Supreme Industries


(Rudra Chowdhury) #41

The current P/E is 17.13 (18/10/2013).

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http://www.screener.in/company/?q=509930&con=1 Link: http://www.screener.in/company/?q=509930&con=1 ( Just type the company name. )


(Hemant V Bhatia) #42

The company held its conference call on 29thOct’13 and was addressed by Mr. M P Taparia MD

Key highlights by Capital Market:

During the quarter ending Sep’13, Supreme industries processed 49978 MT of polymers, almost flat on y.o.y and reported net sales of about Rs 705.14 crore, up by 14% y.o.y. About 27.9% of total sales were value added products as compared to 30.3% y.o.y.

For the Sep’13 quarter, Plastic piping segment reported a 7% kind of volume growth to around 32337 MT, while the value wise, the growth stood at 22% to Rs 367 crore. Plastic piping margin for Sep’13 quarter, stood at 15.3%, as compared to 14.8% for Sep’12 quarter.

The packaging segment reported a fall of 6% in volumes to 6915 MT and value growth stood at4% at Rs 129 crore. The segmental margin for Sep’13 quarter, stood at 15.7%, as compared to 18% for Sep’12 quarter.

The industrial product segment reported 13% decrease in volume to 7486 MT and value was up by 4% at Rs 134 crore. The margin for Sep’13 quarter stood at 9% and was almost flat YoY.

Consumer Product segment reported 8% fall in volume and value growth was almost flat at around Rs 50 crore and segmental margin for Sep’13 quarter stood at 4%.

CPVC sale for Sep’13 quarter grew by about 25% in value terms and management expects the year to end with value growth of about 40%. For 12 months ending June’12, the CPVC sales stood at Rs 213 crore. The company has capacity of about 9000 MT of CPVC.

During the quarter ended Sep’13, the industrial subsidy value stood at Rs 7 crore. After Sep’13, subsidy of about Rs 45 crore continues to be pending, which is to be claimed in next couple of years.

Management is confident of about 12% volume growth and 22% value growth for 12 months ending June’14.

During the Sep’13 quarter, the flat volume growth was due to unprecedented price increase in raw materials between 15-19% in less than 2 months of time, due to severe volatility on forex and crude front. Also extended monsoon, delayed some of the activities and hence demand was lower in general.

For 12 months ended June’14, management expects plastic piping to grow about 15%, furniture about 3%, industrial division about 9% and plastic packaging business about 20%.

In automobile, except Maruti, things are going slow with other OEM’s.

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.

Borrowing as of Sep’13 stood around Rs 475 crore which will further be increased by about Rs 75 crore during the year.

The company has tied up for about 26500 sq feet of about 160 thousand sq feet of saleable area ready and vacant. It expects to garner sum of about Rs 40-50 crore in 12 months ending Sep’13.

Margins at operating level will remain around 14-15% for 12 months ending June’14. Continuous increase in high value added products together with newer capacities will help the margins.

There was not much inventory gain or loss during Sep’13 quarter.

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.


(Hemant V Bhatia) #43

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.


(Hemant V Bhatia) #44
Calladdressed by Mr. M P Taparia MD.Key highlights by Capital Mkt

The company sold about 275463 MT of plastic goods during 12 months ended June'14, a volume growth of 2% on YoY basis.

For the 12 months ended June'14, Plastic Piping business grew by 7% in volumes and 22% in value terms, the Packaging product business grew by 5% in volume terms and 6% in value terms, Industrial product de grew by 16% volume and 1% in value terms and Consumer business de grew by 18% in volume and 6% in value terms.

CPVC volume for year ended June'14 stood at 10600 MT as compared to 9000 MT YoY and net sales stood at Rs 284 crore as compared to Rs 217 crore on YoY basis. Cross laminated volume for the year stood at 17510 MT which was same on YoY basis, and on value front net sales stood at Rs 394 crore as compared to Rs 365 crore on YoY basis.

For the quarter ended June'14, the volume in plastic piping stood at 62750 MT as compared to 53109 MT YoY with sales at Rs 694 crore as compared to Rs 540 crore YoY and Margin for the segment stood at 17%, the volume in Packaging Product stood at 11120 MT as compared to 10580 MT YoY with sales at Rs 239 crore as compared to Rs 205 crore and Margin at 23%, for Industrial products volume stood at 8784 MT as compared to 10573 MT on YoY with net sales at Rs 145 crore as compared to Rs 165 crore and Margin at 16% and Consumer product business volume stood at 4209 MT as compared to 5467 MT on YoY with net sales at Rs 78 crore and Margin at 15.7%.

During the year ended June'14, the value added product sale stood at 32.3% as compared to 31.7% YoY.Industrial component and material handling of the industrial product segment had de growth and management expects with stable government, confidence has revived and the segment will bounce back in year ended June '15

Management expects that except for furniture segment, there will be both volume and value growth in all the segments in 12 months ended June'15. For furniture as the company is shifting from commodity to premium segment there can be some de growth.

The composite cylinders manufacturing facility at Halol of 4.5 lakh cylinders, have been approved by all regulatory agencies. The cylinders are Light in weight, rust free, leak proof, safe and are transparent in showing the gas levels. Company manufactures the cylinders in 6 different sizes. Currently the company is focusing on exports for these cylinders with about 50000 cylinders order in hand from Korea. Further, more enquiries coming from Kenya, UAE, Central Asia etc

Current borrowing stands around Rs 469.91 crore as on June'14 average costs is 8.9%. Management does not expect the debt level to go up and fund the entire capex through internal accruals.The company would keep 6681 sq feet for internal use and total available area for sale left with the company stood at 142393 sq feet. Management is selling at around Rs 15500 per sq feet and does not expect sale of more than 20000 sq feet in 12 months ended June'15.

Subsidy during the year stood at around Rs 47 crore. However the subsidy is expiring in Dec'14 and expects subsidy of around Rs 25 crore for the year ended June'15. So about 0.7% of margin loss will be there due to subsidy in the period ended June'15, however through value addition and high margin sales, management expects the margin to be protected.

Supreme Petro had a bad year due to de growth in Polystyrene where due to lower demand from consumer durable segment resulted in pricing pressure on one hand and cheap imports from Singapore due to duty imbalance, hurt further. However, management expects good demand from consumer segment during the year and the imbalance of duty structure was addressed in the current budget. So year 2014-15 will be better than last year.Due to crude oil prices and the prevailing tensions hovering around, management expects the costs of plastic raw material may remain around current level.Management expects Revenue growth of about 15-20% on CAGR basis for next 3 years.


(Muthukumar) #45

Supreme industries is a very supreme in nature for last 46+ years. A great interview and views here in this video -http://www.supreme.co.in/video.html. It is covering how the business empire was built, roadmap, moats, ROCE from operating earnings as a goal, investor rewards, … (all required to understand the business in depth and breadth). This is a great yard stick company and emulating from Asian paints as a framework to run the business.


(onefoothurdle) #46

Thanks Muthu,

Very interesting video, However Mr Taparia seems very old, does that bother you?


(Hemant V Bhatia) #47
[quote="basumallick, post:1, topic:36365612"] value growth of [/quote] The company held its conference call on 16thOctober'14 and was addressed by Mr. M P Taparia MD.Key highlights by Capital mkt;

At current polymer prices, for current year ended June'15, the company envisages an annual growth of around 18-20% in net product turnover on YoY basis.The company has revised its capex plan to about Rs 250 crore during the year from earlier target of more than Rs 400 crore. This includes Kharagpur complex having facilities for Protective packaging products, PVC and HDPE pipe systems, Material handling products, furniture, septic tanks and water tanks, introduction of additional varieties of pipe fittings and bath fittings, premium range of furniture, moulding machines and other balancing equipments for better production efficiency in industrial product division and pipe fitting division at Jalgaon and Malanpur, new unit in Malanpur to produce Septic tanks and water tanks and to expand capacity of protective packaging products at Hosur and Malanpur and automation of plant at Jalgaon.

Construction division has negotiated sale of about 29511 sq feet premises with consideration of around Rs 46 crore and will be completed before Mar'15. After the envisaged sale, the company will have a further area of about 1.12 lac sq feet to be sold in future.Plastic piping business saw a volume growth of around 7% and volume stood at 30086 MT. There was a about 4% and value stood at Rs 352 crore with margin of around 12.6.Packaging product business saw a 23% increase in volume which stood at 7482 MT and there was a value growth of around 8% to Rs 159 crore with margin of around 13.1%.Industrial saw a volume growth of around 14% and value was more or less same at around Rs 159 crore with margin of around 9.3%.Consumer product volume stood at 2926 MT more or less at same level while value was down by about 10% to Rs 51 crore with margin of around 8%.

Subsidy element during Sep'14 quarter was Rs 6.03 crore and management expects for full year the subsidy to be around Rs 25 crore as compared to about Rs 47 crore for last year ended June'14.There was about Rs 7 crore inventory loss during Q1 ended Sep'14 and management expects inventory loss to continue in Q2 as well.Cross laminated PVC films Q1 volume stood at 1945 MT vis a vis 1758 MT YoY. On value wise the sales stood at Rs 46.6 crore vis a vis Rs 40.03 crore YoY. Sale from CPVC business for Sep'14 quarter stood at Rs 56 crore vis a vis Rs 55 crore on YoY basis.

As per the management, the PVC price reduction was severe and has reached the bottom. Management believes that for PVC most of the reduction has taken place to the extent crude hovering around US $ 80 to US $90. Unless crude goes further down, then the fall will not continue. Infact post Nov'14, management expects prices to rise. With strong demand, management continues to remain firm that they will bounce back strongly in margins.Also there was an Anti dumping duty on PVC from imports from China being levied in Sep'14. Around 40000 tons of PVC was imported every month from China. Slowly this has started reducing and management expects prices to stabilize.PE and PP prices are not that down for the quarter ended Sep'14 as compared to PVC prices, although the trend was confirmed on lower side.Value added product sale stood at about 29.18% as compared to 27.9% on YoY basis.The company's borrowing stood at Rs 769 crore as on Sep'14. Average costs of borrowing are 8.83% p.a.

Costs of plastic raw material with declining trend will result in some short term inventory loss however long term this will benefit the demand and company will be able to increase the market share.


(Hemant V Bhatia) #48

Call add by Mr. M P Taparia MD.Key highlights by Capital Mkt;

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There was a volume and value growth of 10% and 9% respectively for the quarter ended Dec’14. OPM was lower during the Dec’14 quarter due to inventory losses to the extent of around Rs 50 crore, due to continuous fall in polymer prices. Polymer prices fell 23% to 32% from peak level in Dec’14 quarter

Margins were hit both due to lower demand as well inventory losses. Margins to recover on the back of better demand recovery for the second half ending June’15. However, the trend on inventory is difficult to gauge given the volatility in prices.

Customers emptied down their godowns. There is hardly any inventory now. Also, due to fall in polymer prices, they have become more competitive to recycle materials. Management expects price stability to achieve somewhere in Feb’15. Once that happens, with no inventory, there will be a spurt in demand going forward.

Overall, the company expects volume growth between 12-15% and value growth between 8-10% during the current year ending June’15. That means the management expects strong volume and value growth in H2 on the back of improvement in demand.

Plastic Product value wise grew by around 2% and 4% in volume terms during the quarter. Volume for the quarter stood at 47675 MT vis a vis 42388 MT YoY. The segment reported an OPM of around 7.5% as against 14% for Dec’13 quarter.

Packaging products value wise grew by 14% and volume wise grew by 7% to 12836 MT. OPM for the segment stood at 14.8% Vis 17.6% for Dec’13 quarter.

Industrial segment reported a 19% value growth and volume growth of 13% on a low base of last year. OPM stood at 11.5% Vs 9% for Dec’13 quarter.

Consumer segment saw a 1% decrease in value and an 8% reduction in volume to 3797 Mt with OPM of around 9.2%.

During the quarter, there was a Subsidy of Rs 10.09 crore vis a vis Rs 9.85 crore for Dec’13 quarter.

CPVC volume for the quarter stood at 3094 MT compared to 2483 MT YoY Rs 81 crore of revenue as compared to Rs 64 crore

Value added product sale stood at 38.2% more or less flat as compared to last year.

Avg cost of debt stood at 8.34% p.a. Management expects significant improvement in working capital requirements.

Management expects another 53000 sq feet sale to happen and the same will be booked in H2 or early next year. This will be to the tune of around Rs 50 crore. After this sale, the company will be left with about 64000 sq feet of saleable area.

Supreme Petrochem suffered an inventory loss of about Rs 75 crore during the quarter. Imported raw material PS price which stood at US $1550 came down to US $ 900. Thus, entire profit was eaten away and severe loss happened during Dec’14 quarter. Most of the inventory losses have been booked and cleared.


(Hemant V Bhatia) #49

**Conf Call add by Mr. M P Taparia MD.**Key highlights by Capital Mkt;

There was a volume growth of 18% to 85732 MT and value growth of 8% to Rs 1028 crore for the quarter ended Mar’15 on YoY basis.After inventory losses in Dec’14 quarter, where polymer prices fell by around 25-30%, most of the polymer prices were on rising trend from Jan’15 onwards. Around 2/3rdof loss in prices of polymers was recovered in Mar’15 quarter and now on YoY basis, polymer prices are down by about 10%.There was some margin recovery seen in Mar’15 quarter, largely due to inventory gain and higher sale of value added products. Sale of value added products stood at 33.26% Vs 30.46% on YoY basis.However, unseasonal rains and other natural calamities along with lower MSP prices will continue to weigh on farmers. Thus for June’15 quarter, while management expects volume growth; value will continue to be under pressure. Overall for the year ended June’15 management expects volume growth of around 12-15% and value growth of around 8-10%.

Plastic Product value wise grew by around 5% and 18% in volume terms during the quarter. Volume for the quarter stood at 59714 MT vis a vis 50527 MT YoY. The segment reported an OPM of around 13% for March’15 quarter.Packaging products value wise grew by 10% and volume wise grew by 20% to 10648MT. OPM for the segment stood at 16% for March’15 quarter.

Industrial segment reported a 6% value growth and volume growth of 14% on a low base of last year. OPM stood at 12% for March’15 quarter.

Consumer segment saw a 15% increase in value and an 21% increase in volume to 4432 MT with OPM of around 7%.During the quarter, there was a Subsidy of Rs 5.61 crore vis a vis 12.20 crore for Mar’14 quarter.CPVC volume for the quarter stood at 2847 MT compared to 2869 MT YoY Rs 79 crore of revenue as compared to Rs 77 crore for March’14 quarter.

Avg cost of debt stood at 8.75% p.a. Management expects significant improvement in working capital requirements. The funds coming from real estate business will be used in repaying the loans and outstanding borrowing is expected to be reduced from around Rs 650 crore to around Rs 400 crore by June’15.

Management expects another 12500 sq feet sale of real estate to happen in June’15 quarter and income of around Rs 25 crore.Capex of Rs 270 crore is progressing well and as per the internal plan of the management.Composite Cylinder enquiry is at all time high, however it will take some more time before actual conversion happens. The segment is going slowly.


(Hemant V Bhatia) #50

Call was addressed by Mr. M P Taparia MD.Key highlights by Capital Mkt
There was a volume growth of 8% to 94044 MT and value growth of 4% to Rs 1205 crore for the quarter ended June’15 on YoY basis. For full year ended June’15, the volume growth stood at 10% to 275463 MT and value growth stood at 7% at Rs 3918 crore.Sale of value added products stood at 34.20% Vs 32.30% on YoY basis.The company has total installed capacity of 454000 MT of polymers and 2 green field capacity will be operational in next 12 months, thus an addition of 50000 MT will take place to existing capacity, bringing overall capacity to around 500000 MT.
In piping business, while Agriculture was badly affected, housing continued to do well. Housing accounts for about 65% of piping business and 35% came from agriculture in overall piping business.Of the total OPM of about 19.1%, about 4.5-5% was purely due to inventory gain. Overall, as guided earlier,
sustainable OPM is around 14%.CPVC pipes continue to do well and have grown by about 15%.Subsidy is coming down every year and will affect the margins by about 0.3%.
In Supreme Petro, about 50% of profits in the Q4 FY’15, was as a result of inventory gain. However given the turn in the cycle of Polystyrene, management expects the OPM of around 7% to remain going forward.India produced about 257000 tons of polystyrene in FY’13, which came down to 224000 tons in FY’14 and inched up slightly to around 241000 tons in FY’15. Management expects PS to once again go to around 257000 tons in FY’16. Expandable PS is expected to go from about 34000 tons to 36000 tons. Specialty plastic compounds to grow around 20% on low base. Overall volume growth of Supreme Petro to be around 10-12% in FY’16.
Average borrowing of the company stood at Rs 219 crore at average rate of around 8.75% p.a.
Management expects debt to come down further.The entire capex of about Rs 200 crore, will be met through internal accrualsThe company still has about 60000 sq feet of constructed area remaining to be sold which will be undertaken during coming years.Management expects the prices of polymer to remain in narrow range and there will not be much volatility in coming 12 months period ended June’16.The company also has proposed to change the financial year to March and thus next year will be a period of 9 months for the company ended March 2016.Plastic piping business value wise grew by around 3% and 9% in volume terms during the year ended June’15. The segment reported an OPM of around 13.35% for 12 months ended June’15.Packaging products value wise grew by around 13% and 14% in volume terms during the year ended June’15. The segment reported an OPM of around 18.54% for 12 months ended June’15.Industrial segment value wise grew by around 8% and 11% in volume terms during the year ended June’15. The segment reported an OPM of around 12.10% for 12 months ended June’15.
Consumer segment value wise grew by around 7% and 5% in volume terms during the year ended June’15. The segment reported an OPM of around 14.76% for 12 months ended June’15.Composite Cylinder enquiry is at all time high, however it will take some more time before actual conversion happens. The segment is going slowly.


(Hemant V Bhatia) #51

Key highlights of AGM by Capital Mkt
Despite challenges and severe volatility, Supreme Industries recorded a volume growth stood at 10% to 275463 MT and value growth stood at 7% at Rs 3918 crore for full year ended June’15. Diverse revenue model with large product portfolio across 5 business verticals namely, Plastic piping, consumer products, packaging products, industrial products and composite products, also helped in sailing through the tough times.The company has total installed capacity of around 4.5 lakh MT with 2 green field capacities coming up by Oct’15, which will lead to a total of 5 lakh MT of installed capacity.
Domestic piping market is expected to be around Rs 22500 crore and about 70% is organized market. The organized share is growing faster and tapping more market share from unorganized players. The company has a 14% market share in the organized domestic plastic piping market in India.Consumer products business market is expected to be around Rs 2900 crore with Supreme’s share of around 9.8%. The company is a one stop solution of entire range of furniture’s made from polymers.The company has a 15% market share in industrial products segment which is about Rs 1600 crore market in India.
Poly vinyl chloride resin, polyethylene, and polypropylene are the major raw materials for the company, which are crude derivatives. These raw materials are volatile and thus the margins of the company fluctuate every quarter due to inventory positions. As per the management, sustainable margin on a 1ong term basis is around 14% for the company. In Supreme Petro, OPM of around 7% is a sustainable margin for the company going forward.Management expects the volatility of raw material prices to come down from Dec’15 quarter onwards, as in this volatile environment, neither the buyer nor the seller gets benefit. Going forward management expects things should remain range bound for some time, which will be good for the whole industry.The company is also the largest supplier to the soft drink industry.
Sale of value added products stood at 34.20% Vs 32.30% on YoY basis.Of the total saleable area of 2.8 lakh sq. feet of Andheri Commercial complex project, about 2.1 lakh sq. feet area is already sold and the balance area of about 0.7 lakh sq. feet is expected to be sold in next 12 months at price of around Rs 125 crore.The company also has proposed to change the financial year to March and thus next year will be a period of 9 months for the company ended March 2016.Overall, company expects to grow in double digit in volume terms for 9 months ended Mar’16, however it’s difficult to gauge a picture on value wise. Long term target in next 4-5 years is to reach a turnover of around Rs 8500 crore by say 2020.


(onsomani) #52

I am invested in supreme industries since last 2 years and I feel supreme has one of the most transparent management and buying of cartica capital has further spiked up my confidence in Supreme. Will continue to hold.


(varun jain) #53

Will echo your statement completely - add to Cartica I guess holding for last 5 yrs by Nalanda Capital is a big positive


(Karthik) #54

The management of this company draws a lot of similarity with Nebraska Furniture which warren buffet had bought.


(Abhishek Basumallick) #55

The management quality is fantastic. I have been owning and holding this company for around 10 years now. What is interesting is the way they have been able to move away consistently from low margin, low ROE businesses. But one has to be vigilant in terms of the future. The scope for improving margins is more limited now. Their ability to grow profits at 25%+ for the next 5 years is not very certain, at least to me. The composite cylinder business area is an interesting one and may surprise on the upside. Otherwise, this is likely to to have muted growth for the next few years (10-12% revenue), before actual GDP growth kicks in. PE re-rating options are limited, in my opinion.


(Hemant V Bhatia) #56

Call was addressed by Mr. M P Taparia MD-Key highlights by Capital Mkt
There was a volume growth of 16.5% to 57226 MT and value growth of 5.6% to Rs 755.21 crore for the quarter ended Sep’15 on YoY basis.Sale of value added products stood at 32.31% Vs 29.18% on YoY basis.Plastic piping business value wise grew by around 14% and 26% in volume terms during the Sep’15 quarter. The segment reported an OPM of around 13.5% for Sep’15 quarter as compared to 12.6% for Sep’14 quarter.
Packaging products value wise de-grew by around 0.6% and grew volume wise about 4% in during the Sep’15 quarter on YoY basis. The segment reported an OPM of around 15.5% for Sep’15 quarter as compared to 13.1% for Sep’14 quarter.
Industrial segment value wise de-grew by around 12% and de-grew by 1.9% in volume terms during the Sep’15 quarter on YoY basis. The segment reported an OPM of around 9.7% for Sep’15 quarter as compared to 9.3% for Sep’14 quarter.
Consumer segment value wise grew by around 14% and 10% in volume terms during the Sep’15 quarter. The segment reported an OPM of around 11.2% for Sep’15 quarter as compared to 7.8% for Sep’14 quarter.The company expects to incur a capex of about Rs 200 crore for 9 months ended FY’16. Management expects commercial production of new units to Kharagpur and Malanpur to commence from Nov’15 onwards. Entire capex will be through internal accruals.The prices of raw material moved downwards during Sep’15 quarter. Management expects overall raw material prices to remain in range bound fluctuations and affordable.The company has received its first export order of US $ 55000 of CPVC fire sprinkler system in Sep’15 quarter.Also, the company expects to supply about 5000 pieces of Composite LPG cylinders to South Korea in Dec’15 quarter and expects tender from Government refineries for their requirement of about 8000-12000 pieces of composite cylinders in Dec’15 quarter.Average debt stands at around Rs 350 crore as compared to around Rs 500 crore on YoY basis. An average cost of borrowing is about 8.9%.
The company holds about 63800 sq feet of saleable are of supreme chambers and will sell at appropriate prices.Subsidy for Sep’15 stood at Rs 1.29 crore as compared to around Rs 6 crore in Sep’14 quarter.CPVC volumes and value stood at 2712 MT and Rs 75 crore for Sep’15 quarter as compared to 2054 MT and Rs 55 crore for Sep’14 quarter.Piping Industry growth was around 12-13% as compared to 26% growth in piping business for the company. Most of the growth in piping came from housing.More sale of value added product has resulted in higher realization in consumer product segment.
Agriculture was better in Oct 2015 on YoY basis and demand should be better in H2 FY’16 for piping segment.Material handling division has grown in volume terms by 7%. Industrial segment volumes were lower by 6% and were lower by14% in value terms due to tough times of industries. Both automotive and non-automotive segment have suffered in Sep’15 quarter.
The company expects to achieve volume growth of around 15-18% for 9 months ended March 2016. Management expects about Rs 3200 crore to Rs 3300 crore turnover for 9 months ended Mar’16, unless there is a major movement in raw material prices. OPM is expected to remain around 13.5% for 9 months ended Mar’16.


(Vishnu Ch) #57

CONFERENCE CALL - from Capital Markets

Supreme Industries

Expects to achieve volume growth of around 12-15% for 9 months ended March 2016.

The company held its conference call on 25th January 2016 and was addressed by Mr. M P Taparia MD
Key highlights

There was a volume growth of 5% to 76613 MT and value growth of 2% to Rs 989.48 crore for the quarter ended Dec’15 on YoY basis.

Sale of value added products stood at 42.38% Vs 38.20% on YoY basis. The main reason for an increase in margins is the increase in contribution from the value added products. Management expects the value added products sale to continue to remain robust.

The prices of raw material continued its downward trend during Dec’15 quarter as well. Management expects overall raw material prices to remain in range bound fluctuations and affordable.

The company expects to incur a capex of about Rs 200 crore for 9 months ended March ‘16. The commercial production of new units to Kharagpur and Malanpur have commenced and shall achieve normalcy in Jan-Mar’16 quarter.

Plastic piping business value wise was more or flat on YoY basis and grew by 4% in volume terms for Dec’15 quarter. The segment reported an OPM of around 13.0% for Dec’15 quarter.

Packaging products grew by around 13% both value and volume wise during the Dec’15 quarter on YoY basis. The segment reported an OPM of around 21.2% for Dec’15 quarter.

Industrial segment value wise de-grew by around 21% and de-grew by 12% in volume terms during the Dec’15 quarter on YoY basis. The segment reported an OPM of around 11% for Dec’15 quarter.

Consumer segment value wise grew by around 12% and 21% in volume terms during the Dec’15 quarter. The segment reported an OPM of around 16.3% for Dec’15 quarter as compared to 7.8% for Sep’14 quarter.

Loans stood at Rs 449 crore as on Dec’15 as compared to Rs 712 crore on Dec’14 with average rate of borrowing stood at 8.7%.

CPVC volumes and value stood at 3064 MT and Rs 86 crore for Dec’15 quarter

Subsidy for Dec’15 stood at Rs 1.7 crore as compared to around Rs 3 crore for H1 ended Dec’15.

The company expects to achieve volume growth of around 12-15% for 9 months ended March 2016.

Management is still not positive about industrial segment and expects some de-growth also in Mar’16 quarter. Except industrial component all other segments will grow in double digits in Mar’16 quarter.

Industry component and Material handling systems which form a part of industrial segment, continued to remain under pressure. Not much traction is happening on either of these sub segments and as per the management, it will take some more time, before the segment improves. Soft drink segment is growing quite slow.

The outlook for FY’17 will be revealed in more detail in April’16 but the management continues to remain optimistic about the future and increase of sale of value added products.


(Vishnu Ch) #58

CONFERENCE CALL - from Capital Markets

Expects to achieve volume growth of around 12-15% for 12 months ended Mar’17

The company held its conference call on 21st April 2016 and was addressed by Mr. M P Taparia MD

Key highlights

  • There was a volume growth of 18% to 101467 MT during Mar’16 quarter on YoY basis. The volume growth for 9 months ended Mar’16 on YoY basis stood at 13%.

  • Sale of value added products for 9 months ended Mar’16 stood at 36.7% Vs 34% on YoY basis. The main reason for an increase in margins is the increase in contribution from the value added products. Management expects the value added products sale to continue to remain robust.

  • Plastic piping business value wise grew by 14% on YoY basis and grew by 19% in volume terms for 9 months ended Mar’16. The segment reported an OPM of around 14.2% for 9 months ended Mar’16 as compared to 11.1% for 9 months ended Mar’15.

  • Packaging products grew by 6% on YoY basis and grew by 7% in volume terms for 9 months ended Mar’16. The segment reported an OPM of around 21.5% for 9 months ended Mar’16 as compared to 14.8% for 9 months ended Mar’15.

  • Industrial segment value wise de-grew by around 16% and de-grew by 8% in volume terms for 9 months ended Mar’16 on YoY basis. The segment reported an OPM of around 12.3% for 9 months ended Mar’16 as compared to 10.9% for 9 months ended Mar’15.

  • Consumer segment value wise grew by around 14% and 16% in volume terms during the 9 months ended Mar’16 on YoY basis. The segment reported an OPM of around 16.8% for 9 months ended Mar’16 as compared to 11.9% for 9 months ended Mar’15.

  • Rs 234 crore capex has been incurred by the company in 9 months ended Mar’16. The company expects to incur a capex of about Rs 250 crore for 12 months period ended Mar’17. This includes 20000 tons annual capacity of PVC pipes at Jalgaon and new extrusion lines for PVC pipes and PE pipes at Kharagpur, land for performance packaging films, energy efficient machines in plastic piping and furniture division, new range of product offerings in plastic piping systems, furniture products, material handling products, roto moulded products and bathroom fittings, to invest in balancing equipments and automation at all plants and to increase the capacities of protective packaging products at Malanpur and Hosur and to add varieties of other products.

  • As per the management, the company has no plans for any borrowings and is confident enough to meet its capex requirement of around Rs 250 crore from internal accruals and sale of property. The company aims to be a debt free company in next couple of years.

  • Total borrowing stood at Rs 412 crore as on Mar’16 as compared Rs 691 crore for same period last year. Average cost of borrowing is 8.78% Vs 8.85% for 9 months ended Mar’15.

  • Polymer prices continued to remain lower for entire period of FY 2016, lower cost of raw material at opening of Jan’16 helped in higher margins apart from increase in sale of value added products.

  • Management expects around 12-15% volume growth for 12 months period ended Mar’17. Several new varieties of products including exports will drive growth. Management expects volume growth in all segments except industrial side.

  • 14-14.5% is the average margin for the company, but raw material prices, inventory levels and any further increase in sale of value added products can affect the margins.

  • For Supreme Petro, the year ended Mar’16 saw a year of combination of both value and volume growth. The volume growth of 12-15% was never seen in past decade. Lower levels of inventory and then the spurt in demand due to higher applications, together with higher exports particularly to EU is driving the growth for the company. Management expects another strong FY’17 year for Supreme Petro, wherein volume growth is expected to remain around 12-15%.

  • Demand for Packaging and Piping continue to remain strong from housing, agriculture, drinking water and storage demand from state government etc. While auto demand is also strong and the company is adding new customers. Industrial side demand outlook remains uncertain.

  • CPVC volumes for Mar’16 quarter stood at 4138 MT and revenue was Rs 114 crore as compared to 2847 MT and Rs 79 crore for 3 months ended Mar’15 quarter. For 9 months ended Mar’16, CPVC volumes stood at 9914 MT with sales of Rs 275 crore as compared to 7995 MT and Rs 216 crore respectively for same period last year.

  • The company in CPVC segment has grown faster than the market. Both Astral and Supreme are in Plumbing side of CPVC. Astral has also entered on the industrial component side of CPVC and Supreme will also follow the same.


(Vishnu Ch) #59

AGM - from Capital Markets

During FY’17, company plans to go global for its furniture business

The company held its AGM on 28th June’16 and was addressed by Mr. Taporia MD

Key Highlights

  • Demand for packaging and piping continues to remain strong from agriculture, housing, storage, drinking water segments. Management expects the industrial product segment to show good traction compared to last year. Already enquiries are high and execution is also happening in some industries.

  • Around 200 new varieties of plastic pipes and fittings will be launched in FY’17. Water tanks and Septic tanks will be produced in a month’s time. Other material handling and piping products will also be launched very soon.

  • During FY’17, company plans to go global for its furniture business. It will participate in global exhibitions and fares and expects good exports in FY’17. The company will introduce new products in furniture category of business and a green field manufacturing unit in West Bengal will commence its operations in Sep’16 quarter to manufacture these new products.

  • Monsoon has picked up well in the 2nd half of June’16 and will help in gaining confidence for the rural economy. Management expects good demand from rural and agri segment in FY’17.

  • The company had incurred a capex of around Rs 235 crore during last year and plans to spend around R 250 crore in FY’17.

  • As per the management, there is a further scope for increase in the value added product sales which is currently around 36.7% of total sales.

  • Management expects its borrowings to go down further from around Rs 400 crore as on Mar’16 to around Rs 300 crore by Mar’17. Any sale proceeds from the sale of around 64000 sq feet ready construction area will be bonus.

  • Management continues to remain optimistic about a volume growth of around 12-15% in FY’17. New products, higher exports, higher sale of value added products and newer geographies will drive the volume growth. There will be quarterly variance but overall, the company will be able to achieve the volume growth.

  • Management expects quarterly variation to get reduced going forward and expects more or less even quarters going forward gradually.

  • For Supreme Petro, management expects another strong year with a double digit volume growth largely due to strong demand and lower inventory levels across the industry.

  • Implementation of GST will lead to some benefits in form of higher sale of value added products. The company is already in process of increasing its higher value added product sale and GST will help in the process.


(Abhishek Basumallick) #60

Highlights of Q1 2017 Concall (Capital market)

There was a volume growth of 3% to 97045 MT during June’16 quarter on YoY basis.

Sale of value added products for 3 months ended June’16 stood at 34.98% Vs 34.74% on YoY basis. Management expects the value added products sale to continue to remain robust.

Plastic piping business value wise de-grew by 2.4% on YoY basis and grew by 6% in volume terms for quarter ended June’16. The segment reported an OPM of around 15.9% as compared to 17.9% for quarter ended June’15.

Packaging products de-grew by 11% on YoY basis in volume terms while value growth was lower by 6% for the quarter ended June’16. The segment reported an OPM of around 23.16% as compared to 27.4%.

Demand for Packaging and Piping will improve from housing, agriculture, drinking water and storage demand from state government etc. While auto demand is also strong and the company is adding new customers.

Industrial segment value wise de-grew by around 1 % while volume terms also the segment de-grew by 1% for June’16 quarter on YoY basis. The segment reported an OPM of around 12.1% as compared to 15.8%. Industrial segment is slowly showing good growth and management expects the segment to improve every quarter in FY’17.

Consumer segment volume wise grew by around 2% for June’16 quarter while value wise growth was lower by 2% on YoY basis.

Net borrowing for the company as on June’16 stood at Rs 306 crore Vs Rs 410 crore as on Mar’16. The company expects to reduce debt by further Rs 100 crore during the year ended Mar’17.

CPVC volumes for June’16 quarter stood at 2959 MT and revenue was Rs 84 crore. The CPVC volumes saw a de growth of 6% on industry wise in June’16 quarter. There was a huge surge in imports for CPVC segment in June’16 quarter. Construction was weak in June’16 quarter also resulted in some lower off take for CPVC segment across the industry.

Overall, CPVC industry will be around Rs 3000 crore and company has market share of around 14%.

The June’16 quarter was a transitional quarter. The company used to give targets to its 2700 distributors every year which ended on June. This time, the entire scenario has changed and results will improve upon every quarter. So, Sep’16 quarter will be significantly higher than Sep’15 quarter and management expects the loss of revenues in June’16 quarter, to compensate going forward in coming quarters particularly in Mar’17 quarter.

June’15 quarter had more than 19% margin due to inventory gain and being the last quarter of every year, most of the growth for the year ended June’15 happened in June’15 quarter. As per the management, one of the reasons why the YoY comparable numbers are not mentioned is due to seasonality and related issues. Gradually as the year move on, more clarity will emerge on quarterly numbers. Thus FY’17 has to be a transitional year, with June’16 quarter being more transitional due to seasonality of business.

Thus, management continues to expect strong volume growth of around 12-15% for 12 months ended Mar’17. Along with 12-15% volume growth there can be a realization growth of around 1%. Margins will be around 14.5-15% for FY’17. Lower raw material prices and increase in share of value added products will lead to better margins going forward.

Polymer prices continued to remain lower for entire period of FY 2016 and even in the current quarter, raw material prices have not increased much even though there was some increasing trend seen on QoQ basis.

Rs 234 crore capex has been incurred by the company in 9 months ended Mar.'16. The company expects to incur a capex of about Rs 250 crore for 12 months period ended Mar.'17. This includes 20000 tons annual capacity of PVC pipes at Jalgaon and new extrusion lines for PVC pipes and PE pipes at Kharagpur, land for performance packaging films, energy efficient machines in plastic piping and furniture division, new range of product offerings in plastic piping systems, furniture products, material handling products, roto moulded products and bathroom fittings, to invest in balancing equipments and automation at all plants and to increase the capacities of protective packaging products at Malanpur and Hosur and to add varieties of other products.