Time Technoplast conducted conference call on 31 May 2022 to discuss the financial results and performance of the company for the quarter ended Dec'21. Mr. Sanjaya Kulkarni - Chairman & Independent Director, Mr. Bharat Vageria, Managing Director, Mr. Raghupathy Thyagarajan, Whole-time Director, Mr. Sandip Modi, Sr. VP - Accounts & Corp. Planning and Mr. Hemant Soni, Head – Legal of the company addressed the call

Highlights of the Concall

• FY2022 remained very challenging due to global supply chain disruptions triggering volatility in raw material prices.

• The company witnessed an encouraging performance delivering a robust revenue growth of 21% in FY22 largely driven by increasing demand for composite products. The company received the single largest order of over 0.75 million Type-IV LPG composite cylinders from Indian Oil Corporation Limited, a first by an Indian Public Sector OMC in Q4FY22. Furthermore, its order book for the supply of cascades with Type-IV CNG composite cylinder has crossed Rs. 250 crore.

• The company remains highly optimistic to continue this growth trajectory given a healthy order book for CNG Cascades and an encouraging demand outlook from end user industry in industrial packaging.

• Net sales increased by 9% in Q4FY22; India,- India growth was 7% while overseas growth was 15%. Volume increased 7% during Q4FY22- India 3% and overseas 11%.

• Polymer prices have increased substantially in Q4FY22. The company was able to pass on, but with the little time gap. Therefore, this impacted the margin by around 0.5% to 0.7%.

• Value-added product share has increased and grew by 27% in FY'22 as compared to FY'21. Established product grew by 20%. The share of value-added product is 21% of the total sale in FY'22 as against 20% in FY'21.

• Value added products grew by 17% in Q4FY22 as compared to Q4FY21, while established products grew by 8%.

• India business formed 68% of total business while overseas formed 32% in FY22 compared to 69% India business in FY21 and 31% overseas.

• The total debt as of 31st march 2022 stood at Rs 825 crore as against Rs 810 crore at end of FY21. Net debt stood at 731 crore at end of FY22 against net debt of Rs 723 crore at end of FY21

• Capex incurred during the FY'22 stood at Rs 186 crore which includes Rs 79 crore includes towards the capacity expansion for the existing established product and Rs 107 crore towards the value-added products, which includes mainly composite products, IBC and the CNG product, and small expansion in the LPG product.

• The company has approved for consolidation cum restructuring of overseas business to capture the growth in Asian Countries, Middle East and USA through Joint Venture/Special Purpose Vehicle by onboarding strategic partner/investor partner by way of sale/transfer/disposal of part of assets/investments of subsidiaries/material subsidiaries/step down subsidiaries. The company will be benefitted by utilizing proceeds of the consolidation cum restructuring for repayment of debt, capex for composite cylinders (LPG/CNG/Hydrogen) & core business in India to meet huge market demand and benefit to the shareholders

• Overall capacity utilization in FY22 was 75%- India capacity utilization was 72% and overseas capacity utilization was 82%.

• The company is focused on improving working capital cycle time and targets to achieve 90 days in next 12-18 months.

• The international unit in Far East, Middle East and the U.S.A has been set up to cater to the demand in those regions because they are all catering to industrial packaging requirements. And they are bulky in nature, so obviously, the manufacturing caters to the local demand.

• International units are definitely seeing impact of inflation due to the increase in the cost of the raw material and allied freight expenses but the market continues to be buoyant. All three locations in the USA i.e. Chicago, Houston and Iowa continue to show healthy performance as good demand for IBCs and large sized drums continues.

• Type 4 cylinders are almost 3 times more costlier than Type 1 cylinders but they are able to carry more quantum of gas easily which offsets the additional expenditure. On a service life of 20 years that these gaskets are supposed to have a payback in a short period of less than half a year or 7 months.

• The company expect that the next phase of expansion would include investments for manufacture of cylinders for automotive application, that both to the OEM as well as to onboard cylinders along with the use of these cylinders on buses, which will also give them an opportunity to travel long distances without the need to refuel in between because they can carry more quantum of CNG gas in them.

• The company targets to reduce its debt by 50%.

• The company is targeting revenues of Rs 1000 crore from composite business in 3 year including LPG and CNG.