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Analyst Meet / AGM
28-Jul-20
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Conference Call
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Supreme Industries
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Currently plant utilization is around 70%
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Supreme Industries conducted conference call on 27 th July 2020 to discuss the financial results and performance of the company for the quarter ended June'20. 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 91451 tonne of plastic goods and achieved net product turnover of Rs. 1040 crore during Q1FY21 against sale of 113428 tonne and net product turnover of Rs. 1418 crore in Q1FY20 achieving volume & product value degrowth of about 19 % and 27 % respectively.
- The overall turnover of value added products remained at Rs. 378 crore during the current quarter as compared to Rs. 457 crore in the corresponding period of previous year.
- Total Net Borrowing of the Company stands at surplus of Rs. 31 crore as on 30th June, 2020 as against Borrowings of Rs. 217 crore as on 31st March, 2020.
- Average Net Borrowing level during the current quarter remained at Rs. 134 crore against Rs. 169 crore in corresponding quarter in the previous year.
- Average Cost of Borrowings as on 30th June, 2020 decreased to 7.53 % per annum as against 8.35 % per annum as on 31st March, 2020.
- Although production and dispatches at all the plants of the company have commenced during last week of April/first week of May, 2020, normalcy of operations and business level is yet to be restored at pre Covid level.
- Plants for Piping products, Packaging Film and Cross Laminated Film products and material handling products have seen gradual recovery and by now have reached near to normalcy of operations whereas plants for Furniture and Industrial Components and certain segments of Packaging products are operating between 50 to 70% capacity utilization.
- Frequent lockdowns in various parts of the country, coupled with exodus of millions of workers to the native place is hampering a smoothening of economy revival and severally affecting the construction activity and plant operations in large and tier II cities.
- The management finds it difficult to forecast the annual outlook about the businesses for the year.
- The company is seeing a robust demand from rural areas and tier three and four cities and towns mainly due to bountiful rabi crop. Also the procurement machinery ran very well in various state governments. Also farmers were paid in time.
- The piping volumes declined 12% in Q1FY21 compared to Q1FY20 driven by weakness in housing pipes while the agri pipes volumes rose 15% over the same period.
- The company has taken price increase in cross laminated films and expects that market share must have gone up as volumes rose more than 20% in June.
- Central Asia governments are taking various steps to boost the economy by pushing infrastructure investments
- PVC resin declined by Rs 13.5 kg from 18 March to 1st may and then recovered to Rs 12 per tonne by end of June 2020. Currently Prices in a tight position due to supply constraints.
- Polymer prices has shown upward trend since second half of May, but remains affordable.
- The company expects that once these widespread localized lockdowns are significantly reduced pent up demand will emerge for all the products in the company's portfolio initiating good demand prospect in the year 2021-22.
- Envisaging good demand prospect in the year 2021-22, the company has committed and/or to commit an investment of around Rs. 350 crores in its' various existing plants and in putting up new plant to make piping system at Orissa and a Cross Plastic Film plant at a site adjacent to its' Composite Cylinder plant in Gujarat.
- There was tremendous destruction of demand for PS and EPS and also degrowth in the all the polymer consumption. Industry wise PS saw degrowth of 73% and EPS 71%. Supreme Industries PS degrowth was 36% by volume and EPS 60%
- July- September is always a lean quarter for the company in the agri pipes segment as the farmers is busy sowing crops in the field. But the demand comes from housing and infrastructure in piping which is also not great in current situation.
- Currently plant utilization is around 70%
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