Supreme Industries conducted conference call on 26 July 2022 to discuss the financial results and performance of the company for the quarter ended June'22. 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 108922 tonne of plastic goods and achieved net product turnover of Rs. 2210 crore during Q1FY23 against sale of 71264 tonne and net product turnover of Rs.1346 crore in the corresponding quarter of previous year resulting in volume growth of about 53% and product value growth of about 66%. This high volume growth was mainly due to lower base of previous year, when business was badly affected due to Covid 2nd wave effect.

• Plastic piping system business grew by 65% in volume to 79424 tonne for the quarter year June 2022 as compared to the previous year and grew by 76% in value terms to Rs 1463 crore.

• Packaging product segment business grew by 12% in volume to 12866 tonne in Q1FY23 compared to Q1FY22 and 35% in value terms to Rs 23 crore.

• Industrial product segment business grew by 36% in volume to 12901 tonne in Q1FY23 compared to Q1FY22 and 52% in value terms in to Rs 302 crore.

• Consumer product segment business grew by 77% in volume to 3731 tonne in Q1FY23 compared to Q1FY22 and 98% in value terms in to Rs 96 crore

• The overall turnover of value added products increase to Rs. 761 crore during the current quarter as compared to Rs. 516 crore in the corresponding period of previous year achieving growth of 47%.

• The company has cash surplus of Rs. 533 crore as on 30th June, 2022 as against cash surplus of Rs. 518 crore as on 31st March, 2022.

• The company continues to aggressively grow plastic piping system business. The company is implementing the greenfield expansion, launching new applications and system and continue to enlarge its product basket along with brownfield expansion in existing plants.

• New unit at Guwahati will commence commercial production and units at Cuttak & Erode are likely to go in production by September- October 2022. The company has augmented its offering in turning system by introducing PEX plain pipes and PEX composite pipe, which are ideal pipe system to carry hot water. All these initiatives will give required impetus to the division to grow faster and see the growing business opportunities

• The company's olefin fittings & electrofusion fittings have received positive response in “Nal Se Jal” scheme which Government has committed to implement throughout the country by 2024.

• The business of cross laminated film products is getting impacted by fierce competition from look- alike products. The thrust in the current year will be on promoting non- Tarpaulin applications, targeting new customers in existing markets & making breakthrough in new export markets for special applications

• The company plans to launch variety of new models & remain focused in the premium range of plastic furniture which will help in overall growth in this business segment.

• In industrial component division, business conditions are showing signs of gradual improvement. The company expects positive demand scenario in sectors of appliances like washing machines, air conditioners, coolers and refrigerators, segments where it has good presence.

• Material handling division has been able to add many new customers all over the country and the comany is striving to continue enlarge its customer base and product portfolio.

• In composite LPG cylinder division, repeated orders from existing as well as new customers are encouraging. Supplies against the letter of intent from IOCL have commenced and existing capacity is running at full capacity. Work on doubling the capacity is progressing smoothly and is likely to be operational by November, 2022.

• In protective packaging division, business conditions are improving. It has 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. The company expects good business for the division and continues to develop various customized solutions for the user industry.

• Performance Packaging Film has done well. Exports have also grown and received good response from countries in Middle East, Africa and Europe. With improved product mix and focus on increasing customer base, the company would soon have all its capacities fully tied up and would require to look for expansion opportunities. The company remains optimistic in various business segments where it operates.

• The company's envisaged capex plan for the year 2022-23 of about Rs. 700 crore including carry forward commitment of Rs. 280 crore is progressing smoothly and shall be funded entirely from internal accruals.

• Raw material prices continue to slide down. The prices of different polymers particularly for polypropylene (PP), Low density polyethylene (LDPE) and poly vinyl chloride (PVC) have gone down between Rs. 19 per kg to Rs. 46 per kg since beginning of the year till now i.e. a reduction between 13% to 32%.

• The company is large consumer of PVC Resin which has witnessed the highest fall since April,2022. This sharp reduction would result in inventory losses, yet this price fall will boost demand of company's products.

• The company expects inventory loss in current quarter i.e. Q2FY23 as well

• The company expects business conditions to improve from September,22 onwards & will lead to higher volume growth in plastic piping business in the remaining period of the year.

• Overall plastic piping market is around INR 40,000 crore and the organized sector will be around 15%.

• The company expects volume growth of 15% and OPM of 15% in FY23.