NOCILNSEMarch 31, 2022

NOCIL Limited

8,434words

158turns

16analyst exchanges

3executives

Download PDF ↗NOCIL stock page →

Management on call

S. R. Deo

MANAGING DIRECTOR - NOCIL LIMITED

Anand V S

DEPUTY MANAGING DIRECTOR - NOCIL LIMITED

P. Srinivasan

CHIEF FINANCIAL OFFICER - NOCIL LIMITED

Key numbers — 40 extracted

Rs. 1,571 Crore

oing well. Let me discuss this periods business highlights. We ended FY2022 with the revenue of Rs. 1,571 Crores with the growth of 70% that entails a 16% annual volume growth compared to the previous year. Th

70%

iods business highlights. We ended FY2022 with the revenue of Rs. 1,571 Crores with the growth of 70% that entails a 16% annual volume growth compared to the previous year. The revenue mix for the ye

16%

ights. We ended FY2022 with the revenue of Rs. 1,571 Crores with the growth of 70% that entails a 16% annual volume growth compared to the previous year. The revenue mix for the year is domestic 64%

64%

16% annual volume growth compared to the previous year. The revenue mix for the year is domestic 64% and export 36%. On a sequential basis, the domestic business for the quarter has shown a marginal

36%

ume growth compared to the previous year. The revenue mix for the year is domestic 64% and export 36%. On a sequential basis, the domestic business for the quarter has shown a marginal growth while

34%

rew marginally due to logistic and shipping issues. The year also saw a production growth of over 34% to align with our strategy of building inventory to make short-term demand spikes and any supply

rs,

China on various raw materials. In spite of the challenging environment prevailing in last two years, NOCIL has performed well due to integrated value chain, technological strength, wide product range

10%

h these measures, we are happy to inform you that we could out - perform our guidance of more than 10% volume growth and more than 50% revenue growth in FY2022 compared to FY2021. As informed earlie

50%

o inform you that we could out - perform our guidance of more than 10% volume growth and more than 50% revenue growth in FY2022 compared to FY2021. As informed earlier during our previous call, we c

ollows the GDP growth pattern and we therefore believe that this growth can be in the region of 7% to 9% in FY2023. As the demand out look in the medium term remains favorable, the capex plans ann

the GDP growth pattern and we therefore believe that this growth can be in the region of 7% to 9% in FY2023. As the demand out look in the medium term remains favorable, the capex plans announced

Rs. 463 Crore

marize or brief you the results of Q4 FY2022, we registered the highest ever quarterly revenue of Rs. 463 Crores. The performance was always on the back better realization during the quarter, which we indicate

Advertisement

Guidance — 20 items

S.R. Deo

opening

“With these measures, we are happy to inform you that we could out - perform our guidance of more than 10% volume growth and more than 50% revenue growth in FY2022 compared to FY2021.”

S.R. Deo

opening

“As the demand out look in the medium term remains favorable, the capex plans announced by some of the tyre industry present us as an opportunity to participate in the same.”

P. Srinivasan

opening

“Deo, we have already exceeded the earlier guidance of 10% plus.”

Nirav Jimudia

“Deo, so like in terms of our guidance of hitting the full utilization by September 2023, I think if it still holds true then how we are placed with respect to the validation time from the customers after which we may start seeing those incremental volumes coming to us?”

S.R. Deo

“So, basically I think that outlook that we will reach our volumes by September 2023 still holds good, second is I think I have mentioned one thing that we have now started looking at first the de-bottlenecking of the plants so that after that whatever volumes will come we will start increasing the volume through various de-bottlenecking so which is the short-term plan and the long-term plan I have already explained that we are looking at a long-term plan.”

S.R. Deo

“Nirav it will be very difficult to quantify the things because the de-bottlenecking projects are such that we start realizing it only when projects are complete, so of course we have objectives for de-bottlenecking, but difficult to quantify and this debottlenecking will happen only for certain products not for all the products.”

Nirav Jimudia

“But Sir, like any sort of example if you can quantify like in terms of let us say some of the cost which earlier we have been incurring on a higher scale has now been optimized and now that could be a permanent was whenever we will grow our volumes to the fullest extent, so if you can just quantify some of those?”

Rohit Nagraj

“One just quick question on the balance sheet, so this year what was the capex and given that we will come out with the capex update later what will be the maintenance capex for FY2023?”

P. Srinivasan

“Maintenance capex one cannot quantify I absolute terms, but it depends on when a particular event happens, so if there is an even happens it requires an replacement similarly we have to do the replacement, but it is not significant that is what we can say, but I do not think so it will be appropriate to quantify that.”

P. Srinivasan

“No, it is not a gain, I think it is a build up of inventory because our production rates were higher than the sales rate, so obviously inventories build up will be there and which Mr.”

Risks & concerns — 13 flagged

Further the unforeseen high utility prices of coal, gas, and supply chain disruptions on an account of COVID disturbances in China delayed arrival of import parcels and the various logistics issues and also on the impact of input costs.

— S.R. Deo

Nirav it will be very difficult to quantify the things because the de-bottlenecking projects are such that we start realizing it only when projects are complete, so of course we have objectives for de-bottlenecking, but difficult to quantify and this debottlenecking will happen only for certain products not for all the products.

— S.R. Deo

And as far as the improvements are concerned, I think the challenge still continue to the supply chain, but as I have mentioned from last 18 months, we have been changing the whole supply strategy and supply chain security that is one thing which we have done.

— S.R. Deo

Difficult to predict in this uncertain environment because there are so many challenges, etc., so it would be very nice if one can predict a clear thing, but it is too premature, it is not appropriate to even give a long term call on that.

— P. Srinivasan

I think this is very difficult to comment on this situation because this would be stable or an aberration because if you really see oil prices are volatile, oil supplies are volatile, so I think it is very difficult situation to say whether these prices will remain stable or they will go up or go down.

— S.R. Deo

We continue to experience challenge, it is a challenging environment, I do not think so it has improve that way, but we are trying our best to mitigate to best possible extent and availability is an issue of the containers and shipping vessels on time.

— P. Srinivasan

Deep, I think we would like to give this clarification more at the end of Q1 results because today still is an uncertain environment, so it is too much on our part to comment on that.

— P. Srinivasan

Sir, second is on the volume growth, you have answered that we are maintaining the guidance as of September 2023, I wanted to understand if you can provide any visibility on step-up in volume growth is it more a visibility on the client validation, which is little uncertain at this time, how do you see it?

— Anubhav

I think we have been consistently saying that with the current uncertainty in the marketplace it is very difficult give certain guidance on volume growth, but as we have been emphasizing from last two years and what we have seen in the results that our emphasis is always on volume growth and as we have been saying that we are pretty confident that going towards September 2023 we should have 90% to 95% capacity utilization.

— S.R. Deo

Sir, last question is on the raw materials sourcing particularly for aniline if you could specify what is the supply mix you are having, which countries we are sourcing and how we are managing the risk on that side?

— Anubhav

I think I have made it very clear that what we have done in last two years is to ensure the supply security, two things we have done, first thing is more buying from the domestic market, so that it gives a boost to the domestic market and second thing is we have scattered the sourcing not only aniline, for many of the products to reduce the risk of sourcing only from China.

— S. R. Deo

Secondly, as you mentioned that the capacity utilization is between 70% and 75% and your target is close to 100% by September 2023, which is 18 months away from the March quarter, so that could translate into an annualized volume growth of about 20%, I understand that markets are volatile and things can be different, but does it mean that you are targeting 20% kind of volume growth when you are looking at close to 100% utilization by September 2023?

— Sandeep Baid

Advertisement

Q&A — 16 exchanges

Good afternoon and congratulations to the team for the good job. Sir, I have two questions, one for Mr. Srinivasan and one for you, Sir. First one for Mr. Srinivasan, if you can just guide us in terms of the total volumes what we sold in FY2022, how much is coming from the exports in terms of volume terms, percentage also would help?

P. Srinivasan

One minute, we will let you know, just give a second. Yes and Sir, you mentioned in your opening remarks that the increase in the realization is the derivative of two things, one price increases and some product mix changes, so if you can just help us explain that this is because some of the products from our expanded capacity would have been sold for the first time or some of the products where we have already been selling a higher realization products and those products have been sold more in this quarter and because of which your product mix is showing some higher realization, so if you can

Thanks for the opportunity and congrats on a stellar Q4 as well as FY2022. Sir, my first question is, our performance has been increasing and better in every single quarter and that is also an element of price increases that we have exercise since October 2020, now in the recent past again the input cost inflation has come in, so what are we hearing from our customers in terms of further increasing the prices both in domestic as well as exports market and whether they are really, there is any impact on the volume front that we are experiencing in the recent months or so, thank you?

P. Srinivasan

Rohit, Srinivasan here. As per price correction or price matching we actually do the price matching with what has been offered in marketplace by the competitors to the customers and you will appreciate that one cannot be different with the tyre customers on that front, so I think on the pricing front, we are adjusting our pricing or we are seeking price corrections based on what the market is offering and according to the cost increases, so that is one part. Second part, we have not heard any news on degrowth in volumes as it stands today. Right, Sir. Got it, this is really helpful. Sir, secon

Good evening, Sir. My question is, in this fourth quarter is there an elements of one-off inventory gain may be because of higher inventory during the quarter?

P. Srinivasan

Just repeat the question, sorry, we missed your question? Sir, if the margins that you put in, is there any one-off inventory sort of gains because I see that your inventory has jumped up quite sharply even at the end of quarter, so any element of inventory gains here? No, it is not a gain, I think it is a build up of inventory because our production rates were higher than the sales rate, so obviously inventories build up will be there and which Mr. Deo alluded that it is more to participate any short-term demand spikes or supply chain disruptions. So, that means the 50% gross margin that you

Good afternoon team and congratulations for the good set of performance. Recently DGTR has recommended antidumping duty on import of three products in the TDQ, PVI and CBS originating from China, even Russia, any comments on this, whether this can go through in terms of approvals from the central government?

P. Srinivasan

We have made our representations to the central government. We are awaiting their decision, so we cannot predict because if you see the last one-and-a-half years, there has been far too many rejections so that is why we have to keep fingers crossed. Bhargav Buddhadev: Would it be fair to say that these three products would account for about 25% of NOCIL’s revenue? It depends on situation, but it is significant revenue, but not extremely very high, significant revenue. Lastly, Sir, want to understand is the pricing of aniline has started correcting since the last couple of months and MIBK as we

Thank you for the opportunity. Sir, my first question is on the raw material price front, so has this complete raw material price rise has been passed on this quarter or can we expect some more price hikes going ahead to compensate the increase in raw material prices?

P. Srinivasan

Aditya, I think what we have indicated to you for the whole year we are managed to pass on the cost increases in the form of appropriate price corrections so that is true, going forward what will happen and what is likely benefit, I think that is too long call to take, as we announce we will have a better position to take a call and the point is so long as the cost increase is there we are trying to push for a price increase and it also depends on how the competitors are also reacting to the same so it is a situation of what you are experiencing and what the market is offering it is a combinat

Good afternoon, Sir. Thanks for taking my questions. You may have answered this earlier, but I may have missed it, this quarter I have noticed that the EBITDA per kg is almost Rs 800, just wanted to understand and we have obviously got some benefit of older inventory, so just wanted to understand where this number will settle at, should I be looking at the only number of approximately Rs.500 to Rs.550 going ahead or will Rs.800 be the new norm?

P. Srinivasan

Gentlemen I do not know which is your reference work sheet or to which you are saying Rs.800 per ton, it is Rs.800 per kg or per ton? Kg. I think none of our price really has an Rs.800 per kg level of EBITDA, I think some miscommunication is there, please rectify you file workings. Sir, let me rephrase that we have done Rs. 111 Crores of EBITDA on a 136 metric tons of volume, correct so whatever this number be sustainable going ahead or should I be looking at a full year numbers? Gentlemen, the number you are referring to is index form, 136 is an index form, you are converting into some tons o

I have two questions, if I look at the annual cash flow despite a PAT growth of 99% in FY2022, operating cash flow has actually decreased from Rs. 94 Crores to Rs. 29 Crores and you know we have seen inventory, which is more than doubled, receivables are up, so if you could give us some sense how much of this is to price increase, is it some change in working capital in terms of domestic or export side of the business and you know when do we see operating cash flow growing in line with the profitability growth?

P. Srinivasan

Gentlemen, when a businesses level of activity increases, obviously the working capital requirement grows in proportion to the level of activity, as far as the number of days operating cycle for working capital as far as NOCIL is concerned it still continues to remain similar to what was prevailing last year in number of the days cycle. But however the input cost parameters have increased the pricing parameters are increased therefore the working capital deployment is much higher and you have an inflationary trend when you input cost goes up by 100%, you are supposed to keep that much stock, s

Thank you for the opportunity. Sir, my first question is on exports, you can give more colour in terms of the geography where we have seen the growth coming in and also if you can share the geography wise mix top three geography where NOCIL exports are the largest quantity?

P. Srinivasan

We export to three regions with the Asia, Europe, and America, in America we have expanded on index level of 100 to 300 in the last three years. So, in Asia, what it would be, should assume that the growth will be muted while Europe and America should have grown largely because if you see the China Sun sine Commentary they have committed they have gained the market share in Asia for a while in Europe and America they have not able to do that, so probably NOCIL would have benefited out of that? If you recollect all our investor calls what have been communicated in the last two years we have bei

Sir, I just wanted to understand the most of your contracts with your customers are they on half yearly basis or yearly basis and how frequently can the price hikes to be taken?

P. Srinivasan

It is on quarterly basis. That was my question, thanks.

Sir, thanks for taking my question. I just wanted to get some sense on your expectations for volume in the coming year, we have seen that the export mix has improved so clearly you export volumes are picking up and like you mentioned earlier there was some impact off take on due to a sort of Omicron at the beginning of the quarter and also you have started drawing a plan for de-bottlenecking, so that gives me hint that maybe you are expecting volumes to pick up quite nicely this coming year, so just wanted to get some sense from you and when we can start to see those step jump increases in vol

P. Srinivasan

I think our guidance remains the same, so we are working towards that that is number one on September 2023, which is what we set, we would like to achieve the 100% utilization and we are still working on the path towards that. Thank you, Sir and just another question is can try my luck, I just wanted to get some sense from you, you know we have seen a great performance from you on the EBITDA side again a step jump in EBITDA versus the run rate that we have seen in the previous quarters of FY2022, any sense you can give us on how much of this is sustainable because our mix have improved, so if

Thanks for the opportunity and congratulations for a good set of numbers. Sir, my first question is how do we see the demand environment in India and in our key market’s revenue for FY2023 and in the context that one of Chinese competitor whether the China Sunshine?

P. Srinivasan

Gentleman we are not able to able hear you properly, please. Sir, what I was asking is how do we see the demand environment in India and in our key markets in light of the commentary of China Sunshine have indicated that they will be able to increase volumes despite the slower demand in China to an account of multiple factors like with repeated lock downs, etc., can that imply some bit of increase in competitive intensity and margins compression in markets ex of a China your thoughts on the same? We would not like to address the near term challenges right now as the situation now is a bit flui

Thanks for the opportunity. A couple of questions, one is on the capacity front, if I understand when the spare capacities, we have with the order of 30000 tons right and in light of that I wanted to understand the rationale for de-bottlenecking, is it for a specific grades of the products?

S. R. Deo

Basically, the debottlenecking is being done for certain products, it is not across the range, so as we see the growth of certain products, we want to be ahead to the market so that we should be constantly supplying the product as the demand grows. Sir, second is on the volume growth, you have answered that we are maintaining the guidance as of September 2023, I wanted to understand if you can provide any visibility on step-up in volume growth is it more a visibility on the client validation, which is little uncertain at this time, how do you see it? I think we have been consistently saying th

Good evening and congratulations on a very good set of numbers. Sir, you had mentioned that you took a price hike in the January to March quarter which resulted in higher realization, I just wanted to know for the April to June quarter have the prices again been hike or they are more on the same as January and March quarter?

S. R. Deo

I think we will not be able to comment on this because as we have been saying from last one hour, that the situation is very, very volatile in terms of raw material or raw material availability pricing, so we will not be able to comment on this. Secondly, as you mentioned that the capacity utilization is between 70% and 75% and your target is close to 100% by September 2023, which is 18 months away from the March quarter, so that could translate into an annualized volume growth of about 20%, I understand that markets are volatile and things can be different, but does it mean that you are targe

Sir, you mentioned that the antidumping duty you are expecting some approval so when can we expect the outcome from that?

P. Srinivasan

Gentlemen, we never said this. It is under process, we are not sure whether we will get approval, it will be notified or not, we are not sure, we have given our representation to the central government, it is up to them to take the judgment. Sir, second thing that the value growth has been significant, so going forward maybe one and one-and-a-half years down the line if prices normalized, how much of the value growth is able to capture and how much we will have to pass on, can you give any colour on that? Gentlemen, I asked a counter question, can you predict oil prices, none of us can predict

Congratulations on good set of numbers. I just wanted idea on antidumping duty which has won by you in Chinese import so what is the situation there, what kind of demand we plan to foresee on that?

Rushabh Shah

Gentlemen, we did not follow your question, please? You know antidumping duty which is imposed by US, there is antidumping duty on Chinese imports of rubber chemicals so I just wanted to know what kind of situation, what kind of demand NOCIL can fulfil or NOCIL is present there to take over all these demand? I think we just answered to this question sometime back, on an index level of 100 we have already moved to 300 in the US market, as you rightly said, we will see the opportunity we have participated in that and we intend to grow further and consolidate our position there. So, what is the v

Thank you. I take this opportunity to thank everyone for joining the call. I hope we have been able to address all your queries. For any further information, kindly contact NOCIL or Strategic Growth Advisors, our Investors Relations Advisors. I request all of you to be safe under the given the circumstances. Thank you very much.

Management

Speaking time

P. Srinivasan

Moderator

S.R. Deo

Nirav Jimudia

Dixit Mittal

Aditya Khetan

Arpit Shah

Saurabh

Nitesh Dhoot

Anubhav

Advertisement

Opening remarks

S.R. Deo

Thank you very much. Good afternoon all the participants. A very warm welcome to everybody on the call. Firstly, we welcome Mr. Anand, who has joined NOCIL board effective from March 2, 2022, as Deputy Managing Director. Mr. Anand comes with a rich experience of over 20 years from BASF Group and he has handled several critical responsibilities at BASF. Along with Mr. Anand, I have Mr. P. Srinivasan, our Chief Financial Officer and SGA, our Investor Relations Advisors. I hope you all have received our investor presentation by now. For those who have not, you can view them on the Stock Exchanges and the Company’s website. I hope you and your loved ones are safe and doing well. Let me discuss this periods business highlights. We ended FY2022 with the revenue of Rs. 1,571 Crores with the growth of 70% that entails a 16% annual volume growth compared to the previous year. The revenue mix for the year is domestic 64% and export 36%. On a sequential basis, the domestic business for the quarte

P. Srinivasan

Thank you, Mr. Deo, Mr. Anand, and good afternoon to everyone. I hope you all are safe and in good health. To summarize or brief you the results of Q4 FY2022, we registered the highest ever quarterly revenue of Rs. 463 Crores. The performance was always on the back better realization during the quarter, which we indicated in the previous call that we are going to have price hikes. Let me run through on some of the financial highlights. Volumes for Q4 FY2022 grew by 34% taking a base of Q1 FY2020 that means on base of 100 it is 136 or 135, where our sequential quarter volume were flattish. Mr. Deo has explained the reasons. The volumes for FY2022 grew by 16% as compared to FY2021 and as indicated by Mr. Deo, we have already exceeded the earlier guidance of 10% plus. Net revenue for Q4 FY2022 stood at Rs. 463 Crores as against Rs. 389 Crores from Q3 FY2022, a sequential growth of 19%. The sales growth was driven by price hikes taken across products during the quarter commensurate with th

Advertisement

← All transcripts NOCIL stock page →

NOCIL Limited

Market Movers