The Supreme Industries Limited (SUPREMEIND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Supreme Industries Q4 FY '26 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference call is being recorded. I now hand the conference over to Mr. Aasim Bharde from DAM Capital Advisors Limited. Thank you, and over to you, sir.

Thank you, Farah, and good evening to everybody joining in for Supreme Industries Q4 and FY '26 Post Earnings Call. So we have, as usual, the CGI management of the company, led by Mr. M.P. Taparia, Chairman and Managing Director; Mr. P.C. Somani, CFO; and Mr. Ajay Sabu, VP, Corporate [indiscernible] and Company Secretary. Thank you, and over to Mr. Taparia for his opening comments.

Thank you, Mr. Aasim. I am M.P. Taparia, Chairman and Managing Director of the Supreme Industries Limited. I am with colleague siri, P.C. Somani, CFO, Siri Ajay Sabu [indiscernible], Vice President, Corporate Affair and Company Secretary. Welcome all the participants while participating in the [indiscernible] of the [indiscernible] is in alone [indiscernible] result for quarter and year ended [indiscernible] FY '26. . [indiscernible] results [indiscernible] and the company operating performance results highlights. The company sold [ 753,970 of ] plastic goods [indiscernible] revenue from operation of INR 11,200 crores [indiscernible] against share of 674,500 tonnes and revenue of INR 10,446 crores in the previous year, achieving volume and revenue growth about 12% and 7% respectively. The consolidated operating profit and profit after tax [indiscernible] is INR 1,664 crores and INR 954 crores respectively as compared to INR 1,552 crores and between INR 961 crores in the previous year. This produces an increase of 7% in operating profit, while profit after tax declined marginally by 1% year-on-year. The biggest scenario of all the product segment of the company for India ended March compared to previous year. Plastic Piping System business grew by 14% in volume and [indiscernible] value term. Industry [indiscernible] segment business degrew by 1% in volume and 3% in value term. [indiscernible] segment grew by 5% in volume and 3% in value term. consumer products segment business grew by 4% in volume and degrew by 1% in value term. The total -- the overall turnout of [indiscernible] products increase to INR 4,677 crores as compared to INR 4,060 crores in the previous year, achieving growth of 15%. The company proposed getting [indiscernible] access of INR 1,000 crores through the year, including [indiscernible] New greenfield projects for plastic pricing system [indiscernible] Jammu and Jammu Kashmir and [indiscernible] in Maharastra and a new facility for [indiscernible]. The prepared and [indiscernible] CapEx decrease [indiscernible] and a [indiscernible] manufacturing credibility, expanding capacity, enhancing product offering and advancing sustainability initiative. The plant [indiscernible] to enhance at the company's annual [indiscernible] capacity by approximately [indiscernible] 10,000 metric tons, taking the total [indiscernible] production capacity to around 1.35 million tonnes per annum. The finance [indiscernible] 2 while challenging it event for the company, marked by volatility [indiscernible] subdued [indiscernible] spending and heightened global geopolitical uncertainties. [indiscernible] including footprint is price point during the year, significantly impacted channel guide by extended margin conditions, effective demand, particularly in the [indiscernible] segment. [indiscernible] engaged. -- come to liver LD volume growth across its driving portfolio underpinned by a strong [indiscernible] market orientation right put range robust distribution network and disciplined execution. The product piping system uses regained a [indiscernible] by continuing expansion of [indiscernible] a new system, a capacity augmentation [indiscernible] location. The company further expanded its portfolio by introducing new [indiscernible] and system getting to diverse applications. [Audio Gap] [indiscernible] market company expect to sell the capacity by next year, we should also inhibited to expand capacity on the same site. The company [indiscernible] business delivered favored encouraging performance with targeted product innovation, customer diversification and focus on new added offering. Industry segment, however, continued to witness demand load from OEM customers. export performance weakness moderation due to newer portal development at [indiscernible] disruption. However, the company remains optimistic and making focused efforts to push export [indiscernible] product [indiscernible] the emerging opportunity with many [indiscernible] agreement already sent by India and [indiscernible] which would deliver continue to [indiscernible] export to manufacture goods. Looking ahead, the [indiscernible] remains well positioned for sustained growth, driven by domestic [indiscernible], instructor development and policy support. With strong balance sheet Godet, expanding manufacturing base, [indiscernible] and diversified business model, the company confident of driving improved performance in the coming years and creating long-term value for our shareholders. We see [indiscernible] the overall synergy for the quarter and year, month ended [indiscernible]. Thank you for your questions. Now I and my colleagues, [indiscernible] are available to deploy a very query by all of you. Thank you very much.

[Operator Instructions] The first question is from the line of Rahul Agarwal from Incred Assets.

First question is on the inventory gain, which we would have had in March because of higher PVC pricing. Could you give the number for the fourth quarter or for the full year? Whichever you have.

On full year, they may be [indiscernible] even to [indiscernible] earlier quarter [indiscernible] gross.

Yes. Sir, I am aware of that.

No, we don't see any inventory gain for full year. But in the fourth quarter, they may even [indiscernible] net to net, maybe around INR 70 crores to INR 80 crores.

Okay, sir. Got that. And sir, second and last question was on CapEx. You have dated in the press release about the CapEx, but any plans on the packaging side where you think you would expect capacity? .

Packaging side, we are [indiscernible] going on [indiscernible] the land comes in our position, then we announce looking efficiently to make packaging product -- we [indiscernible] key area. Mostly month for export market. .

Sir, how much would be the CapEx go? What kind of [indiscernible] we should...

Let the rent come [indiscernible] then we will talk, please.

And last question, sir, what is the growth for CPVC pipes and fittings?

Last year, the growth around 28%.

The next question is from the line of Sharvan Shah from Dolat Capital.

Sir, now how are we looking at the overall volume in piping volume for FY '27?

Piping [indiscernible] 15% to 17%.

15% to 17% in piping, and overall?

Overall around 12%.

12 to 13%.

12% to 13%.

12%, 13%. And for margin, sir, how now we look at the margins?

Margin [indiscernible] between 14% to 14.5%.

14.5%. Okay.

[indiscernible] 14.5%.

14.5%, sir?

14% to 14.5%.

Okay. 14% to 14.5%. Got it. Sir, how -- given the PVC prices so much volatility that we have seen INR 47, 48 [indiscernible] in the January to March [indiscernible] down. So how one can look at, do we still see the volatility to continue? Or now it seems to be stabilizing. And now in the last 10, 15 days, how are we seeing the channel inventory or the demand because such a volatility is there, how it is impacting the demand? .

[indiscernible] commodity product remain volatile [indiscernible] situation. [indiscernible] typically too much [indiscernible] price [indiscernible] can't demonstrate throughout the year [indiscernible] meant [indiscernible] . And now the [indiscernible] price come down right lot, we shipped 12 to [indiscernible] the price coming down by [indiscernible], nearly 30% price went down, but [indiscernible] in the month of March price went up by 32%. So the price increased we corrected in the month of April. Now the inventory also the [indiscernible] can level up mostly clear. So we do not anticipate now any [indiscernible] because [indiscernible] getting weaker, [indiscernible] will be around [indiscernible]we can -- we have to import dependent. So we do not see any [indiscernible] erosion now in [indiscernible]

Got it, sir. And lastly, sir, this INR 110,000 capacity that we are adding, out of that, how much will be in the piping segment? And are this entire INR 110,000 will be added by FY '27?

[indiscernible] FY '27, for sure. Under [indiscernible] will be entitle [indiscernible] only.

Okay. The entire would be in the piping you are saying? .

Under [indiscernible] will be mostly in material lending system.

Okay. Got it. And then lastly, in terms of the -- for this one particular specifically, do we see any inventory gain or loss?

[indiscernible] they can't [indiscernible]

I understand. But because the previous --

Find again in the [indiscernible] inventory gain.

Got it. Got it sir.Thank you and all the best sir.

Our next question is from the line of Keshav Lahoti from HDFC Securities.

Hello. Thank you for the opportunity. Sir my first question is can we bifurcate in your view the Q4 volume growth, we believe channel inventory has improved in Q4. So possibly what would be the growth because of end demand and because of channel inventory?

[indiscernible] is not visible to just quantify [indiscernible] it. They are more than INR 50,000. We don't [indiscernible], not worth [indiscernible].

Sir, can you give a sense on how channel inventory has moved in Q4 quarter month-wise? And lastly, how is the channel inventory after now?

No idea [indiscernible]. No idea [indiscernible]

The next question is from the line of Praveen Sahay of [indiscernible] capital.

My first question is related to the demand, especially for the Agri. As we had seen a lot of fluctuation in the previous [indiscernible] prices. And we also understand the Q4 and Q1 where the every demand comes in. So do you see any impact on the agri demand, especially because of the previous [indiscernible] price, fluctuation in the Q4?

No. [indiscernible] Q1. Q4 demand in the month of March, but now Q1 -- now we are taking Q1 only, now demand [indiscernible] full force, there's no issue. Big demand now coming from [indiscernible] segment.

So with the price correction, demand has picked up in the agri?

Prices come down very low. And agri sector don't keep inventory [indiscernible] normally, they don't keep. As of now, prices are quite low so demand has come very [indiscernible].

Okay. And also with this fluctuation in the plate prices, have you seen any impact on the plumbing, especially some delay from the builder side or project side of the business in Q4?

You can't compare building without plumbing.

Okay. One clarification on the...

[indiscernible] The structure [indiscernible] there is no demand [indiscernible].

Okay. Okay, sir. And one clarification on your 38% of Y-o-Y growth in the CPVC, is that of a volume or value?

[indiscernible] value. We don't know.

This is a volume growth in the CPVC. .

Yes. For the full year.

For the full year. And can you give any addition, how much is that contribute to our total piping business?

No idea.

[Operator Instructions] The next question is from the line of Sneha from Nuvama.

[indiscernible] Just a couple of questions from me. What would have been the industry growth in FY '26? So any number there or maybe even Q4 would be helpful.

[indiscernible]

Yes, sir.

And we are told by related provisions, they [indiscernible] minus 9%.

Minus 9% of FY '26 growth?

FY '26 [indiscernible] volume degrowth by 9% in plastic piping system in the country.

[indiscernible] How are things looking up from your thing from polymer suppliers or you all say that the industry is likely to grow in FY '27. Any update that you've seen in [indiscernible] results.

No, you're right. I'm not hear your question. Not [indiscernible] what you asked.

So what's the kind of growth at an industry level that we're expecting in FY '27? And any updates that you seen [indiscernible] scheme because there were very recently some allocations made?

Industry growth, yes, you can ask, [indiscernible] they told [indiscernible] 8% growth this year.

Anything on [indiscernible] sir, recently the were allocations?Have we seen any [indiscernible] starting to replace any fund releases?

No. No. As of now, we don't see any update on that. You see this [indiscernible] depends upon the state and central government corporation. So [indiscernible]

[indiscernible] depend on the [indiscernible] supporting to continue down. So unless [indiscernible]. So [indiscernible] we are not sure. Up till now that never happen to the [indiscernible] of the government to [indiscernible] to central government. Last 2 years also what your budget they announced in February -- 1 February, they could spent only 1/3 amount. So we are not sure this year also.

The next question is from the line of Sonali from Jefferies.

Congratulations on a good set of numbers. So my question is about the Middle East impact on the polymers. You did mention in your press release that the impact on polytheliene products is much higher as compared to PVC. But just wanted to understand the broader dynamics of demand supply globally as to what, in your view, can be impacted more? And what impact can trickle down to Supreme's product or supply because of that?

No, no, [indiscernible] all the polymers. They are not only making polymer, they are also supplying [indiscernible] for the polymer to the brand [indiscernible] Asia, Southeast Asia, that posture effected. So we want to get to the [indiscernible] capacity worldwide bring way.

Sir, if that is the case in your best understanding why are the PVC prices going down, right? Is it because that the government of India revoked the import duty for a period of 3 months? Or is it because globally, the supply of PVC has increased over the past 1 month.

[indiscernible] the volume of production.

That's right. Sir, I'm asking of PVC resin price.

The point is previously [indiscernible] expected huge volume is coming from China. And China production is not best on crude [Operator Instructions], given such a best on gold. So gold to PVC China is a very large [indiscernible] defect by any gulf disruption. So China big player in India. Now they become bigger players.

So because of debt, do you see defect in India?

There are really big supply from China.

So you foresee the prices of PVC to go down further, like we have seen in the past 2 weeks. Is that understanding?

[indiscernible] don't go up very much. [indiscernible] go up, but we did not go up the way the [indiscernible] gone up.

The next question is from the line of Tajas Pradhan from Citigroup. .

So just on the notes to accounts, the note #6, you have mentioned the change in labor hold provisioning I noticed that last quarter, it was mentioned that INR 15.38 crores is the provisioning. And in this quarter, it is mentioned as INR 14.4 crores. So I just wanted to clarify if this is in addition to the INR 15.38 crores that was provided in the third quarter? Or is there any sort of revaluation of the provision and the net full year impact is now INR 14.4 crores.

Correct. Is the net full year impact. Earlier in the Q3, we've estimated based on our working, but based on the actual valuation report, which we have made now March '26. It is a full year impact. So 15.3% reduced to 14.4%.

Okay. Understood. And on -- secondly, on the industry, I mean, would you be able to -- like for Supreme Industries, would you be able to sort of take up the volume range that we saw in this quarter between Jan and Fairbank, how the trends were in March? And if you can maybe extend that to April as well between these 3 periods how were the trends for both us and the industry. .

We have told the annual good expectation. Already told you.

[indiscernible] we don't declare or we don't discuss. [indiscernible] quarter-on-quarter, we always give the data. In April, yes...

We already admit that. We go 15% to 17% type of business for the current year and [indiscernible]

We wanted April, which is not [indiscernible] .

Expectations are over now.

Yes, any, maybe not give month-to-month figure of.

Sure. Sir, any qualitative sense would have also been great, but I mean, depending on what you want to dispose. Yes.

As you know, the year has begun with still the geopolitical conflict continued. So really, you can't think of it better things today. But yes, will let us hope for the better situation to come. .

The next question is from the line of Bhavin Rupani from Investec.

So first question is related to some PVC. So what is our average procurement cost of PVC, which is standing as inventory as on 31st March?

[indiscernible] E&D requirement.

Cost of the inventory, what is you are carrying into go.

See, these are the classified information. We don't really disclose those kind of things.

All right. Sir, in terms of days, what would be the number of days of PVC inventory doing [indiscernible] 31 March.

We must keep a plant adequate [indiscernible] plant will go running. We [indiscernible] import both to a local and not ready trade, slightly more than local. [indiscernible] also. But import, we need to see the pipeline. We don't take improvement decision. So the plant should not be short of [indiscernible] not [indiscernible] available. The India imports 68% requirement, 32% only supply locally. So when doubled the requirement [indiscernible] China, you to keep inventory in plant or warehouse [indiscernible] we are [indiscernible] supply. So we never sharing huge supply to our customers. So we won't tell [indiscernible].

Sir, just second question on [indiscernible] what would be our volumes from [indiscernible] during the quarter? .

[indiscernible] capacity 70,000 tonnes, and we [indiscernible] capacity. So all will get around 48,000 tonnes, 49,000 tonnes biggest volume this year.

In [indiscernible] plants are running normally from February onwards. See initial [indiscernible] foremost, it took time to revamp and refurbish everything. [indiscernible], there are number parts.

Sir, what is the contribution in terms of volumes...

Return to the queue? Pavan, could you return to the queue, please?

This is just a follow-up, just a follow-up.

So about 4,000 a month from February, March, if you look at it. So for the quarter, it could be on 10,000 tonnes.

The next question is from the line of Girish Choudhary from Avendus [indiscernible].

Firstly, if you could give us some insights on the competitive dynamics, especially after the war, where we have seen significant volatility in resin prices. accelerated market share gains? And then now that the resin prices have reversed, are these small and manufacturers coming back strongly into the market.

[indiscernible] running a plant. [indiscernible] A big market.

Okay. In terms of the raw material availability challenges do you hear anything about the small manufacturers facing some issues and...

We are not aware -- we have no [indiscernible]. So we are not in any way not getting [indiscernible] [indiscernible] is adequately available.

Okay. So my second question is on the Windows business. So if you could give us some sense on what kind of revenues we can expect in the next 1 year and the margins as well.

Window. And [indiscernible] key -- how much you can share? [indiscernible] we achieve full capacity utilization, it should be about INR 200 crores, INR 250 crores this annual revenue. .

Around INR 250 crore annual revenue will get. We have put a smart capacity. So we may get INR 200 crores, INR 250 crores annually when we start [indiscernible] platform.

Okay. And can we assume similar margins for this business as well?

Margin would be better. It's a customized window.

Profitable [indiscernible]. [indiscernible] was at INR 200 crores in the business. So margin, we [indiscernible] maintained to be [indiscernible] on the [indiscernible] effect.

Our next question is from the line of Durgesh Shukla from InCred Capital. .

Actually, my question was similar to that labor law code provision, which has already been answered. So this was over from my side.

The next question is from Shubham Shukla from Voyager Capital. .

I'm relatively new and currently trying to build a better understanding of this industry. I wanted to get a sense on the rod capacity utilization scenario, both for our company and the industry. From what I have observed utilization levels seem to be largely in the 60, 70 ballpark range, while capacity addition [indiscernible] to me, I wanted to ask what is the ideal utilization? And how do you define lower and higher organization banks, both for company and more broadly for the industry?