Sharing my notes from Pokarna’s Q1FY19 concall. You can also read the transcript from here.
* Growth of 22% to a large extent which was driven by strong performance of Quartz business and also partly owing to the low base of the last year.
* Business environment for Granite continue to remain challenging owing to highly competitive intensity and currency headwinds.
* Realization remains under pressure owing to rising competitive intensity.
* Currency depreciation as well is causing certain challenge for the business.
* Chinese possibility of the tariff, Quartz coming at a low price will be again, I assume replaced by low value Granite.
* But, margins will never be there because there are too many players now and too many options.
* Polyester resin key RM input for our Quartz business has seen an increase in prices in recent times following the rise in crude prices.
* We have applied for requisite regulatory approval for commencing the work on new Quartz plant and civil work should start on the same shortly.
* Plant will be situated at approximately 25 kilometers from Rajiv Gandhi International Airport.
* And is close proximity to ICD, Hyderabad which is well connected by roads to key domestic ports.
* Facility will cater to both international as well as domestic demand.
* We have started servicing IKEA, Hyderabad.
* In quartz presently we work to full capacity.
* We are exploring ways if we can put some small investments to improve the total yield till the new plant comes up.
* New plant should come up in another 18 months.
* Regarding Chinese tariffs, we are yet waiting because this is all paper news which is happening but no new tariffs have come yet.
* In the US market, the Quartz share of Chinese is in excess of 60%
* Regarding converting our rupee loan to ECB our lead bank and IOB have agreed. Only BOI is remaining, we will give them a month otherwise convert the remaining loans.
* Apparel business stake sale not getting any reasonable valuation or any customer.
* We do not hedge our sales.
* However, rupee fall’s benefit will be off set with our earlier foreign currency loans where we have to account for today’s price in the books.
* Term loan is 44 Cr & in the Quartz business we do have the promoters’ loan 85 Cr
* Completed about 80 installations through Ikea.
* It is just done for their new store and some sample and trial stores
* Actual customer flow will start now.
* Lot of people especially with the Breton Stone Technology are adding more capacity gradually.
* Chinese granite vs Indian granite will be 20-25% cheaper.