It’s always been our goal to change the market norms rather than to confine by them. This year, our focus will be to launch products for the infrastructure sector as well as the domestic sector. We are introducing advanced products for drainage and hot/cold plumbing systems.
Apart from this, the launch of our ‘ResiQuick’ instant Adhesive product has taken the brand ‘Astral’ to every nook and corner of India. ResiQuick is a substantially superior product, the first of its kind instant adhesive ampule, available at an attractive price point in the Indian market .
Astral being a responsible corporate house on growth trajectory, we always try to judiciously allocate the money for growth rather than to be either a debt-free company or sitting on cash to maximise the returns for our shareholders.
We made the right decision of entering into Adhesive Business 3 years before and now we are entering into Double Wall Corrugated (DWC ) pipes and Infrastructure space through inorganic way and we feel this new category will take the company to a new height in terms of growth and profitability while expanding the offerings for the market.
NEW PRODUCTS : ‘RECYFIX’ – comprehensive range of surface drainage system; ‘PEX-A PRO’ – Advanced, next generation plumbing system for hot and cold water; ‘INSUPRO’ – XLPE Insulation for hot and cold water piping as well as for HVAC etc.; Launched ‘Double Wall Corrugated‘ pipes for underground drainage system – that can replace bigger diameter RCC pipes; Backward integration in CPVC at all plants. This will help improve in gross margins
UPCOMING MANUFACTURING FACILITIES: Rajasthan plant has commenced commercial production from June 2018; Additional capacity in hosur plant will be operational and to start commercial production from September 2018; Exploring to establish footprint in East India by setting up a manufacturing facility
Present build-up capacity of adhesives business can generate business around INR 12,000 MN. Currently offering total 642 SKUs
During the year under review, your Company has increased its installed capacity by 10% from 1,37,708 MT to 1,52,101 MT. Your Company has utilised its capacity to the tune of 1,05,753 MT. as against last year’s figure of 87,694 MT. which shows a utilization growth of 21%.
During the year under review, your Company has incurred capital expenditure to the tune of Rs. 408 Lacs towards the purchase of land and Rs. 8,286 Lacs towards plant & machineries, factory building and other capital expenditure.
Construction activity within the country has started growing slowly and it will pickup pace in the coming years, which will be the real positive factor for the county as many industries are associated with the construction activity. Now problems related to RERA are almost resolved and things have started moving in the right direction. Govt. is spending sizeable amount on the infrastructure activities, which is going to help to grow the economy in the coming years.
From the year 2012 to 2017, the piping industry in India has grown by 10%-12% CAGR and attained the size of Rs. 250 Billion (Crisil Report). The main reason for the growth in the demand was increased construction and irrigation activities and replacement of metal by plastic.
As per the CRISIL forecast for 2017-2022, Plastic Pipes & Fitting Industry will post a CAGR of 12-14% reaching market size of Rs. 460 Billion in India.
Due to inherent advantages of plastic v/s metal, the usage of plastic pipes is increasing and recently due to lower crude price the shift is getting faster from metal to plastic. Also within the polymer, the usage of CPVC is increasing continuously. As per the CRISIL estimate, CPVC is expected to grow at a CAGR of 24-25% by 2021-22. The overall share of CPVC pipes which was 12% within the Pipe Industry in 2016-17, would go up to 20% by 2022. Also, the demand is coming from replacement of older plastic pipes with the new polymer pipes.
Year 2017-18 was full of challenges. On one hand, GST regime was implemented and on the other hand there was significant slowdown in the real-estate sector. In spite of these challenges, your company was able to generate a volume growth of 16%, which was the highest in the last 3 years though the Industry growth of piping segment was very low. Company not only focussed on the volume growth but also improved the Gross Margin from 28.78 % to 32.60% and EBIDTA margin also improved from 14.58% to 15.39%. Due to lower price of crude in International markets and appreciation of currency, the price of polymer was low during the year. Hence your company was able to deliver a value growth of 9%. The backward integration of CPVC polymer helped the company to grow the volume and improve the Gross Margin.
Ghiloth Plant: Your company has successfully completed the construction of the plant and installed the machineries. The total production capacity of the plant is 22,700 M.T. The plant will be operational in the July 2018 once all the regulatory approvals are obtained. The company will be able to save on logistics cost in the North and North-East region and will be able to expand its footprints in the region where the presence of the company is low or nearly absent.
Your company is consistently adding new distributors to its portfolio. As of today, the company has 750+ distributors and 28,000+ dealers across the country. This year, the focus was on increasing the dealer’s network.
GST is considered to be positive for organized players like your Company and to create an opportunity for organized players to replace the market share of unorganized players. Share of unorganized sectors in the Indian Plastic Piping industry is estimated at around 40%, which we expect, will gradually move to the organized sector sizeably.
Adhesive business of the company is growing steadily at the domestic level and delivering good margins. Last year domestic business has grew by 20.3% in value terms and EBDITA margin also improved as compared to the previous year from 16.0% to 19.1%. Though the margins are very robust, it has to be seen how the high margins can be sustained in a rising raw material price scenario.
The overseas adhesive sales has grown by 6.2% . The EBDITA was 5.7% mainly because of the lower performance of US subsidiary. However, we are forseeing that in the year 2018-19, the growth will be better and there will be improvement in the margins.