Supreme Industries conducted conference call on 28 July 2023 to discuss the financial results and performance of the company for the quarter ended June'23. 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 148,544 tonne of plastic goods and achieved net product turnover of Rs 2340 crore during Q1FY24 against sale of 108,922 tonne and net product turnover of Rs 2169 crore in the corresponding quarter of previous year, achieving volume and product value growth of about 36% and 8% respectively.

• Volume increased by 36% YoY to 148,544 tonne in Q1FY24 compared to 108,922 tonne in Q1FY23

• Plastic pricing system business grew 48% by volume and 11% in value term on a YoY basis in Q1FY24. Packaging Product segment business grew by 5% in volume and degrew by 1% in value term. Industrial Products segment business grew by 4% in volume and degrew by 1% in value terms. Consumer product segment business grew 15% by volume and 10% in value term.

• Big growth in the Piping division during the quarter came from agriculture and infrastructure sector as the government is taking many initiatives to boost the infrastructure.

• EBIT per tonne for plastic pipes was lower during the quarter due to higher contribution from agri and infra volumes and inventory loss.

• The company has sold 12,000 tonnes in nal se jal scheme which was 7000 tonne more than compared to the quarter last year.

• The overall turnover of value-added product remains at Rs 766 crore during the current quarter as compared to Rs 761 crore in the corresponding period of previous year.

• The company has total cash surplus of Rs 951 crore as on June 30, 2023 as against cash surplus of Rs 738 crore as on March 31,2023.

• Polymer prices witnessed a downward bias and continue to fall albeit in range bound manner. During the quarter, prices of various polymers fell between 5 to Rs. 8 per kg except for Polypropylene which fell down by Rs.13 per kg causing moderate inventory losses across the product segments of the company.

• The company has taken in hand a project to make PVC window & doors at its newly acquired 32 acres site 15 Kms away from Kanpur (U.P.). The initial capacity planned will be 10,000 tonne per annum (tpa). The company intends to sell window profile & complete window from this site. Later on the company will put up window making facilities at several of its manufacturing sites. The envisaged investment in this project will be about Rs.160 crore and after attaining full capacity, the company may add additional turnover of about Rs. 350 crore annually in this segment.

• The company expect PVC window & doors to be a very big opportunity considering market for plastic windows and door in china is about 4.5 million tonne whereas in India it is about 100 thousand tonne. Population of India and China is around at the same level.

• The company is ready to seize the business opportunities and continues to commit desired investment. During the year Company has plans to add 4 additional systems - PP multilayer silent pipe system, Gas Piping system, PE/AL/PE piping system and PPR pipe system for Industrial applications along with its existing 36 Systems in its flagship plastics piping business.

• Project execution has commenced for setting up of dedicated greenfield unit at Malanpur (M.P.) to manufacture varieties of Industrial and ball valves. The company continues to commit new investment to increase range of value-added products in its piping business. Expansion of capacities and enlarging the product basket is underway, which would increase installed capacities of this division to 7,50,000 tpa by end of FY24 against present capacity of 6,00,000 tpa.

• The company continues to focus more on made-up product sales from cross laminated film which would help in better realizations and improved profitability. The Company plans to introduce newly developed cross plastic film is progressing well and plant with a capacity of 2500 tpa should be in operation by end of FY24.

• Furniture business is expected to grow well during the year backed by softening of PP prices and introduction of several premium products in the range. The Company has total 244 show rooms as on 30th June,2023 and are being added regularly where quality furniture produced by the Company is available.

• In Industrial Component division, Passenger Vehicle segment in auto sector is continuing its bullish trend and expected to remain positive during the year. Impending festive season and overall positivity in the economy should help the appliance segment of the division gather steam going forward.

• Material Handling Division product portfolio is doing reasonably well keeping in pace with the major drivers of material handling products like automobile, FMCG, whitegoods and retail. To meet the diverse needs of the customers, newer products are being introduced. Supplies of tailor-made solutions with customized crates are growing and most models of garbage bins range have started selling well.

• Composite LPG Cylinder division continues to supply new age composite LPG Cylinders to Indian Oil Corporation against its LOI as per schedule being received. It is also pursuing vigorously with other Oil marketing companies for promoting composite cylinders in domestic market showcasing the safety to human life what they provide. Efforts continue to expand geographical reach and add new customers which is a lengthy process due to nature of the product.

• In Protective Packaging Division, strategy to drive growth both in volume and value with enhanced profitability across product lines is yielding positive results. Division continues to focus on development of new applications, value engineering to provide best product with customized solutions and increase its export business by strengthening distribution reach in newer markets.

• The Performance Packaging division of the company is functioning optimally with its existing capacity. The division serves different market segments in food and various non- food industries and working towards post extrusion value added products for better margins.

• The company has a capex plan in excess of Rs. 750 crore for the current year including carry forward commitments of previous year. Entire Capex shall be funded from internal accruals.

• CPVC had 12% degrowth in Q1FY24 mostly in the North and Eastern market because of so many counterfeit products. The company has filed legal cases again many of them where it has succeded , but during the period of success, it lost some business in North and East.

• The company expect turnover of Rs 11000 crore in FY24 with volume growth of 20% and 14% OPM.

• The company is targeting 10-12% volume growth in industrial segment in FY24.