The company held its conference call on 10th Aug 2017 and was addressed by CFO Mr. Bhupesh Porwal
Key Highlights
Sharp fall in raw material and finished goods prices in international markets led to inventory losses in July 17 quarter which affected the overall margins.
Steep decline of international prices seen in April 17 month while in May and June 17, the prices were becoming stable.
There was some unplanned shut down for Polystyrene which resulted in high inventory in March 17 quarter which further added to higher inventory losses in June 17 quarter.
Compounding utilization capacity stands at around 90%
Polystyrene utilization stands at around 70%
60% of total business in the speciality segment will be value added products and rest will be commodity products
The inventory levels are reaching to normalcy and things should stabilize by Sep 17 quarter. The raw material prices are stable so far in Sep 17 quarter. Expects the prices to remain stable for the rest of the year.
Generally the company has to keep inventory of around 45 days of raw materials as it imports nearly 90% of its raw material requirements. The company does not have any control on this window of 45 days and any fall in raw material prices have to be passed on to the customers.
The company is expanding its compounding manufacturing facility from 66000 tons to 1 lakh tons, which will commercialize by end of FY 18. The capex of around Rs 150 crore will be met from internal loan arrangements with the Parent. The capacity will be for meeting the requirements of Indian operations.
The company is also evaluating ABS capacity expansion program and currently technical study is going on.
Overall, margins should return to normalcy from Sep 17 quarter onwards.
Demand remains strong from automotive segment while household segment saw some GST disruption but is coming back gradually.
Will continue to add new product portfolio and higher grades to existing portfolio which should result in better product mix going forward.
New products in healthcare segment will be launched in H2 of FY 18 with support from the Parent.
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