Styrenix Performance Materials Limited (506222) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 FY '21 Earnings Conference Call of INEOS Styrolution India Limited. We have with us today from the management of INEOS Styrolution India Limited; Mr. Sanjiv Vasudeva, Managing Director; Mr. Sanjeev Madan, Director of Finance; Mr. Abhijaat Sinha, Company Secretary and Head of Legal, India; and Ms. Amita Mistry, Litigation and Secretarial Officer. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjeev Madan. Thank you, and over to you, sir.

Yes. Thank you. Dear shareholders, investors and analysts fraternity. We welcome you to this earning call. Your company, INEOS Styrolution India Limited has declared its results for the year ended March 31, 2021 on 19th May 2021. We will brief you about the major highlights of the performance. First, regarding quarterly performance, revenue net of GST from operations in current quarter is INR 63, 655 lakhs as compared to INR 35,900 lakhs in January to March '20 and INR 48,483 lakhs as in previous quarter. Profit before tax in current quarter stands at INR 21,645 lakhs as compared to INR 889 lakhs in January to March '20 and INR 13,526 lakhs in previous quarter. Regarding year-to-date performance, revenue net of GST from operations stand at INR 163,148 lakhs in financial year 2021 as compared to INR 157,900 lakhs in previous year. Profit before tax and exceptional items in financial year 2021 stands at INR 37,607 lakhs as compared to INR 2,446 lakhs in previous year. However, after inclusion of exceptional item, loss before tax stands at INR 1,350 lakhs in financial year 2019/'20. Now regarding quarterly segment performance, first specialties, profit before interest, tax and other allocable expenditures stands at INR 17,656 lakhs in current quarter as compared to INR 10, 402 lakhs in previous quarter. And profit in financial year 2021 stands at INR 29,153 lakhs as compared to INR 2,905 lakhs in previous year, which excludes exceptional item of INR 1,525 lakhs. Polystyrene profit before interest and tax and other allocable expenditure is INR 4,330 lakhs in current quarter as compared to INR 3,348 lakhs in previous quarter. And profit in financial year 2021 stands at INR 9,414 lakhs as compared to loss of INR 1,830 lakhs in previous year, which includes exceptional item of INR 2,270 lakhs. During the quarter under review, the company operated all its operations at all locations at normal level. The second wave of COVID-19 has tightly hit the country post-March 2021 with lockdowns, restrictions on movement imposed by state governments in the country due to the second wave of COVID-19. The business of the company may get affected to some extent, impact of the same is unknown. In fact, assessment of COVID-19; however, is a continuous process given the uncertainty associated with its nature and duration. The company continues to monitor changes in economic condition and is prepared to take measures to safeguard its business operations. The company has elected to exercise the option permitted under Section 15BAA of the Income Tax Act 1961 as introduced by the taxation law amendment ordinance 2019. Accordingly, the company has recognized provision for current tax for the year ended March 31, 2021, and remade its deferred tax basis the rate described in that set section. The full impact of this change has been recognized in the financial result for the quarter ended December 31, 2020. So this is all about clarification and details about our financials. Now we can go forward for the queries or any clarifications, which are further needed. Thank you.

[Operator Instructions] The first question is from the line of Sudhir Bheda from Right Time Consultancy.

Yes, congratulation on exceptional set of numbers, sir. Sir, my questions are on the one hand, we are seeing the COVID impact and auto sales are down by 30%, 35% as per the commentary of all automakers. And on the other hand, raw material prices are going up. So how do you see your margin panning out in the current quarter as well as in the year ahead? And spread also.

Yes. This is Sanjiv Vasudeva...

As we see your volume growth in the current quarter as well as for the year FY '22 and spread and the margin.

Sure. I'll take your questions. This is Sanjiv Vasudeva. So surely, we will see some impact on the volume. As you all read what's happening in automotive, household and generally with economy in India. Our company is not isolated from it. So we will see the impact to the extent the economy down in all the segments here. So that effect will be there for sure. In terms of margins, the raw material prices are still holding pretty well. And we still see healthy margins for now. It is very difficult for us to speculate and predict the margins 6 months down the road. All I can say is as of now, the margins are healthy.

So any sustainable margin do you foresee in the current year?

I mean what we have seen is very unprecedented margins for the chemical industry in general. Not just for styrenics and for other polymers. For the chemical industry in general we have seen very high margin over the last 1 year or so. So some level of sustainability will be there. And most companies keep working on new products and applications to kind of do a mix up here. And we do the same. So we expect good margins to continue, but would it be to this high level is something which is very difficult for us to comment on.

The next question is from the line of Vaibhav Badjatya from H&I Investment.

Last quarter, you said that there was some 500,000 tonnes of capacity of ABS that is coming in China. So has that come or what is your estimate as when it is going to come in. And any other capacity expansion that we are forcing any large capacity that is coming up for ABS, which can significantly impact the demand supply for you?

So the capacity in China, in fact, announced capacity for the coming 2 to 3 years are -- even more than that, right? It will grow for a couple of million tonnes, yes. Now how much of them actually happened is something to be seen, okay? We continuously monitor the progress on any capacity which in China, because at the end of the day, India is a net importer. So the good part for us is the demand is there in India. But additional capacity in China will surely impact. So that's something that we keep monitoring. And not all the announced capacities actually happen. So that's something we have to keep in mind. So we can see gain on the capacity going forward.

But anything new from commissioning that you are estimating in next 3 to 6 months or all of the capacity denote that?

Nothing we are expecting that may impact India right away in the coming 3 to 6 months.

The next question is from the line of Rushabh Sharedalal from Pravin Ratilal Share and Stock Brokers.

Congratulations. Just one question on the second wave. So in May, the country has seen a big second wave. So what kind of impact has it had on sales and ultimately your margins? And one more question pertaining to your investor presentation on Slide 9 where you say that INEOS Styrolution acts as an exclusive distributor for INEOS ABS plant in Ohio. So how much of sales is generated from this particular thing? And what kind of margins do we have in this transaction?

To answer your first question, like I said earlier, we do expect impact on our volumes, yes. As you would understand, most of the sales of wide roads, automotive and, in general, all kind of applications where plastics go, not just our plastics from ABS, but other plastics, right? Unified packaging, packages still kind of holding up a bit. But most of the segments of plastics and other metals and all have got affected. My guess is any good as yours, at least you're talking about 30% to 50% demand erosion, yes, in the month of May. Let's keep our fingers crossed for June, and we see how things shape up. So that's all I can comment on this right now. As far as your Slide #8 or 9 is concerned, we do not sell any of ABS plant in Addyston, Ohio. Those sales are predominantly done in Americas only, yes? So that does not affect us at all.

Okay. And one more question pertaining to -- if I see your total income in March 2020, it was roughly INR 360 crores, and of which the cost of material was INR 275 crores. So your gross margin was pretty low during that time. So what led to this sudden upsurge in the gross margin, on the gross margin front? If you can help me explain that.

Yes. So basically, the gross margin is nothing but the difference between the cost of your raw material and the selling price of your finished goods, right? The key raw material for both for polystyrene and styrene and one of the key materials in ABS is styrene, yes. So if you look at the prices of styrene, they have not increased to that extent as much as the pricing of ABS or polystyrene have increased, yes. And that's not just in India, that has happened across Asia Pacific and globally as well. Now -- so that's the main reason for expansion in the margins for the -- both of our products.

But these sort of ABS prices are expected to sustain in the coming quarters as well? Do you...

Difficult -- like I answered earlier, it's very difficult for us to speculate and predict. ABS prices are at all-time highs, yes. Nothing stays at high forever yes. How long it will last? It's something that we cannot speculate.

Next question is from the line of Rajesh, an individual investor.

Congratulations on fantastic outcome. Am I audible?

Yes, Rajesh.

What was the capacity utilization in the last quarter? And at what capacity are you working now?

So we had a pretty -- we won't disclose the number, but we were at a high utilization rates last quarter. And needless to say, in the month of May, because of COVID, our utilization rate have reduced, yes.

What is the -- how much is the effective...

Sorry?

And secondly -- Hello? Am I audible?

I didn't catch your question. How much is what?

What is the capacity utilization we have up to -- still working?

Our factories are partially working. So the utilization is of course lower in line with the market demand, yes.

The next question is from the line of Ankur Jain, an individual investor.

I see -- I mean we are having around 20% gross margin generally on an average for last few years. And this time, there is a -- I mean, last 2 quarters, we have quite a big jump in the gross margin. So just wanted to understand, to make the margin a little steady, can we -- do we have any hedging policy? That is my first query. And second query is, I mean, if the cost is so less right now and when we see that there is a -- I mean, in future, again, the pricing may change. So should we not buy a lot of inventory and keep with us too, which may help in the coming quarters as well?

Okay. Let me answer the first question. Basically, the margins are something which are very difficult for us to predict, right? As you said that the gross margins over the last few years is 20%, now they are much higher, right? They are driven by what's happening with all the commodities moving, correct? ABS, polystyrene, styrene, all these are globally traded commodity products as well, yes, along with other polymers, right? Like polypropylene, LDPE, benzine et cetera, et cetera. So very difficult for us to say because there are so many factors which affect these margins, yes. So that's something that we really cannot comment as to how long it's going to last and all. And what was your second question?

My second question was, I mean, considering as of now -- I mean, the inventory cost is very less. So should we not add the inventory which may help in near quarter?

We generally do not try to do trading of raw materials and take these speculative bets, yes. We try to -- and with a very difficult volatile market in this field, you may get right once or twice as a trader, but, you know, every time it may not work, yes. So we trying to balance our inventories to the ideally levels as to what's needed based on the production numbers and forecast from our customers. And we generally will not try to do all this speculate buying. We have all seen what's happened in oil, right? Oil went into negative also. It was a year back, right? So that's $20 or $5 or $2, people were saying that oil is at a great price to buy but went negative, yes. So it's very difficult for us to predict these things. So let's just be steady and follow the right technical in terms of running the business.

Okay. So just to add here, I mean, do we -- I mean, so how much percentage of overall revenue would be of fixed -- I mean, based on the contract, the periodical contract maybe where rates will be fixed for 6 months or 1 year or something like that? Or there it will be for each [ PO ] there a different rate?

We do not disclose our -- all these particularly, but we have a good balance there, yes. That's all I can say.

The next question is from the line of Agam Shah from Raj Trading.

Congrats on the good set of numbers. Sir, I have 2 questions. So on the polystyrene business part, so your counter competitor, let's say, [indiscernible] as you know, in India, has gone out of competition. So how is this scenario playing out there? Is the plant coming up again or?

So on LG side, to our best understanding, is they have not restarted the plant yet. We do not know if they will be restarting the plant this year. We do not know that. So with them not being there, approval utilization rates and our competitor utilization rates have improved, yes. And we did benefit from that.

And any such thing is happening on the ABS side or any plants globally getting shut down or maybe taking time to come up or anything on that side?

I mean, these distributions plant shutdowns and startups keep happening, right? Across the globe, yes, at any given point of time, yes. So I mean, that's a continuous process, right? And in China itself has more than 50 suppliers of ABS, yes. So some of them do shut down, some of them don't. So that really doesn't affect, yes. It's only when very, very large amount of capacity which comes on stream is then effects the long run prices, yes. And that's something that we continue to monitor.

But do you see the price trend stabling here for next 3 to 6 months? Or...

It's very difficult for us to speculate on going forward numbers.

The next question is from the line of Bhavesh Patel from Patel Investments.

First of all, Mr. Sanjiv and your entire leadership team, I do want to congratulate on a great set of numbers. And I do hope and pray you and your family are safe in this crazy time. Coming to the question, with the duopoly play in India for -- especially ABS, are there any plans for increasing the scale of ABS because the demand is going to go up, we are still importing part of the capacity. So are we looking at capacity expansion? And if yes, any strategic direction on that side, please?

Yes. Thank you, Bhavesh, for your kind comments. And hope that you and family are also keeping safe and doing well. On the expansion side, as you know, India is a net importer of ABS, so the demand is there. As the economics of ABS and the margins improve, right? And the companies become more profitable, yes, us or anyone else will surely think of investments in the future year. In our case, as and when we have any such plans, we will communicate it to the shareholders.

Sure, sure. And again, I do understand business situations do vary and you and your leadership team does adapt to it. But knowing that we are like literally 40% net importer of the overall India capacity, maybe it makes sense and especially looking at the growth, both in demand as well as economy having gone through a very bad phase, I mean, I think that would be interesting to know. But once again, I mean, best wishes and congratulations again.

Next question is from the line of Abhishek Jain, an individual investor.

First of all, congratulations on the great set of numbers. My question was, as I understand that the key raw material for us is styrene and the prominent product is ABS. So how sensitive is the spread to the movement in crude oil prices in general? That is whether margins have a positive or negative correlation with the movement in crude oil prices?

So typically, styrene, you would expect because, again, everything is tied with crude oil and benzene, right? Those prices go up, styrene will go up. And logically, when styrene goes up -- ABS goes up when styrene goes up, yes. so normally that does happens, yes. And, so there is a positive correlation between all these raw materials.

So assuming, say, a 10% increase or decrease in the crude oil prices, how will margin gets impact in account of that?

So that is the point. The question is how lean is the correlation, right? Between the 2. Is it one, yes, that means not necessarily be true, yes. So the [ profit position ] is there, generally they would go up together. But will they go up at the same extent? It's something which is difficult for anyone to predict because there are lots of factors which determine this. It depends on all that specific raw material also how much capacities are there. What's happening in the supply demand in one region versus the other, and one country versus the other. Are there some import duty which countries have laid on each other. U.S., China, something that happened. So I mean it's a very dynamic situation. So it's not that straightforward, right? You can't just [ block 5 ] raw materials and then your license fees just goes up, margins will expand by so much, not that simple, but yes, we do monitor what is happening with the raw material and do our pricing accordingly, yes.

So we are seeing that we have a situation, if the price goes up, our end product pricing would also go up. But at the same time, our cost will also go up. On the other hand, if the price goes down, we'll have a decreased cost of production, but we might also have inventory losses. Right?

Yes. Yes, that very well happen, right? We have dealt this kind of situation earlier because like I said, directionally, you're right, most of the raw material will go up and down together direction, but it's not that straightforward. So this situation do arise, will survive, yes.

Yes. So what is good actually is bad. So just one thing I ask the company, what do you think is the ideal level of crude prices, which should be -- which would all go well for the company from a margins perspective?

We do not have any such crude specific price in mind, yes. But generally, I think crude -- anything for the global economy in general, my understanding, I'm not an expert here, will be $50 to $70 is a good number, right? Hoping to stay for -- [ crude ] companies will also make money because [indiscernible] can move, yes.

The next question is from the line of Anindita Das from SKS Capital.

This is Amitabh Sonthalia actually. So just some -- my questions have been answered. I wanted to clarify, from your presentation, you made a -- there's outlook line in the outlooks, which I wanted to just understand. Just to quote the line, it says we expect the ABS and styrenics market to get long sometime this year. What does that mean? I'm sorry, I couldn't quite understand.

Yes. Long is -- that the demand will become lower. And as of now short means the supply situation is very tight, yes. Long means that the supply situation becomes much more open, yes, the demand supply, yes.

Okay. So basically, right now, it's just -- there's a supply squeeze due to supply chain disruptions globally, correct?

That's part of it. And it's also -- it's been more of a sellers market rather than a buyers market, right, yes.

So it will -- you -- by this, you mean it will normalize sometime this year, right? Basically.

We expect it, because these kind of margins, how long they last, it's very difficult to predict, yes. So we expect that it should get normalized sometime, yes.

Yes, yes. So that's what I was just trying to understand very quickly. What are the factors that have led to such a squeeze and global factors or local factors that has led to this mismatch -- demand-supply mismatch in the short run, which has benefited us in such strong margins?

So China has played a very big role here, right? China plays a very big role in what happened in the global economy and with materials and all. And the demand, which kind of got ramped up in China from March, April last year, right? Because China, COVID recovery was faster, right? They're [ come into ] COVID earlier, about 3 to 6 months earlier than some of the other countries, and they recovered faster, right? So I think that demand growth has really helped with the raw material prices, yes, because the demand supply balance was in favor of the seller, yes. So we hope that the demand in China continues to grow, but nothing keeps growing forever, right? So China may have been slowed down a bit. Still, China will still grow, still economy which should grow at 4% to 5%, right? Then for the economy of that size, it's amazing numbers, yes. But may not be a 10%, 12% kind of a number, which China had a very steep recovery, yes. So that is a very, very big factor which affects the prices of all the raw materials.

Right. So basically, but this is a standard, I guess, commentary from -- coming from lot of companies, and that's what you said is absolutely true that China. But what I'm still -- what is -- I mean, your sense from dealing with this -- and China macro data, as we know, is all in enigma. There's very little macro information available on China or like you can for country type information. It's just through these price imbalances and demand side commentary that we get to know that China has been so strong last 1 year. So what's -- I mean, what is the driving factor in China according to you which makes it so strong and sustainable In terms of -- we're not talking about the COVID recovery here. We're talking about sort of almost like a boom phase, as if China is growing 10% a year plus for the next couple of years, and that's the kind of almost the message that we're getting from whether it's metals, whether it's your products. So what's your sense? I mean, what's going on here? And what can...

I think traditionally, China has relied a lot on the exports, right? In Europe and Americas and other with manufacturing facility for the whole world. And over the last few years, the government has also -- again, I'm not an expert on China, but what I assume is where they've also tried to balance their domestic consumption versus just being export-oriented country, yes? So that has also -- and government has seen lots of incentives. In fact, even the COVID, as you know, the government regulating incentives for people up to 30% to go and buy new appliances, yes. So it's a different form of government than what we have in India, yes? And the kind of what things we can do in terms to spur the company different than some of the other countries. So the government is very conscious about how they want to motivate people to go and spend, yes. So I think that balance we are trying to strike between -- I think especially also after the U.S. China trade was war, yes. Over the last 1 year, they become more sensitive to focusing more on domestic economy. So I'm not sure what percentage value pursuit for them between the board, but that's a change which we have observed, yes, over the last decade versus what's happening in the recent few years, yes.

Right. So Just quickly to wrap up. You had some delisting plans a year or 2 back, which was then later withdrawn. So could you just throw some light on what is the rationale behind that? And about trying for delisting and then, of course, then rejecting the bids. And then -- is it something that can be revived in the future? What are some thoughts on that, if you're able to share some?

Yes. I would Abhijaat, our company secretary answer this question. Abhijaat, do you want to comment on this?

Yes, sure. So I think, see, the delisting was promoter's decision at that point of time to attempt for delisting and the prices -- the price at which the bid game was not feasible for them. But we cannot comment on their ability to -- or willingness to go for another offer again. So we'll not be able to comment on that. We are not aware at least.

Yes. Just quickly, just quick one on any plans to return to supernormal cash that you generate to investors in form of a special dividend or buyback?

As and when they come out those funds, we will keep you informed. We did declare a dividend, higher dividend than last few years. If we have further plans, you will hear it from us, yes.

The next question is from the line of Shivan Sarvaiya from JHP Securities.

I had a couple of questions. So one is the -- if you could just help me with the ABS prices in the quarter?

Well, these are all public domain information, right? You can check the pricing of ABS in the last 3 months. There will be a deal around $2,300, if I'm correct.

Okay. Okay. And these are at the current level, also at the same prices?

I mean, at least last month, the prices were around the current level, yes.

Okay. Okay. And sir, is there a situation because of the current lockdown situation in India where our -- the realizations in India are much lower than what has been quoted globally. Is there a situation of that sorts?

Not really. India follows more or less the global prices. So it's not isolated from what happens with the pricing in other region.

Okay. Okay. And sir, is there any raw material supply chain issues that we are seeing in from the styrene point of view, any supply chain issues?

Not this quarter. We did see some disruption in the supply chain last quarter. I'm not sure when was the Suez canal cleared, right? That did happen about a month back or so, yes. It got sorted out. So no, we don't expect any major supply chain issues.

Okay, okay. And sir, there has been a reduction in the COVID cases in the country. And what is your qualitative perspective would do sir? What is your sense on how the revival is going to be once things start getting normalized? Just a qualitative thought process, just a color would be -- would suffice.

My personal take is I do not expect this steep recovery which we saw last time, because this time around, people are trying to conserve cash. A lot of people have suffered because of the health care -- lack of health care infrastructure. And it would be really, you know, left on themselves to defend themselves and their family. So I think people will confirm cash and would be more prudent this time around.

Okay, okay. And sir, any inventory gains that we had during this quarter?

Not -- Sanjeev, I'll let you take this one, but I don't think so. Sanjeev?

Yes. Sorry, yes, we have gained some inventory gain this quarter. It's maybe around INR 15 crores, INR 16 crores.

The next question is from the line of Anuj Jain from Globe Capital.

Congratulations on the superb set of numbers. And all of my questions have already been answered. All the best.

The next question is from the line of Aman Vij from [ Astute ] Investment.

My first question is on the imports. And first on the polystyrene side. So could you talk about the reasons why the import has not increased in India? It used to be 10%, as you had explained in earlier call. But given the opportunity, given LG is not in India, there is no antidumping duty. So why hasn't import increase?

The imports -- the last quarter, the imports have increased in India. In the last quarter, specifically. Okay. Both for ABS and for polystyrene.

I didn't know that. And last quarter, you mean March quarter or December quarter?

Jan, February, March.

Okay. It has increased. So what will be the current ratio sir, around polystyrene and ABS?

In general, you have around 40%. 40% sometimes becomes 38%, sometime from 45% import, right? So it's in and around 40% around the imports side, right? So when I say increase, 2 percentage increase is there, right? And for polystyrene, typically, the imports are relatively lower. It's in the range of 15% or so.

Polystyrene is 15 now?

One five...

Okay. It used to be 10, right?

Yes. So it's increased over the last 1 year. Yes.

Sure, sir. And on ABS import side, sir, you had explained that the import increases if say the China demand is not there, which, thankfully, last year at least, the demand seems to be back. So any rough numbers you have of what was China's demand pre-COVID, what it is now? Just to understand how much is the growth?

I mean it will be very difficult for me to answer this question. I'm not an expert in China, but we do see that whenever China slowdown, the Korean [indiscernible] would ship material to India, yes. And we have seen that. So we are seeing a bit more of that now versus 6 months back. So that's all I can comment.

Sure, sir. And the final question on -- and this is also you have talked about, the spread part. When the spreads were low for us, you used to talk about $400 is a good number for the industry, the $400 kind of spread. So sir, now obviously, the spreads are higher, but do you think maybe the spread will settle at, say, $500, $600 versus coming back all the way down to $200, $300?

We cannot predict how and how fast the spend is going to come down. All we can do is try to take our action, right, to keep the spend as high as possible, right? The pricing in the market by -- there is a product made specially to the right customer, by commanding the right price and the value for our materials, et cetera, et cetera, yes. But your spreads historically have kind of increased to these kind of levels which are pretty high levels and to relatively lower level in the past that eventually would happen, so difficult for us to comment on it. But we continue to work on trying to maintain healthier margins by doing product mix up and you're trying to hold the prices, yes.

I'm just trying to understand, if the new norm, whenever it comes, obviously, these kind of margins, long term might not sustain. But is the new norm will be above the, say, last 10 years average spread. What is your view on that?

So like I said, how long that lasts is something which is difficult for us to speculate, yes. So any kind of high spreads and whether it's in our materials or whether it is in any other product, it's difficult to predict. And these are cyclical businesses. And then to just see how it then shape in the coming quarter.

Thank you. The next question is from the line of Nitin Kapur, an individual investor.

Sir, most of my questions have been answered. Just wanted to compare your December and March quarters. There is a sales growth of around 30% in this quarter. How much is due to volume rise, and how much is due to the rise in prices, #1. And #2, what's the approximate ABS prices internationally and the prices in India, how do we compare with the landed price?

So to answer your first question, we generally do not disclose our volume numbers, yes. And -- but all I can say because of high prices, revenue is the key driver, yes, #1. And #2, the prices in India are pretty much aligned with what happens with the ABS prices globally, and they are around $2200, $2400.

And this is the maximum they have [ stretched ] in the last couple of years?

That would be correct.

Thank you. The next question is from the line of Paresh Shah from Noble Investments.

Congratulations for fantastic set of numbers. I have one question about asset turnover. I can see from the balance sheet, in March '19, we had 6 assets worth INR 200 crores, which is now almost doubled. And when we had assets worth INR 200 crores, we were doing turnover of INR 2,000 crores. So a set turnover I could see is 10x versus current price hike, which is INR 16,000 -- INR 1,600 crores is the turnover. If I remove or make it at least equal, this is March '19, asset turnover is hardly 4x. So what was the reason of that 100% increase in fixed assets? That is the first question. And secondly, by when do you feel that you'll be able to go to the asset turnover of 10x, which used to be the past earlier trend? And as you rightly said that we are still importer for our products in India. Many people are still importing, but why our asset turnover is not going up?

Sanjeev, you want to take this one?

Yes. So asset turnover what you are looking at it. So if you remember, we have announced our capacity expansion in our compounding [indiscernible] which we came up approximately with the INR 120 crore investment in [ multi-compounding ] last year, around December '19. So that's primarily related to that. And whatever the turnover is increasing, you know the chemical prices, as you are listening all the calls earlier and all the participants earlier, in the -- our industry, the prices of our finished product is linked with the market delta margin or market [indiscernible] prices. So it will go up and down, and that changes our asset turnover ratio.

But sir, my question is, I think, still not answered. March 21, right now, we have highest price. March '19, prices were less, but still turnover was more. So that means output and production was more, our sales in quantity terms was more. Why as on today, it is half of what it was 2 years back? So what are your plans to increase that -- basically what I'm trying to ask is, what action you are taking to go back to the 10x asset turnover ratio?

So as you know, the whole world and India was under the COVID situation last year 2020, yes. So in first quarter was, obviously, the sales, et cetera, was down. You have seen our results as well. So volume -- overall volume is definitely has gone down. So we do not disclose what the volume number as Mr. Vasudeva has already mentioned. So for future, how -- what we are doing, strategically, we are -- as Mr. Vasudeva has already explained. So we are working in the right direction to product mix and price mix, et cetera. We are looking at giving the value to the -- our customer [indiscernible]. And do you want to me explain about the future growth from that perspective that we are working?

So is it safe to assume that if normalization happens after COVID, again, we will be going to affect turnover of 10x, which was in past because COVID has impacted this? Is it safe to assume, 10x?

So it depends on how the future volume growth can happen and how the prices will move on. So our revenue will change accordingly. So in our industry, the revenue and volume is a bit different. But before reduction...

Okay, because I thought it would be easy because as you said that our country is still net importer for our products. And I'm surprised that we have not yet reached 10x asset turnover. Anyway let's see how moving forward, yes.

The next question is from the line of Rajesh, an individual investor.

Sir, what is the CapEx requirement? Are you thinking of any CapEx this year?

Well, we keep doing our regular CapEx maintenance and all.

What is the figure which we intend to do it this year?

We don't disclose those numbers, right? Exact CapEx numbers, not in these calls.

And what is our debt? Do we disclose that? What is our net debt as of now?

We are debt-free as of now.

The next question is from the line of Sufiyan Lakdawala from Lalkar Securities. [Operator Instructions]

Hello? Now can you hear me? Hello?

Yes, it's better but -- still not very clear but we can hear you?

How was the demand scenario in the Q4 and now how is this Q1 for the client side. How much the demand is expected according following second wave, any guess...

Sorry, Mr. Lakdawala, I really cannot hear you. Asking a question something to with demand and appliances in this quarter or something like that?

Hello?

Yes.

Now, can you hear me?

Yes, this is much better.

Yes. So I just wanted to know how was the demand scenario from client base in Q4 and now in Q1 after the second wave, how much it has impacted, drop in the demand side?

As I mentioned earlier, the demand in this quarter is affected in line with what you read in the papers with the Indian economy and the demand for automotive, appliances and in general, right? On all kind of consumer good equipments, yes, and packaging materials. So obviously, demand is much lower than earlier in the range of 30% to 50%.

30% to 50%, you say?

Again, it depends, right? Depending on what you read there, yes. If you look at the automotive data, the automotive is down 30%, depending on what the [indiscernible] has been published. When you lead in appliances, some of the -- kind of closed their factories as of now, yes. Generally, we expect much lower demand than last quarter.

So then you think then there can be a pent-up demand in Q2?

The demand should come back, maybe not as fast as what it did last year, but it should come back.

The next question is from the line of Dipen Sheth from Crystal Investment.

Actually, I had a couple of questions, which kind of have been asked earlier, but I think it's worth raising the issues again. One is that you are sitting on something like INR 200 crores net cash as we speak for what has clearly been a very, very fruitful after a very fruitful year. And whether you're going to pay dividends, whether you going to sit on this cash, whether you going to reinvest it in the business, this is a very fundamental capital allocation decision. And while you may not have made up your mind by now, I can only urge you to make up your minds as soon as possible. And if there is any sense of what you're going to do with this money, it will matter a lot by the minority shareholders. So is there any sense -- I mean, as a management, what would you want to do Mr. Vasudeva? I understand that there is a 75% shareholder overseas. But as CEO, what's your view on this?

Well, like you said, we've not made up our mind. So very difficult for us to comment on it. And I cannot speak the mind of the 75% shareholders, right? So I'm not the right person to answer that question at this moment, yes.

True. But I'm asking you for your opinion. Okay, so you can hold it back from now. But I can tell you that the pressure to take a decision is only going to increase here on. It looks like a solid business at a solid point of time. The temptation to reinvest is high, but we can't understand and figure out the cyclicality here. Whether this year's profits have been very, very fortuitous or whether this -- even half of these profits, if they are sustainable, then we are on to something really good. That's the sense. And that's the only way you can create value. If you reinvest in a business that is set on a different path from where it goes for the last few years. Indeed, that is the case. That's for you to check. Okay. That's the first bit. The second bit is pertaining to the balance sheet observations that I have. And I can see not only close to INR 200 crores of net cash on the balance sheet, but also more than significant bloat up in both current assets and current liabilities. So at a net level, maybe you might tell me it nets out. But how do you explain creditors going up from INR 137 crores to INR 222 crores? That's like INR 85 crores jump in a year for roughly a similar top line, I dare say at a lower volume, okay. Even if I was to go by rupee value, that's not clearly understood. And even on the current asset side, inventories are actually comparable, like INR 268.5 crores and INR 290 crores. But again, receivables have jumped up drastically from INR 172 crores to INR 306 crores. It looks like you're funding your receivables with higher liabilities to creditors. Who are these receivables from and who are the creditors? Who are willing to give you this kind of credit? And how -- what is the underlying business dynamic here, which has led to this change?

So first of all, you are seeing the absolute number of the our receivable which, yes, that definitely is understandable from the financials, yes, but our DSO has not increased. In fact, it has stable, stable for last couple of quarters. So we are not funding anybody from that perspective. Since you have seen the prices are going -- prices has gone up, so probably that has resulted in a larger number from that perspective, but DSO are very much under control. Yes, some -- definitely last year, there was definitely of the -- lockdown impact was there in the March '20, that quarter. So -- but not in this quarter.

So, what about the creditors bit?

Creditors, also. That's what -- again, you are looking for the absolute number, yes, so in line with the fee stock prices going up and down. So the prices of the [ creditors ] will go up and down accordingly. But our BPO is almost similar, in fact is much better, yes, as compared to the last year's same numbers if we look at it, yes. In fact, much, much better than that.

I guess I'd have to look at that. And naturally, with the comparable top line in both FY '20 and FY '21, and prices being much higher right now, volumes have fallen although you don't disclose volumes, right?

Correct. Yes.

And you don't disclose volumes even in your annual report. There's no point in waiting?

Yes. No company or industry in India is -- gives the volume into the annual report as per the [indiscernible] regulation.

Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Abhijaat Sinha for closing comments. Over to you, sir.

Yes. Thanks, everybody, for your interest in the company and attending this earnings call. We know we've -- due to time constraints, we have not been able to probably answer a few questions from the investors who are in the queue, but we look forward to connecting with you during the next earnings call, which will happen probably in August, yes. Thank you, and have a nice day.

Thank you. Ladies and gentlemen, on behalf of INEOS Styrolution India Limited. That concludes this conference. We thank you all for joining us, and you may now disconnect your lines.