Key Highlights

Margin improvement in Dec 17 quarter was due to combination of factors like higher sales, lower raw material costs and lower costs at Valia plant.

Volume growth was seen in Dec 17 quarter across all the industries to which the company caters to. All industries have grown double digit for the company. There was a volume growth of around 25% YoY in Dec 17 quarter.

More or less of total sales, Synthetic rubber which includes high styrene rubber and nitrile rubber accounts for around 50% sales, synthetic latex including nitrile latex forms the rest.

Volumes from the biggest customer in paper industry is slowly coming up, as the customer has started its plant.

Nitrile Rubber market share improved in Dec 17 quarter. It was 17% when the company acquired the facility a year back and today it is around 25%.

Exports was strong in Dec 17 quarter. Exports account for around 15% of total sales and grew by 80% YoY for 9 months ended Dec 17. Some new products have also helped in higher growth in exports.

Capex of Rs 60 crore has been started at Valia plant which will be done in phases over 2 years. This includes debottleneck of capacity, some brownfield expansion and power related capex and some expense to reduce overall costs. Capacity will increase form 16000 tons to 22000 tons.

Company aims to reach 14% margins post all these capex. Margins should improve given new product profile and cost initiatives.

New products and expanding current product line will drive growth going forward.

Still looking for some strategic acquisitions

Nitrile rubber has seen good margins

Margin improvement is due to better raw material pricing, better quality approvals and overall market is bullish.

Latex at taloja plant saw good volumes.

Company aims to be around Rs 550 crore sales in FY 18.

Overall market for synthetic rubber has been good for past 6 months and company has fully capitalized on it.

Some other income component was due to mark to market investments which may not be there in coming quarters.