Premier Explosives Ltd. expects its topline to grow as the maker of solid propellants for India's missile systems bets localisation of the nation's defence manufacturing.
The company sees its revenue surpassing the Rs 500 crore mark in the current fiscal year, supported by an order book worth approximately Rs 521 crore as of March 31, 2023, TV Chowdary, managing director at Premier Explosives, told BQ Prime in an interview. It targets to secure orders worth around Rs 700 crore in the first quarter of FY24.
Premier Explosives is among beneficiaries of growing orders for domestic defence firms as the world's third biggest importer of arms and ammunition focuses on local production. The company, previously centred around the industrial explosives segment, has now switched focus to the defence explosives segment, Chowdary said.
Order Execution Timeline
The company's orders in the current financial year primarily focus on the supply of flares and shafts. These orders, placed on an emergency procurement basis, are expected to be fulfilled within a 12-month timeline, according to Chowdary.
While it aims to complete its FY23 order book by the end of this year, Chowdary also said the execution can extend up to six months into the next financial year. He also highlighted that several orders have estimated timelines of 24 months.
Moreover, the fulfillment of rocket motor casing related orders for Larsen & Toubro Ltd., Bharat Dynamics Ltd., and Indian Space Research Organisation is contingent upon the availability of free issue materials, he said. The supply and financing will be handled on a pro-rata basis, he said.
Plant Capacity
After it completed a new manufacturing facility in Telangana, Premier Explosives now has eight plants. This latest one is exclusively dedicated to fulfilling defence-related orders, providing enhanced capacity for the production of items such as graphic motors, flares, and shafts, he said.
Tthe company is operating at a 50% capacity utilisation including recent orders.
Revenue Break-Up
Chowdary said the company's aims for a 70:30 revenue ratio split, with greater focus on the defence segment.
In FY23, Premier Explosives recorded a revenue of Rs 2020 crore, primarily driven by its explosives segment. Looking ahead, the company anticipates a surge in export-related orders for its rocket motor product.
Areas Of Opportunity
India's emphasis on the 'Make in India' initiative, particularly in the defence sector, has played a vital role in driving business growth for the company, according to Chowdary.
Chowdary identified space as a big area of opportunity for the company in the next three-four years. Premier Explosives is aiming for a 15-20% revenue contribution from this vertical in the coming years. The company has an order from ISRO in its pipeline, with a planned execution timeline of six years.
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