Key highlights

The net sales for Q1 has increased by 13% to Rs 320.7 crore while net profit declined by 7% to Rs 12.26 crore. OPM has come down from 11.22% to 10.7% on Y-o-Y basis, while it is up on Q-o-Q basis from 9.06%. The net profit was down due to rise in interest and depreciation cost because of increase in cost of funds and capital expenditure incurred during the previous financial year

In Q1 the net Sales of the plastics segments increased by 12% to Rs 283 crore whereas that of the retail segment increased by 17% to Rs 39 crore. In the Plastic Segment, material handling business grew by 20% and moulded furniture business by 8% on y-o-y basis. The loss in retail business was due to its recent store which was opened in Kochi which saw loss of Rs 0.5 crore.

Moulded furniture sales stood at Rs 119 crore, 8% growth in value term and 4% de-growth in volume term. In moulded furniture, 85% sales is from chair. It has EBIDTA margin of 12%. Value added products sales for quarter was Rs 13 crore and expected to close FY12 with sales of Rs 70 crore. The gross margin in valued added products is 25% to 30%.

Material handling sales stood at Rs 162 crore, 20% growth in volume. It has EBIDTA margin of 12% to 15%.

The company's plastic division has experienced a continuous fall in its operating margin since last three quarters which was due to constant increase in raw material prices. The EBIDTA margin witnessed by the said division was 12.73%, 11.43% and 9.76% in Q2, Q3 and Q4 of the previous financial year. However. with the help of the volume and the value growth of 7% and 15% respectively, the said division was successful in achieving an EBIDTA margin of 12.24% in Q1 thus reflecting the path of recovery.

The company's raw materials mainly HDPE and CPVC has seen a rise in price of 20% plus in recent time, has now stabilized.

The company has opened its 17^th @home store at Kochi and is planning open three @home stores in city of Bangalore, Pune and Hyderabad by end of the current financial year. The capex planned for these 4 stores (including Kochi) is at Rs 11 crore. During the current financial year @home is expected to contribute positively to its bottom line.

The capex incurred on per store is Rs 3 to 3.5 crore. Normally a store takes about 3 to 4 months time to breakeven at store level. Almost every thing is outsourced from China, Malaysia , Vietnam and from some domestic manufacturers. In any @home store, 65% is furniture, 15% is soft furnishing and 20% is accessories. The company usually have 4 to 6 new stores opened in a year.

The company has ventured into mattresses business. Presently it is outsourced and sold in 4 varieties at price range of Rs 30000 to Rs 40000. The company has carried out a test launch of mattresses in the state of Andhra Pradesh and Maharashtra and shall start the manufacturing activity of the mattresses at its Hosur plant by the end of this calendar year. The company has seen sales of Rs 64 lakh in one month and expected to do a sales of Rs 1.5 to 2 crore in next 2 months.

The green field plant at Hosur which has commenced its manufacturing operations during the

Q1 is one of the largest plants of the Company. The said plant shall contain facilities for manufacturing of all range of products of the Company.

During the current financial year, the company intends to incur a further capital expenditure of approximately Rs 50 crore for its new business of mattresses, existing plastic business and @home business. The capex for FY11 was Rs 120 crore.

The company is also in the process of developing a product as well as services to be offered in the building & construction segment. The company will start selling light, easy-to-erect & quick-to-dismantle injection molded plastic formwork systems with a lower cost of ownership compared to the wood & metal formwork that is ubiquitously used in construction projects today. It will also enter into monolithic construction business.

The term loan is Rs 136 crore and working capital is Rs 110 crore as on 30^th June 2011.

The management expects moulded furniture and material handling business to grow by 15% in FY12. It is looking at improving its margin to 14% to 15% in coming years.