Emmbi Poly Q1FY18 Concall Summary

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 Business Segments & Product Portfolio:

  • Water Conservation: Pond Liners, Flexi Tanks, Canal Liners, Check Dams etc.
  • Agro Polymers: Export Substitution Crop Protection Covers, Mulch Films, Silage, Incubators, Agro Sheds etc.
  • Advance Composites: Pneumatic Human Safety Fall Arrest Systems & Dunnage systems, Infrastructure Road & Roofing Underlayment, Fire Retardant Scaffolding etc.
  • Specialty Packaging: Industry specific such as Food Grade, Pharma Grade, Hazardous Chemical grade, Cement grade & E-Commerce tamperproof packaging solutions etc.

Financial Highlights

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  • Healthy YOY growth in Revenue, EBITDA & Profitability.
  • Successful implementation of Ind-AS accounting standards and GST system of Taxation at all operational levels
  • Q1 Revenue stands at INR 63.02 Crore.
  • The year-on-year growth in the revenue is around 13%.
  • Q1 EBITDA stands at INR 7.95 Crore.
  • Growth in EBITDA is more than 14%.
  • The improvement in the profitability is around 21% as per expectation
  • The company is hoping to achieve 20% growth in long-term. 
Emmbi Q1FY17 Revenue Breakdown.png

Company Overview

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  • First quarter sales are always low in Indian market & this year it took some beating for GST also.
  • With diverse market scenario & planned season mapping demand is not seasonal for Emmbi.
  • Specialty packaging contributes 33% to the company’s revenue and efforts are being made to guide it in the range of 25-28% by next few years.
  • The target for the next 2 years is to reach 100 Crores Level in pond lining business and by 2020, the company will have a substantial expansion plan.
  • Emmbi is focusing more on B2C market strategically & aggressively seeking business.
  • This quarter B2C is expected to move up to 7.2% from existing 3% which is very much in the line with Emmbi’s target for improving the B2Cmarket share from 8-9%. 
  • The company is moving towards the Six Sigma Level for operational efficiency & also employs lean technology to reduce waste.
  • Total working capital days have come down to 120 days and company targets to achieve the target of 90 in the next 2 years.
  • Emmbi is comfortable in acquiring raw materials from Indian market with no monopoly present and a number of suppliers available for the same. 
  • The company prefers the method of advance payment for these suppliers as it makes polymer available at better pricing.
  • A couple of companies from America and Europe have approved Emmbi and have started buying from company.
  •  Emmbi is prioritizing repeat orders than acquiring new customers as when they approve the facility they keep buying.
  • Post GST regime, Emmbi Watcon is made a subsidiary of Emmbi Industries. This venture is created to support activities like canal digging and excavation for Jal Sanchay. 
  • With alert finance department, Emmbi is not much exposed to the international currency risk & they play it safe & non-speculative as half of the risk already hedged with new orders & raw materials.
  • Awaiting certification from the BRC and ISO 22000 for pharma grade & food grade facilities, however, production has been started in both facilities.
  • No bpayment related issues regarding farmers’ agitation in various parts of India, as Emmbi doesn’t sell products to them in credit.

Industry Overview:

  • In polymer processing, India is a leading country & Indian firms are way ahead than their foreign counterparts. There is little threat from existing global players like Owens Corning.
  • With market size like Pan India Market, fear of a competitor disrupting the complete market scenario is almost little to none.
  • Revenues are vulnerable for commoditization to a certain level but Emmby likes to move up the value chain and get out of those products ASAP.
  • Recently Time Technoplast launched a recent MOX product which has some synergy with existing agro polymer products of Emmbi. However, it probably will help to expand the market for such products in Indian market though there is always a scope of competing.

CAPEX, Innovation & Brand Building

  • Two major CAPEX programme - “Positive Pressure Clean Room” & “Water Conservation” has been completed. 
  • Around 22 Crores (US$3 million) were spent pertaining to two major investments: INR 15 Crores for Positive pressure clean room & INR 7 Crores for a dedicated manufacturing facility for the water conservation products. Both the CAPEX program has been completed.
  • Emmbi innovation lab consists of 34 people and their primary functions are to identify the needs of the market and create R&D model to solve the needs. This team is working with people from rural development program team & Sales team to observe, communicate & understand the need of the market.
  • A brand new product called wool pack has been launched. With this product, Emmbi Innovation Lab delivers breakthrough innovation in packaging for export of raw wool which will cost almost half & also will help to reduce carbon footprint to a substantial level. 
  •  Now Emmbi is recognized globally as an innovative Indian company in Pond Liner Market & it is featured on various global publications. 
  • Emmby has created 15 base brands. Some of powerful Emmby brands are -“CleanTec”, Jal Sanchay (Branded as “Aqua Save” in the International market) and Krishirakshak.