Kamdhenu CFO says looking to expand capacity once Covid recedes, CFO News, ETCFO

Kamdhenu CFO Harish Kumar Agarwal Harish Kumar Agarwal, Chief Finance Officer at steel bars retailer Kamdhenu Ltd, has set his eyes on ramping up capacity once pandemic disruptions lessen.

He is optimistic about the long-term demand prospects for steel and sees a strong recovery once the lockdowns imposed to contain the virus end.

“We have a target to increase our production capacity from 38 lakh MT to 50 lakh MT, through franchise route by FY23. We are actively looking at expanding our product portfolio and operations through the franchise route only, which is an asset-light model,” Agarwal told ETCFO in a phone interview.


The CFO said fresh disruptions are affecting demand, both in urban as well as rural markets, but quickly added that the impact has been much lesser than the same period last year when the nationwide lockdown was announced. He is hopeful that the second wave would be controlled soon through the government’s curbs.Even last year, we saw the economy was affected at the same time when the disruptions hit. But after the curbs were lifted, we saw a strong recovery. There was strong pent-up demand for the existing infrastructure projects. That same story is likely to play out this time as well.Kamdhenu CFO Harish Kumar Agarwal
Kamdhenu’s 70 per cent revenue comes from the rural markets, where the virus this time seems to have penetrated, while the rest 30 per cent share comes from the urban areas. The real estate and construction sectors form the backbone of the economy, and the government would not let them suffer adversely, the CFO said.

Paints business hive-off

The CFO shared the objective behind the company’s decision to hive off the paints business into a separate entity, saying the move was taken primarily to unlock shareholders value as well as give the paints line of business a separate exclusive identity following a good strong performance in the last couple of years.

We have already filed the scheme of demerger with the National Companies Law Tribunal (NCLT), and the approval is awaited. Shareholders of Kamdhenu (steel business) will be given a mirror shareholding in the new paints entity, which will get separately listed. This is also an opportunity for us to get private equity or a strategic investor down the line. We are targeting Rs 1,000 crore revenue from the paints business in next five years or so.Kamdhenu CFO Harish Kumar Agarwal

Kamdhenu foresees a brand turnover of Rs 12,000 crore for the financial year 2020-21, an increase of more than 10 per cent over the last number of Rs 10,800 crore. It has 80 franchise units, and a dealer network of 11,500 of which 7,500 are steel dealers, while the rest 4,000 are paint dealers.

It primarily sells steel bars in the retail markets; its majority revenue comes from the royalty that it gets from its franchise units after allowing its brand to use. It has one manufacturing capacity of its own, located in Bhiwadi (Rajasthan), which caters to the Delhi/NCR region and has an annual capacity of 1.56 lakh MT; it does more than Rs 300 crore business from this facility.

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