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Apcotex Industries held its conference call on 7th November 2016 and was addressed by Adiraj Choksi, MD
Key Highlights
Consolidated net sales for the company for Sep'16 quarter stood at around Rs 67.84 crore, down by 36% on YoY basis with Ebidta at Rs 4.62 crore as compared to Ebidta of Rs 9.5 crore for Sep'15 quarter.
Around 50% of total sales come from synthetic rubber and roughly around the remaining 50% from latex rubber.
Key sectors which are users for company's products include Paper and Paper boards, construction, carpets, tyres, leather, speciality chemicals etc.
On sales side, one of the major customer of the company in Paper and Paper Boards segment did not operate its plant in Sep'16 quarter and thus, Paper and Paper Boards segment which account for around 33% of company's total sales, got severely affected in Sep'16 quarter.
Further, Butadiene, one of the major raw materials for the company saw a steep price increase in Sep'16 quarter in international market which was unexpected. It was due to a sudden shut down in supply in global market due to an emergency plant shut down by the supplier. The rise was so sharp and sudden that the company was not able to pass it on in very short term. All these, lead to lower Ebidta margin for Sep'16 quarter.
Further, the high styrene rubber (HSR) plant at Taloja continued to remain shut down for repairs and maintenance activities during the entire Sep'16 quarter and the manufacturing activity of HSR was shifted to Apoctex Solutions (AS) (erstwhile Omnova Solutions) in Valia plant.
Management expects some volume pick up from Paper and Paper Board segment to start from Dec'16 onwards on QoQ basis and then gradually things will get better by end of FY'17.
The company was able to increase its market share in Tyre segment.
75% of total revenues still come from India while remaining from international market. Middle East and South East Asia constitute around 75% of total exports for the company while rest from markets like US, EU and Australia.
The company has a gross debt of around Rs 32 crore and net debt of around Rs 7 crore.
The scheme of amalgamation between 100% subsidiary Apcotex solutions India pvt ltd (AS) and Apcotex industries was approved by the high court and date of merger will be effective from 1st April'16.
Management expects the things to improve gradually on QoQ basis going forward.
The company was able to turnaround the business of AS in just 4 months from the date of acquisition.
There is a continuous effort on increase in market share of AS products, increase in reach, betterment of quality, increase in sale of value added products, rationalization of costs, reduction of working capital etc.
Going forward, for Apcotex Industries, there is a good potential in exports markets, while domestic market was more or less at steady state. For AS, there is a tremendous scope to increase the market share in domestic market and also in exports.
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