Release Date: February 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Black Rose Industries Ltd (BOM:514183, Financial) reported a substantial 12% growth in overall revenue from operations during Q3 FY24.
- The EBITDA margin improved significantly to 13.7% for the current quarter, marking the fifth consecutive quarter of margin improvement.
- The company has a very strong balance sheet with a healthy current ratio of over eight times and negligible debt-to-equity ratio.
- The distribution margins increased by around 20% on a quarterly basis due to better material planning and a favorable product mix.
- The company has successfully obtained approval and validation from key customers domestically and internationally for new products, indicating potential future growth.
Negative Points
- Exports for the distribution segment declined on a quarter-to-quarter basis due to a slowdown in the U.S. oil and gas sector.
- The polyamide solid project is still in the finalization stages, indicating potential delays in new product launches.
- The ceramic tile industry, a key market for the company's polyamide liquids, continues to be impacted by higher energy costs and geopolitical issues, affecting demand.
- The company faces challenges from Chinese dumping in the acrylamide powder market, impacting domestic sales.
- There are concerns from long-term shareholders about the slow pace of execution and delays in project timelines, which could affect investor confidence.
Q & A Highlights
Q: Can you provide the capacity utilization for solid and NMA?
A: We do not primarily focus on capacity utilization as a benchmark. However, for full utilization, we can generate revenue between INR300 crores to INR400 crores from the four products we currently manufacture. (Ambarish Daga, Joint CFO, Whole Time Non-Independent Director, IR Officer)
Q: Why is the management taking so long to execute projects and R&D activities?
A: R&D can take years to finalize, especially for performance chemicals. Execution timelines are not definitive due to the complexity and efficiency required in manufacturing processes. We are committed to updating shareholders regularly. (Ambarish Daga, Joint CFO, Whole Time Non-Independent Director, IR Officer)
Q: What is the outlook for the distribution business?
A: We expect substantial increases in sales volume and revenues due to stable domestic demand, increased supplies, and strong support from our principles. We are also focusing on adding new customers and business segments. (Ambarish Daga, Joint CFO, Whole Time Non-Independent Director, IR Officer)
Q: Can the current facilities produce poly acrylamide liquid for other applications?
A: Yes, we are actively looking at increasing our product portfolio for poly acrylamide liquids to ensure a diversified basket of products and higher utilization of capacities. (Ambarish Daga, Joint CFO, Whole Time Non-Independent Director, IR Officer)
Q: How will the geopolitical events and logistics issues affect the export of acrylamide solids?
A: Despite global headwinds, we expect overall exports for acrylamide solids to increase due to reaching new customers and gaining acceptance for our products. (Ambarish Daga, Joint CFO, Whole Time Non-Independent Director, IR Officer)
Q: What is the reason for the recent designation change of Mr. Anup Jatia to Non-Executive Chairman?
A: The change allows the existing team to grow and excel. Mr. Jatia remains available for guidance and support as a member of the Board. There are no plans to change the ownership or promoters of the company. (Anup Jatia, Non-Executive Chairman)
Q: What is the volume growth for Q3 and the nine months of the current financial year?
A: The manufacturing volumes have been flattish overall for the quarter but are on the higher side for the nine months compared to the previous financial year. (Ambarish Daga, Joint CFO, Whole Time Non-Independent Director, IR Officer)
Q: How does the company plan to address the impact of Chinese dumping on acrylamide solids?
A: We are focusing on increasing exports and gaining market presence in Europe, supported by our REACH certification. Despite logistical challenges, we expect export volumes to remain strong. (Ambarish Daga, Joint CFO, Whole Time Non-Independent Director, IR Officer)
Q: What is the outlook for volume increase in manufacturing and distribution for the coming quarter and FY24?
A: We expect substantial increases in both manufacturing and distribution volumes due to stable demand, increased supplies, and strong support from our principles. (Ambarish Daga, Joint CFO, Whole Time Non-Independent Director, IR Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
