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The company held its conference call on 26th Oct'16 and was addressed by key management
Key Highlights
The company reported a 4.2% volume growth as against 0.7% volume of industry growth in asbestos sheet segment. For H1 ended Sep'16, the volume growth stood at 3.3% as compared to a -1% industry volume growth.
There was a total of around Rs 4 crore of EO expense in form of diminution in the value of investments for H1 ended Sep'16.
The company reported jump in profit margin in Building product segment, largely due to lower raw material costs and lower other expenses.
Management expects the going to be good for the coming quarters as well.
In Boards business, the domestic business grew by around 37% while exports were lower by around 50% on YoY basis in Sep'16 quarter due to issues in Middle East and Africa region. Exports are expected to remain subdued and focus will continue to remain in domestic market going forward.
As per the management, there is a strong domestic demand for boards segment and realizations are also very high in this segment. The margin are hovering around 11% in this segment, but through proper brand building exercise, pan India presence etc, margins can improve significantly from here. Management will be investing in this segment for brand building exercise in the coming quarters.
The spinning division is operating nearly at full capacity with margin of around 15.5%. The 2nd phase of capacity expansion will be operational by Mar'17. The company will be investing around Rs 25 crore in this segment.
The company has a net debt of around Rs 250 crore as on Sep'16 at 9% average rate of interest.
Asbestos sheet business challenges are phasing out and gradually the segment should do well going forward.
In Boards business lot of opportunities is seen in future.
The Asbestos sheet industry show tough competition from colour coated sheets segment which was a cheaper alternative and the consumers got carried away. The company will launch colour coated asbestos sheets in the market just to show the consumers why the asbestos sheets are better compared to any other cheaper alternatives.
The industry also expects soon some anti dumping duty on imports of colour coated sheets from China and EU markets.
The company will launch colour coated asbestos sheets in the market just to show the consumers why the asbestos sheets are better compared to any other cheaper alternatives.
Going forward overall for FY'17, the management expects around 7% annual growth in building product segment. The company will take another 12 months to reach the 100% of its installed capacity of around 8.5 lakh tons of asbestos.
Overall, management continues to remain optimistic about all the segments of the company in FY'17.
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