Plastic goods maker Supreme Industries aims to clock 12 percent volume growth over next three years. In an interview to CNBC-TV18, MD MP Taparia said that the company’s capacity utilisation currently stands at 70 percent and he expects volumes to grow across sectors except industrial products.
The Mumbai based company reported 10.37 percent increase in consolidated net profit at Rs 43 crore for in the quarter ended September 30, 2013 versus Rs 38.97 crore in the same period year ago. The company follows July-June fiscal year. Its sales rose 14.17 percent at Rs 705.14 crore from Rs 617.64 crore in the corresponding quarter of FY13. (Read More)
Taparia further added that the company’s margins are likely to improve to 14 percent going ahead and its debt would reduce by around Rs 150cr by December-end.
Meanwhile, the company is looking to monetise a land parcel of Rs 200 crore by June 30, 2015 and has no plans to raise equity in the near-term.
Supreme Industries has been one for the fastest wealth creator for equity investors according to Motilal Oswal’s Wealth Creator (2008-2013) study. The stock is amongst Motilal Oswal’s best midcap plays. Shares of the company have rallied from Rs 8 in March 2003 to Rs 445 currently.
Below is the edited transcript of MP Taparia’s interview with CNBC-TV18
Q: Your company has been one of the biggest wealth creators in the broader markets or in the midcap space. I just want to get an understanding from you on how the next couple of years will pan out. In terms of both your revenue and your margin profile you have seen a significant upmove in the last many years. Going forward how do you think business will shape up?
A: We anticipate that our volume will grow in next three-five years by 12 percent and value-wise it will grow by 20 percent. In the current year, we expect our value growth to be 22 percent. We anticipate to reach a turnover of Rs 4,000 crore by 30th June, 2014. We expect an operating margin around 14 percent.
Q: What is the capacity utilisation you have at the moment and what is the expansion plan you have?
A: We are having a capacity utilisation of 70 percent. We aim to place an order of around Rs 230 crore towards capital equipment over our several existing plants and put a new compressed plastics at Kharagpur in West Bengal.
Q: That will increase your capacity by how much in percentage terms?
A: It will increase our capacity in the current year to 460,000 tonne. This year investments will be made to put a plant at Kharagpur which will go in proper production from next year onwards.
Q: What is the capacity previous to expansion?
A: Previously it was 430,000 tonne.
Q: You spoke about a volume growth of 12 percent going forward. Can you give us a breakup of where the chunk of the volume growth will come in from between your plastic piping segments, your industrial product segments, packaging etc.? Where is the fastest growth visible?
A: The volume will grow from all our segments except industrial products. The industrial activity in the country is going slow. We are catering to automotive sector and consumer appliances, both are going in a slow or negative growth path this year. Apart from that segment, plastic pipe system, packaging product, consumer ware, etc we will show growth. Our composite cement plant also will go in production maybe by end of this first quarter, that is April-June 2014 and we expect good growth in the year 14-15.
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