Orient Caron & Chemicals held conference call on November 08, 2021 to discuss the performance for the quarter ended September'21. Mr. Akshat Goenka – Promoter & Jt. Managing Director and Mr. Anurag Jain – Chief Financial Officer of the company addressed the call.

Highlights of the Concall

• The company reported 45% increase in total income to Rs.187.3 crore in the first half of the current fiscal with 11% growth in EBITDA and 15% growth in PAT to Rs.47.2 and Rs. 25.1 respectively. This was on the back of revival in demand post the second wave of the pandemic, normalization of replacement and OEM demand in domestic and international markets, improvement in economic activities with significant decline in covid cases and increase in vaccination rate.

• Sharp increase in raw material costs and freight costs resulted in lower margins and impacted overall profitability with the time lag in raising the finished product prices. The raw material price increase pass through generally happens with a lag of 3 to 6 months

• The company continues to be focused on improving operational efficiencies and is continuously taking steps towards controlling costs. In the long run the company expect margins to normalize.

• The business environment is stable except for South Asian markets which are still affected by Covid. Operations at both its plants are running smoothly.

• The company has completed the Phase I of insoluble sulphur plant at Dharuhera (Haryana) and is in the process of starting trial runs and expects to commission the project by end of November 2021.

• The Sulphuric Acid plant however, will spin into December as one crucial part is still in transit from the US and it was delayed due to the various issues with logistics.

• The optimal utilization of a new line of capacity may only happen in CY2023, as currently even existing capacity is only at approximately 80 to 85% utilization levels.

• Regarding Phase II expansion of insoluble sulphur, the company is continuously monitoring the situation and expects to start ordering the machinery sometime in the second half of CY2022

• The Indian tyre market is witnessing capacity expansions undertaken by tyre manufacturers and new products have been introduced over past few months. Indian Tyre market offtake appears to be optimistic. With increasing radialization in LCV and TBR tyre consumers, on account of superior mileage and fuel efficiency will drive large consumption of insoluble sulphur. The company expects this momentum to sustain going ahead led by the normalization of operations in most markets and the upcoming festive season in India.

• The company is focused on developing higher grades of wires and improving penetration into developed markets like Europe and North America. The company aspires to gain a market share of approximately 10% in North America in the next three years. Currently it is facing serious challenges due to exorbitant freight rates which render it uncompetitive as well as companies prefer local suppliers due to the uncertainties in logistics.

• Post the second wave of COVID the company subsidiary business Duncan Engineering has started performing well and is seeing very good growth in the order book over there.

• The board of directors has declared an interim dividend of Rs 7 per equity share that is 70% of the face value of Rs10 each for FY21-22. This increase in interim dividend is in line with its new policy.