Key Highlights

Mar 17 quarter was affected due to strike at Taloja plant and hence on a low base of Mar 17 quarter, company reported a strong Mar 18 quarter with net sales being up by 60%.

For FY 18, net sales were up by 36%. 90% of the growth was volume led and rest was on higher realisations.

The increase in raw material was fully passed on to the consumers and that also helped in some better margins, as company was smartly able to carry low cost raw material inventory. Generally, the price increase of raw material gets passed on and vice versa.

NBR would account for around 35% of total sales, Synthetic Latex would contribute around 50% of total revenues and Synthetic Rubber would be around 15% for FY 18. Exports mostly is from sale of Latex.

The company is operating at 80% at Taloja and 100% at Walia plant.

The key customer Paper plant has started but volumes are still on lower side. FY 18 volumes are better than FY 17.

The company incurred capex of around Rs 13 crore in FY 18 and has plans to incur capex of around Rs 40-50 crore in FY 19. This will be largely in debottlenecking the NBR capacity which will get increased from 16000 tons to 20000 tons and setting up of power plant.

Exports accounted for around 15% of total sales in FY 18. Exports grew by more than 100% on YoY basis, however in FY 17 some sales was lost due to non operation of the plant.

Overall expects to continue to grow aggressively in exports. New product lines and variants will result in higher exports. Currently Middle East and Saudi Arabia are key markets. The company is looking for other geographies for higher exports.

New product line in latex industry was launched in FY 18 for Gloves industry. Huge opportunity exists globally for this product. Highest demand in South East Asia. The company doesn't have sufficient capacity to meet the kind of demand. The company will be the only company to manufacture in India.

Some maintenance expense were incurred in Dec 17 quarter and some provisions made in Dec 17 quarter were written back in Mar 18 quarter. So other expenses are lower in Mar 18 quarter.

The company had market share of NBR of 17% at the time of acquisition and that has increased to 25% as on Mar 18. Expects market share to improve further from here.

Open for inorganic acquisition.

As per Ind AS, the company had to do MTM in its Treasury portfolio, which resulted in loss in other income. So its not actual loss but a notional loss to portfolio.

In long term say by FY 20, the company has plans to invest around Rs 250 crore for increasing capacity of latex by 40000 tons and NRB by around 25000 tons. This will take around 18 months time from the start of the project and can generate around Rs 500 crore of additional turnover.