Apcotex Industries held its conference call on 18th Aug 2017 and was addressed by Adiraj Choksi, MD
Key Highlights
During June 17 quarter full normalcy was restored with union from April 17 onwards. However customers made alternative arrangements for their requirements which affected the overall take off for the products.
Also the company was stuck with high cost inventory. Raw material prices fell down by more than 40% in past 4 months, where company's strike affected the overall production. With the raw material prices lower in June 17 quarter, when the production happen, the company had to suffer from high raw material costs inventory which affected the gross margins.
Strong sales in June 17 quarter were due to higher exports.
One of the large customer's volume offtake still continues to remain uncertain.
GST to be positive for the company in long run. Didn't have much impact on the company in June 17 quarter.
The company will spend around Rs 60 crore in total in Valia plant. Around Rs 30 crore will be spent to increase the capacity of Nitrile rubber from 16000 MT to 21000 MT and rest will be spent on increasing the efficiency level of the plant and reduction of costs. The capex will be completed by Mar 18.
The company has plans to double the Nitrile rubber capacity in the long run.
Overall despite uncertainty on its one of the major customer on offtake, the company is optimistic of around Rs 600 crore of net sales in FY 18 with better margins.
It would be difficult for 12-14% margins in FY 18, but expects to reach it to around that level in next 3 years.
Company is continuously looking for Inorganic growth opportunities and is aiming at Rs 1000 crore in 3-4 years
Going forward, while challenges continue to remain management is optimistic about the demand.
Management expects the things to improve gradually on QoQ basis going forward.
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