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The company held its conference call on 6 May 2019 and was addressed by CFO and Director Mr. Vallinath
Key Highlights
For FY 19, the asbestos sheet division had 4% volume growth on YoY basis. The industry also more or less grew in that range. For Mar 19 quarter the volume growth was around 7% YoY.
Too early to say of any slowdown in demand. Growth would have been better if election issues were not there.
Demand will come back very strongly in coming quarters. The company had increased prices of asbestos cement overall by 2% in FY 19. More price increase was expected but industry as a whole went cautious given elections on cards. Expects industry as a whole to increase the prices in coming quarters.
Boards and Panels (B&P) grew by 12% in volume terms in FY 19. With Jhajjar plant coming up and more capacity being available, management expects the B&P to grow by around 20% in coming year.
In FY 19, the ad spends stood at around Rs 20 crore compared to Rs 10 crore in FY 18. Also Jhajjar plant had some commissioning expense of around Rs 2.5 crore and loss of around Rs 2.7 crore on Atom plant which got commissioned in FY 19. So all these had resulted in margin pressure in FY 18.
Pulp prices currently are around $ 750 per ton compared to around $ 900 per ton for FY 19. This will aid B&P margins.
With Jhajjar ramping up going well, with commissioning of Atom plant, with pulp prices having eased off and with asbestos sheet price increase on cards and with lower logistics costs and better leverage, margins are expected to improve in coming years. B&P should report double digit margins in FY 20 as compared to around 7% in FY 19.
Expects no new capacity addition in spinning segments. Margins are expected to be around 13.5-14% with 6-8% net sales growth in FY 20 for spinning segment.
Working capital days have slightly increased to 11 days that is largely due to delay in Jhajjar plant
Not much capex going forward. Thus cash flow is expected to improve.
Expects around Rs 25 crore of sales from Atom i.e. around 33% capacity utilisation of Atom plant for solar roofing.
As per the management, margins for building product segment will increase going forward and the margins have reached a floor in FY 19.
Interest cost is expected to come down further.
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