Royalty Income of Kamdhenu up 29 per cent in June quarter to Rs. 24.4 crore compared to previous year

According to the company, it has recouped its business strategy by reducing B2B Trading Sales and focus on improving efficiencies in Own Manufacturing and on franchisee-based business model, which have led to increased margins and better efficiencies with higher return on equity (RoE) and return on capital employed (RoCE).

The company said its Steel Business contributed 82% of revenues and the Paint Division 18%.

After the fire at its Paint plant, the company has started outsourcing of paints and the business has resumed normalcy.

During the quarter, a major fire broke out in the Paints factory of the compa

Although there was no human casualty, the inventory at the factory, property, plant and equipment got damaged substantially.

The carrying amount as on date of fire of inventories, property, plant and equipment damaged in the fire was to the tune of Rs. 45.68 crore. the company reported.

The inventory, property, plant & equipment damaged in the fire were validly insured and insurance policies were effective as on the date of such fire, according to the company.

The company has filled insurance claim of Rs. 45 crore with an Insurance company and the process of assessing the claim settlement is underway.

The company has recognized insurance claim receivable as on June 30, 2019 amounting to Rs. 45crore (to the extent of amount claimed) in books of account.

Any deficit/surplus in the amount of Insurance claim shall be recognized as expense/income upon final settlement of the claim.

Commenting on the results and performance, Satish Kumar Agarwal, Chairman & Managing Director said: “We have started FY20 on a strong note. Despite the slowdown in the steel industry, due to our business model we have been able to improve our overall sales volumes by ~20%. This was mainly driven by our strong execution strategies and our brand pull, created through our large distribution and marketing strength."

He said, "For the quarter, our Royalty Income grew by 29 per cent to Rs. 24 crores. The company is on course to beat its target of Rs. 100 crores as Royalty Income during this financial year. Along with this, we also expect to add more franchisee capacity going forward and reach the 5 million MT per annum capacity by FY22."

"We have been able to improve our profitability significantly in the steel business and have reported a 44 per cent growth to Rs. 9.5 crore," said Agarwal.

Kamdhenu Group was founded in 1994

Kamdhenu operates through a network of over 11,500 dealers and distributors in India out of which 7,500 are exclusive for steel business.

Image Credit: Kamdhenu Limited/Twitter