Supreme Industries conducted conference call on 29 April 2022 to discuss the financial results and performance of the company for the quarter ended Mar'22. Mr. S. J. Taparia- Executive 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 128607 tonne of plastic goods and achieved net product turnover of Rs. 2519 crore during Q4FY22 against sale of 111238 tonne and net product turnover of Rs. 2049 crore in the corresponding quarter of previous year resulting in volume growth of about 16% and product value growth of about 23%.

• The company sold 393908 tonne of plastic goods and achieved net product turnover of Rs. 7625 crore during FY22 against sale of 409109 tonne and net product turnover of Rs. 6177 crore in the corresponding quarter of previous year resulting in volume degrowth of about 4% and product value growth of about 23%.

• Plastic piping system business degrew by 7% in volume for the year ended 31st March 2022 as compared to the previous year and and grew by 23% in value terms

• Packaging product segment business degrew by 1% in volume for FY22 compared to FY21 but grew by 17% in value terms

• Industrial product segment business grew by 16% in volume and 35% in value terms in FY22 while consumer product segment business degrew by 6% in volume and grew by 14% in value terms.

• The overall turnover of value added products increase to Rs. 2911 crore in FY22 as compared to Rs. 2480 crore in the previous year achieving growth of 17%.

• The company has cash surplus of Rs. 518 crore as on 31st March, 2022 as against cash surplus of Rs. 759 crore as on 31st March, 2021

• The company incurred capital expenditure of Rs. 259 crore in FY22. The entire capex has been incurred towards ramping up the capacities in plastic piping system, introduction of new products in various business segments, automation and replacing some old production equipment with new technology machines. Company has also incurred capex for increasing captive generation capacity of solar energy apart from balancing equipment at various locations. The entire capex has been funded through internal accruals only.

• The company has plans to commit capex of about Rs. 700 crore in FY23 including carry forward commitments of Rs. 280 crore at the beginning of the year. The entire capex and increased working capital requirement shall be funded from internal accruals of the company.

• The Government at the Centre and States have put the priority focus on Jal Jeevan Mission, Swatch Bharat Abhiyan, Sanitation , affordable housing and many more such initiatives which all would boost demand for plastic piping products. The Company is implementing brown field expansion, launching new applications & systems and continues to enlarge its product basket apart from three new manufacturing sites where work is going on in full swing. This will give required impetus to the division to grow faster and recap the lost business opportunities due to Pandemic in last two years.

• The business of Cross Laminated Film products was impacted the most due to one of its product tarpaulin being seasonal in nature with peak season between April to June. Business also got impacted by fierce competition from look- alike products as well as higher polymer prices which could not be passed on to the product in appropriate manner. The thrust in the current year will be on promoting non- Tarpaulin products, finding new applications, targeting new customers in existing markets & reaching new markets. The company expects the exports to grow further in the current year apart from increasing the sale of made up products. The company has also expanded its capacity to 30,000 tonne per annum.

• The company continues to remain a market leader in the premium range of plastic furniture. The company's furniture range is sold on various e-commerce portals & retailers who are being serviced through company's network of 1306 channel partners. The company has launched its own portal for showcasing to its consumers its wide range of premium products and made it available for them from the comforts of their home. With economy opening up, the company plans to launch variety of new models during FY23 which will help in overall growth in the current year.

• In Industrial Component division, the year was marked by huge supply chain issues at all its customers due to shortage of imported material because of shipping and logistics issues, nonavailability of containers, shortage of semi-conductors etc. This led to typical scenario of high demand but no supply. Supply chain was also affected by rising commodity and fuel prices during the year. Business conditions have started improving and looking at positive demand scenario in various sectors of Appliances like Washing Machines, Air Conditioners, Coolers and Refrigerators, segments where the Company has good presence. The company invested in capacity expansion at various locations. This has started yielding results and will help the division going forward.

• In Material handling division, the company has shown good growth in essential commodities, retail, industrial sector, fruits & vegetable segment, e-commerce, FMCG, fisheries jumbo crates, dairy segment and injection & rota moulded pallets and dustbins. The company is highly focused to constantly improve its product quality and the timely delivery of products to its customers. The division has been able to add many new customers all over the country and would strive to continue enlarge its customer base.

• In Composite LPG Cylinder division, repeated orders from existing as well as new customers stood testimony to the excellent quality of the current product offering. The company has successfully participated and received Letter of Intent (LOI) for supply of 7,35,186 Nos of 10 Kg. capacity composite LPG cylinders valuing about Rs.170 crore from Indian Oil Corporation Limited (IOCL), one of the leading government oil marketing Company. The volume of business is large which surpasses the existing installed capacity. The company has taken effective steps to install a new plant on a war footing in the same premises to double the capacity and the same is likely to be operational by November, 2022, which will enable the company to make around 1 million Nos per year.

• In Protective packaging division, business conditions were good and there was growth in all its application segments viz. packaging, insulation and civil. It has also started doing good business in its consumer products, sports goods, yoga mats and kids puzzle & toys. Good growth is shown in export markets as well. Buyers have reduced their dependency on China and exploring opportunities in India. The company expects good business for the division in the coming year.

• Performance packaging film being part of intermediary to essential product category has done well particularly in dairy & oil industry. Continuous efforts to develop new products will help the division grow better and add more value added products in its fold. Exports have shown positive growth and received good response from countries in Middle East, Africa and Europe. Other markets are now being explored in parts of Europe and USA. With improved product mix and focus on increasing customer base, the company expects to achieve volume and value growth in this business in the current year.

• Most of the business segments are now showing improved demand prospects. The company continues with its investment plans vigorously. The company envisages good business growth opportunities in all its segments going forward as the impact of pandemic has ebbed and several initiatives are being taken by the government to put the country on higher growth path. PVC prices are showing a downward trend. Lower PVC prices definitely give boost to the demand, which will be healthy. And the company expects prices to remain in the range bound, which will help the market to grow

• The company plans to introduce about 280 new products in FY23

• The company expects a minimum growth of 15% in volumes in FY23