ESTERNSEQ1 FY2421 August 2023

Ester Industries Limited

3,413words
55turns
4analyst exchanges
2executives
Management on call
Sourabh Agarwal
CFO and Mr. Girish Behal - Business Head. We will begin this call with opening
Girish Behal
Business Head of Ester Industries. I will briefly talk about
Key numbers — 40 extracted
rs,
he US economy, which in turn is percolating into slow demand. Let me start with the headline numbers, on a standalone basis our revenues for the quarter stood at Rs.206 crore, with EBITDA of Rs.13 cror
Rs.206 crore
et me start with the headline numbers, on a standalone basis our revenues for the quarter stood at Rs.206 crore, with EBITDA of Rs.13 crore and loss for the quarter was Rs. 5 crores. The soft performance as men
Rs.13 crore
numbers, on a standalone basis our revenues for the quarter stood at Rs.206 crore, with EBITDA of Rs.13 crore and loss for the quarter was Rs. 5 crores. The soft performance as mentioned earlier is reflective
Rs. 5 crore
es for the quarter stood at Rs.206 crore, with EBITDA of Rs.13 crore and loss for the quarter was Rs. 5 crores. The soft performance as mentioned earlier is reflective of the on- ground challenges both our bus
79 MT
essed lower sales for the quarter. To quantify, Innovative PBT volumes during the quarter stood at 79 MT as against 485 MT, while the same for MB03 stood at 247 MT as against 403 MT. I would just like t
485 MT
for the quarter. To quantify, Innovative PBT volumes during the quarter stood at 79 MT as against 485 MT, while the same for MB03 stood at 247 MT as against 403 MT. I would just like to reiterate that th
247 MT
PBT volumes during the quarter stood at 79 MT as against 485 MT, while the same for MB03 stood at 247 MT as against 403 MT. I would just like to reiterate that the sales moderation has nothing to do with
403 MT
g the quarter stood at 79 MT as against 485 MT, while the same for MB03 stood at 247 MT as against 403 MT. I would just like to reiterate that the sales moderation has nothing to do with competitive inte
18,221 MT
ts markets has further aggravated the profitability. Our overall volumes for the quarter stood at 18,221 MT comprising of 12,461 MT on a standalone basis and 5760 MT at our subsidiary level. The volumes wou
12,461 MT
aggravated the profitability. Our overall volumes for the quarter stood at 18,221 MT comprising of 12,461 MT on a standalone basis and 5760 MT at our subsidiary level. The volumes would have been higher but
5760 MT
erall volumes for the quarter stood at 18,221 MT comprising of 12,461 MT on a standalone basis and 5760 MT at our subsidiary level. The volumes would have been higher but for the plant shutdown undertaken
Rs. 402 crore
on. Starting with the revenues, on a standalone level, the same stood at Rs.206 crore as against Rs. 402 crore in corresponding quarter last year, lower by 49%. The reason for the de-growth pertains to non – a
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Guidance — 18 items
Sourabh Agarwal
opening
“The volumes would have been higher but for the plant shutdown undertaken during the quarter.While we expect the business to operate in a challenging environment in near term, we remain focused on our attempts towards lowering cost, enhancing efficiencies and improving our product mix by increasing the share of value-added products.”
Sourabh Agarwal
opening
“Build-up of volume from new coater will be achieved gradually and continuously.”
Sourabh Agarwal
qa
“As soon as the recessionary pressure in the US improves and there is a recovery in the market, we expect that our sale is also going to go up.”
Saket Kapoor
qa
“And for the new facility at Telangana, do we have any moratorium, or we will be repaying the debt from this year itself?”
Sourabh Agarwal
qa
“So price trend as I mentioned, it is in a range bound manner, it will be very difficult for me to quote any number here, but all I can say is that there is not much movement in the price between January to July.”
Saket Kapoor
qa
“What is the year-end target you have mentioned?”
Sourabh Agarwal
qa
“But going forward in market the demand increase, we may look at options for enhancing the product mix with Telangana also.”
Saket Kapoor
qa
“Is your understanding that the second quarter will be in line with what the first quarter has been, in the same the volume offtakes will be similar?”
Sourabh Agarwal
qa
“However, we believe that it will be marginally better than the quarter 1.”
Saket Kapoor
qa
“Singhania, any one of them to definitely be present on the call going forward.”
Risks & concerns — 12 flagged
Our quarterly performance is reflective of the stress prevailing across both the businesses.
— Sourabh Agarwal
As far as Specialty Polymers is concerned, that business as we have been articulating is largely IP protected and as such is not subject to any competitive risk.
— Sourabh Agarwal
The primary reason for the slowdown in Specialty Polymer business has been the recessionary worries in the US economy, which in turn is percolating into slow demand.
— Sourabh Agarwal
EBITDA losses are largely owing to lower utilization level and the stress in the films business prevailing currently that has impacted margins.
— Sourabh Agarwal
My next question is on the Specialty Polymers, so there you have seen that it has been highly volatile in recent years, so what would explain the inconsistency there?
— Nitesh Dhoot
As soon as the recessionary pressure in the US improves and there is a recovery in the market, we expect that our sale is also going to go up.
— Sourabh Agarwal
So price trend as I mentioned, it is in a range bound manner, it will be very difficult for me to quote any number here, but all I can say is that there is not much movement in the price between January to July.
— Sourabh Agarwal
Earlier sir, it was the raw material mix that used to also define the trends for your realizations, if there was an increase in the raw material, it was a pass on to your customers and you realizations were maintained, but now do you think because of this over capacity or the new facilities coming online and it is taking time to get adjusted with the demand, do you think the realizations will remain under pressure even though the raw material prices have now normalized or are in a narrow brand?
— Saket Kapoor
Yes, we feel that it will remain under pressure and the major reason for this is that there is excess supply in the market compared to the demand which is leading to this price pressure.
— Sourabh Agarwal
So while we are optimistic about second quarter, it is very difficult for me to give you any direction on the same.
— Sourabh Agarwal
It is very difficult for me to give you any number at this point of time in terms of revenue target for the next two years.
— Sourabh Agarwal
However, it will all depend on the final realization which we are going to get in our end product as well as the cost of raw material, so right now you can safely assume that it will be in line with our past performance, but giving out any number at this point in time will be very difficult.
— Sourabh Agarwal
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Q&A — 4 exchanges
Q
Sir my first question is on the plant shutdown, what was the reason for the shutdown? Was it a maintenance shutdown? And if you can quantify the volume impact that you had because of the shutdown? So this particular plant of our new investment in Telangana, which was commissioned in January and these kind of plant in the initial period have got certain stabilization period, so whatever the shutdown that we have ever had relating to the plant stabilization requirement, I think Sourabh has already mentioned the kind of volume that we have done in the last quarter. So that is a reflection of the
Nitesh Dhoot
My next question is on the Specialty Polymers, so there you have seen that it has been highly volatile in recent years, so what would explain the inconsistency there? Our primary market for Specialty Polymers is the US, so right now if you look, we are going through a recessionary phase in the US because of which our offtake for Specialty Polymers has taken a dip. As soon as the recessionary pressure in the US improves and there is a recovery in the market, we expect that our sale is also going to go up.
Q
Sir, firstly, if you could give us the utilization level for our plant at Uttarakhand?
Sourabh Agarwal
I think we have already shared the numbers in terms of production, EFL utilization was around 50% and Ester Industries’ utilization was around 90%. 90% you mentioned, right? Yes. Currently what should be the utilization levels for this September quarter? We are already two-third into it? For Ester Industries, we are expecting utilization to be above 90% and for our Ester Filmtech, we are expecting utilization anywhere between 50% to 70%, but obviously that is also dependent on many factors which is both external as well as internal. Sir how have the raw material prices shaped up for the last q
Q
My question is what would be the revenue target of our company in next 2 years?
Sourabh Agarwal
The revenue target of the company for next 2 years? Yes. It is very difficult for me to give you any number at this point of time in terms of revenue target for the next two years. However, it will all depend on the final realization which we are going to get in our end product as well as the cost of raw material, so right now you can safely assume that it will be in line with our past performance, but giving out any number at this point in time will be very difficult. Next question, when will be the Telangana plant we can use full capacity, are you full utilization in this quarter? So, Telang
Q
So I would like to thank all the participants for joining today and I hope we were able to answer all your questions and we look forward to meet you again in the Earnings call for the second quarter. Thank you so much. Thanks everyone.
Management
Speaking time
Sourabh Agarwal
25
Saket Kapoor
19
Moderator
5
Madan
3
Gavin Desa
1
Girish Behal
1
Nitesh Dhoot
1
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Opening remarks
Gavin Desa
Thank you. Good day, everyone and a warm welcome to Ester Industries Q1 FY24 Analyst and Investor Conference Call. We have with us today Mr. Sourabh Agarwal - CFO and Mr. Girish Behal - Business Head. We will begin this call with opening remarks from the management, following which we will have the floor open for an interactive Q&A session. Before we begin, I would like to point out that some statements made in today's discussion may be forward-looking in nature, and a note to this effect was sent to you in the invite earlier. We trust you have had a chance to go through the documents on financial performance. I would now like to invite Sourabh Agarwal for opening remarks. Over to you, Sourabh.
Sourabh Agarwal
Thank you, Gavin, and thank you everyone for joining us today. I have alongside with me Mr. Girish Behal – Business Head of Ester Industries. I will briefly talk about the key business highlights post which I will walk you through our financial performance. The overall business environment for both Films and Specialty Polymer remains challenging. Our quarterly performance is reflective of the stress prevailing across both the businesses. We have seen similar subdued performance reported by our peers as well for the quarter. Film business as we have been highlighting has seen sharp addition on the supply side following commissioning of new capacities which in turn has had an adverse impact on the realizations and profitability. As far as Specialty Polymers is concerned, that business as we have been articulating is largely IP protected and as such is not subject to any competitive risk. The primary reason for the slowdown in Specialty Polymer business has been the recessionary worries i
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