Pokarna Q3FY17 Concall Summary

Pokarna Logo

Performance Highlights

Pokarna Q3FY17 Performance
  • Consolidated revenue for 9M FY17 stands at Rs. 281 Cr as against 9M FY16
  • 9M FY 7 revenue lower by 5% owing to soft performance of granite business
  • Granite business generated revenues of RS 109 crore as against Rs 138 Cr delivered during 9M FY16
  • Softness in Granite business is due to oversupply across geographies
  • Quartz business generated revenues worth Rs. 164 Cr by 8% owing to consistent demand. This led to operating profitability for 9M FY17 expanding by 3%
  • Apparel business delivered revenues of 7 crore during 9 months of FY17 as against Rs 6 Cr generated during corresponding period in the last year
Pokara Segment Revenue 9MFY17

EBITDA and PAT

•    Consolidated EBITDA for nine months of FY17 stood at RS 105 crores as against rs 102 crores generated during nine monts of FY16
•    Consolidated PAT for nine months of FY17 stood at 52 crores against Rs 46 crores delivered during nine months of FY16 higher of 13%
•    Margin for nine months of  FY17 stood at about 38% as against 35% reported during nine months of FY16
•    Profitability expansion was largely driven by consistent performance of quartz business
•    Better cost control and lower interest expenses were seen
•    In FY 16-17 nine months the company have EBIT of around 47%
•    The company is generating an EBIDTA lower than 40%
•    The last year EBDITA was 45%
•    The current nine months EBIDTA is close to 47%

Pokarna EBIT 9MFY17

 Business Updates

  • Granite Business
    • Soft performance of granite division is reflective of the challenging environment prevailing at present 
    • Realizations remain under pressure owing to excessive supply pushed by industry participants across geographies
    • Prices at the factory level of practically all kinds of naturally stones like granite from all over the world relatively down due to oversupply
    • Us granite market is rejecting every other company that is try to get inside US market
    • Even if they get in, the prices are very low and can barely cover the production cost, so basically the entire company is at risk.  
    • The company’s main focus is on profitability and sustainable growth
    • The company is more inclined towards a business model where segments are cut to size to improve realizations
    • Revenues are 60% from expots ad 40% from domestic. Cmpany is trying to penetrate deeper in domestic market to improve the topline
  • Apparel business
    • The company is setting up of independent committee to chart future Apparel Business
    • The committee will explore and evaluate various options which could include restructuring, selling , leasing, exchanging , transferring hiring off or otherwise disposing the same
  • Quartz Business
    • Quartz business continues to deliver consistent growth on the back of steady demand
    • Company’s target is to expand the quartz production capacity by 130% by building a new facility at a cost of Rs 325 crore
    • Major raw material of quartz businessis resin . Resin prices depends on oil prices and the cmpnay ahs no control over resin prices.
    • There was a production maintenance shutdown in quartz plant in Q3FY17. The shut down was for both maintenance as well technology upgradation
    • The company has also secured the right to use the Bretstone technology in India from march 2020. New facility will be one of the most advanced Brentstone plant with a production capacity of 7 lakhs square meter
    • The company has entered into an exclusive partnership with IKEA to serve exclusive Quartz supply and installation partners

 

Capex

  • Recently announced expanding the quartz production capacity by 130% by building a new facility of Rs 325 crore
  • Of the Rs 325 Cr, Rs 250 Cr will be funded by debt and the remaining Rs &5 Cr by internal accruals
  • Investment expected to be computed by June 2018
  • Sanction assured from a lead band for term loan of RS 250 crore
  • The company should be breaking even in the new line at about 60% utilisation
  • The break-even will range from 50%-60% actually of the production capacity.
  • About Rs 185 -200 crore will be a spent on the machine part
  • The company is hoping to get 60% of the capacity utilization 
  • The company is targeting about touching peak capacity of 80% to 85%
     

Liabilities

  • Net worth stands at 131 crore in 9M FY2017 .It was 78 crore in 9MFY16
  • In FY 16 the net worth stood at 97 crore
  • The long term debt liability stands at 171 crore as of 9M FY17. It was in 9M FY16
  • The foreign currency loan last year was Rs 27 crore plus in 9M FY16. It has come down to Rs 24 crore plus currently
  • About 10% reduction in the interest on the consolidate basis
  • The foreign currency loan would be available for approximately around 7.5% vis a vis 13.9% interest given to bankers today
  • About Rs 70 crore of loan will be converted into foreign currency in FY18
  • The promoter’s loan is about Rs 75 crore so it will not be converted into foreign currency.  
     
POkarna Liabilities 9MFY17

 Impact of Demonetization

  • The company took a minor hit due to demonetization in terms of collecting money

Downloads