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Supreme Industries announced the results for the quarter ended December 2017 and held a conference call on 30 January 2017 to discuss the results and future growth strategies.
M P Taparia MD of the company addressed the call.
Highlights of the call
On standalone basis the company sold 96736 MT against 81183 MT. Volume grew 19% and product value grew 15%.
On standalone basis for the nine months the company sold 267961 MT against 245036 MT. Volume grew 9% and product value grew 10%.
Consolidated sales grew 15.43% to Rs 1278.30 crore during the quarter ended December 2017. PAT grew 3% to Rs 104.22 crore.
For the nine months, consolidated sales grew 9.9% to Rs 3495.03 crore. PAT fell 10.8% to Rs 253.43 crore.
GST has stabilized.
The introduction of E-Way Bill from 1st Feb will boost the business of organized players.
Going forward the demand looks better in all the segments serviced by the company.
Raw Material prices have strengthened since December beginning.
In first half of the current calendar year the polymer prices are expected to remain at elevated level.
The share of overall sales in the value added products has been 40% of the sales in the quarter against 43% yoy. The company remains focused to increase the share of value added products in its turnover. Value added products have fallen in plastic pipes systems.
Keeping in view the expansion opportunities, company has finalised to purchase about 11.2 acres of land adjoining to its Pudicherry plant which was made available to it.
Capex is expected to be in the range of about Rs. 425 to 450 crore in FY 2018 and the same is progressing smoothly.
Project work at Ghiloth (Rajasthan), Malanpur Unit III (MP) and [adcherla (Telangana) is running smoothly and likely to go into production in next financial year.
The company expects better business growth potential going forward.
Considering the good prospects the company has increased investment plan to around to Rs. 450 crore in FY 2018 compared to Rs. 350 crore as planned in beginning of the year.
Increased investment outlay along with increased working capital requirement may require small debt to remain in the books of the company instead of company being debt free.
The company still maintains its annual volume growth estimate of 12% for FY 2018.
It clocked volume 19% growth in the third quarter.
The company is able to pass the increased raw material cost,
The demand from the housing sector has returned. The company is getting good enquiries from infrastructure sector.
The company has installed CPVC fire sprinkler system first time in India to the satisfaction of the relevant authorities. The company expects good business growth in this application during current financial year and beyond.
The company intends to add around 60000 tonne capacity of all the products together.
Capacity will rise from 544000 to 600000 tons.
Major addition will be in piping segment and packaging segment.
Turnover for Q4 is expected to be in the range of Rs 1550-1600 crore and Rs 5050-5100 crore for the full year
The company is seeing a revival in demand from housing and also from affordable housing.
The company's Packaging product segment is adding more value in packaging segment with better margin going forward. This business raw material price is stable.
Liquidity situation remains tight and the company has made credit available to the dealers. But the inventory level is at reasonable levels. Target is to bring inventory days down to 21 days by Q4 against current 30 days.
Q4 margin is expected to be better than Q3.
OPM for FY 2018 is expected to be 14.5-15%. Aim is to reach 16% OPM going forward.
Consumer durable demand is extremely strong, especially the durable demand.
Feb-May is a good period for the company where demand is good, plants are working at higher capacity and cost of production comes down.
The company has planned for the first time Rs 177 crore investment in Supreme Pertochem.
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