CFO of the company addressed the call:

Highlights of the call:

Economy is slowing down. All are waiting for signs of improvement.

The management is very happy with the performance. This is because the quarter performance was decent despite huge fall in the month of May.

Month of May showed weakness because of extreme heat and political activities.

Cement Asbestos business saw 2% volume fall in quarter but during the month of May it fell 12.28%. June saw no drop and it made up in the month of June with significant growth.

In May sales fell 17.2% in asbestos division.

May saw 300 bps fall in margins in cement asbestos business but for the full quarter it was down only 1.5%.

All EBITDA margins are after allocating corporate expenses to the respective divisions in propionate of sales.

Monsoon has improved even though it has not been uniform throughout the months. But rural economy is expected to improve soon. Also the government is expected to take measures to improve the economy.

The management expects things to pickup and give reasonable performance for the full year.

Cement prices went very high during the quarter but have fallen offlate.

EBITDA Margins in cement asbestos continue to be in high single digits.

Price increase in cement asbestos business is long overdue. It can happen anytime. Concerns over volumes are not high.

Flood impact would be for some 10-15 days after which it will depend on how fast reconstruction work is started and how demand moves.

Volumes and sales in Boards business grew but margins fell.

Average pulp price was down but the company did not have benefit due to opening stock which were at high price. From August it will start getting the benefit of low pulp prices and margin will peak in the month of October.

Spinning business is doing well and signal for Q2 is also good.

Board and spinning business defied slowdown.

Urban India saw no slowdown but rural India saw impact of slowdown.

The month of July saw decent growth in all businesses.

Overall capacity utilization should reach 70-80% in FY 2020.

Fall in margins reported in June 2019 quarter will be more than made up in subsequent quarters. Margins in the remaining nine months will be better than last year. The company will continue to generate industry leading margins.

15-16% margin for the year is easily reachable. Even if 3-4% price increase is taken in cement asbestos then margins can easily go up to 18%.

Net debt stood at 193 crore against Rs 202 crore in June 2018 quarter and Rs 266 crore in March 2019 quarter.

Cost of debt is expected to come down with the fall in interest rates. Since the company is rated AA so it will get the benefit.

Gearing is 0.43 and is expected to go down further.

Q1 RoCE is 21% on annualized basis. Q1 is peak.

Overall margins are expected to improve as volume and price of cement asbestos is expected to grow, board volume is expected to grow by 20%+ with double digit margins and spinning business is expected to see steady growth in sales and margins0.

In Spinning and looms business lots of business have shot down except companies like Reliance, Grasim etc. But the company is operating at top capacity.

No large capex is planned. The management is focused on improving margins and efficiencies by reducing costs.

Cement Asbestos prices have not been increased from past 16-18 months and so it is anytime due for price hike.

Advertisement cost was high during the same quarter last year and it has remained around the same level. So this is another area where costs can be contained.