Apollo Pipes reported steady volumes at 9,721 MTPA in Q4 FY20 as against 9,613 MTPA in Q4FY19. Volumes for the quarter, especially in the month of March were impacted due to the plant closures and suspension of logistics activities caused by the COVID-19 outbreak.

Other income fell 10% to Rs 2.64 crore. Interest cost was Rs 1.96 crore compared to Rs 1.83 crore. Depreciation rose 47% to Rs 3.71 crore. PBT before EO fell 19% to Rs 7.45 crore. The company had EO nil EO items during the quarter compared to EO expense of Rs 1.68 crore related to loss due to fire at its Dadri plant on November 27, 2017. PBT after EO remained flat at Rs 7.45 crore.

Tax expense was down 42% to Rs 1.27 crore. Net profit rose 17% to Rs 6.19 crore.

Performance for nine months ended December 2019

For year ended Mar'20, net sales rose 13% to Rs 407.96 crore compared to corresponding previous year period. Operating margins of the company rose 60 bps to 11.4% leading a 18% increase in operating profit to Rs 46.35 crore.

In FY20, volumes stood at 44,692 MTPA, delivering a steady growth of 12% YoY

Other income fell 16% to Rs 10.13 crore. Interest cost was Rs 6.07 crore compared to Rs 5.94 crore. Depreciation rose 31% to Rs 12.7 crore. PBT before EO as a result rose 6% to Rs 37.72 crore. The company had nil EO items during the quarter compared to EO expense of Rs 1.68 in the corresponding previous year period related to loss due to fire at its Dadri plant on November 27, 2017. PBT after EO was up 11% to Rs 37.72 crore. Tax expense was down 8% to Rs 9.19 crore. Net profit rose 19% to Rs 28.53 crore.

The company expects to gradually ramp up manufacturing capacities and enhance plant efficiencies, once the current situation stabilizes. While the demand outlook over the long-term is expected to remain robust, the company is still assessing the likely impact on FY21 performance owing to the broad-based disruption in a seasonally important quarter

Commenting on the Company's performance for Q4 & FY2020, Mr. Sameer Gupta, Managing Director, Apollo Pipes said,

"We are currently facing an unparalleled disruption due to the COVID-19 pandemic. Interrupted supply chains, halted production and lock-downs across India have significantly impacted our ability to conduct business. Our primary focus during these challenging times was towards undertaking all necessary measures to ensure safety and well-being of our employees, business partners, communities and to safeguard the interests of our customers and distributors to the best possible extent.

In the months of January and February, we witnessed healthy demand across our product categories and reported a steady growth in volumes. However, a country-wide lockdown from mid-March onwards disrupted movement of goods, distribution, production and impacted demand. On the operational front, in line with Government directives, we have recently resumed production at our manufacturing facilities at Dadri, Ahmedabad and Tumkur albeit at a lower utilization level. Our primary focus here is towards maintaining the highest standards of hygiene and social distancing norms for the safety of our employees at our plants. Our teams are also actively in contact with all our distributors in order to ensure streamlined deliveries and supplies.

the near-term, our focus is towards synchronizing the ramp-up in production capacities and stabilizing supply chains, once the macro-situation normalizes. We have also instituted many cost rationalization initiatives and optimum working capital measures to conserve cash flows and ensure steady profitability during this challenging period. We believe there should be a gradual bounce back in consumer sentiment driven by steady restoration of the economy and normalcy in daily day-to-day activities. As an organization, Apollo Pipes remains solid with a strong cash position. Over the longer term, our growth strategy continues to be towards driving volumes by ramping-up utilization at new and existing facilities, increasing contribution from value-added products, and improving our distribution network to emerge as a PAN-India player."

Expiry of Warrants allotted to Promoters and Promoter group

The company had allotted 2,485,000 fully convertible warrants, in addition to 950,000 equity shares, on preferential basis to Promoters and promoter group in October 2018 at a price of Rs 590 per share, which were to be converted into equity within 18 months from the date of allotment.

The promoters during this 18-month period exercised 1,125,000 equity shares. Post conversion of these warrants, the promoter shareholding of the Company increased to 47.11%

However, given the current macro-environment, the promoters believe it is prudent to not undertake any further investments owing to the following reasons:

• The company currently holds a strong cash balance and is more than adequately funded for existing growth plans 

• Given the unprecedented situation, focus now primarily is on improving its utilization levels at the existing and new capacities scheduled to be commissioned in the coming fiscal 

• To avoid further equity dilution without commensurate growth opportunities in the current environment

Accordingly, the promoter group has decided to not exercise their right to convert the remaining warrants into equity shares and 1,360,000 warrants allotted in their favour now stand lapsed. o Overall, the promoter group remains committed towards the business operations and are confident in its growth outlook

Resumption of manufacturing activities across facilities

In light of the Covid-19 pandemic and in compliance with government advisories and directives issued in this regard, the company had temporarily suspended manufacturing operations at its facilities across India from March 22, 2020 till April 23, 2020. The company, however, pursuant to requisite approvals from the concerned Government Authorities, recently resumed manufacturing operations at its facilities at Dadri, Ahmedabad and Tumkur from April 24, 2020 onwards

While the units are currently operating at low capacity due to social distancing restrictions and labour unavailability, the company is taking utmost precaution and is deploying highest safety standards as advised by the Government Authorities at its manufacturing and supply chain locations

The company will be ramping-up capacity at its manufacturing plants in a phased manner as per the approvals received from the regional District Authorities. Apollo Pipes is in the process of expanding capacity at its current manufacturing facility at Dadri. Once the situation normalizes, the Company will be integrating and installing additional new plant machineries at its facility in Dadri, which will enable healthy improvement in volume contribution, going forward

Currently, the company's offices across India continue to be shut and Work from Home policy continues to be enforced for the employees

The company is closely monitoring the situation and will take all necessary measures as directed by the Central and State Governments and authorities, from time to time to ensure safety of its employees, business partners, communities, and to overall safeguard the interests of all stakeholders to the best possible extent

The scrip is trading at Rs 319 at BSE