"Bodal Chemicals Limited
Q1 FY 23 Earnings Conference Call"
August 10, 2022
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Bodal Chemicals Limited
August 10, 2022
MANAGEMENT: | MR. ANKIT PATEL - EXECUTIVE DIRECTOR, |
BODAL CHEMICALS LIMITED | |
MR. MAYUR PADHYA - CFO, BODAL CHEMICALS | |
LIMITED | |
Moderator: | Ladies and gentlemen, welcome to the Q1 FY'23 Earnings Call for Bodal Chemicals |
Limited. This conference call may contain forward-looking statements about the | |
company, which are based on the beliefs, opinions and expectations of the company | |
as on date of this call. These statements are not the guarantees of future performance | |
and involve risks and uncertainties that are difficult to predict. | |
As a reminder, all participant lines will be in the listen-only mode, and there will be | |
an opportunity for you to ask questions after the presentation concludes. Should you | |
need any assistance during the conference call, please signal an operator by pressing | |
'*' then '0' on your touchtone phone. Please note that this conference is being | |
recorded. | |
I now hand the conference over to Mr. Ankit Patel, Executive Director of Bodal | |
Chemicals Limited. Thank you, and over to you, sir. | |
Ankit Patel: | Thank you very much. Good evening, everybody. On behalf of Bodal Chemicals |
Limited, I extend a very warm welcome to everyone for joining us on our call today. | |
On this call, we are joined by our CFO, Mr. Mayur Padhya; and SGA, our Investor | |
Relations Advisors. I hope everyone had an opportunity to go through the financial | |
results and investor presentations, which have been uploaded on the stock exchanges | |
and our company's website. | |
Let me give you a quick snapshot of the recent developments of our company, and | |
then I will hand over the call to Mr. Mayur Padhya to talk about the financial | |
performance. Our company, Bodal Chemicals, is India's largest integrated Dyestuffs | |
and the Dye Intermediates manufacturer. In an environment where Indian suppliers | |
are preferred as reliable partners globally, we have been able to leverage our | |
leadership position. | |
In domestic market our Dyestuff and Dye Intermediate market shares are around | |
13% and 20%, respectively. Globally, our Dyestuff and Dye Intermediate market | |
share are around 3% and 6%, respectively. I'm excited to share that over the last 1 | |
year, we have successfully implanted the Chlor Alkali products in our product | |
portfolio. We are expanding our product basketand entering benzene chemistry | |
products, and we are confident that we will be able to replicate a similar success in | |
this new product as well. | |
Coming to the performance overview during Q1 FY'23. Total revenue for the Q1 | |
FY'23 stood at INR 463 crore, a growth of 8% on a year-on-year basis. Consumption | |
of end-user industries has been on edge headed by many uncertain global events, | |
although the rising raw material price has been positively reflected in our Basic | |
Chemicals and Chlor Alkali business, which has partly negated the adverse | |
performance of the Dye Intermediates business. We will now touch upon each | |
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Bodal Chemicals Limited
August 10, 2022
business vertical and its recent developments. Dyestuffs and application industries of Dyestuff like textile, leather, paper have shown some moderation during the last quarter. The Dyestuff business for Q1 FY'23 stood at INR 150 crore compared to
INR 131 crore in Q1 FY'22, a growth of 15% on year-on-year basis. | |
Coming to Dye Intermediates. This segment has seen some pressure due to | |
unprecedented volatility in key products like H-acid and vinyl sulphone prices. This | |
quarter, revenue contribution from Dye Intermediate chemicals stood at INR 122 | |
crore. The lukewarm demand from textile manufacturers due to the steep price hike | |
in cotton has impacted the overall demand for dye intermediates to a certain extent. | |
Average prices of key products, H-acid and vinyl sulphone have been moderated in | |
Q1 FY'23 to INR 473 per kg for H-acid and INR 290 per kg for vinyl sulphone. | |
More than 40%, 45% of these intermediate capacity is captively consumed resulting | |
in a significant cost advantage for our Dyestuff products. Given the healthy | |
prospects for Dyestuff, we strategically intend to move up the value chain and | |
increase our captive consumption of Dye Intermediates. | |
Moving to Basic Chemicals. Although our Basic Chemical division also reported | |
healthy performance led by higher raw material prices, close to half of the basic | |
chemical capacity is purely consumed for Dye Intermediates production. Our overall | |
Basic Chemical segment contributed around 15% of our total revenue, Q1 FY'23 | |
with a revenue contribution of INR 64 crore. Chlor Alkali business, this segment has | |
come up well for us and has contributed meaningfully to our overall business. Since | |
March, there has been a disparity in the price reported in India and China. | |
The overall cost of production and the demand supply gap has been uncertain on the | |
back of various geopolitical events. In India, the demand for key products like | |
caustic soda has been healthy in FMCG, textile and paper industries. The Chlor | |
Alkali business delivered a strong performance with revenue of INR 86 crore in Q1 | |
FY'23. The upgradation of the Rajpura caustic unit is on track and is expected to be | |
completed by October '22. Post completion, our Chlor Alkali business will contribute | |
a significant pie of total revenue. | |
Our benzene derivatives and sulfuric acid, the Saykha greenfield project is | |
progressing well and is expected to start a trial run in Q1 FY'24. Indian | |
manufacturers import a lot of benzene derivatives. Our main goal is to replace | |
imports and capture business in the pharma and agrochemical markets where such | |
benzene derivatives are used. | |
Subsidiary performances. Our subsidiary, Sener Boya, has reported a notable | |
performance, whereas the other subsidiaries have reported weak performance, | |
especially the SPS unit due to the lower demand of Dye Intermediate products. In a | |
medium to long-term view, we foresee these subsidiaries will improve in their | |
respective region and will bring meaningful business to our company. | |
In the last few weeks, we are seeing some green shoot events, and we anticipated a | |
steady performance in the upcoming quarters. We aim to create a sustainable | |
business model without losing the leadership position in our legacy business. In the | |
coming years, we expect our business will be less volatile and more diversified as we | |
will be serving a wide spectrum of end user industries. | |
Thank you. And now I hand over the call to Mr. Mayur Padhya to walk you through | |
the financial performance. | |
Mayur Padhya: | Good evening, everyone. Overall performance of the company has been steady for |
Q1 FY'23. Our consolidated performance for Q1 FY'23 is as follows, total revenue | |
stood at INR 463 crore for Q1 FY'23, a growth of 8% year-on-year basis. EBITDA | |
stood at INR 54 crore for Q1 FY'23, a degrowth of 3% on year-on-year basis. |
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Bodal Chemicals Limited
August 10, 2022
EBITDA margin stood at 11.6% for Q1 FY'23. Net profit for the quarter stood at
INR 23 crore for Q1 FY'23, a degrowth of 18% on a year-on-year basis. | |
As highlighted earlier by Mr. Ankit, the sluggish response from end users has | |
affected our primary business of Dyestuff and Dye Intermediates. Performance of the | |
key subsidiary was healthy. Subsidiary, particularly SPS, posted revenue of INR 23 | |
crore. Sener Boya has reported a total income of INR 26 crore. Total income from | |
the China subsidiary was nearly INR 3 crore. | |
Segment-wise performance on a consolidated basis for the Q1 FY'23 are as follows, | |
Dyestuff revenue stood at INR 150 crore. Dye Intermediate revenue stood at INR | |
122 crore. Basic Chemical revenue stood at INR 64 crore. Chlor Alkali division | |
revenue stood at INR 86 crore. TCCA revenue stood at INR 10 crore for the quarter. | |
Total production volume on a standalone basis for the Q1 FY'23 are as follows, | |
Dyestuff stood at 3,993 metric ton. Dye Intermediate stood at 3,442 metric ton. Basic | |
Chemical stood at 51,594 metric ton. Chlor Alkali stood at 21,299 metric ton, of | |
which caustic soda stood at 15,134 metric ton. TCCA stood at 299 metric ton. | |
With this, I conclude the presentation and open the floor for question and answer. | |
Anybody who has a question can now start asking questions. | |
Moderator: | The first question is from the line of Yogesh Tiwari from Arihant Capital. Please go |
ahead. | |
Yogesh Tiwari: | My first question is regarding the Rajpura unit. So like Chlor Alkali, it's about INR |
85 crore. So once this gets commissioned in Q2, what would be the revenue | |
contribution of this unit in FY'23? | |
Ankit Patel: | See, currently, the rates of, especially caustic rate is much higher than the average 5 |
or 10-year price. So if you take it at the current rate, then it will be more than INR | |
400 crore. But if I calculate it with a 5 or 10-year average prices of finished goods | |
caustic soda, then it will be in the range of INR 300 crore to INR 350 crore. | |
Yogesh Tiwari: | Annually? |
Ankit Patel: | Annually. |
Yogesh Tiwari: | For example, if like INR 300 crore additional revenue will come from only this |
Rajpura unit for FY'23? | |
Ankit Patel: | It is not additional. It is going at that same rate. At a normal price, at an average |
price, it will be around INR 325 crore. So around INR 80 crore a quarter, which is | |
going on right now also because of the extra higher price. | |
Mayur Padhya: | For your clarification, last year, this division has contributed INR 254 crore. So if we |
achieve INR 400 crore from this unit, then INR 150 crore is additional revenue from | |
this division. | |
Yogesh Tiwari: | That is helpful. And if you can share what was the realization of caustic soda average |
realization for Q1 FY'23? And what is the current price of caustic soda in the market, | |
the range? | |
Ankit Patel: | The current price is around INR 55 delivered. So on an average, I think the |
manufacturers get around INR 53. That is today's market. For most of the August, | |
we expect the price to be around that much for the month of August because there | |
are a lot of exports happening from Gujarat. So August is going to be strong. | |
September also, they are trying to take more export orders, so we can maintain the | |
higher prices. And for this quarter, the average price was around INR 50, ex-plant. |
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Bodal Chemicals Ltd. published this content on 17 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 17 August 2022 06:03:02 UTC.