I had a conversation with a representative of the company. Below is a summary
- For the new quartz plant, the average utilization rate in the previous year was about 40-50% and for granite it was 70-80%. Quartz utilization will improve going forward as sales pickup
- For the recent quarter, the quartz plant was shut down for ~20 days. Without this, their production and utilization would have been higher. (Possibly sales also would have been higher but this is my assumption)
- No immediate plans to add capacity and therefore they dont expect any additional funding for another 2 years. This is the status as of now but may change.
- Cash generated would go to service the debt and bring it down. That is the near term plan.
- Vizag plant has provision for adding lines so any expansion will use lesser capital as it will be a brownfield expansion
- Quartz uses a polymer and is not a straight extraction like granite. Polymer is driven by Crude prices. This is a positive as Crude price falls. (Not a big positive in my view as I read somewhere that polymer is a small component. Will need to check)
- Branding is through Quantra and it is doing well. Pokarna will have step up efforts to improve this.
- Primary competition is other companies having access to Breton technology (5-6 companies). Market is very large in US and Canada to accomodate all.
- Chinese quartz is of inferior quality and is not direct competition to them (not sure if this is correct. need someone from US to confirm this)
- Recent data on housing starts a positive. Company expects demand to grow (very generic on this so not much insight)
All in all, most of the data was a reconfirmation of what we know with 1-2 additional insights. Will have to watch the sales growth and debt reduction closely.
Disc – Invested. Please do your own due diligence
| Subscribe To Our Free Newsletter |
