Analyst Meet / AGM     20-Oct-09
Conference Call
VST Industries
Plan capex of Rs 25-30 crore for FY10
VST Industries held a conference call to discuss the results for the quarter ended September 2009. Following are the key highlights of the call:

Highlights of the call

  • Cigarette Industry has seen virtually flat growth during the September quarter versus June quarter, as budget was present in June quarter. However, industry has seen 5% to 6% growth on y-o-y basis.
  • Today, 98% of industry is dominated by filter segment.
  • After stop in production of non-filter cigarette, the industry has seen major action in Rs 2 price point cigarette. The people who used to have Rs 1.50 per stick non-filter cigarette has upgraded to Rs 2 filter cigarette.
  • The company doesn't expects any change in tax structure for the remaining quarters as GST will be implemented from April 2010 which may discourage states to make changes in tax structure.
  • The company's net sales for September quarter (Q2) has increased by 31% to Rs 115.72 crore. The net profit of the company has increased by 52% to Rs 17.15 crore.
  • The operating profit margin of the company has gone up by 423 basis points to 19.75% during the quarter.
  • The company's raw material cost has increased by 42% due to input cost hike and change in product mix.
  • The company's net sales for the half-year ended September has increased by 52% to Rs 241.07 crore while net profit has increased by 88% to Rs 41.25 crore.
  • The operating profit margin of the company has gone up by 1450 basis points to 39.35% during the half-year period.
  • Charm filter and Charminar filter are the two brands from the company which grown strongly during the quarter.
  • There was no price hike during the last 2 quarters.
  • The company has seen a volume growth of 4% during the quarter and 10.5% during the half year. The company expects similar kind of Q2 growth in volume for the rest of the two-quarters.
  • The company has maintained its market share during the quarter.
  • The company got good margin from cigarette business compared to leaf tobacco business.
  • The company is targeting new geography with new brands to take on the competition from other cigarette firms.
  • The company's cash balance as on September 30, 2009 is at Rs 170-180 crore.
  • The company has capex plan of Rs 25-30 crore for FY10.
  • The company expects to sustain the Q2 margin for the remaining quarter also.
  • Any price hike in coming quarter will depend on the company's growth plan and changes in tax structure if any taken by the states.
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