Key takeaways from the above interview:

1. MD Indicates that the demand scenario has improved a lot. This is corroborated by the 2nd point(below).
2. MD indicates rough capacity utilization of about 70-75%.(much higher than 62% last quarter)
3. He has indicated that Q2 will also be as good as Q1.
4. 2nd half of the FY is always better than the first half as construction activity picks up.
5. 90-100crores expected debt for next FY.

Risks are already highlighted in the previous posts.

Thanks,
Ravi.S
Disc – Invested

This is what Charlie Munger had to say on the board of directors.

Finally the institution of the board of directors of the major American company. Well, the
top guy is sitting there, he’s an authority figure. He’s doing asinine things, you look
around the board, nobody else is objecting, social proof, it’s okay? Reciprocation
tendency, he’s raising the directors fees every year, he’s flying you around in the corporate
airplane to look at interesting plants, or whatever in hell they do, and you go and you really
get extreme dysfunction as a corrective decision-making body in the typical American
board of directors. They only act, again the power of incentives, they only act when it gets
so bad it starts making them look foolish, or threatening legal liability to them. That’s
Munger’s rule. I mean there are occasional things that don’t follow Munger’s rule, but by
and large the board of directors is a very ineffective corrector if the top guy is a little nuts,
which, of course, frequently happens.

Well I see connected cars, life sciences systems traffic management as a
very big theme in coming times. By connected cars I mean car as an
extension of your mobile phone. KPIT is into the designs and solutions of
vehicle safety and connected systems. In life sciences systems as well it
is into several products like e-clinical solutions. One has to go through
their website to understand the areas they are researching and working on.

It may not be in the same league as Tata Elxsi as far as innovation is
concerned but they are working in right spaces. Moreover I see sometime in
future management change happening which may provide triggers coupled up
with throw away valuations.

With Thanks & Best Regards

Varun Jain
Associate Architect
ARCOP
Mob – 09910507431
Off – 01126242050,
Alt email-ID –
Work – vjain@arcop.co.in

Key highlights of AGM by Capital Mkt
Despite challenges and severe volatility, Supreme Industries recorded a volume growth stood at 10% to 275463 MT and value growth stood at 7% at Rs 3918 crore for full year ended June’15. Diverse revenue model with large product portfolio across 5 business verticals namely, Plastic piping, consumer products, packaging products, industrial products and composite products, also helped in sailing through the tough times.The company has total installed capacity of around 4.5 lakh MT with 2 green field capacities coming up by Oct’15, which will lead to a total of 5 lakh MT of installed capacity.
Domestic piping market is expected to be around Rs 22500 crore and about 70% is organized market. The organized share is growing faster and tapping more market share from unorganized players. The company has a 14% market share in the organized domestic plastic piping market in India.Consumer products business market is expected to be around Rs 2900 crore with Supreme’s share of around 9.8%. The company is a one stop solution of entire range of furniture’s made from polymers.The company has a 15% market share in industrial products segment which is about Rs 1600 crore market in India.
Poly vinyl chloride resin, polyethylene, and polypropylene are the major raw materials for the company, which are crude derivatives. These raw materials are volatile and thus the margins of the company fluctuate every quarter due to inventory positions. As per the management, sustainable margin on a 1ong term basis is around 14% for the company. In Supreme Petro, OPM of around 7% is a sustainable margin for the company going forward.Management expects the volatility of raw material prices to come down from Dec’15 quarter onwards, as in this volatile environment, neither the buyer nor the seller gets benefit. Going forward management expects things should remain range bound for some time, which will be good for the whole industry.The company is also the largest supplier to the soft drink industry.
Sale of value added products stood at 34.20% Vs 32.30% on YoY basis.Of the total saleable area of 2.8 lakh sq. feet of Andheri Commercial complex project, about 2.1 lakh sq. feet area is already sold and the balance area of about 0.7 lakh sq. feet is expected to be sold in next 12 months at price of around Rs 125 crore.The company also has proposed to change the financial year to March and thus next year will be a period of 9 months for the company ended March 2016.Overall, company expects to grow in double digit in volume terms for 9 months ended Mar’16, however it’s difficult to gauge a picture on value wise. Long term target in next 4-5 years is to reach a turnover of around Rs 8500 crore by say 2020.

Looks like an excellent company.
Generate 3crs cash from operations, pay no tax,
Acquire businesses worth 36crs, and at the end of year become debt free co after infusing cash from reserves & surpluse.