Supreme Industries conducted conference call on 24th January 2022 to discuss the financial results and performance of the company for the quarter ended Dec'21. 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 91364 tonne of plastic goods and achieved net product turnover of Rs. 1895 crore during Q3FY22 against sale of 111584 tonne and net product turnover of Rs. 1766 crore in the corresponding quarter of previous year resulting in volume degrowth of about 18% and product value growth of about 7%.

• Plastic Piping System fell 25% in volumes to 57197 tonne but rose by 1% in value terms to Rs 1148 crore in Q3FY22 compared to Q3FY21.

• Industrial Products rose 6% in volumes to 12365 tonne and 26% in value terms to Rs 272 crore in Q3FY22 compared to Q3FY21.

• Packaging Products fell 1% in volumes to 16594 tonne but rose 16% in value terms to Rs 370 crore in Q3FY22 compared to Q3FY21.

• Consumer Products decreased 18% in volumes to 5207 tonne but rose 9% in value terms to Rs 127 crore in Q3FY22 compared to Q3FY21.

• The overall turnover of value added products decreased to Rs. 665 crore during the current 3rd quarter as compared to Rs. 758 crore in the corresponding period of previous year achieving degrowth of 12%.

• The company has cash surplus funds of Rs. 148 crore as on 31st Dec, 2021 as against cash surplus funds of Rs. 331 crore as on 30th Sep, 2021

• The polymer prices were extremely volatile in the quarter. Starting November, PVC prices have dropped by Rs. 25 i.e. 15% per kg. The prices of other polymers also swung wildly during the quarter. Such a swing in the prices has affected overall demand for the products. The products, where demand were driven strongly by distributors have seen large scale destocking in the quarter. Due to extended rainfall period in the quarter, the demand from agriculture and infrastructure was also deferred. Due to supply chain disruption, the company had suffered degrowth in CPVC pipe system.

• There was a steep fall in the sale of plastics pipe system, furniture and packaging products. Overall the company's volume sale has gone down by around 18%. As the prices have stabilized and on recovery path the distribution channel has started normal working. The company expects good volume growth in the fourth quarter in most of its businesses.

• The company expect to recover whatever business it has lost in the previous quarter in the current the quarter

• The company's progress in putting up plants at Guwahati, Cuttack and Erode are now moving. All these plants will be operational between April to August this year. The start-up is delayed due to supply chain disruption due to Covid-19 pandemic. The same is now ebbing down.

• Material handling division has shown 17% volume growth. The company continues to add new product range and deepen its market reach in this division.

• Furniture division has shown 18% volume de-growth during the quarter, as the demand was quite weak.

• The composite cylinder has received encouraging response from Indian consumers. With expected surge in demand from domestic sources and also from international market, the company is keeping itself ready to double it's capacity from existing 5 lakhs cylinder per annum at it's existing plant in Gujarat in a short span of 8 to 9 months.

• The demand for performance packaging film has shown 50% growth in volume mostly from export market.

• Due to chip shortage, industrial component business has de-grown in the quarter by 3.5% in volume.

• The company's raw material cost has gone quite high in XF division. The revised increase in prices of company products have gone into effect with a time lag only by January 2022. This has affected the margin of this product segment steeply in the quarter. There was demand destruction in this segment due to look alike competitor's product with quite inferior properties. The company is confident that the demand will revive for its product because the consumers will know the real value of look-alike products. Protective packaging business has shown a de-growth of 10% in volume

• The company's envisaged capex plan of Rs. 521 crore for the year, including carried forward commitment of previous year is going smoothly.

• The company's initiative of launching of several new products and systems in it's various segments have been received positively.

• With the Covid-19 pandemic is now moving towards endemic, the company is quite optimistic of good business growth in the fourth quarter and coming years.

• The company expects sales of around Rs 7500 crore in FY22 with margins around 16%.