Capitaline

Analyst Meet / AGM 25-May-20

Conference Call

Apcotex Industries

Volume growth was flattish in Q4

Apcotex Industries held a conference call to discuss the results for the quarter ended Mar20 and way forward. Mr. Abhiraj Choksey- Managing Director and Mr. Anand V Kumashi- Company Secretary of the company addressed the call.
Highlights of the Concall

Q4FY20 and FY20 was a very challenging period and with covid-19 these challenges further aggravated.

Net sales fell 23.8% YoY in Q4FY20 to Rs 115.6 crore. Operating EBITDA was down 43.2% to Rs 7.9 crore with Ebitda magin at 6.8%. PAT was down 80% to Rs 3.1 crore with a PAT margin of 2.7%. For FY20 net sales fell 21% YoY to Rs 496 crore. Operating EBITDA was down 51% to Rs 33.4 crore with Ebitda magin at 6.7%. PAT was down 64% to Rs 16.6 crore with a PAT margin of 3.4%.

The company has re-started operations at both its plants from 20th April 2020 post shutdown on account of COVID19

Raw materials like Butadiene, Styrene prices are at a decade low prices.

The company lost about Rs 17 crore of sale and Rs 4 crore in bottom-line because of losing about the last 16 days of sales.

Volume growth was flattish in Q4 YoY but was better compared to Q3FY20. Lower sales were due to fall in product prices and a change in product sales mix. The company sold more latex than rubber and latex prices are generally 50-65% of the rubber prices.

The company would have had the best quarter ever in terms of volumes in exports but due to lockdown could not complete pending orders

Taloja plant in Maharashtra would have had the best quarter ever in terms of volumes but due to lockdown could not complete pending orders. Margins were still under pressure but gradually improving.

The company saw a very strong demand for its Taloja facility and the plant was running at 100% capacity utilization in January and Feb20

NBR market as well as allied products started picking up at Valia plant in Gujarat in Q4FY20 while margins were slowly coming back to normal levels.

NBR market in Q4 was much better while in Q3 it was very challenging. Although things were not normal in Q4 as the dumping was still going. The company has filed anti dumping against Korea and few other countries in which investigations has started but it would take around two more quarters to know the result of investigations.

The company believes that NBR is very sound and strong business. The company acquired the business in February 2016 and turned it around. It had a pretty good run for about three years. The business got impacted when China imposed an anti dumping duty on Korea and Japan in the end of 2018.And that has resulted in the Koreans and Japanese looking for other markets. The company has a very low market share of about 20-25% in India and rest is import. So, there is good import substitution story as it is the only producer of NBR in India.

The company has invested Rs 95 crore out of Phase 1 of capex of Rs 100 crore till March 31, 2020.

The company commissioned the Co-gen Power Plant just before COVID19 shutdown but had to stop temporarily due to lockdown.

The company shall complete the debottlenecking project shortly which will increase Valia production capacity to about 20,000 tonne per annum and will also help in reducing operational costs per tonne.

The company is coming up with two major projects for Designing/Consent Applications – XNBR Latex worth Rs 60 crore and Polymerization Line 2 of Rs 180 crore.

The company is looking to add latex capacity in Taloja to the extent of 20% in FY21 at a cost of Rs 12-15 crore. Major industries that it caters from Taloja facility are luxurious paper, paper board, construction, carpet, tile, and textiles and a few other specialty applications. Pre Covid the company was very bullish in these sectors.

The company is modifying a few reactors at both plants for manufacturing XNBR Latex for Gloves, where the demand is extremely strong. The modified reactors will be ready in a few weeks for production. The demand for medical gloves is extremely high and it is seeing a lot of inquiries and strong demand from existing customers.

The company is always looking out for strategic acquisition at the right value

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