Supreme Petrochem Q4: Profit Drops, Margins Shrink - Insights From ED Rakesh Nayyar | NDTV Profit - video Dailymotion

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00:00 Let's talk about Supreme Petrochem now. Numbers are out in Q4. Rakesh Nair, the ED,

00:06 is with us now on the show talking about the quarterly numbers. Now, revenue as I see it is

00:12 increase of about 12.5-13%. EBITDA though has shrunk about 16% to 175 crores. Margins

00:21 also down about 381 bps and net profits down about 17.5% to 131.5 crores. Mr. Nair,

00:31 welcome and thank you for speaking with us at NDTV Profit. Can you give us a sense of

00:37 what have been the headwinds this quarter? No, there have not been any headwinds barring that

00:44 there was this West Asia crisis issue and generally the global deltas have also shrunk

00:51 over the year and as compared to the previous year in the same quarter. So that has all come

00:57 in our bottom line. The exports were doing very well but in the last quarter our exports are a

01:03 little down because of the West Asia crisis there, the Red Sea crisis particularly. Otherwise,

01:08 there have been no headwinds. The domestic market has been good and the total sales volume of IC on

01:16 a year-on-year basis in the quarter we have done 17.6% more than the corresponding quarter in the

01:22 previous year. So generally the quarter has been good. The West Asia crisis but I was just looking

01:29 at your three year EBITDA, Mr. Nair and just help me understand. So I'm seeing 904 crores in FY22,

01:36 658 crores in FY23 and then 467 crores in FY24. Is this a realignment or can you explain to us

01:44 what's happening here? See in the year 22-23, the global deltas are very high because of the

01:51 freight rates. The freight rates generally for all the container cargo was very, very high

01:57 which have now come down to a normal level and also that during the current year the deltas

02:03 between the styrene and the end products have come down or have shrunk marginally or globally.

02:09 So that all has come down and resulted in these numbers here for us. And likewise with EBITDA

02:16 margins, I'm assuming the same reason you've had great margins in FY22 because of the freight rates?

02:21 Yeah, FY21, FY22, there were all this COVID, after effects of COVID, there were global plans which

02:30 were shut. So all that had increased the global margins and that has also reflected in the Indian

02:36 market. Okay, so what is the sort of steady state EBITDA margin that can be guided to or expected?

02:45 Now we're sitting in FY24 looking at an 8.9% figure, what do you reckon it could be for FY25?

02:52 See the margins are a play of many things, the raw material prices, the global events,

02:58 the global deltas. So it's very difficult to predict the margins. I can only say that just our

03:04 volume growth would be there. We did almost 325,000 tons of volumes last year.

03:09 And going forward in this year, we should be doing 8 to 10% more than that.

03:14 Mr. Nair, but because the margins are a factor of many things, one will have to understand

03:21 what could a reasonable expectation be because you may do volumes, but if the margins contract,

03:26 then it doesn't quite bring about the earnings growth. So is there some assessment that you can

03:30 give to your shareholders and viewers? If everything is static, everything is the same,

03:34 then we would be doing the same kind of margins as we have done this year.

03:37 And for the increased quantity, the volume absolute numbers would go up.

03:44 What about expansion plans, if anything on the anvil which might aid volume growth

03:51 on newer plants that you might be setting up elsewhere?

03:55 No, our expansion plans are on, our capex is on, but that all would be completed by the end of

04:01 this financial year. So the impact of that would start coming in from the next financial year and

04:07 the main impact would come in the financial year of the end of March 27.

04:13 I'm just trying to understand. So if you have steady state growth, I heard you speak about some

04:20 volume growth for FY25, which is fine. What's the kind of growth that comes in for FY26 or

04:25 27 because of the added capacities? So we are setting up 70,000 tons of mass

04:30 ABS project, which would be ready by the fourth quarter of this year. So the part of that quantity

04:36 would come in the next year. It is the first time that product is being introduced in the Indian

04:40 market. So we expect that in the year 26, 27, we should be able to do almost the same 70,000 tons

04:48 would get added apart from the regular volume growth in our existing product lines.

04:52 And just trying to understand, what is that addition amount to in terms of,

04:58 let's say a percentage or what your normal growth would be?

05:02 The 70,000 tons additional quantities, today we are doing 325 or this year we'll do more than

05:10 350,000. So that 70,000 brings in another 20% volume growth for us.

05:17 Mr. Nair, you talked about geopolitical issues in West Asia being a bit of a challenge this

05:25 quarter. Now, how do you see that playing out? Because once again, this is in the realm of

05:32 uncertainty. And if we do continue to have conflagrations, can you just give us a sense of

05:38 how the impact will play out for you and how it hits you?

05:41 The West Asia issue, the Red Sea issue, that had an impact on our exports. Because now the

05:48 Suez Canal is not available to us for exporting our cargo. So we have to go through the other

05:54 longer route, which takes almost three weeks more and the freight rates are higher. So aligning the

06:00 whole thing with the customers and getting new orders on the new rates, with the new freight

06:05 rates and all that has taken time. But now every customer in the European market, the Turkey market

06:12 has understood that that is the reality. So they all have, they kind of going to live with it. And

06:19 we hope that our volumes in the export market would not be impacted going forward now.

06:26 Okay. And do you see the first signs of those volumes stabilizing or do you have an outlook

06:31 where you see this?

06:32 This is what we are seeing now that the orders are coming in now at the new rates and the new

06:38 freight rates. So, and we are also exploring new markets and new customers. So we expect that our

06:45 total export volumes would be better than the previous year.

06:48 Okay. Thank you so much, Mr. Nair for speaking with us.

Supreme Petrochem Q4: Profit Drops, Margins Shrink - Insights From ED Rakesh Nayyar | NDTV Profit

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