Mr R B Kabra addressed the call.Highlights of the call by Capital Mkt:
For the quarter ended December 2013, net sales fell 8% to Rs 361.29 crore. PAT was down 4% to Rs 11.79 crore.
This has been a mixed quarter. It feels that the results are mixed because the company's building product business has done well. Sales grew 16% which was good. Also the growth in OPM and PAT margins were good. This division saw 36% growth in absolute profitability.
The company is focusing more and more on sales of value added products, cost control and price increase. Out of 16%, 2% was volume growth of sanitaryware, 17% was faucets growth, balance came from price increase.
Value added products have increased. It stood at 19% in Building Product segment against 17% in September 2013 quarter due to good demand.
18-20% revenue growth in building product.Q4 is usually the best quarter.
CAGR has been 20% + so the company targets 20% growth in future also. The company is seeing strong demand in tier II and tier III.
The company is in the process of commissioning large faucets plant in April 2014. Machine testing is going on. After commissioning this plant the company will become second largest faucets player (in FY 2015).
At full capacity it will have capacity of 2.5 million piece per year.
The management is confident of selling full volume as currently it already outsources 60% of the need. In FY 2015 additional sales from this plant could be in the region of Rs 100-150 crore.
In December 2013 quarter sales from the faucets business grew 25%. In volume terns it grew 17%.
The faucets market is larger than the sanitaryware business.
In FY 2015 Faucets contribution to total Building product sales should be 22-23% from 16% currently.
Sanitaryware capacity utilization is 85%.
The company does not see any issues for growth for the next two and a half year for the building product business.
Glass capacity utilization is 73% sales were down by 28% and volume was down by 25%.
Slowdown in the Glass business in December 2013 quarter was completely unexpected. Usually Q3 and Q4 are best for the company. This year the growth might have been impacted due to monsoon which lasted longer.
Profit margins have improved due to fuel cost control, power cost control and other cost measures.
OPM for this business was up at 14% against 8% in September 2013 quarter and 12% in December 2012 quarter.
The management is confident of keeping the OPM of this business at 14%. OPM can also increase in Q4 and in fact the company can possibly make profit if the sales were as good for the Q4 as seen in the month of January 2014.
For this business the company succeeded in getting price rise from the aerated water companies. It was also successful in getting 7-8% price rise from few food and pharma companies. The company is confident of getting price rise from all the food and pharma companies in next 2 months.
It has not been able to get any price rise from the Liquor companies but even this will be done in the next 2 months.
Forget beer and liquor even Pepsi and Coke rinse and use the bottle on an average or around 20 times. Beer bottles are reused 6-7 times.
Q4 is normally best for this business.
For the glass business the company has gone for alternate power and fuel options. It has also been able to get power from power exchange. Power from the power exchange is cheaper than the generated power.
The company has not seen any reduction of inventory in Q3 as sales were down but will see reduction of inventory in Q4.
Net debt was Rs 135 crore.
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