Highlights of Q3 Concall
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Our Wada location is qualified for IATF certification
which will strengthen our position with tire companies as this certification is a need from the
respectable suppliers.
Our Gummidipoondi location is already IATF certified. -
a joint study was commissioned
along with IIT Tirupati and final report was received during this quarter which has highlighted
that carbon emission saving through use of Crumb Rubber Modified Bitumen over virgin
binder. In absolute value use of recycled rubber in bitumen brings down carbon emission by 750
times and this will give us the edge to promote more and more crumb rubber usage for the
road construction application. -
we have commissioned two centralized plant one at
Panipat and the other at Gummidipoondi for sales of bitumen and modified bitumen. This will make
our products more accessible to our end users as we see large projects in the road sector in
South India is coming towards completion. So,
we want to be ready for that business . -
Our forth
devulcunizer which is the key footprint used for making reclaim rubber has now been
commissioned in Gummidipoondi so that has doubled our reclaim rubber manufacturing
capacity in Gummidipoondi from 300 tons to 600 tons per month. -
We have shifted our reclaim rubber plant from Panipat facility to our
Wada facility. So, going forward we will have a reclaim rubber manufacturing consolidated in
two of our locations one is Wada and the second is at Gummidipoondi. -
we have acquired a tire
recycling business in Oman and our intention is to setup crumbing facility over there. Initially tire crushing capacity will be 6000 MTPA . Going forward tire crushing capacity can be enhanced to 15000-20000 MTPA. -
Our bankers have upgraded the rating for our company
and have granted a reduction in rate of interest by 200 basis points. So, this will help us in
saving cost and better profitability. our absolute debt which was
at 69 crores on 31st of March 22 is now down to 63 crores as of 31st December. -
our tire crushing
this year will cross about 70,000 tons versus it being around 50,000 tons last year. This financial year till dec 22 we have crushed 53,000 tons of tire . Currently our crushing capacity utilisation reached to 90 percent. -
We have seen our raw material prices go up by about 4% points actually when I say 4% you
have to interpret it in the form that our cost of raw material was 13% now it is 17% so that is
quite high and now we are seeing already some correction again in the raw material prices. So,
we are hoping to see that benefit in our EBITDA margins. -
Prior to two years where we have seen volatility in our
revenue and profitability.That was the phase when our multiple customer base between the
road sector and non-road sector had not stabilized is achieved now. Therefore,
going forward I feel we have better visibility, better ability to adjust to any down cycle in a
particular sector. So, we feel more confident now of our revenue projections and
our profitability. -
Now we are dealing with road sector
customers in multiple ways, one being through the refineries second
being through mobile blending units where we set a plant at their sites and the third now the
centralized bitumen and modified bitumen plant that we have commissioned in Panipat as well
as Gummidipoondi. -
Our top line for this financial year will be plus minus around
310 crores and on the EBITDA margin side last year we were at 16.5% this year our 9 month
EBITDA is 13.2% I am expecting this financial year we will close at the current levels of around
13.5% EBITDA and we are hoping to get back to our last year EBITDA levels in the next financial
year. -
Currently contribution of road sector in our top line is 30% which means 70% is non-road and within that 70% of non-roads tire
industry is half of it and the non tire industry is the other half. -
We are in the midst of finalizing our plans for the next financial year and what I can share
with you is that we feel confident that the company should be able to grow at around 25% in
the coming financial year also. -
There was variety of reasons we did drop to 11 odd percent EBITDA margin in this quarter, but
I expect that to be fixed in Q4. we are at 13% EBITDA margin YTD right now. Our expectation is to get back to 15% in
the coming financial year with this growth. -
The investment in TP Buildtech I will reiterate is
basically a joint venture between Tinna Rubber group and Ultra high networth individual Mr.
Mayank Singhal owns the other 50% in TP Buildtech. This company since 6 last years has made
good progress in establishing itself in the construction materials space. We see a very strong
connect of this business with the road sector business of Tinna Rubber that is why we continue
to support it and continue to invest in it. TP Buildtech has a tie up with very large Japanese
polymer manufacturer called Nippon Shokubai where import this polymer from Japan and then
converted into a concrete admixture and the customer base is very similar to that as the road
contractors customers of Tinna Rubber. TP Buildtech has grown approximately 36% in FY23
versus FY22. We strongly believe in the business model of this company and therefore we will
continue to invest in it. We see an excellent opportunity in grooming this business into a full
fledged one stop shop kind of company for construction materials. So, I hope this throws some
light on the interest that we have in TP Buildtech. TP Buildtech sales this financial year is for
the first 9 months is 42 crores versus 30 crores in the last financial year for 9 months. So, 36%
growth as I mentioned. -
It is a fair point so let me clarify TP Buildtech even though it has shown good growth in this
financial year has suffered some losses in the past. However, I am pleased to tell you that as of
December FY23 TP Buildtech is now net positive, it is making money. So, we believe the era of
losses is now behind us and we have a bright future to look ahead. -
Some investments that we have in
BGK Infratech etcetera those investments we also consider not core to our business. They have
been done historically and we are trying our best to get out of these investments without any
negative impact to Tinna Rubber balance sheet. -
On opportunity size I will mention two companies which immediately come to my mind in this space one is liberty
recycling from USA which probably recycles half a million tons of tires annually and the other
example Genan out of Europe which is similar in size maybe just a little bit smaller than liberty.
So, we are this year we will be at around 70,000 tons of tire crushing in a country like India
which is producing 2 million tons of waste tires annually. So, that is the scale and opportunity
that India is presenting to us and we wish to be ready to recycle such large volumes, but the
two nearest example would be Liberty Tire from USA and Genan from Europe.
Disclosure:- invested.
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