BHANSALI
ENGINEERING POLYMERS LIMITED
Q1
FY 19 RESULTS REVIEW
BEPL
manufactures Acrylonitrile Butadiene Styrene
or ABS and SAN. ABS is a raw material for leading companies in
automobiles, home appliances, telecommunications, luggage, bus body and various
other multifaceted applications.
At
present, BEPL has consolidated its ABS Production in Abu Road, Rajasthan and
HRG at Satnoor, Madhya Pradesh.
It
is now constructing a Greenfield Unit for ABS with 200 KTPA near Pipavav Port
in Gujarat.
Let
us look at the Notes to the Q1 results and then the Q1 results for the first
quarter ended June 2018.
NOTES TO Q1 RESULTS :
Fire
broke out on 29th April, 2018 at the factory premises at Bhansali Nagar,
Satnoor, in MP. The Fire was confined in the Flocculation and Drying Section of
the plant. The production recommenced on 1st June, 2018.
ADDL INFO ON FIRE ACCIDENT
:
The
Japanese led Technical Investigation team established that the accident
occurred due to generation of Static Charge which is unpredictable and purely
accidental in nature.
Management
took pro-active action to keep Abu Road Plant fully operational during this
period, to ensure that adequate inventory of SAN co-polymer which is 75%
constituent of BS resins, could be built up.
Company
made arrangement to import HRG to ensure that shortfall of the production
during 1st quarter is recompensed.
Management
is confident that the overall performance of the company for the current fiscal
will most likely be maintained.
INSURANCE
CLAIM :Company has preferred a provisional claim with insurers for the loss of
Fixed Assets due to the fire. Pending finalization of the claim no adjustments
have been made in the carrying cost of the Fixed Assets. No significant loss is
anticipated in this regard.
MY
COMMENTS :Loss is not mentioned. Claim amount is not mentioned. Some loss, but,
not significant loss is expected
The
capacity expansion programme from 100 KTPA to 137 KTPA at Abu road Unit is put
on hold considering the keen desire to establish its port based Greenfield project
for 200 KTPA. In 2018-19, a capacity utilization of approximately 75% is aimed
at to progressively reach at 100 KTPA . In regard to the expansion of the
capacity from 100 KTPA to 137 KTPA, the matter will be reviewed at appropriate
time.
MY
COMMENTS : There is considerable shifting of decisions in respect of project
expansions. 100 to 137 ,
if
possible, at Abu Road, along with 200 at Pipavav Road, why not? Again, will the
company close down the Abu Road, after establishing the Pipavav Port Unit?Why
not continue the Abu Road Unit which is functioning well, along with the
Pipavav Road Unit, taking total to 300 KTPA? Management must speak with clarity
on all this.
Q1 RESULTS REVIEW :
Net
sales at Rs.202 Cr has decreased by 10% YoY and by 33% QoQ. But, raw Material @
160Cr has increased by 5% YoY and 9% QoQ. Purchase of Traded goods at Rs.61 Cr has
increased by 1370% YoY and 27% QoQ. Stocks at -75 Cr has decreased by 764% YoY but
increased by 503% QoQ.
Consequently,
EBITDA at Rs.26 Cr has decreased by 8% YoY and 39% QoQ. PBT at Rs.26 cr has decreased by 7% YoY and 44% QoQ. Net
Profit at 17 Cr has decreased by 1% YoY and 41% QoQ.
Diluted
EPS On FV of Rs.1 is Rs.1.01 compared to Rs.1.72 in previous qtr and Rs.1.05 in
Same quarter last year.
Current
Market price is 135 and PE ratio is 33.41. Price trend indicates an increase of
77% in last one year from 76.5 to current levels.
4TH QUARTER RESULTS :
Expenses
during Q4 have shot up from 198 Cr to 262 crores. 2 factors which increased
EXPENSES and REDUCED Net profits are :
(i)
Forex loss of Rs.6.82 Crores
(ii)
Debtors write-off of Rs.8.56 Crores
(iii)
It is a Zero Debt entity now.
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