Asian Granito Q4FY17 Concall Summary

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Financial Highlights

Asian Granito Q4FY17
  • Quarterly y-o-y growth has been 10.5%, the volume growth is about 15% and for the year growth is about 7.5% and volume growth is of 10%
  • Last year, the company declared a total dividend of Rs 1.3 per share
  • The GST of 28% which implemented is good due to the payment of 28-30% taxes 12.5% excise, 2% CST and 15% VAT
  • After demonetization, the company received numerous Government projects which had low value products and were outsourced from Morbi, due to which EBITDA margins got impacted in this quarter
  • Prices of Soluble Salt reduced from Rs. 75 per square foot in 2004 to Rs. 20
  • Now 1.5% of the expense is spent around Rs. 16 Crores towards branding, samples, sales promotions
  • Earlier, it was Rs.8 Crores which increased to 15 Crores and will increase to 2 to 2.5% because after the implementation of GST, branding would increase in coming years 

Capex 

Asian Granito Capex
  • Having a turnover of Rs. 1,150 Crores at Plant through increase in utilization – Rs.150 crores, another Rs 150 Crores from the existing Crystal Plant and Rs. 60 Crores from the new Quartz line
  • About Rs 150 Crores from JV in south India, approximately Rs 200 Crores from additional expansion in Crystal and the rest would be outsourced or partnered through JV in Morbi
  • US and Europe are the biggest market for Breton technology in India, has only one plant and it has a huge CAPEX
  • The new CAPEX that is after August because there is a wait for product for about three months in the market 

Key Operational Highlights 

  • The company took a decision to manufacture GVT products in south Indian Andhra Pradesh
  • Newly launched around 50 different products in 20mm and 30mm thickness which got a great response form dealers in the meet
  • EBITDA margin for this product should be in the range of 30% - 33%
  • At present, exports orders worth Rs.8 to 10 Crores and there was a good demand of the product in domestic metropolitan cities
  • Standalone capacity is Rs 85,000 per day sq. meter and Rs 15,000 is outsourced adding total capacity to 1,00,000 sq. meter per day which currently are 65% to 70% utilization
  • Current mix of revenues is 19% is GVT, double charge is almost 22% in total tiles turnover
  • Due to demonetization, some distress and plus while selling high end products which helped gaining market share, the debtor’s days  increased by 10-15 days
  • All the production is done from the perspective of the international market only
  • Tiles are exported and all of the 7% and the new exports of quartz, exports can become 10%
  • In GST, 28% will be the rated whose current tax structure is around 30%, so there will be no negative impact but it will be only positive
  • Now the CAPEX done is around 20 Crores, internal accrual is about 11-12 Crores is through LC and rest 8 crores is from internal accruals
  • The dealer is separate even in international and domestic markets
  • 85% to 90% is the capacity utilization in quartz
  • There is no threat from China also as anti-dumping duty of $1.87 has been levied by the government, there by restricting small dealers to import

Growth 

  • The Government projects which normally are at 15%, have increased to 17-18%
  • Revenues were Rs. 1,150 Crores this year and next year exoexted growth would be 12-13%
  • GVT growth is above 30% double charge is around 15%
  • The growth of the Ceramic and Soluble Salt Industry would be 5%-10%
  • In Morbi, around 50 new plants are coming up in the GVT and double charge space
  • Export market which was around Rs. 2,000 Crores, went up to Rs. 5,000 Crores which is expected to reach higher around Rs. 8,000 Crores as well
  • In April month also the growth rate was about 10% as compared to this month

Key Strategy & Outlook

  • The company is focusing to increase its retail sales, and has targeted 120 showrooms but have achieved 144 showrooms and completed it and also the company’s retail base which was 35%, grown above 37%
  • By 2020-21, the target of reaching turnover of Rs. 2000 Crores, concentrated a lot on the product mix, the low value products taken up by Morbi which will concentrate on manufacturing of high value products
  • Company want to increase by retail segment to around 50% in the coming years, 25% from Governmental projects and the rest through Institutional
  • Working on different strategies to reduce Working Capital Cycle which should also come down in coming years
  • The company hopes to maintain margins in the range of 13-15% for the next year
  • First target is optimum utilization of all their plants
  • Post implementation of GST, consolidated taking place in the industry
  • Company planned a JV in south for GVT products with 51% stake with a total investment of Rs. 35-40 crores through internal accruals
  • Inventory days increased 86 days, the main target is to focus on high value products which will be manufactured in-house

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