• Downside in sales was largely due to fall in revenue of synthetic blended yarn (SBY) segments. The BP sales was higher by 15% to Rs 202.01 crore powered by 3% growth in volume to 226492 MT. Even with in BP segment the growth seems driven by roofing products rather than boards & panels which is largely in demand from urban and semi urban centres. The cement roofing sheets that depends on rural demand has shown good resilence due to the lower impact of the pandemic, good rabi crop and normal monsoon. The ATUM solar panels volume was nil compared to 456 KW in corresponding previous period. However the SBY sales was down by 54% to Rs 24.28 crore, with its volume down by 48% to 1388 MT.
• EBIT was up by 137% to Rs 37.51 crore driven largely by higher profit from BP segment. Segment profit of BP was up by 393% to Rs 39.18 crore facilitated by higher sales and its segment margin expand by 1500 bps to 19.4%. Segment profit of SBY was a loss of Rs 1.67 crore compared to a profit of Rs 7.89 crore in the corresponding previous period. EBIT loss of SBY was largely due to the impact of COVID lockdown.

Half Yearly Performance

Sales for the fiscal ended Sep 2020 was down by 12% to Rs 511.47 crore with sales of building products stay flat at Rs 473.89 crore and that of SBY was down by 66% to Rs 37.58 crore. With operating profit margin expand by 780 bps to 19.3%, the operating profit was down by 48% to Rs 98.84 crore. The overall EBIT was up by 47% to Rs 92.34 crore with the segment profit of Building Products more than double (up 107%) to Rs 100.45 crore. The segment profit of SBY was a loss of Rs 8.11 crore compared to a profit of Rs 14.12 crore in the corresponding previous period. The PBT was up by 85% to Rs 76.02 crore. After accounting for higher taxation, which was jumped up by 306% to Rs 19.33 crore, the PAT was up by 56% to Rs 56.69 crore.

Other developments

During the quarter ended the Company had made a preferential allotment of 200,000 fully paid up equity shares Rs.10/- each at a price of Rs.241/- each to the promoters of the Company and received an amount of Rs 4.82 crore.

Also the Company had allotted 1200000 convertible warrants to the promoters group each carrying a right exercisable by the warrant holder to subscribe one equity share per warrant, a price of Rs 241/- each aggregating to Rs 28.92 crore and received a sum of Rs 7.23 crore during the quarter being 25% of the warrant issue price. Balance 75% of the warrant issue price shall be payable by the warrant holder at the time of allotment of the equity share which may be exercised at any time before expiry of 18 months from the date of allotment of warrants, failing which the warrants shall lapse and the amount paid shall stand forfeited by the Company.

Management comment

Performance of the company was driven by continuous focus on cost rationalization and digitalization of market outreach strategies. In addition, the cement roof business held its market share and price levels. Other building material products such as Vnext and ATUM have also contributed positively to the company's results. The spread of COVID-19 is continuing to have an unprecedented impact on people and the economy. The Company has experienced a slowdown in the synthetic blended yarn segment which is currently on the path of recovery.

Management is bullish on its building products segment and optimistic on the synthetic yarn segment for the rest of the financial year

Visaka's spinning business is a unique technology and management expects significant improvement in sales as the demand improves in the textile markets post Covid-19 unlocking.

Cement Asbestos market share stays at 18% in FY20. Boards and Panels market share at 32%.