PHILIPS CARBON BLACK Q2 FY 18-19 RESULTS REVIEW

PHILIPS CARBON BLACK

Q2 FY 18-19 RESULTS REVIEW

Phillips Carbon Black Limited (PCBL), a part of RP-Sanjiv Goenka Group, is India's largest carbon black producer and exporter. The Company has four state-of-the-art plants at Durgapur, Palej, Cochin and Mundra. All plants are located near Type plants and near Ports. All major Indian and Global Type Majors are its long standing clients.

Currently, it has a production capacity of 5,15,000 MT per annum in India, and involves a dedicated capacity of Specialty Blacks of 40,000 MT per annum at Palej, and 76 MW of Green power.

PCBL has a market presence in more than 30 nations. The non-rubber or Speciality Black customers include prominent names across the globe. 

Company provides a complete portfolio of products to meet the specific end requirements for Rubber, Plastics, Coatings, Inks and other niche industries globally. 

PCBL has captive power plants at each factory.

Let us look at its Q2 FY 19 results :

PHILIPS CARBON	Sep '18	Jun '18	Mar '18	Dec '17	Sep '17	YOY	QOQ
Net Sales	880	781	753	612	598	47	13
Net Profit	107.97	97.54	74.25	56.59	50.78	112.6	10.69
Equity	34.47	34.47	34.47	34.47	34.47	0	0
Basic EPS	6.26	5.66	4.31	16.42	14.73	-57.5	10.6
Diluted EPS	6.26	5.66	4.31	16.42	14.73	-57.5	10.6
PE	8.71
VOLUME	1032020
FV	2
52 W L H	157	319
PRICE TREND
25 11 18	1 week	2 week	1 month	3 month	6 month	9 month	1 year
Price	214.95	225	209	249.7	237.15	236.46	195.53
Gain / Loss	1.02%	-3.49%	3.90%	-13.04%	-8.43%	-8.17%	11.06%

·       Company had record-breaking production of Carbon Black, and highest-ever output from the four plants, the highest-ever turnover, as also profits.

·       final dividend of 60% in addition to the earlier interim dividend of 60%.

·       It should ideally make FY19 another record-breaking year for PCBL and all its stakeholders.

·       bold shift in product mix to higher value-added premium grades, leveraging of expanded product portfolios, as also the expanded geographical reach of PCBL products. 

·       Over 50 Grades of Tyre carbon blacks and speciality carbon blacks

·       upcoming R&D Centre at Palej, Gujarat will give a global standard infrastructure to be operated by  world-class professionals. 

·       PCBL is further expanding its annual capacity by 56,000 tonnes at Mundra and 32,000 tonnes at Palej (both in Gujarat). The clear aim is to complete these two expansions by the second quarter of FY20.

WIDE APPLICATIONS OF  CARBON BLACK

Carbon black is a reinforcing agent, pigmentation, UV protection and also as an excellent conductive agent.

customers' specific requirements across tyres and moulded rubber goods, plastics, coatings, inks and other niche industries globally. 

Its Specialty Black is under the brand name – Royale Black.

It is one of the three carbon black producers in the world to meet the stringent US FDA requirements for direct/ indirect food contact plastics applications such as plastic food trays and cutleries. 

Its product range can cover more than 90% of the global demand in plastics applications. 

It recently developed medium/ high color blacks under the registered brand name - Bleumina to cater to the markets of automotive, consumer electronics, home appliances and coatings. 

Ramping up production

enabled us to achieve about 95% capacity utilisation across our four plants. 

March 2018.FINANCIAL HIGHLIGHTS

(Amount in ` Crore) Year ended 31.03.18 31.03.17

Total Revenue      2600.31 2131.27

PBT                      303.82          165.52

PAT                      229.78          69.52

PERFORMANCE OVERVIEW

MANUFACTURING

Carbon Black production during FY18 rose to 3,99,904 MT as compared to 3,83,316 MT in the previous year.

SUB-DIVISION OF EQUITY SHARES OF THE COMPANY

the Company had sub-divided 1 Equity Share of the face value of Rs10/- per share, fully paid up, to 5 Equity Shares of the face value of Rs. 2/- per share, fully paid up, effective from 21st April 2018.

SUBSIDIARY COMPANIES

The Company has three subsidiaries as on date, namely, Phillips Carbon Black Cyprus Holding Limited, PCBL Netherlands Holdings B.V. and Phillips Carbon Black Vietnam Joint Stock Company. 

MANUFACTURING UNITS

Carbon Black and Power

Durgapur 1,63,500 MT 30 MW

Kochi 92,500 MT 10 MW

Palej 1,10,250 MT 12 MW

Mundra 1,48,750 MT 24 MW

Total 5,15,000 MT 76 MW

Specialty Black segment.

The Rubber Black portfolio caters to the demand of all renowned tyres and industrial rubber goods customers across the globe, helping their products in reinforcing physical properties. Our portfolio also caters to non-rubber high margin applications, plastic being the largest application globally by market size. The Specialty portfolio can serve more than 90 % of the plastic market by product segment in various industries worldwide.

There are state-of-the-art laboratories for:

> Carbon black characterisation

> CBFS characterisation

> Rubber applications

> Specialty applications

OPPORTUNITIES

increase the demand for automobiles and tyres, in turn increases the demand for carbon black.

The domestic tyre industry is aligning itself in line with any capacity addition in the Indian auto industry, to meet the increasing demand.

Globally, the demand for carbon black is outpacing the increase in capacity and the Company is well positioned to serve the surplus demand through organic growth.

THREATS

Increasing competition from low-cost carbon black manufacturers such as Russia and China continues.

Aggressive protectionism policies, if any, by advanced economies can prove detrimental to the sales by Indian carbon black manufacturers in the international market.

Any sharp hike in the raw material cost due to geopolitical conflicts might aggravate the working capital requirement and therefore increase the short-term borrowings, impacting finance cost.

RISKS AND CONCERNS

Carbon Black Feed Stock (CBFS) is the raw material for the Company. It is a residue from a distillation process and is subject to daily volatility. In the case of extreme volatility and if the Company is unable to pass on the increase in CBFS cost, it may have an adverse impact on profit.

The Company is also exposed to fluctuation of the Indian rupee visà- vis other currencies, which is fully hedged.