=Promoters are buying constantly from open market
=Apcotex Q2 /2022 -2023 concall
1…We witnessed balanced growth in first half across all the industries and product groups. We continue to run at nearly 100% capacity utilization.
2…Both projects in Valia and Taloja expected to be completed in Q3 of financial year '22, '23.
3…Also happy to inform that the company received the succeeded recognition of Best Under a Billion Company for '22, '23. We are one of 200 companies from all over Asia.
4…Full capacity
=One is on the volume growth. So we’ve seen, as we have been mentioning for the last many quarters that we’ve been running at almost full capacity utilization.
= So compared to the same period quarter last year, it’s been about a 5% – 5% to 6% volume growth. In terms of value, approximately 16% volume – value of revenue growth for the quarter.
= it’s in fact the next 3 quarters that we are going to – we are at 100% capacity utilization.
5…margin and roe
=Obviously the commodity prices have gone up and then for us raw materials have gone up, but we’ve largely been able to pass it through.
=As I told you earlier that percentage margin varies quite dramatically in our kind of business. We would be satisfied with anywhere between 13% to 18% is what – 12% to 18% even is fine depending on where oil prices are.
= The most important metric for us is return on capital and as long as we’re delivering a healthy return on capital, EBITDA margins we are happy to let it vary.
6… Look, first of all, the company compared to the past and now the company is also different.
= The different strategies that we have executed over the last 2, 3 years after the acquisition along with a lot of debottlenecking projects, product mix, customer mix and so on, new products that we’ve introduced. So we feel a lot more comfortable. We are also at a much higher capacity utilization.
7…Apcobuild
=Gujarat, Madhya Pradesh, within Maharashtra also increased our footprint and Goa. So we’re in 4 states. We’re also doing small business in the south a little bit. But I would say largely these 3 states, Maharashtra expanding our footprint and entered Gujarat and Madhya Pradesh over the last year.
=growth will be over – it will be almost 150% to 200% for ApcoBuild this year, 150% at least.
=We don’t give separate numbers for ApcoBuild. It is – as I mentioned before, it’s a small part of our company so far. We believe in the next 3 to 5 years it will become a larger chunk and as and when we feel it has some critical mass which is worth reporting as a separate segment, we will do that.
8…Domestic v/s export
=On the latex side of course, I think it’s more of a regional play. That means we focus on Southeast Asia, Middle East and India because latex is about 50% water so to transport it over very long distances may not make sense.
=our export was close to 0 10 years ago. Now it’s at 21% of the total revenue
9…Capex
= I would say between FY '22 and FY '23, we are looking at about INR 225 crores
=We are working on a few products. As I mentioned last time, as of now our focus and what we’ve announced is the current CapEx for latex products, which is nitrile latex in Valia and a multipurpose latex plant in Taloja, which will include all our current products as well.
=And in addition to that, after that we also – we only have about 30% or less market share in the NBR business in India and we are largely exporting. We believe that in the long run even though it’s not a very high growth industry compared to, let’s say, nitrile latex or some of the latex products, we believe there is a good opportunity for import substitution – further import substitution in India as well as export into Southeast Asia, Middle East and Asia.
=we are doing 2 projects. One is mostly nitrile latex in our Gujarat facility and in Taloja is a multipurpose latex plant. In the beginning, initially we are looking at a total of additional 60,000 tons which would give us about INR 500 crores of revenue. But as I mentioned before that the additional CapEx that will be required for an additional revenue that will come, another INR 300 crores, INR 400 crores will be at a marginal cost. So it will be about INR 500 crores of revenue once both the plants are fully utilized. And as far as EBITDA margin is concerned, obviously EBITDA margins should only improve because our fixed costs will not increase by that much. So we are hoping as we grow the capacity utilization, as we increase the capacity utilization of the new plants, EBITDA margins should only go up.
10…Diversified industries
A=one of the large industries would be paper and paperboard, but even that would not be more than 20% of our overall sales, maybe less than 20% in fact now in the current context, 17%, 18%
B=. Then followed by construction, which includes construction chemicals and paints
C=. Then followed by tire industry, carpet – there’s also NBR, which goes into several industries, right, which is a lot of rubber industries. So that would be another 25% of our sales.
=So fairly well diversified. We’re not dependent on any one major industry. Nothing is more than 20% of our overall sales.
11…Next few quarters @less volume growth due to almost full capacity utilization
=Look, the volume growth, as I mentioned that most of the debottlenecking projects were completed in Q2 and Q3. So Q4 of course we would have a little bit more headroom for volume growth not significantly more, but little bit more. And as I mentioned to one of the previous callers that Q4 onwards maybe for another 2 quarters, we may not have headroom for volume growth
12…X nbr latex
=we have many customers other than pawa gloves.
There was just 1 or 2 that we have mentioned in our presentation because they’re well-known customers. The other problem that we have is a lot of other customers are telling us that look, you don’t have the capacity now, why would we go through this whole process and you won’t be able to give us anything for another 9 months? So why don’t you come to us closer to the date and then we will go through the process. But a lot of them we have done lab trials and whatever we could, but unfortunately, we’re not able to give bulk quantities because we just don’t have the capacity today and it would be at the expense of other customers, which also we don’t want to do which is not a good idea as well.
=Look, when we initially made a decision to get into the nitrile latex market, there was no COVID. This was back in 2016, '17 when we started developing it. Obviously during 2020 and the first half of '21, glove availability and – glove demand and glove availability and therefore glove prices, whether it’s natural gloves or nitrile gloves, were at historic highs. And therefore, obviously the players that were in the nitrile latex market also got good margins.
Now the margins I would say have normalized. They are not under pressure, but they have normalized than what they were earlier –
13…Revenue
=So we think at the peak we can do INR 1,500 crores, INR 1,600 crores as much as INR 2,000 crores once we do the second phase of expansion.
14…Raw material
= I mean I just said we have many different raw materials from some of our A class raw materials like – I’ll just give you an example of styrene. That largely comes from Middle East and Southeast Asia. Another raw material comes from Europe, East Asia, [indiscernible] Nitrile, all over the place. And yes, I mean we don’t have a specific sort of geography of imports from everywhere.
15…Entry barrier
we believe that the product that we have developed, and we are working with our – a harder – it’s quite hard for people to get into barriers to [ enter a high ] – approvals take a long time.
16…Bad case scenerio
= we can use part of the latex manufacturing capacity towards our captive NBR production, of course. But for that, there is reasonable and sizable investments required. So we’re working through the different options right now and seeing in the worst-case scenario. But frankly, we have worked out a pretty bad case scenario
.=But frankly, we have worked out a pretty bad case scenario. And even with those bad scenario, we’re looking at 20% to 25% ROCE on Nitrile Latex. So our focus will be to try and ramp up Nitrile Latex production, get to full capacity as soon as possible.
=So if it goes back to normal, then we can see reasonably good ROCEs and focus on this business itself without looking at contingency plans.
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