Key Highlights

For the 9 months ended Dec'15, total volumes sale stood at 65.8 KT up by 5% YoY. However for the Dec'15 quarter, the volumes were lower by more than 10% to 19.5 KT largely due to lower overall demand.

What happened was the overall industrial demand including automobiles and households grew well prior to Diwali and inventory was built up. However post Diwali, demand didn't pick up as anticipated. So high inventory together with lower demand resulted in overall lower demand of ABS and SAM products in Dec'15 quarter.

However since Jan'16 onwards, demand is stable and crude is also rising. What the company wants is a stable crude oil prices which will help in creating a base for demand. Much demand is held up due to uncertain raw material price direction.

The company is increasing its sales of Premium products which will help in increasing margins.

Some of the one off expenditure during the Dec'15 quarter includes; Employee benefit costs of Rs 52 lakh due to bonus act, increase in other expenditure due to provisions on doubtful debts of Rs 2.8 crore and increase in charges and storage rates by Kandla port trust to the extent of Rs 1.61 crore.

There was an inventory loss of around Rs 4.5 crore during the Dec'15 quarter.

Management expects a 10-15% increase in volume in Mar'16 quarter over Dec'15 quarter.

ABS capacity utilization is hovering around 85% for 12 months ended Dec'15 and management expects to operate around 95% for calendar year Dec'16.

While ABS demand improved by around 5% towards auto sector, the company was able to increase its volume towards auto segment by 11%. It increased its supply to TVS Motors and almost all new passenger car models.

House hold sector grew by around 15% pre Diwali, but since then the segment is not performing well and is affecting the overall growth. However the company performed better than the industry.

Other sectors were growing in line with the GDP growth.

The subsidiary performed better than the last year and further financials will be shared at the year-end results.

Going forward, new products and mixtures have been aimed and are well tested in FY'16. These products have higher realizations and increase the overall productivity of consumers as well.