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

Ladies and gentlemen, good day, and welcome to the Q2 FY '21 22 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 and CEO; Mr. Sanjeev Madan, Whole Time Director and CFO; Mr. Abhijaat Sinha, Head Legal and Company Secretary; and Ms. Amita Mistry, Litigation and Sectoral 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.

Thank you. To our shareholders, investors and analysts fraternity. We welcome you to this earning call. The company INEOS Styrolution India Limited has declared its results for the half year ended September 30, 2021 on 12th November, 2021. We will brief you about the major highlights of the performance regarding quarterly performance. First, revenue net of GST from operations in current quarter is INR 588.48 crore as compared to INR 394.59 crore in July, September '20 and INR 454.72 crore in previous quarter. Profit before tax in current quarter stands at INR 120.61 crores as compared to INR 55.07 crore in July to September '20, and INR 118.43 crore in previous quarter. Regarding year-to-date performance, revenue net of GST from operations stands at INR 104,321 lakhs in YTD September '21 as compared to INR 51,011 lakhs in YTD September '20. Profit before tax in YTD September '21 stands at INR 23,905 lakhs as compared to profit of INR 2,436 lakhs in YTD September '20. Regarding quarterly segment performance, specialties, profit before tax and other un-allocable expenditures stand at INR 8,961 lakhs in current quarter as compared to INR 8,639 lakhs in the previous quarter. For [ styrene ] profit before tax and other un-expenditure is INR 2,999 lakhs in current quarter as compared to [ INR 3,340 ] lakhs in the previous quarter. The Board of Directors had declared a special interim dividend of INR 192 at the rate of 1,920% as a special interim dividend per equity share of INR 10 each at its meeting held on October 14, 2021. So this is all about the clarification and details about our financials. We can go forward for the queries or any clarifications, which are needed now. Thank you.

[Operator Instructions] The first question is from the line of Nitin Kapoor, an individual investor.

Yes. I'm Nitin Kapoor. I just wanted to know about the margins in this quarter. What I observe is that the margins in this quarter are lower than the margins in the previous quarter, that's the June ending quarter. Can you throw some light on this? And there was a talk of a shortage of one of our raw materials, butadiene, what's the current status regarding the raw materials? And how is the company positioned regarding status of different raw materials?

This is Sanjiv Vasudeva, so I'll take both of your questions. As you rightly put, the margins are relatively lower than the previous quarter. And these are all cyclical businesses in which the margins change every quarter, every month, yes. But we still have a pretty good healthy margin position here. On your second question, butadiene shortage, we do not have any butadiene shortage. There was some [indiscernible] shortage for a short period of time, which was addressed in a week's time. And overall, we do not see major issues on the raw material, right? Butadiene is all locally sourced from local companies in India. Styrene and acrylonitrile comes from outside. But the global supply chain has, kind of, hindered a bit of shipments and all, but we are in a pretty good position as we hold inventories, and we manage our raw materials effectively. So we're not as such effected, and we don't foresee because we make forecast for the coming few months as well. And then we turn over accordingly and work closely with the suppliers.

Just a follow-up question on this only. Last time we talked, the ABS prices internationally were around USD 2,200, USD 2,300. What's the current price of ABS and how are the spreads currently?

The current price of ABS, you can Google it, but it's about the similar level of USD 2,300. And what's your second question?

And how does spread -- considering all this China situation and the different supply shocks and because of which some prices have gone up -- some chemical prices have gone up. How are our spreads currently?

The spreads are still pretty healthy, relatively lower than the previous quarter, as you mentioned, but still healthy.

[Operator Instructions] Next question is from the line of [ Rajiv Sarda ] from [indiscernible].

Congratulations on a nice quarter. I'm audible?

Yes, kind of. Yes. Go ahead.

Yes. So I wanted to know what is the capacity utilization which you're working on? And how do you foresee the future?

Well, we do not disclose our capacity utilization numbers, and the future is good.

So you've seen the prices which you are prevailing should [indiscernible]?

I mean, it's as good as [indiscernible] the oil prices, right? And I think these are commodity markets, right? Commodity markets, it's very difficult to predict the future beyond even a month, right? Beyond even a week for that matter, yes.

Perfect. I'm just asking you for opinion, what do you -- the company foresees?

I foresee, at least for the coming quarter or so, the prices may still hold to a decent number. But at some point of time, they'll drop down, yes.

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

Yes, Nitin Kapoor, again, I don't think many institution investors are interested in us as a company. So I would -- because not many questions coming. So I was just a different question, I would like to ask you, sir, what's the status of stake sale by the promoters? What I've been reading is that they are investing in China, quite big amounts, they are investing in China, this company coming out with the 600,000 metric ton plant in China. But they don't seem very interested in India. This investment in China -- in India have not been very large. And now suddenly, the promoters have decided to reduce their stake. Can you just throw some light on that? Why is it that they are reducing -- trying to reduce their stake in India? And two, what's the status of that? And by how much percent they are planning to reduce the stake?

We have a very simple answer for you. As we do not comment on each shareholder matter, either from promoter or from any [ other investor ]. Thank you.

Okay. The next question is from the line of [ Abhijit Chok ] from LSCW Consultants.

It will be helpful to understand if you could advise on your major capacity expansion programs, if any, they are in the offering?

As and when we make the plans [ forum ] and we'll inform the stock exchange and inform the shareholders as well.

So one should presume that there are none at this point in the offering?

Not anything that we can talk about today.

Okay. I also just wanted to understand, besides our focus on ABS, is the company exploring to look into any other product area?

Global product portfolio, in which we -- and that's the beauty about being a part of INEOS and being a global company. We have multiple products that we can source from the parent company, which we do. But until the time we have substantial volume for some of those products, adding capacity on those may not make sense, right? So in the near future, looks like ABS and polystyrene only, and SAN, of course.

But do you trade in any of those products actually in India? Or do you plan to do that, if not manufacture or...

Yes, we do.

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

Yes. Sir, one more thing. You have given a big dividend. Now what's the status of cash with the company after paying this dividend? And what's the future dividend policy is going to be? Has the company any policy that what percentage of profit they will be giving as dividends? Anything -- any light you can throw on that?

All I can say is the company has made a decision on the dividend, and we also reviewed our cash position. Our cash position is healthy, and we foresee a healthy cash position going forward.

[Operator Instructions] As there are no further questions, I would now like to hand the conference floor over to Mr. Abhijaat Sinha for closing comments.

So thanks, everybody, for showing your interest in the company. And we thank you for participating in the call. We look forward to seeing you and answering your questions in the next investor call, which will be sometime in February 2022. Until then, thank you so much.

On behalf of INEOS Styrolution, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.