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Analyst Meet / AGM
31-May-21
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Conference Call
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Time Technoplast
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Sees huge opportunity in composite cylinder business
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Time Technoplast conducted conference call on 31st May 2021 to discuss the financial results and performance of the company for the quarter and year ended Mar'21. Managing Director Mr. Anil Jain and Director- Finance, CFO Mr. Bharat Vageria addressed the call
Highlights of the Concall
- The company supply chains are still severely affected as most of its vendors are not able to operate normally due to severe restrictions. The biggest problem for the company is migrant labour who left for home as soon as second wave of Covid started. The company expects migrant labour to return back after 1-2 months or as the covid situation improves.
- The company saw improved performance in Q4FY21 compared to Q3FY21 and expect that the improvement will continue well into FY22 as well though Q1 started at an unhappy note with lot of lockdowns.
Dividend payout increased by 20% in FY21 and stands at 15.3% as compared to 12.7% previous year.
- Total capex in FY21 was Rs 103.5 crore- Rs 67 crore for established products for capacity expansion, re-engineering and automation and Rs 36.5 crore for value added products. Capex in FY20 was Rs 145 crore.
- Overall capacity utilization was 66% in FY21- India 65% while Overseas: 70%
- Industrial Packaging received overwhelming response for packaging products i.e. IBC and large sized drums, from all the three locations in USA i.e. Chicago, Houston and Iowa.
- The company is doing brownfield expansion of industrial packaging in India and overseas locations for future growth and leveraging of existing infrastructure.
- Pipe segment got affected downwards especially in Q4FY21 due to delay in providing upward price revision to EPC contractors by government authorities on account of unexpected increase in polymer prices. The situation is now normalizing.
- Continued good order book in PE Pipe business of Rs 240 crore
- The supply of newly launched new generation multilayer pipes for power/communication cable duct with silicon in-lining continues to get overwhelmed response
- The pipes/ducts have substantial business potential especially in government projects like Smart Cities, Jal Jeevan Mission and Swachh Bharat Mission.
- The company is seeing continued overwhelming response from overseas customers for composite cylinder for use in filling of LPG. The company currently has approvals in over 55 countries and is exporting composite cylinders to over 40 nations.
- Composite cylinder (CNG application- Cascades) is a highly technical product has huge business potential and has been developed by Company‟s R&D team in last 3 years
- In the first 8th round of CNG distribution bidding around 2100 CNG station was allocated. In the 8th and 9th round of bidding around 8100 CNG stations were allocated. Assuming two casket per CNG stations total new demand would be around 16200 casket. Typically one casket cost Rs 70 lakh. In the tenth round ( expected to happen around this year or early next year) it is expected that around 3000-5000 new CNG gas station will be allocated
- CNG is brought for the distribution from the main compressor station to the dispensing station by way of caskets where the piped natural gas is converted into CNG and then the battery of cylinders mounted on a vehicle on a train called caskets and they are used to bring CNG from the compressor stations to the dispensing station. There were about 4200 caskets, which was mostly type one. Type one is all steel.
- Current order book position for composite cylinder (CNG application- Cascades) is Rs 53.6 crore to be executed during FY22. The company is also in talks with various gas distribution companies for larger orders.
- Total business from present arrangeement of CNG station and future gas stations from 8th, 9th and 10 th round would be Rs 52500 crore.
- Type IV composite cylinder reduces the weight of casket by 70-75% compared to Type I cylinder (steel)
- The company has finally received approval in May 2021, for the first time in India from PESO and Bureau Veritas under ISO: 11439-2013 as applicable for manufacturing of fully wrapped carbon fibre reinforced type-IV composite cylinder for on board (vehicle) applications.
- Besides the OEMs, who have explicitly expressed their preference for Type-IV cylinders vis-à-vis Type-I (steel cylinders), the company is also going to target the secondary market in the Automobile industry.
- The company has also received inquires from Varanasi for Type-IV cylinders for the conversion of boats from the traditional fuel to CNG, under „Namami Gange‟ initiative.
- The company has successfully developed carbon fibre reinforced composite cylinder (Type-III) for oxygen. The first prototype has been developed in 10 litre capacity at 200 bar pressure carrying sufficient medical grade oxygen to serve a patient for 7 hours @5 Litre Per Minute (LPM). The company is also working on developing a 20 Litre capacity cylinder. These cylinders shall now undergo extensive tests/trials by third party inspection agency and PESO. The company plans to launch these cylinders for emergency use in August 2021.
- The company is innovating new applications of the MOX films and is launching new products in the market like Truck covers, Pond Liners, Mulching Film & Poly house Films. Continued focus on export markets of Thailand, Malaysia, Germany UK & USA.
- Revenue from established product formed 80% of total revenues in FY21 while value added products formed 20%.
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