Time Technoplast conducted conference call on 16 August 2022 to discuss the financial results and performance of the company for the quarter ended Dec'21. Mr. Sanjaya Kulkarni - Chairman & Independent Director, Mr. Bharat Vageria, Managing Director, Mr. Raghupathy Thyagarajan, Whole-time Director, Mr. Sandip Modi, Sr. VP - Accounts & Corp. Planning and Mr. Hemant Soni, Head – Legal of the company addressed the call

Highlights of the Concall

• The company has started fiscal 2023 on an encouraging note with a healthy performance driven by good demand in industrial packaging and robust growth in composite cylinder business.

• Q1 Revenue and PAT are up by 25% and 56% year-on-year led by higher utilization of capacities. Overall capacity utilization was 77%. India capacity utilization was 72% while Overseas was 84%

• Ebitda margin was down to 13.1% from 13.4% due to inflationary pressure in key raw materials which has been also passed on to the customer, but there is a gap of around 25 to 30 days

• Overall volume growth was 13% YoY in Q1FY23. Doemstic volume growthw was 14% and overseas was 12%.

• Total Debt reduced by Rs 26.3 crore in Q1FY23 from year ended FY22

• Value added products grew by 36% in Q1FY23 as compared to Q1FY22, while established products grew by 23%. The share of value-added product is 22% of the total sale in Q1FY'23 as against 20% in Q1FY22.

• India business formed 67% of total business while overseas formed 33% in FY22 similar to previous year quarter

• Capex during the quarter was Rs 49 crore out of which Rs 34 crore was for value addes products and Rs 15 crore is maintenance capex. Brownfield expansion in India and overseas locations to continue for future growth and leveraging of existing infrastructures

• The company has continued focus on improving working capital cycle time and targeting to achieve 90 days in next 12-18 months.

• All three locations in the USA i.e. Chicago, Houston and Iowa continue to show healthy performance as good demand for IBCs and large sized drums continues

• The unprecedented hike in raw material prices resulting in delay in procurement of pipes by EPC contractors on account of pending price hike from Government authorities. The pipes/ducts have substantial business potential specially in government projects like Smart Cities, Jal Jeevan Mission and Swachh Bharat Mission.

• The company is innovating new applications of the MOX films and is launching new products in the market like Truck covers, Pond Liners, Mulching Film, Poly house Films and Films for Agricultural use. It has continued focus on export markets of Thailand, Malaysia, Germany UK & USA

• The Board of Directors and Members have approved the consolidation cum restructuring of overseas business by way of disinvestment of majority stake to Strategic Partner/ Investor Partner. The proceeds will be used for repayment of debt, capex for composite cylinders (LPG/CNG/Hydrogen) & core business in India to meet huge market demand and also used to benefit the shareholders

• The company has appointed JP Morgan India and Ernst & Young India as Advisors to handle entire process of consolidation cum restructuring. The process is still under discussion on the terms and conditions of the transaction as at June 30, 2022.

• The supplies against this single largest order of over 0.75 million Type-IV LPG Composite cylinders received from Indian Oil Corporation Limited (IOCL) in March 2022, have already started and continuing and is to be supplied over the next 12 months. IOCL has said that the same order quantity may be repeated at their discretion for a further period of up to 12 months, on same terms and conditions

• The company sees continued good response from overseas customers towards Composite Cylinder (LPG application). It currently has approvals in over 50 countries and is exporting composite cylinders to over 42 nations. Current order book position for LNG composite cylinder is around Rs 300 crore

• Keeping with the growing demand for LPG composite cylinders both domestically and internationally, the company plans to add additional 1.0 million cylinder manufacturing capacity with a capital outlay of about Rs 90 crore in the period of next 12 months.

• The company receiving over whelming response in a short period of time for CNG cascades with fully wrapped carbon fibre reinforced Type-IV composite cylinder. Current order book position for CNG cascades is over Rs 250 crore.

• During the quarter, NED Energy Limited, a subsidiary of Time Technoplast has signed a Memorandum of Understanding (MOU) with TESLA POWER USA INC for orders worth Rs 100 crore (approx.) to supply VRLA Batteries of different sizes for applications across power, solar, UPS etc

• The company did revenues of Rs 230 crore towards composite cylinder (both for LPG and CNG) and it expects revenue from composite cylinder around Rs 350 crore in FY23

• The company expects to continue its growth momentum for the rest of the year led by strong outlook on Indian pharmaceutical and chemical business driven by migration of chemical companies out of China aided by good demand for CNG cascades.

• The company expects revenue of more than Rs 4000 crore in FY23