Release Date: July 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Operating income for the quarter was INR337 crores, reflecting a 21% year-on-year growth due to increased volumes, product mix, and better price realization.
- EBITDA increased by approximately 25% year-on-year to INR32 crores, with an EBITDA margin of 9.4%.
- Net profit after tax grew by 22% year-on-year to INR14.8 crores, with a profit margin of 4.4%.
- The company achieved an impressive 14% year-on-year volume growth, with export volume growing by 12% year-on-year.
- The company is focusing on niche products and expanding its reach in specific states, which has shown positive growth in segments like paper, construction, and tire cord.
Negative Points
- Margins continue to be under pressure due to various reasons, including the gloves segment, which has low margins despite good volumes.
- The company is facing challenges with export consignments due to delays and congestion in shipping routes, impacting sales and margins.
- Capacity utilization for the new gloves project is only at 50%-60%, lower than the expected 100%, affecting overall profitability.
- The chemical industry is experiencing a cycle of lower margins, impacting the company's profitability.
- The company has not yet decided on expanding its nitrile latex capacity due to current market conditions and low margins.
Q & A Highlights
Q: Can you provide more color on the segments that have done well in terms of volumes and value compared to previous quarters?
A: Almost across the board, we have had growth in the June quarter, largely led by paper and construction as well as tire cord. Overall, we achieved a 14% year-on-year volume growth this quarter.
Q: Is it fair to assume that the margin is taking a hit mainly because of the gloves segment?
A: Yes, the gloves segment is one of the reasons. However, compared to Q4, our overall EBITDA per tonne has improved. Our margins are certainly better compared to Q1 of last year, with EBITDA up by 23%.
Q: How is the Valia project performing?
A: The gloves project in Valia is currently at about 50%-60% capacity utilization. While the revenue and sales have been satisfactory, margins remain muted due to post-COVID inventory and additional capacities in Asia. The project is EBITDA-neutral at this stage.
Q: What are your thoughts on the demand-supply balance in nitrile latex going forward?
A: The inventory of gloves has been utilized, but the additional capacity of gloves and latex put up during COVID remains. As capacity utilization improves to 75%-80%, we expect margins to become healthier.
Q: Can you share your CapEx plans for fiscal year '25?
A: We are focusing on projects that help reduce operating costs or are maintenance-related. We are also planning a significant investment in our R&D center and additional capacity for styrene butadiene latex products, which we will announce in the next three to six months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
