The company held its Analyst Meet on 24^th May'12 and was addressed by Mr. Sandeep Engineer MD and the CFO Mr. Hiranand Savlani

Key highlights

• The company grew at 40% CAGR in net sales and FY'12 was no different. The company today has about 13 Astral brands in the market and continues to enjoy the position of only licensee of Lubrizol for many products like Flow guard, Corzon, Blazemaster and Bendable.
• As against the installed capacity of 48,432 MT at the beginning of FY'11, the company utilized about 38,824 MT capacity (up by 37% y.o.y) during FY'12. By the year end of FY'12, the installed capacity has been increased and stood at around 65,496 MT. If one includes the 1100 MT capacity of new bendable pipe machine, then total installed capacity stands around 66,596 MT. During Q4 FY'12, the company utilized capacity to the tune of around 11,698 MT.
• About 63% of total sales of FY'12 came from CPVC pipes and rest from PVC pipes.
• A total of about 68 crore has been incurred during FY'12 including the Bendable pipe machine. This capacity of about 66,596 MT, is sufficient to generate sale of around Rs 1000 crore.
• Management has indicated that the Q4 FY'12 was an abnormal quarter, where the management made price increase of about 7% due to rupee depreciation when it was at 53 and then the rupee went all the way to Rs 50. So the margin of about 21% was an abnormal margin. Going forward management expects OPM of around 13-14% on annual basis, which is more realistic. A further 5% rise in prices of products has been made in May'12, to tackle the further depreciation of rupee and thus higher raw material costs.
• The company has 3 plants in India now, one in Himachal Pradesh where it has 3 more years left for tax holidays and another 2 in Gujarat. One plant in Gujarat at Salej is dedicated for clear water related pipes and the other one at Dholka is dedicated for sewage, wastage and drainage related pipes. A land at Hosur of about 22500 sq meter is already purchased by the company for future development. This is to reduce the transportation costs and better delivery for South Indian market. The JV in Kenya where company has 32% stake operated satisfactorily during FY'12 and 2 machines already have been laid down and has started its local operations. .
• Astral has commenced the commercial production of bendable pipes first time in the world with the technical support of Lubrizol during May'12. Lubrizol has exclusivity of this technology for about 20 years. This is a very complex technology where by CPVC will be blended with Aluminum using laser technology and will replace the traditional copper pipes. Although cost wise it is same as a copper price, it is far better in terms of heat resistance, thermal expansions, pressure, velocity etc.
• The company has so far installed 1 bendable machine although it has laid down the infrastructure for 4 more such machines. Each of such machines cost about Rs 20 crore and can generate sale of about Rs 80 crore at its optimum capacity. Initially the capacity will be used for exports to Lubrizol and simultaneously the local demand will also be created.
• The solvent cement plant for PVC pipes is performing well. The company has just commenced solvent cement plant for CPVC pipes. The entire solvent chemicals are manufactured in Astral's 100% subsidiary company. The solvent cement plant for CPVC pipes can generate strong sales in next couple of years.
• Blazemaster product continues to be used by many players even though the BIS requirements from government of India have yet not come.
• Wavin pipes which have high impact strength and produces no noise whenever the application is made is accepted well by the market. They are particularly applied in Hotels, high-rise buildings, commercial offices etc.
• The company has also tied up with AlcaPlast, a UK based company for selling products like shower channels, waster trap, flush tanks and other sanitary products. All these products will be traded at present.
• The strong network of Astral, in terms of dealers, now more than 9500 as compared to around 5000, 2 years back, distributors, brand awareness, education among plumbers and dealers etc all have played significant role in the growth of the company. The company now has presence in all the geographies of India through its distributors and dealers.
• Availability and pricing of raw material is not an issue for the company, but rupee is definitely, as the company imports its raw material requirements. However it tries to minimize the costs to the extent through plain vanilla hedging.
• The company so far does not export much since the domestic market is growing phenomenally well. However it does export some of the products to Bangladesh, Maldives, Nepal. Lubrizol has allowed the company to export its products to SAARC countries, Russia, Middle East and African countries.
• Management expects capex of about Rs 45-50 crore for FY'13.
• Overall the company continues to expect sales growth of around 25-30% for FY'13.