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Conference Call Details • Date: May 18, 2024 • Transcript submitted to BSE and NSE on May 24, 2024
Business Performance • Positive performance despite shipment delays due to the Red Sea crisis • Double-digit volume growth reported • Annual sales volume slightly declined to 292,628 metric tonnes • Q4 revenue grew 16% year-on-year to Rs. 2,697 crores • EBITDA for Q4 increased by 42% to Rs. 699 crores • Profit after tax rose 88% to Rs. 481 crores
Capital Expenditures and Dividends • Ongoing capital expenditures include a new carbon black project • Compliance with Extended Producer Responsibility regulations discussed • Final dividend declared at Rs. 4 per equity share, in addition to interim dividends
Management Insights • Stable channel inventory maintained despite geopolitical uncertainties • No immediate signs of demand decline noted • Price hikes under evaluation, but none implemented in Q4 • Raw material costs slightly increased from Rs. 149-150 per kg in Q3 to Rs. 152 per kg in Q4
Future Outlook • Expected capital expenditure of Rs. 500-600 crores for the year • Company likely to remain cash positive • Strong demand anticipated, particularly in agricultural and American sectors
Strategic Discussions • Advanced carbon black project expected to enhance margins by 200-300 basis points • Target of 10% market share in non-agricultural tyre sector within five years • Focus on quality over price in competitive strategy
Market Dynamics • Concerns about carbon black pricing and potential oversupply addressed • Positive impact of geopolitical tensions on sales noted • Commitment to update stakeholders in the next quarter
Conclusion • Management expressed confidence in maintaining margins despite commodity cost pressures and confirmed compliance with regulations in Europe and the US.
Q3 and 9M FY24 Results • Volume Growth: 9% year-on-year, totaling 72,749 metric tons. • Revenue: 5% increase to INR 2,316 crores. • Profit After Tax: 210% growth, amounting to INR 309 crores. • Dividend: Third interim dividend of INR 4 per share declared.
Market Outlook • Market Stability: Gradually improving outlook with no recent price changes. • Geopolitical Challenges: Potential impact on Q4 sales, predicting flat sales compared to the previous year. • Indian Market Growth: Accounts for 30% of sales; potential to match/exceed European sales.
European Market Insights • Demand Trends: Stable demand with improvement expected in the agricultural segment. • Supply Chain Issues: Temporary challenges and rising freight costs noted. • Carbon Black Sales: Currently 7.5% of total revenue, expected to rise to 8-9%.
Strategic Goals • Market Share Target: Aiming for 10% global market share, currently at 5-6%. • Cost Management: Decreased operating costs due to rationalization and lower freight costs. • Inventory Levels: Reduced dealer inventory; potential supply constraints noted.
Geopolitical Concerns • Operational Impact: Uncertainty regarding geopolitical situation; potential cost pass-through delays. • Interest Costs: Rising interest costs despite reduced net debt.
Compliance and Market Dynamics • EPR Policy: Confidentiality concerns regarding rubber recycling compliance. • Supply Disruptions: Potential benefits from disruptions in the Red Sea.
Capacity and Production • Capacity Expansion: Current capacity of 170,000 MT to increase to 200,000 MT. • Utilization Rates: Operating at 85-90% capacity; enhanced production improving margins.
Future Guidance • Volume Predictions: No specific guidance provided due to geopolitical tensions. • Demand Stabilization: Indications of stabilization and improvement in demand.
Conclusion • Next Steps: Call concluded with thanks and indication of the next quarterly update.
Date and Purpose • Date: October 30, 2023 • Purpose: Discuss Q2 and H1 FY24 results
Key Highlights • Challenges: • Heat waves and recessionary fears in export markets • Strong domestic performance • Financials: • Volume: 70,585 metric tons • Standalone Revenue: INR 2,247 crores • Net Profit: INR 335 crores • Capital Expenditure: • Planned increase to INR 900 crores for FY24 • New mould manufacturing plant in Bhuj
Market Insights • Volume Trajectory: • Stable anticipated despite slight decline in overall volumes for FY24 • Market Share: • Current market share in India: 4% to 5% • Aspiration to increase to 10% driven by government spending • European Demand: • Geopolitical uncertainties may impact recovery
Strategic Initiatives • Production Capabilities: • INR 300 crore investment focused on enhancing production • EBITDA Margins: • Expected to sustain between 26% to 28% • Growth Segments: • Identifying new products to achieve targeted market share
Q&A Highlights • Market Share Disparities: • Confidence in growth projections and solid nationwide presence • Mould Expansion: • Expansion in Bhuj with negligible maintenance capex • Inventory Levels: • Dealer inventories normalized at two to three months • Pricing Strategy: • Aligns with international markets, no immediate price increases planned • Advanced Carbon Black Project: • Expected to generate significant revenue upon completion
Challenges and Outlook • Extended Producer Responsibility (EPR) Law: • Challenges in maintaining quality while meeting regulatory requirements • International Market: • Uncertainty due to geopolitical tensions, optimism in Australia and Brazil • Future Expectations: • Anticipation of stable gross margins despite cost fluctuations
Conclusion • Management expressed gratitude and optimism for the next quarter.
Financial Performance • Q1 FY2024 Sales Volume: 67,209 metric tonnes • Domestic Sales Growth: 19% year-on-year • Standalone Revenue: Decreased by 22% to Rs. 2,115 Crores • Profit After Tax: Rs. 312 Crores • Capital Expenditure Plan: Rs. 550-600 Crores for FY2024 • Interim Dividend Declared: Rs. 4 per share
Market Challenges • Impact of Heat Waves: Affecting global agricultural demand • Demand Stability: Improvements in inventory levels noted • Sequential Decline in Realization: Attributed to decreased raw material costs
Pricing and Margins • Pricing Strategy: Recent price cuts to maintain gross margins and respond to competition • EBITDA Margin Confidence: Over 23% expected despite revenue realization declines • Raw Material Costs: High-cost inventory adjusted; stable prices anticipated
Segment Performance • Agricultural and OTR Segments: Experiencing softness in demand • OTR Segment Contribution: Approximately 38% of the business
Future Outlook • Q2 Expectations: Typically the weakest quarter, but potential for stronger results due to Q1 dispatches • Market Share Goal: Aim to double from 5-6% to 10% in 4-5 years, requiring new capex cycle • Debt Management: Adherence to repayment schedule assured
Additional Insights • High Other Income: Rs. 66 Crores attributed to forex and treasury mark-to-market impact • Concerns on Recession: Acknowledgment of potential impacts from Europe and America • Margin Sustainability: Expected to maintain levels despite lower domestic margins
Conclusion • Management's Cautious Approach: Due to ongoing market uncertainties, with a focus on volume growth and competitive positioning.
Key Highlights • Earnings Submission: Transcript submitted to BSE and NSE on June 3, 2023. • Performance Metrics: • 9% quarter-on-quarter growth in volumes (72,676 metric tons). • 21.3% EBITDA margin. • Year-on-year revenue decline of 4% to INR 2,325 crores. • First-time annual sales exceeding INR 10,000 crores. • Net profit of INR 256 crores for Q4 and INR 1,079 crores for the fiscal year. • Gross debt reported at INR 3,254 crores. • Proposed final dividend of INR 4 per share.
Management Insights • Future Outlook: • Optimism for FY24 with expectations of improved margins and continued investments. • Market Dynamics: • Acknowledgment of destocking impact on retail sales. • Confidence in growth in the U.S. market despite volume declines. • Strong volume growth in India attributed to branding efforts.
Financial Strategies • Debt Management: • High gross debt concerns addressed; cash reserved for expansion rather than debt repayment. • Plans to reduce net debt through cash flow generation. • Raw Material Inventory: • Typical inventory maintained at 45-60 days; recent market corrections affected cost realization.
Competitive Landscape • Pricing Strategy: • Focus on quality over price competition. • No significant pricing pressure reported. • Market Share Goals: • Current market share at approximately 5%, with plans for expansion to 10% in 4-5 years.
Operational Plans • Capex for FY '24: • Planned capex of INR 600 crores for growth and maintenance. • Inventory Management: • Expected inventory levels post-destock around two months.
Additional Discussions • Hedging and Margin Expectations: • Average hedge rates for FY '23 and FY '24 discussed. • Expected margin improvement of 200-300 basis points compared to Q4 FY '23. • Expansion Potential: • Capacity expansion at the Bhuj facility confirmed. • Positive performance in the ultra-large mining tyre segment.
Conclusion • Future Updates: Next update anticipated at the end of the next quarter, with a goal of becoming net debt-free within 15 to 18 months, barring major expansions.
Conference Call Details • Date: February 13, 2023 • Submitted to: BSE Limited and National Stock Exchange of India • Hosted by: Batlivala & Karani Securities • Key Speaker: Rajiv Poddar, Joint Managing Director • Transcript Availability: Company website • Signed by: Vipul Shah, Director and Company Secretary
Company Performance Highlights • Q3 Volumes: 66,480 metric tons (5% YoY decline) • Challenges: Ongoing channel inventory clearance, particularly in Off-Highway Tyre segment • Regional Insights: • North America: Better conditions but recession fears may impact demand • India: Stable market
Financial Performance • Revenue: INR 2,215 crores for Q3 • Net Profit: INR 100 crores • Dividend Declared: INR 4 per share • EBITDA Margins: Improved due to reduced freight costs (14% to 9% of sales)
Inventory and Market Dynamics • Dealer Inventory Levels: Reduced to approximately 2.5 months • Average Selling Prices (ASPs): Decline attributed to lower freight surcharges • Competition: No significant changes in competitive landscape
Capital Expenditure and Future Outlook • Capital Expenditure: INR 1,300 crores spent in first nine months; INR 300-400 crores anticipated next year • Margin Recovery: Expected in FY '24 due to lower raw material and freight costs • Growth Projections: Low single-digit growth for Off-Highway Tyre segment
Strategic Initiatives • Market Share Goals: Increase from 5-6% to 10% over the medium term • Focus Areas: Distribution, product development, and marketing • Treasury Management: Funds allocated for capital expansion and safe investments
Conclusion • Management's Stance: Cautiously optimistic about demand recovery and margin improvements • Future Plans: Continued focus on operational efficiencies and market share growth despite current challenges.