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The company held its conference call on 27th July 2017 and was addressed by Mr. M P Taparia MD
Key highlights
The company has sold 92196 MT of plastic goods a volume de-growth of 5% for the June 17 quarter on YoY basis. Distributors went in de stocking mode from 20th May till 3rd week of July 17 which affected the volume and value growth in June 17 quarter. Demand continued to remain robust otherwise.
Value added products account for around 32% of total sales for June 17 quarter as compared to 35% for June 16 quarter.
The business is expected to improve from Aug 17 onwards. Business for July 17 so far is far better than July 16.
There was some inventory loss in June 17 quarter and lower production resulted in higher costs. Lower sale of value added products also affected the margins in June 17 quarter.
Expects the H2 FY 18 should recoup the business loss in H1 FY 18.
Aims to register a volume growth of around 12% for FY 18.
Raw material prices continue to remain stable due to stable crude oil prices.
All the benefits of GST will be passed on to the customers which will drive volumes for the company.
Ideal average and sustainable margins for the company is around 15.5-16%. However any increase in sale from value added products and higher volumes can drive higher margins.
For June 17 quarter, plastic piping system volume growth was down by 7% and value growth was down by 3% to 66149 MT and Rs 665 crore respectively on YoY basis. OPM for the segment stood at 13% as compared to 16% for June 16 quarter.
Packaging products reported volume de-growth of 2% and value de-growth of 7% to 11469 MT and Rs 239 crore respectively for June 17 quarter on YoY basis.OPM stood at 19% as compared to 23% for June 16 quarter.
For Industrial products, volume growth for June 17 quarter stood at 6% to 9979 MT and value growth stood at 10% to Rs 166 crore on YoY basis. OPM stood at 11% as compared to 12% for June 16 quarter.
Consumer products segment reported a 8% fall in volume for June 17 quarter at 4584 MT while value de-growth stood at Rs 81 crore for June 17 quarter on YoY basis. OPM stood at 16% as compared to 19% for June 16 quarter.
Company's net borrowing as on June 17 stood at Rs 166 crore as compared to Rs 228 crore on Mar 17. Average net borrowing stood at Rs 196 crore in June 17 quarter with average cost of borrowing at 7.3% p.a. The company is committed to become debt free in next 12 months.
Company envisages capex in the range of around Rs 300 to Rs 350 crore in FY 18 and the same is progressing smoothly. Commercial production of blow furniture at West Bengal unit has commenced and 5 product items have been launched in the market. Entire capex will be from internal accruals only.
In business of piping systems and furniture, nearly 50% of business is unorganised. Many players are slowly becoming organised, but further clarity will emerge from Dec 17 onward. Unorganised share will shrink in next 2 years.
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