DCM Shriram Q2FY18 Concall Summary

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Financial highlights:

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  • The overall Q2’18 Net Revenue is Rs. 1605 crores and it grew 17.5% over same period last year.
  • The revenues of the company’s own products at Rs. 1394 crores were up by 33% whereas revenues of traded products at Rs. 211 crores were down by 34%.
  • Growth in revenues of own products included 23% growth in volumes led mainly by Chemicals & Sugar.
  • All other businesses also registered volume growth.
  • The PBDIT for Q2’18 at Rs.306 crores was up by 133%.
  • The PBDIT for own products was Rs. 299.2 crores, up 121% over last year.
  • The margin for own products went up from 13% to 21%.
  • Tax rate was also higher, estimated at ~ 24% for the current year vis-à-vis 13% last year.
  • The Net profit at Rs. 172 crores is 88% higher than last year.
  • The Gross Debt as at 30th September, 2017 was Rs. 673 crores and net debt at Rs. Negative 44 crores vs. Rs. 737 crores and Rs. 707 crores respectively, last year.
  • The financials for H1’18 recorded similar trends as the Q2’18 financials.
  • Overall net revenue was up 26.5% with revenues of own products going up by 42%.
  • The own products recorded 33% volume growth, led by Sugar & Chemicals. The PBDIT at Rs. 648 crores was up 70% and PAT at Rs. 405 crores was up 57% over H1FY17
  • The cash on the balance sheet as of now is around Rs. 750 crore whereas the debt is around Rs. 670 crore.
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Non-Financial Highlights:

  • The turnover of Hariyali Business went down as we surrendered 8 of the 37 fuel pumps back to BPCL.
  • With the objective of strengthening the businesses, primarily on downstream products, Company is implementing projects worth Rs. 350 crore in Sugar and Chemicals businesses.
  • The Distillery in Sugar will come on-stream by January 2018 at an investment of ~RS. 190 crores.
  • The capacity expansion in Caustic Soda Liquid & Flakes and Stable bleaching powder at Kota at an investment of Rs. 98 crore and Ammonium Chloride Plant at Bharuch at an investment of ~Rs. 43 crore is expected to be commissioned by June 2018.
  • The Board has approved additional investments worth ~Rs. 850 crore in Sugar and Chemicals Business along with Power utility.
  • In Sugar business the proposed investment is Rs. 500 Crore. Sugar and Co-gen capacity expansion at an investment of Rs. 360 crore will be commissioned by Oct 2018.
  • In Chemicals business the proposed investment is Rs. 98 crore.
  • In Power utility we are investing Rs. 240 crore to setup a new Power plant at Kota in part replacement of existing power plant
  • Chemicals business witnessed growth in volumes and margins, Sugar business reported higher volumes with stable margins.

 Business wise highlights

 Chloro-vinyl

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  • The Chloro-Vinyl business of the Company has highly integrated operations with multiple revenue streams and 143 MW captive power generation facilities. Chemicals operations are at two locations (Kota – Rajasthan and Bharuch – Gujarat), while Vinyl is at Kota only. The multiple revenue streams enable the Company to optimize operations in a manner to maximize the contribution per unit of power .

Chemicals :

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  • Net revenue for Q2’18 is at Rs. 338 crores and grew by 66% YoY and 15% sequentially.
  • The business has achieved overall capacity utilization of 93% in Q2’18. The prices of Chlor-Alkali firmed up during the quarter, up 9% over Q1’18 and 28% over last year.
  • The PBDIT of the business, at Rs. 163 crores was up 171% YoY and 33% sequentially.
  • Caustic soda business is growing at about 6% a year, which is being consistent.
  • The plant is now operating at 90% capacity utilisation.
  • The Capacity expansion project at Bharuch completed last year has taken up our total Chlor-alkali capacity from 780 TPD to 1345 TPD.
  • The new Aluminium Chloride plant has a capacity of 60 TPD

Plastics:

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  • The Net Revenues of the business for Q2’18 was up by 17% due to higher volumes.
  • PVC prices remained at last year’s level, where as carbide prices were up by 6%
  • PBDIT went up to Rs. 34.5 crores vis-à-vis Rs. 23 crores last year due to higher volumes and a one time debit of Rs. 5 crores last year.
  • With the objective of improving efficiency in power generation, company is now setting up a 66 MW power plant in replacement of old sets of 50 MW at Kota.
  • The new plant will be ~22% more efficient than the existing sets.

 Sugar

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  • Q2 Net Revenues of sugar business at Rs. 516 crores were up 39% YoY.
  • Sugar sales volume were up 34%.
  • The selling prices went up by 5%
  • The PBDIT of the business at Rs. 81.4 crores was up 18.1% in Q2’18 vs. last year.
  • Total inventory was valued at Rs. 2,970 per quintal and the inventory was 3.9 lakh quintal.
  • For portfolio sugar and its byproducts, company is adding co-gen as well as ethanol or distillery to manufacture ethanol as well as other alcohol products and spirits, so company is not dependent on only bagasse and molasses
  • There is a plan to value add on this, so that will make business more stable and stronger.
  • The sugarcane pricing has been raised by only Rs. 10 per quintal, to make the sugar industry more stable.
  • This year the crushing has started early and it is expected to reach close to 100% capacity utilisation.
  • Around 9% to 10% higher production can be probably seen this year vis-a-vis last year
  • Cane availability in the area is improving. Industry fundamentals have been positive over last few years.
  • Board has approved expansion at Hariawan unit which involves Sugar Capacity addition of 5000 TCD, Co-gen by 34 MW and Distillery by 100 KLD. These investments will take the total Sugar capacity to 38000 TCD, Distillery to 250 KLD and Power to 145 MW and makes the business highly integrated.
  • The combined Chlor-Alkali current capacity is 1345 TPD now which will increase as company is undertaking expansion of about 350 tons which will get completed by September ’19 in phases; the split is 330 TPD at Kota and 1,015 TPD at Bharuch.
  • There is  implementation of two expansions at Kota; one for 80 tons which will get completed in August-September ’18 and the second expansion of 80-85 tons will get done in June ’19
  • There is an expansion of 162 tons at Bharuch, end capacity will be 1660-1670 tons by September ’19.

Shriram Farm Solutions

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  • The growth in this business is expected to remain muted in the near term.
  • Q2FY18 net revenue declined by 37 % to Rs. 152 crores. ‘Value Added’ segment’s revenue stood lower by 24 % vis-à-vis last year.
  • The PBIT stood up at Rs. 7 crores vs loss of Rs. 3 crs last year.

Fertiliser

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  • Net Revenues of fertiliser business in Q2’18 were up 13.1% YoY. The volumes were up 14% as we had 11 days plant shutdown in Q2’17.
  • The PBDIT for the quarter was Rs. 35.7 crores vs. Rs. 7.9 crores last year, due to higher volumes and accrual of Rs. 14 crores during the quarter on account of revision in freight rates for 2008-09 to 2015-16.

Fenesta Building Systems

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  • The Q2 FY18 net revenue was up 35% YoY due to higher volumes. ‘Retail’ revenue was up 14% and ‘Projects revenue’ was up 107% as the execution in both Retail & Project segment was satisfactory.
  • 70% of the total real estate business is retail.
  • There has been lower order bookings in the ‘project’ vertical, a result of slowdown in real estate industry.

 Bioseed

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  • India Revenues in Q2 FY18 increased to Rs. 58 cr. vs. Rs. 44 cr. last year.
  • PBIT loss for India business at Rs. 2 crore was lower vis-à-vis Rs. 3 crore last year.
  • International Business saw stable revenues at Rs. 22 cr. vs. Rs. 23 cr. last year.
  • PBIT loss reduced to Rs. 0.5 crore from a loss of Rs. 5 crores last year.
  •  In Khariff 2017 season the total sales of BT cotton stood at 37 lac packet vs 32 lac packets in the last season.

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