Total income up 3.1% to 82.4 cr.
Electric cars (and any car in general) have a cap on energy consumption/ km.
One parameter which affects this energy consumption is rolling resistance of tyre (25% contritution)
Radial tyres have lower rolling resistance. And hence going forward if EV picks up then radial tyres requirement will go up.
Radial tyres require more insoluble sulphur.
Hi OCCL investors
There is a sudden spurt in the market price. I did not get any news flow so could not correlate the events.
Please could someone share what has just happened. Thanks.
A newbie doubt:
I was checking the bulk/block deal in the morning and now again but couldn’t see this transaction. Is it supposed to reflect in this category as it was a market purchase as per the filing.
The purchases happened on the 15th (Friday) and we came to know on Monday post market hours.
Highlights from the press release
The results for the quarter seem decent.
Anti dumping duty on chinese tyres might help further
From the latest Annual Report of Eastman Chemicals (one of three internationally accepted suppliers of Insoluble Sulphur)…
In 2017, the Company:
• advanced growth and innovation of Crystex® insoluble sulfur rubber additives through completion of an expansion of the manufacturing facility in
Kuantan, Malaysia that management expects will produce material qualified for commercial sales in 2018. This expansion is expected to allow the Company to capitalize on recent enhancements of technology for the manufacture of Crystex® insoluble sulfur by improving the Company’s cost
position and facilitating the introduction of new products into the tire markets;
Prices of insoluble sulphur remain firm given the demand. Sunshine recently reported good numbers. The average selling prices are higher and firm due to increasing environmental regulations in China.
Q4 fy18 results
Sales are up both qoq and yoy. Pat has grown yoy and is flat qoq basis. Increase in other expenses and raw material costs.
Overall stable sets of results.
Company is on track regarding construction of the expanded capacity and should be live in q2.
Q4 Fy18 Concall -
- New line at Mundra has started trial runs and would be commissioning soon
- Savings in total project cost
- Have been able to cater to growing domestic demamnd
- CV sector has grown 20%
- Tyre majors are investing 35000 crores having reached 80% capacity utilisation
- Tyre majors anticipate double digit growth in FY19
- New compound is being designed for ultra high performance tyres which would lead to increased consumption of insoluble sulphur
- Have made inroads in North America and China and expect these markets to propel OCCL going Forward
- Subsidiary Duncan engineering declared positive pat for first time. cash flows have improved tremendously. Subsidiary has repaid 1.5 crore loan to OCCL. Expect the subsidiary performance to improve further this year
- Revenue growth 10% YoY due to catering to newer geograhies
- Interest cost higher due to commissioning of phase 1
- PAT up 5% YOY
- Centrum broking - Phase 1 not at 100% utilisation as there was a hiccup at the start of the year. Trying to ramp up it to 100% that level. Ramp up takes some time. Hiccup was related to some teething problems of the new customers whom they went to.
Growth is mainly on volumes. Realisation marginally negative due to exchange rate. In terms of dollar it’s almost same. More growth comes from domestic market.
There have been benefits in operational costs in terms of power and fuel. Cost is more due to 6 months forward cover and had to book loss on MTM on forward covers. Provision of 2 crores on 31st March as rupee had appreciated. Freight cost was higher by some amount.
Savings in new project Capex to be notified soon and would be a good saving. Maintenance capex would be in single digit.
- ICICI Securities - Credit terms don’t generally fluctuate. Sulphur price has no correlation with crude price. Sulphur price have now stabilised. Last quarter crude increased but Suphur prices decreased. Sulphur price as percentage of overall sale is very less. For most of the cases we have formula based pricing. In case of any high increase in sulphur price it can be passed on.
Production of tyre in India would increase due to domestic demand, import from China is decreasing and India is becoming export hub tyres.
Have started going to drawing board for new projects and in next 2-3 months would be having some plans for the same product.
For new product the journey is on from last 1-1.5 years and sooner something crystallizes investors would be communicated.
- (Individual Investor) - Eastman doesn’t have any major IS capacity expansion plan currently other than 22000 MT Malaysia/Thailand (don’t remember). Even small IS manufacturers in China is closing down and hence China Sunshine might just cover up that capacity going offline. China Sunshine is not competing us globally.
- Smart sync services - 75% of 6 month net exposure as forward cover policy.
- RB Securities - 2 major raw materials are coating oil and Sulphur. Sulphur doesn’t have much correlation. Coating oil has some correlation and it tends to go up if the crude oil are up for long. In some cases where formula based pricing is there then we can pass on. Where formula pricing is not there the price increased is passed on with 3-6 months lag.
Average debtor days are 75 days.
Certain IS producers are facing heat and hence demand China should be better in future
Current facility is full in Mundra after current expansion.
- ICICI securities - Cashflows from operational activities was 85 crores.
Tax rate is 22% and going to remain for 4-5 years. EBITDA should be in higher 20s. All these benefits give us the confidence to maintain the margins. Employee cost is 39 crores against 37 crores last year.
Duncan Engineering has some legacy issues which might be sorted out and expect to post a positive PAT this year also.
FY 18 AR notes
• Sales growth- 10.5 % (332 cr vs 310 cr)
• EBITDA growth – 10.9 % ( 98 cr vs 88 cr)
• PAT growth- 5%
• EBITDA % = 31.2 %
• Managerial remuneration – 1.9 cr ( Arvind Goenka) + 1.7 cr( Akshat Goenka) – 3.6 cr
• Dividned – 8.67 cr . ; 15.4% payout
• Newer market USA & China – good scope to grow here
• Domestic market growth in double digits due to :
-commerical vehicle moving towards complete radialisation
- new tyre capacities being set up by international players, india emerging as a hub for export of tyres
• Global demand for IS- 3.05 lakh MT
• 1 lakh MT – demand from China & .84 lakh MT from America& Europe
• Out of 1 lakh MT in China , 50 % is of quality IS( one supplied by our company)
• Hence total demand – 2.48 lakh MT
• Number of employees- 433
• Phase 2 of expansion( 5500 MT) well on track
• Company making inroads into American Markets
• Completely headged against foreign currency exposure
OCCL has commenced its production of second phase at Mundra plant on time. A positive trigger.
ICRA has recently come out with a credit rating report on OCCL. You can read it by clicking here.
Q1 Fy19 results
Results look good with the profits up 8% YoY and sales going up by 18%. Sales have gone above 90 Crs
Savings of 11 crores on the initial expansion plan. This also looks impressive.
1st phase expansion has now stabilized after facing initial hiccups.
Next 2-3 quarters should be good.
I went through the annual report for this company. One point which I could not understand is the following
- Over the last 10 years the fixes assets have grown faster than the growth of sales. Assets increased by 5 times while sales increased by 2.5 times. Asset turnover has gone down from ~2 to 1 now which in turn has pulled down the incremental roic to less than 10%. What is the probable reason for this? Has the operating dynamics deteriorated for the business?
- I understood that Eastman is coming with expanded facility for insoluble sulphur in Malaysia. What is going to have an impact of that increased capacity?
Thanks for response in advance.
Can anyone share the historic & current prices of sulfur (raw material for OCCL) in INR as well as USD terms? Couldnt find on google.
Thank you in advance.
today there is a con call of occl at 11.30
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