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Analyst Meet / AGM
24-Jan-20
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Conference Call
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Supreme Industries
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Expects margins to be around 14-14.5% for FY20
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Supreme Industries conducted conference call to discuss the financial results and performance of the company for the quarter ended December 2019. Mr. M. P. Taparia- Managing Director, Mr. P.C. Somani- Chief Financial Officer (CFO) and Mr. R.J. Saboo – VP (Corporate Affairs and Company Secretary) of the company addressed the Concall.
Highlights of the Concall
- The company sold 101393 tonne of plastic goods in Q3FY20 against sales of 100982 tonne of plastic goods in Q3FY19 achieving volume growth and product value degrowth of about 1% and 4%, respectively.
- The overall turnover of value added products increased 7% to Rs. 568 crore during Q3FY20 as compared to Rs. 528 crore in Q2FY19
- Value added products constituted around 41% of total sales in Q3FY20 compared to 37% in Q3FY19. The company expects value added products to grow in value terms.
- The company sold 308321 tonne of plastic goods in 9MFY20 against sales of 284062 tonne in 9MFY19 achieving volume and product value growth of about 9% and 2%, respectively.
- Plastic piping system sales rose 0.35% to Rs 798 core while production volume increased 0.58% to 70431 tonne. OPM improved to 16.0% in Q3FY20 compared to 12.4% in Q3FY19 due to increase of value added products.
- Industrial products sales fell 21.32% to Rs 157 core while production volume decreased 11% to 8801 tonne. OPM improved to 10.8% in Q3FY20 compared to 9.9% in Q3FY19. The company expects Q4FY20 to better.
- Packaging Products sales rose 0.55% to Rs 309 core while production volume increased 4.67% to 16399 tonne. OPM improved to 17.5% in Q3FY20 compared to 14.5% in Q3FY19
- Consumer Products sales rose -3.42% to Rs 104 core while production volume increased 6.6% to 5762 tonne. OPM improved to 18.3% in Q3FY20 compared to 15.6% in Q3FY19
- The bearish trend in raw material prices has come to halt. From the lowest level there is an increase in prices of all kind of polymers. The lower prices have increased the polymer consumption in the country by around 7% in the nine months of this year. The increased prices continue to remain affordable.
- The demand growth for Plastic Piping System is encouraging. In October - December quarter, growth was low due to both major festivals were in October and the rainfall extended upto first week of November. The demand growth came back by second half of November.
- With the prospect of increased demand, the company has stepped up its' investment commitment and plans to commit a sum of around Rs. 500 crore in the current year. It is expected that all the investments will go in production one after another by March 2021.
- Principal investment will be to put PVC Pipe plant and PEX Pipe plant and HDPE Fittings at Jadcherla, PVC Fitting plant at Kharagpur and to put up a Plastic pipe complex at a new site in Orissa.
- The demand for Performance Packaging Film, Protective Packaging Products and Furniture remains normal. The demand for Industrial Components and Cross laminated film products remains subdued. The company continues to execute small orders for Composite Cylinder in International market.
- Average borrowings of the company for the nine months ended 31st December, 2019 was Rs. 223 crore as against Rs. 259 crore for the corresponding period of previous year. Average Cost of Borrowings as on 31st December, 2019 is at 7.10 % p.a. as compared to 8.23% p.a. as on 31st March, 2019.
- The company expects volume growth of 10-12% for FY20. In 9MFY20 volume growth is 9%.
- The company expects margins to be around 14-14.5% for FY20.
- The company has sold its balance 10000 sq. ft. of construction in current month and will be reflected in next quarter. The company has no more premises to sell now.
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