Lava Cast, ongoing customer development and sample approvals suggest expected new orders by March-April next year. - Overall, the dialogue reflects confidence in order continuity and growth prospects, with potential expansion linked to capacity utilization crossing 70% before Phase II investment.