Aman Setia - VP & CS of Sukhjit Starch
Performance of FY 15
Net Sales increased to 532.45 Cr from 507.41 Cr in the previous year
EBITDA grew by 27 % to 65.54 Cr from 51.58 Cr in the previous yr
PAT grew by 45% to 23.20 Cr from 16.04 Cr in the previous yr
Performance in Q 4
Net Sales decline to 129.41 Cr from 139.92 Cr in the corresponding previous quarter
EBITDA 14.51 Cr vs 16.57 Cr in the corresponding previous quarter
PAT 3.57 Cr vs 3.22 Cr in the corresponding previous quarter.
Performance in FY 15 has increased due to optimized performance of Malda Unit & due to lower cost of Raw Material & other operational efficiency.Our interest cost has slightly gone up however interest burden is lower in Q4 than in the corresponding previous quarter due to lower utilization of Working Capital in that quarter.Our long term debt is 63 Crore with debt-equity ratio of around 0.3.
Dhiraj Sardana - Sr.VP & CEO
I would like to reiterate that we are a company always looking to maximize shareholder wealth through prudent financial & operating measures.Given the current economic scenario,the completed one year tenure of Modi Govt has given new hope and improved sentiment for better future.We have to innovate our product mix to receive better margin.We believe that reforms and policies work better in the long term and it will be reflected in the starch industry.
Raw material prices prevalent in the starch industry - prices has remain stable due to good crop harvest in the US.India haven't imported maize for the last few years & we exported maize comprising 20 % of our total production whereas higher maize production in Argentina,US,Brazil,Mexico caused our export in maize to dip by 40 % which helps in the stability & availability of maize in the country despite lower production in main maize growing states like Maharashtra ,Telangana,Karnataka.Moonsoon will be timely and normal. International prices in the future is expected to be stable.
As far as commitment to shareholder is concerned ,the board has already committed a dividend of 50% compatred to 35 % in the last year.Company has reputed track record of rewarding its shareholder in the last 4 decade.
Bhavdeep Sardana - Sr.VP & CEO
Your company is growing consistently due to operational efficiency.We have expanded our Malda & Himachal units.We have a new project in mind.The maize crops was badly affected in FY14 due to untimely monsoons,basic procurement of Raw material & more import from other states resulting in higher trade cost. Raw material & power tariff cost was moderate in the last quarter. Team of sukhjity starch through exceptional research has been focusing on building a strong bottom line which will exceed the expectations of shareholders.We will continuously improve our IR & have 2 conference call each year.
Question & Answer Session
Sarthak Medhi - ACE Investments
Q The main challenge of the company is fluctuation in the Raw Material supply.What is your take on these variation in Raw Material supply. What are the other factors that could affect your raw material supply ?
Ans We are a commodity player and we have to bear all the cost. Because of our multi-location ,we do lose somewhere and gain somewhere.Its a strategy our management has developed and we would like to cultivate maize in all the areas.We can't control nature but we share the information and try to curtail the damage.Our risk management units are better placed in our units vis a vis competition.
Q What is the future outlook in the coming quarter in terms of demand in the domestic and export market ?
Ans Industry is growing.Demand will be stable.Overall economic scenario is changing.There is manufacturing push in our country.
Deepak Jasani - HDFC Securities
Q 1 Top line had a degrowth in Q 4. You mention the reason as labour striker.What is the other reason ?
Q 2 Has the strike been resolved ?
Q 3 Can you share the quarterly numbers - quarter wise and year wise in terms of volume sales which will indicate us the realization trends ?
Q 4 What is the share of value added products? Is it rising because its not being reflected on the operating margin ?
Ans Reason for degrowth is nizamabad unit not contributing.Strike is resolved & we have given workers 4 year contract so it won't resurrect in short to medium term.We won't disclose numbers which are strategic in nature on our value added products & competitive environment.Our growth margin has increased on quarter basis because of the decision we took.Our overall capacity utilization was 70 -75 % .We could have gone higher but choose to be on that level to earn higher profits.
Pradesh Kuleri - An individual investor.
Q Can you give ur maize production outlook & what kind of prices will be available in next season ?
A Maize production is stable at 21 to 22 metric tones per annum & it all depends upon monsoon which may increase it to 2-4 % .Pricing will also be stable in India on the back of decent growth.
Q What is the reason for fall of inventory from 93 Cr to 80 Cr .
A It's a statutory kind of thing as well as seasonal kind of thing so it may be a lower stock of maize we are holding on a specific date.
Q What is the percentage of turnover of value added products ?
A Again that is strategic and I won't be able to tell you
Q Our second biggest cost structure is power & fuel .Are we running on thermal power or what sort of power we are running on ?
A We are buying from the grid at all locations through state electricity boards either directly or through open access in one units.
Q You are not generating your own power ?
A Not at present but we may at our future projects
Q What kind of power - thermal or bio fuel ?
A Going forward it will be bio mass bases or a combination of thermal & bio mass
Ishita Guha - Cogencies
Q How do you see the global price of maize ?
A Stable outlook. We have to see the US harvest numbers.Short term will be good and stable
Q Are imports for India viable ?
A India doesn't allow genetically modified crops.Prices available at ports will not be viable for majority of Companies in starch industry
Q How are you looking at exports ?
A India exports to south east asian countries and the june-july numbers will reflect the amount of surplus.
Pradeep Singh - India Capital
Q Are you entering new market in terms of products
A We are evaluating value added products & thinking of increasing their capacity in our new project.
Q Which end user industry has the most scope of value addition ?
Q Current position of debt ?
A Long term debt - 63 Cr & Debt equity ratio is 0.30
Padavi - ICFR
Q Hows your product mix remained in last 6 months & what is the managing strategy behind it ?
A We have optimum utilization capacity of 70-75 %. We have focused on products which will give us better margin.
Q Power situation in all 4 plants ?
A Stable position.Andhra situation has improved.
Yogashree Padavi - ICFR
Q What is the size of starch industry in India & what is your market share & how are you planning to raise your market share ?
A Difficult to estimate.Data is not available.From unconfirmed sources we can say that our market shareis about 10-12 % .Through continuous development & optimum efficiency we expect to increase our market share by more than growth of the industry.
Q What are the two things that will take the industry to the next level ?
A 1 More pricing stability to offer continuity, 2 Larger dependence on Indian population to protein & GDP growth.
Smriti singh - ICFR
Q Can the investors expect significant changes in working capital in coming quarter ?
A No but working capital will depend upon stock holding in raw material
Q Whats your view on International market regulating of starch consumption ?
A Globally there is no cap on consumption.In india ,usage of starch should not exceed 5 % of certain products.Government is also reviewing it to enhance health standards.