Paramount Communications Ltd. — Interim / Quarterly Report 2023

May 20, 2023

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EARNINGS RELEASE & SHAREHOLDER’S LETTER

Q4 FY23 MAY 19, 2023

In This Report, We Cover

1. About Us

2. Product Portfolio

3. Our Strengths

4. Key Financial Performance

5. Financial Statement

6. What Next?

7. Business Update

8. Management Commentary

9. Management Guidance

About us:

• ➢ Incorporated in the year 1955, Paramount Communications Limited (Paramount) is India’s one of the leading cables and wires manufacturer and markets its products under the brand “paramount cables”, known for its quality and reliability.

• ➢ Paramount’s product portfolio comprises of high-quality power cables, railway cables, telecom cables, domestic wires, specialized cables, and offers turnkey services to telecom, power, railway sectors. Paramount also offers specialized services like undersea cables installation & repair, live installation of OPGW on overhead High-Tension Power lines, and installation of optical fiber & Railway signaling cables network.

• ➢ Paramount was the first mover in the India to provide the following:

• Laying and repairing undersea cables.

• Introducing non-toxic, lead-free house wires in India.

• Development of many path breaking products in the cables industry.

• ➢ Paramount has two production facilities which are certified by various Indian and global agencies for their quality standards: one in Dharuhera, Haryana and the other in Khushkhera, Rajasthan.

Product Portfolio:

• Low Tension (LT) & High Tension (HT) Power

• ▪ LT & HT aerial bunch cables ▪ Screened & Unscreened cables ▪ Control Cables Power ▪ Instrumentation Cables ▪ Thermocouple Cables ▪ Building wire Domestic ▪ Multicore cables ▪ Submersible Cables

• Wires

• ▪ Optical Fibre cables ▪ Fibre to home cables ▪ Jelly filled cables Telecom ▪ Co-axial & Lan cables ▪ Television cables ▪ Signalling Cables ▪ Railway Power Cables

• Railways ▪ Axle Counter Cables

• ▪ Fire survival cables ▪ Solar cables Special ▪ Laying & Repair of ▪▪ PTFE cablesUnderwater Installation cables ▪ Undersea CablesOPGW Cables Live Installation

• Turnkey ▪ Optical Fiber & Railway Signaling

• services cables network installation

• ▪ Telecom consultancy

Our Strengths:

• ➢ Paramount has a presence in 15+ countries spread across 6 continents. Exports account for more than 50% contribution to revenue in FY23 with USA being the dominant export market.

• ➢ Paramount received all the major Indian and International accreditations like BSI, IEC, ASTM etc. which provides assurance about quality and reliability of its products.

• ➢ The company is an approved and preferred vendor for supplying cables to various PSUs and private sector companies offering the diversity and constant demand.

• ➢ Paramount’s clientele consists of the reputed names such as:

PSUs: IOCL, DMRC, MMRCL, EIL, NTPC, BPCL, PGCIL, UHBVN, NPCIL, PDIL, BHEL, BSNL, ISRO, DAE, SAIL, Indian Railways, RDSO, IRCON, RITES.

Private: L&T, Adani, Tata Power, Tata Projects, Sterling & Wilson, Kalpatru Power, Toshiba, ABB, Vikram Solar, Renew Power, GE T&D, JK Cement, Tata Steel, Hitachi Energy , BSES Power, KEC International, Texmaco.

Key Financial Performance:

Segment-wise Revenue Distribution:

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FY22 FY23
EPC Projects Others EPC Projects Others
6% 1% Power 3% 2% Power
Cables Cables
43% 24%
Exports
22%
Railway
Cables
Exports
8%
50%
Domestic
Telecom
Wires
8% Telecom Cables Railway Cables Domestic Wires Cables6%
9% 11% 7%
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Comparison of FY22 vs FY23:

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Revenue From Operations (Rs Profits (Rs In Mn.)
In Mn.)
EBITDA PAT
₹ 7,964.67 ₹ 642.02
₹ 5,809.36 ₹ 477.68
₹ 241.59
₹ 82.05
FY22 FY23 FY22 FY23
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Margins
9.00% 7.90%
8.00%
7.00%
6.00%
5.88%
5.00% 4.13%
4.00%
3.00%
1.40%
2.00%
1.00%
0.00%
FY22 FY23
EBITDA Margin (%) PAT Margin %
Diluted EPS
3
2.4
2
1
0.42
0
FY22 FY23
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Balance Sheet Ratios:

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Balance Sheet Ratios
1.00 18.00%
0.87
0.90 16.19% 16.00%
0.80 14.00%
0.70
12.00%
0.60 0.54 9.43% 10.00%
0.50
8.00%
0.40
6.00%
0.30 4.07%
0.20 4.00%
2.93%
0.10 2.00%
0.00 0.00%
FY22 FY23
Debt to Equity ROCE ROE
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Comparison of Q4 FY22 vs Q3 FY23 vs Q4 FY23:

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Revenue From Operations (Rs. Mn) Profits (Rs. in Mn)
2300 200.00 ₹ 189.36
₹ 178.47
180.00
₹ 2,180.89
2200 160.00
₹ 143.18 ₹ 138.01
140.00
2100
₹ 2,020.78 120.00
2000 100.00 ₹ 83.30
80.00
1900 ₹ 1,831.76 60.00 ₹ 48.67
40.00
1800
20.00
1700 0.00
Q4 FY22 Q3 FY23 Q4 FY23
1600
Q4 FY22 Q3 FY23 Q4 FY23 EBITDA PAT
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Margins

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10.00%
8.53%
8.55%
8.00%
6.61%
6.00%
4.51%
6.45%
4.00%
2.63%
2.00%
0.00%
Q4 FY22 Q3 FY23 Q4 FY23
EBITDA Margin (%) PAT Margin %
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Consolidated Income Statement:

Particulars (Rs. Mn)	Particulars (Rs. Mn)	Q4 FY23	Q4 FY23	Q4 FY22	Q4 FY22	Q4 FY22	YoY%	Q3 FY23	FY23	FY23	FY22	FY22	YoY%
Revenue from Operations		2,020.78		1,831.76			10.32%	2,180.89	7,964.67		5,809.36		37.10%
Other Income		65.95		15.99				39.09	162.53		37.43
Total Revenue		2,086.74		1,847.75				2,219.98	8,127.20		5,846.79
Total Expenses excluding Depreciation, Amortization & Finance Cost		1,908.27		1,764.45				2,030.62	7,485.17		5,605.21
EBITDA		178.47		83.30			114.25%	189.36	642.02		241.59		165.75%
EBITDA Margin(%)		8.55%		4.51%			404 BPS	8.53%	7.90%		4.13%		377 BPS
Depreciation & Amortization		22.81		24.33				23.49	92.58		95.45
Finance Cost		17.65		10.30				22.70	71.77		64.09
PBT before Exceptional Item		138.01		48.67				143.18	477.68		82.05
Exceptional Items		-		-				-	-		-
PBT		138.01		48.67				143.18	477.68		82.05
Tax		-		-				-	-		-
PAT		138.01		48.67			183.58%	143.18	477.68		82.05		482.16%
PAT Margin %		6.61%		2.63%			398 BPS	6.45%	5.88%		1.40%		447 BPS
Other comprehensiveprofit/loss		-0.84		3.45				1.46	3.55		5.86
Net PAT		137.17		52.12				144.64	481.22		87.91
Diluted EPS		0.67		0.25				0.72	2.40		0.42
Consolidated Balance sheet: Particulars (Rs. Mn) As at 31.03.2023 As at 31.03.2022 Assets Non-current assets Property, plant and equipment 976.39 957.71 Right of use assets 289.09 381.74 Intangible Assets 10.87 15.10 Financial Assets -Loans 0.33 0.20 -Other Financial Assets 97.72 144.61 Other non-current assets 10.24 4.62 Total non-current assets 1,384.64 1,503.97 Current Assets Inventories 1,130.96 1,146.09 Financial Assets -Investments 100.20 - -Trade Receivables 1,687.69 1,736.10 -Cash & Cash equivalents 179.74 13.87 -Bank balances 122.02 127.19 -Loans 4.32 2.19 -Other Financial Assets 29.29 34.51 Other Current Assets 381.77 205.07 Current Tax Assets 18.47 40.89						Particulars (Rs. Mn) As at 31.03.2023 As at 31.03.2022 Equity & liabilities Equity Equity share capital 388.37 388.37 Otherequity 2,562.45 1,629.06 Total equity 2,950.82 2,017.43 Non-current liabilities Financial Liabilities -Borrowings 1,123.20 1,573.36 -LeaseLiabilities 22.59 102.76 Provisions 5.98 10.51 Total non-current liabilities 1,151.76 1,686.63 Current liabilities Financial Liabilities -Borrowings 455.76 174.05 -LeaseLiabilities 0.81 16.60 -TradePayable 398.15 835.04 -Other Financial Liabilities 43.58 43.62 Provisions 0.84 8.25 OtherCurrentLiabilities 37.38 28.27 Total current liabilities 936.52 1,105.83 TOTAL EQUITY& LIABILITIES 5,039.10 4,809.89
Particulars (Rs. Mn)	As at 31.03.2023		As at 31.03.2022			Particulars (Rs. Mn)				As at 31.03.2023		As at 31.03.2022
Assets						Equity & liabilities
Non-current assets						Equity
Property, plant and equipment	976.39		957.71			Equity share capital				388.37		388.37
Right of use assets	289.09		381.74			Otherequity				2,562.45		1,629.06
Intangible Assets	10.87		15.10
Financial Assets						Total equity				**2,950.82 **		2,017.43
-Loans	0.33		0.20
-Other Financial Assets	97.72		144.61			Non-current liabilities
Other non-current assets	10.24		4.62			Financial Liabilities
						-Borrowings				1,123.20		1,573.36
Total non-current assets	1,384.64		1,503.97
						-LeaseLiabilities				22.59		102.76
						Provisions				5.98		10.51
Current Assets
Inventories	1,130.96		1,146.09
						Total non-current liabilities				1,151.76		1,686.63
Financial Assets
-Investments	100.20		-
						Current liabilities
-Trade Receivables	1,687.69		1,736.10
						Financial Liabilities
-Cash & Cash equivalents	179.74		13.87
						-Borrowings				455.76		174.05
-Bank balances	122.02		127.19			-LeaseLiabilities				0.81		16.60
-Loans	4.32		2.19			-TradePayable				398.15		835.04
-Other Financial Assets	29.29		34.51			-Other Financial Liabilities				43.58		43.62
Other Current Assets	381.77		205.07			Provisions				0.84		8.25
Current Tax Assets	18.47		40.89			OtherCurrentLiabilities				37.38		28.27
Total current assets	3,654.46		3,305.92			Total current liabilities				**936.52 **		1,105.83
TOTAL ASSETS	5,039.10		4,809.89			TOTAL EQUITY& LIABILITIES				5,039.10		4,809.89

What Next?

• ➢ Paramount has satisfied pre-qualifications for supplying to various transmission and distribution companies which will allow it to further tap the growth opportunities present in transmission and distribution sector.

• ➢ Paramount is pre-qualified by central and state governments as well as government companies and departments for government investments in key infrastructure sectors like energy, transportation, and building materials that will result in orders for infrastructure development, railway electrification, metro rail roll-out, railway network expansion, and decongestion plans.

• ➢ Paramount's diversified portfolio spanning across 2,500+ SKUs places them in a favorable position to capitalize on the increasing demand in the C&W industry across various sectors, projected to grow at a CAGR of 15%.

• ➢ To successfully expand into the Australian and European markets, Paramount will adapt the growth strategy followed in USA of prioritizing quality, and ensuring that products and services meet the specific needs and preferences of these markets.

Business Update:

• ➢ Paramount allotted 6,23,25,925 convertible equity warrants at issue price of Rs 21.57 with subscription price of Rs. 5.40 for each warrant convertible into 1 equity share at warrant exercise price of Rs. 16.17. Conversion can be exercised at any time within 18 months from the date of allotment: 18[th] February 2023.

• ➢ Paramount has shifted their Registered Office of the Company from C-125, Naraina Industrial Area, Phase-1, New Delhi-110028 to 432, Rangpuri, Maulsari Avenue, Adjacent Westend Greens, New Delhi-110038 with effect from 15th Day of February, 2023.

Management Commentary:

Commenting on Paramount’s growth, Mr. Sandeep Aggarwal, Managing Director, said:

“I am pleased to report a year of substantial improvement in financials for Paramount Communications Ltd. Revenue from Operations witnessed a staggering growth of 37.10% from Rs. 5,809.36 Mn in FY22 to Rs.7,964.67 Mn in FY23 driven by increase in operational efficiency and higher capacity utilization. EBITDA grew by 165.75% from Rs.241.59 Mn in FY22 to Rs.642.02 Mn in FY23 with an increase in margins by 377 bps over FY22 led by higher margin products and increase in B2C exports to USA. PAT Margins registered an increase of 447 bps .

As a result of our focused efforts towards enhancing our market reach, we witnessed remarkable growth in the export market which now accounts for more than 50% of our total revenue, compared to just 4.3% in FY20. Since all the exports to the US market are B2C, the total share of B2C sales in our revenue has increased from 19% in FY21 to 61% in FY23.

To continue our growth in international markets, we have a robust plan to establish our brand and supply chain in the lucrative USA, European and Australian markets, with the aim of achieving a minimum of 20% growth in FY24. This presents a tremendous opportunity for us to further capitalize on the global demand for our products and drive substantial revenue growth.

Furthermore, power cables continue to be the crucial contributor accounting for 24% of revenue. Key government initiatives like rural electrification programme, smart cities mission, 100% railway electrification, and increasing total power generation capacity will drive growth of power cables in domestic market.

At Paramount, we continue to reduce our debt and in turn moderate our finance cost. As we ride the wave of robust and encouraging demand from our reputable clients spanning across multiple industries, we are hopeful of showcasing sustainable and high growth in revenue as well as profits for upcoming years.

Our customer-centric approach has been a cornerstone of our success in the cables and wires industry. We have been proactive in understanding our customers' needs, providing innovative solutions, and offering superior customer service. Our strong relationships with our customers have resulted in increased customer satisfaction, repeat business, and positive word-of-mouth, enabling us to expand our market share and strengthen our competitive position.

In conclusion, I would like to extend my thanks to our partners and suppliers, whose collaboration and innovation have enabled us to deliver high-quality products and services to our customers. We value the trust and relationships we have built with each of you, and we look forward to continuing our partnership in the years to come. As we move forward, we remain committed to our values of integrity, innovation, and sustainability, and we will continue to strive for excellence in everything we do.”

Management Guidance:

• ➢ Revenue is expected to be at ~Rs. 10,000 Mn for FY24 led by increase in demand for exports and power cables.

• ➢ EBITDA is expected to stay within a corridor of ~ 9-10%.

Disclaimer:

Certain statements in this document may be forward looking statements. Such forward-looking statements are subject to certain risks and uncertainties like government actions, local political or economic developments, technological risks, and many other factors that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statements. Paramount Communications Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forwardlooking statements to reflect subsequent events or circumstance.

Contact Details:

SANJAY AGGARWAL

Paramount Communications Ltd Contact: +91-1145618800/8900 Email: sanjay@paramountcables.com

Krunal Shah/Naman Maheshwari

Captive IR Strategic Advisors Pvt. Ltd. Contact: +919372467194 Email: Krunal@cap-ir.com/naman@cap-ir.com