Capitaline

Analyst Meet / AGM 28-Oct-20

Conference Call

Supreme Industries

Launching new product every month

Supreme Industries conducted conference call on 28th October 2020 to discuss the financial results and performance of the company for the quarter ended Sep'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 94836 tonne of plastic goods and achieved net product turnover of Rs. 1322 crore during the 2nd quarter of the current year against sales of 93500 tonne of plastic goods and achieved net product turnover of Rs. 1255 crore in the corresponding quarter of previous year achieving volume and product value growth of about 1 % and 5 %, respectively

The company sold 186287 tonne of plastic goods and achieved net product turnover of Rs. 2362 crore during the 1st half year of the current year against sales of 206928 tonne and net product turnover of Rs. 2673 crore in the corresponding half year of previous year resulting volume and product value degrowth of about 10 % and 12 %, respectively.

Plastics pipe business degrew by 2% in volumes and grew by 4% in value terms in Q2FY21 compared to Q2FY20. Packaging product segment grew by 7% in volume and value terms. Industry products segment grew by 13% in volume and 8% in value terms. Consumer products segment grew by 1% in volume and degrew by 1% in value terms

The overall turnover of value added products increased to Rs. 533 crore during the current quarter as compared to Rs. 491 crore in the corresponding period of previous year achieving growth of 9%.

Total net borrowing of the company stands at surplus of Rs. 215 crore as on 30th September, 2020 as against net borrowings of Rs. 217 crore as on 31st March, 2020.

Average net borrowing level during the current half year remained at surplus of Rs. 4 crore against borrowing of Rs. 205 crore in corresponding period of previous year.

Average cost of borrowings as on 30th September,2020 decreased to 5.89 % p.a. as against 8.35% p.a. as on 31st March, 2020

The company has supplied 212 biofloc units to 11 states in the country and is awaiting its result only after which it can launch it commercially throughout in the country.

The company is planning to put up manufacturing unit for water tank in Orissa, Tamil Nadu and Assam.

The company has launched several other fabricated products for agriculture and horticulture application mostly to protect food crops and vegetables and they are getting very well accepted in the market. As a result the company is expanding is Ambala capacity by 3000 tonne per annum which shall increase the capacity to 30000 tonne per annum which shal;l take 6-9 months for completion

The company is launching new product every month

Margins improvement was seen during the quarter due to increased premiumization of products, increased sales ofvalue added products and sustained cost saving efforts along with inventory gain in plastic piping system business due to rise in PVC prices.

The company expects demand of packaging products and plastic piping to increase month on month in normal conditions

The negative impact of pandemic on the business has started withering down. After July, the intermittent lockdowns were mostly not extended in many parts of the country and opening up of economy has progressed. This has broadened business prospects of the company since August in all its segments.

The harvesting of Kharif crops is moving briskly. The crop output is expected to be better than last year. With most of the water dams are close to full capacity, it is expected that Rabi crop sowing may be in a larger acerage as compared to last year. With higher MSP declared by government and various other supports provided, the rural area economy and Tier III and IV Towns economy is expected to do better than last year.

With the return of migrant workers on most of the construction sites, supported with lower rate of interest and lower rates of stamp duty in some States, along with drop in prices of residential homes, the demand of new homes has picked pace throughout the country. Consequently, the company's pipe system for Housing is also seeing better demand from September onwards.

Packaging segment is witnessing good demand supported by many new applications/SKUs targeting agriculture sector and customized requirements. Material Handling Products are being extensively used for logistic solutions, Fruits & Vegetable and Fisheries segments along with revival of demand for Industrial Applications.

Raw material prices, except PVC resin prices, remain range bound. PVC prices, due to tight availability are still making an upward march. It is expected that with the starting of plants in USA and other countries coupled with lower winter demand for housing in USA, Europe, China and other parts of the World, prices may start softening from January 2021 onwards.

The company's investment plans are going as envisaged. It is expected that Orissa land deal may fructify by November. Company is exploring to put up new plants in other States, for which land negotiations are progressing in Assam and Tamilnadu.

Supreme Petrochem (Supreme Petrochem Ltd (SPL) is a joint venture between The Supreme Industries Limited and the Rajan Raheja Group) has announced investment plan of Rs 246 crore. All the three train of polystyrene are put to full use. The company is planning to put fourth train having a capacity of 80000 tonne per year which will be up and running by December 2021. Apart from this the company is expanding its EPS (Expandable Polystryrene) capacity at Manali.

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