The company held its conference call on 22ndJan’14 and was addressed by Mr. M P Taparia MD:Key highlights by Capital Mkt;
During the quarter ending Dec’13, Supreme industries processed 66318 MT of polymers, almost flat on y.o.y and reported net sales growth of about 15% y.o.y. About 33.5% of total sales were value added products as compared to 32.4% y.o.y.
For the Dec’13 quarter, Plastic piping segment reported a 3% kind of volume growth to around 42388 MT, while the value wise, the growth stood at 20% to Rs 457 crore. Plastic piping margin for Dec’13 quarter, stood at 13.5%, as compared to 14.8% for Dec’12 quarter.
The packaging segment reported a growth of 16% in volumes to 12125 MT and value growth stood at 25% at Rs 249crore. The segmental margin for Dec’13 quarter, stood at 17.6%, as compared to 18.5% for Dec’12 quarter.
The industrial product segment reported 21% decrease in volume to 7747 MT and value was down by 13% at Rs 134 crore. The margin for Dec’13 quarter stood at 8.9% as compared to 11.5% for Dec’12 quarter.
Consumer Product segment reported 15% fall in volume to 4058 MT and value growth was almost flat at around Rs 68 crore and segmental margin for Dec’13 quarter stood at 7% as compared to 12% for Dec’12 quarter.
CPVC sale for H1 grew by about 25% to Rs 122 crore and volume stood at 4110 MT. The company has capacity of about 9000 MT of CPVC.
During the quarter ended Dec’13, the industrial subsidy value stood at Rs 9.85 crore. After Dec’13, subsidy of about Rs 35-37 crore continues to be pending, which is to be claimed in next couple of years.
Gross margin of the company is at historical low, not seen in past 15 quarters largely due to lack of volume growth, lower demand, and uncertain raw material prices. However management expects margins to increase and to end the year with about 14% once the volume comes in H2.
The consumer durable segment was down by about 20% in Dec’13 quarter affecting the growth of the company. Based on the interactions with the industry players, the management expects a flat growth of consumer durable segment in Jan-June’14 period.
Management is confident of about overall 9-10% volume growth and 20-22% value growth for 12 months ending June’14. The growth was curtailed lower due to continued slowdown in industrial and consumer durable side and also on lower demand from soft drink industry. Also demand was more of recycle and scrap material, where company was not present.
However management is confident of better growth in H2 as seasonally it is peak season. Also with the kind of squeeze in the demand that the company has seen in H1, management is confident that it will come back from Jan-June’14 period. Automobiles and industrial segment continue to go slow.
Intrest cost was up in H1, largely due to increase in working captial. Company expects debt to come down by about Rs 250 crore to around Rs 550 crore by the end of June’14. Largely due to incremental cash flows from business and also on improving the working capital and also money coming from sale of premises.
Management expects to sell about 23000 tons of cross laminated films in 12 months ending June’14 as compared to about 17000 tons in 12 months ended June’13.
The company has envisaged capex plan of about Rs 230 crore for 12 months ending June’14. This includes a Plastic piping system plant at Kharagpur in West Bengal, protective packaging system unit at Kharagpur Complex, new products in furniture business and to replace some capacity of moulding machines, to increase pipe production capacity at Gadegaon and introducing several new varieties of fittings at Jalgaon and Malanpur and to invest further in automation in several of its existing units and investments in equipments for composite pallets. About Rs 80 crore has been spent so far in H1 ended Dec’13.
About 16 products have been introduced in Bathroom fittings by the company so far and another 11 new in the pipeline in next couple of weeks. The company has received good response and repeat orders for this new vertical.
A more than 20% fall in consumer durable segment, resulted in more than 18% fall in demand of Polystyrene which is the finished product of Supreme Petrochemicals. This has led to poor show by the company. Management expects things to revive and improve in H2, however, a spurt is not expected.