Gravita India success story

Stock Opportunities
45

Check their CapEx plan. I think they have lot many CapEx going on right now.

46

any particluar news on the co? share price has halvedā€¦ is it due to cash flow issues mentioned above

47

From the annual report, there is a sharp deterioration in balance sheet with respect to receivables , payables interest etc. This may be the reason to fall. But from business growth perspective or lead or aluminium price remained stable I think. I think no need to worry unless there is some hidden issues we donā€™t see.

Disc: invested.

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48

Ahā€¦actually, I was wrongā€¦there is a drop in lead priceā€¦that is the reason I think the drop in price of gravitaā€¦

49

but wouldnt this also reduce scrap lead prices? this cant be the only reason

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50

does anyone know why there were huge falls in Mar 13 and oct 14ā€¦was this related to lead prices?

51

Gravita India Limited, is glad to inform that company has expanded the capacity of its existing plant located at Chittoor, Andhra Pradesh by installing new washing line and PPCP Granules extrusion lines which is having annual capacity or 4,800 MTPA. The production from said plant will cater the needs of PP/HDPE Moulding & Fiber Industri es globally.
At present company is utilizing fu ll capacity or its existing plastic plant and after the said expansion the
capacity of Chittoor plant in plastic segment will be 6,000 MTPA. The company has invested Rs. 171.00
Lacs partly by way of leasing & partly from its internal accruals for the said expansion. Further after the
above expansion the total capacity ofChittoor plant in Lead & Plastic segment will be 34,000 MTPA.The
Company expects an EBITDA of approx. 200.00 Lacs per annum from the said expansion .

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52

Can any one help to know where we can find transcript preferably (or audio) of q2 fy19 earning call?
researchbytes does not have any. it shows audio on site. but does not work/get loaded.
i would prefer source of transcript if available any where or even summary of it.

53

Audio file is available on researchbytes. I just heard it.

Regards

54

Thnx.
Unfortunately on my laptop flash player is not compatible. Also due to some restrictions i can not update.
On mobile rb app, it shows up but does not load. Though other scrips audio i am able toblisten on mobile.
Also rb app is removed fm play store n hence not able to reinstall.
Anyway thnx. Will appreciate if u can summarise n mention highlights of major points from con call.

55

Was listening to Gravita Q2 conf call (recorded) yesterday.

  1. Ghana expansion project was delayed due to delay in getting license from govt. Received license, dispatched machinery. Confident that it will be done before March 2019, may be even earlier. Same for one other projectā€¦

  2. Mundra plant faced delays due to availability from domestic suppliers (including Amara Raja). Current tentative date is June 2019, which will be finalized in Dec 2018.

  3. Turnkey segment reported loss due to LME Pb falling from 2400 to 1900. Dispatch got delayed. Customers not in a hurry to start their projects. Hoping to dispatch plant and machinery in Q3 and Q4.

  4. Employee cost: Only 60 lakhs of the total impact of 2 crore will be sustained. Rest are one time.

  5. Tax rate is 20-22% for full year, average for all locations.

  6. Total amount of scrap is > 1 million tonnes in India. Majority from Hyderabad unorganized sector.
    Due to regulation in India, shift is happening from unorganized to organized. Also, GST will lead to unorganized sector coming under tax regime. Both helpful for Gravita.

  7. Pb scrap from battery costs 80rs/kg.

  8. Profitability went down. Why?
    -LME fell $300/tonne. We have some baseline inventory which we always keep in plant. This affects a lot. When price goes up, we gain and vice versa. So inventory restatement affected 6 crores this quarter. We keep a stock of 2900 tonnes which we do not hedge. So when price falls, it affects balance sheet. 6 crore loss this Q.

  9. Total capacity at the end of this FY should be 205,000 tonnes total. Pb-150,000, Al-19,000, Plastic-36,000.
    Domestic capacity is 143,000 and overseas is 62,000. This includes Ghana and Tanzania which will come up this year.
    By Mar 2020, we expect another plant in Dominican Republic-225,000 including that.

  10. EBITDA per tonne in Q2- 6500 rs/tonne for Pb, 14 rs/kg for Al, and 12rs/kg for plastic.
    Q1- 11rs/kg, 8.5 and 551rs/tonne.
    Al went up because some profit for Al in Q1 was realized in Q2.

  11. 75% utilization level currently. With Chittoor plant, it should go up to 90% with volumes that are picking up from Amara Raja.

  12. We do not plan to hedge the 2900 tonne inventory at this time which will result in permanent loss. May be when LME is at 2100, we will.

  13. QoQ Pb volume was lower due to lower utilization of RML part. Currently 90% is scrap. But Al increased from 1800 to 2200 tonnes and plastic, 2100 to 2800 tonnes.

  14. Margins that are sustainable for Pb? At 11rs/kg we can extract both domestic and international share. 30% domestic and 70% overseas. Will depend on the ratio. Future should be better due to logistics cost in Ghana and Tanzania since overseas scrap will be processed there itself.

  15. Will Q3/Q4 see 11rs/kg? Depends on LME. If it remains stable at 1900, then yes. If it goes up, we will make up for the losses made in Q2.

  16. We have expanded 22 crores in H1, another 25 cr in H2. FY20 will see another 40-50crore for Mundra and Dominican Republic plants.

  17. Debt will not increase next year since the cash flow of next year should be sufficient to address capex. Working capital cycle will reduce for domestic and for Ghana to India since it will be processed in Ghana itself.

  18. Current cost of inventory is 2100.

  19. For Amara Raja we procured 1400 tonnes in terms of Pb. Now we get around 1200 tonnes of the Pb equivalent scrap which is 2000 tonnes of scrap/month from Amara Raja.

  20. There was a press release regarding pending supply of 14200 tonnes which will be diverted to other customers with no impact. Clarify?
    We have already diverted some of it. 3000-4000T pending. There are customers (Trafigura/Luminous?) who are willing to take the additional quantity. Since it was unpriced, there will be no financial impact. Quantity diversion was for the raw material to be got in future.

  21. Total volume for this quarter was 20500 tonnes. Pb-14300, Al-2000, Plastic-2900.
    For FY18, it was 16400 total. Plb-13600, Al-1600 and Plastic-700 tonnes.

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56

During the quarter the consolidated revenue of the company increased by 27% as compared to
corresponding quarter of previous year. The increase in revenue is due to increase in the sales
volume by 37%.

57

Any idea on their greenfield expansion planned operations from December 2018?

58

Lead is rising. up 7% since last month. Any idea why Gravita is continuously falling?

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59

EARNINGS PRESENTATION

60

Same Q.

Why this scarp company becomes itself a scrap ?

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61

great write up. but why prices only moving in 1 direction ? any managment fraud which retailers are not aware ?
Does this fall in commodity cycle type company ?

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62

I was trying to understand Gravita and two questions pops up:-

  1. Why is Gravita tax percent is varying so much over the years? ie. -itā€™s varying from -60% to 100%
    What does a negative tax value means as well?
  2. Why is Gravita still in the expansion stage when they have got over capacity?
  3. Any view on itā€™s current debt situation.
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63

Point 3, As of Q3FY 21, Debt is around Rs.250 cr

64

Out of Rs.250 cr, Rs.40 cr is long term and rest is working capital.