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Analyst Meet / AGM
05-Feb-21
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Conference Call
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Prince Pipes and Fittings
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Sees Branding as investment not as a cost
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Prince Pipes and Fittings held a conference call on February 04, 2021 to discuss the results for the quarter ended Dec20 and way forward. Mr. Parag Chheda- Joint Managing Director, Mr. Shyam Sharda- Chief Financial Officer, Mr. Anand Gupta- Deputy Chief Financial Officer and Mr. Nihar Chheda- AVP (Strategy) of the company addressed the call.
Highlights of the Concall
- Sales volume increased 18% at 36,711 tonne in Q3FY21 as compared to 31,122 tonne in Q3FY20. Sales volume reduced by 3% at 96,645 tonne in 9MFY21 as compared to 99,676 tonne in 9MFY20. H1FY21 volume was impacted by country wide lockdown due to COVID
- During the quarter, the working capital days reduced to 28 days from 51 days in December'19 (YoY) on the back of improved business strategies
- In Q1FY21 and Q2FY21 demand from semi urban and rural area was better while in Q3FY21 demand from urban area has also started doing well
- Sharp increase in budgetary allocation for Jal Jeevan Mission program and extended tax sops on affordable housing is viewed highly positive for companies with high exposure to plumbing pipe segment
- Higher government budgetary allocation for urban development is expected to drive the plastic pipe demand used for the Infrastructure sector.
- The company has partially reversed a key related-party transaction by receiving Rs 26.1 crore of the total Rs 40 crore advance payment made by the company to the promoter group Prince Marketing. The transaction was related to purchase of a corporate office at Mumbai, which did not materialise.
- The company has added 250 distributors of which 100 were in Q3FY21. The company has also done some rationalization bringing the total distributors count to around 1500
- Q3 FY21 was first quarter of Prince Flowguard Plus' product penetration across India, subsequent to association with Lubrizol. The product continues to see encouraging response from channel partners and plumbers at a pan-India level.
- Post tie-up with Lubrizol, the company's focus has been on premiumising the "Prince Pipes" brand identity and subsequently ramped up investments in branding. Advertisement & Promotion investments at Rs 19 crore versus Rs 10 crore in the corresponding quarter of previous year. This results in an increase of 90% in branding expenditure
- The seventh manufacturing facility inaugurated in Sangareddy, Telangana and commenced commercial production ahead of schedule with capacity of 4,000 tonne. The plant is expected to have total installed capacity of approximately 50,000 tonne per annum and capacity ramp up will be implemented in a phased manner over the next 2-3 years. The unit will serve Southern markets and play an integral role at a time when industry is witnessing consolidation
- The company sees branding not as a cost but as investment and incurred Rs19 crore in Q3FY21 versus Rs 10 crore in Q3FY20
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