Key highlights

Despite challenges, FY 2014 was a good year for the company in terms of new capacities being stabilized, continue to have strong relationship with customers, maintain dominance in the business and higher depreciation and interest costs being absorbed.

The company operated at around 66% of installed capacity in FY 2014 and expects to increase further to more than 75% in FY'15. Presently, in April May, the plant was operating around 75% level.

In FY'14, the sales growth has been around 8-9%, this is despite a continuous double digit fall in rubber latex segment. However as per the management, rubber business has bottomed out and there will be a steady growth in this segment going forward. Rubber latex now constitute about 12% of total sales as compared to about 20% in FY'13.

Exports contributed around 12% of total sales in FY'14 as compared to about 8% in FY'13. Gradually as per the management in next couple of years, exports would be around 18-20% of total sales.

From May'14 onwards, almost all the industries have gradually picked up. If the government really performs well and monsoon is ok, then H2 will see huge demand and infact, from all across the industry. Even construction activity has started picking up. Its industrial latex which supplies to Dr fixit of Pidilite, saw decent growth in April and May.

Rupee volatility is difficult to pass on in short time period. The management stated that while the rupee at 60 or 55 is not an issue as things can get adjusted and passed on; the sharp volatility is the main concern as it is difficult to adjust and pass on.

The company has completed the entire capex in FY'13 and in FY'14 and now there are no major capex plans for next couple of years. So higher depreciation and interest costs will not hurt the bottom line going forward.

At 100% capacity utilization, the company can generate a turnover of around Rs 600 crore for which additional about Rs 5 crore capex at the most will be required. At optimum capacity utilization, the company can generate decent operating leverage which can increase the OPM to around 10-11% as well.

Overall, while management is very confident of growth, how much in FY'15 is a bit difficult as it all depends upon the pace of recovery in H2 FY'15.