Thread by @tycoonmindset05

IG Petrochemicals Ltd. Conducted their conference call today at 3:30 pm.

" To become a well diversified chemical company with leadership in PAN* Industry. "

Here are the key takeaways 😁...

Business Overview
- Company has given robust growth in both QoQ and YoY basis.

- They still maintain their position of being the largest manufacturer of phthalic Anhydride (PAN) and maleic anhydride.(MAN)

- With government demand being bullish on downstream products like Paints, Plasticizers, UPR and all , there will be demand of PAN in domestic markets.

- They have a positive correlation with the infrastructure industry leading to a strong demand growth.

- There is improvement in the integrated process have also boosted growth.

- Higher volume of PAN and MAN have reduced the cost to much lower levels.

- Their products are currently used in 20+ products.

- The Company is also focused towards other derivative Chemcials as well which comes in relation to business.

- And generate about 30% of revenue from them.

- The next step that Company is planning to take is green Chemistry

- Deep study is done, it will replace oil based paints ,and the company will allow business when every industry approves it with no government hindrance.

- They have concrete plan for it, green Chemistry is not in relation with PAN and MAN.

- India's demand is upwards sloping with more business opportunity for company. There has been jump in domestic demand to 90% of total sales which was around 70 - 80% long way back.

- Government benefits and PLI scheme are also been looked by the company for benefits.

- They keep a target to increase its clients base on regular basis for better growth.

- MAN demand is increasing a lot in india still no new capacity is available due to high Capex and less raw material availablity like n butain.

- It is used in various water based chemicals and works in all types of industry.

- They are likely to avail good global demand growth as there is demand and supply equilibrium of materials.

- With China +1 situation , various companies are at expansion across globe.

- With diversified chemical portfolios, Rather then major focus on margin, their focus is market driven.

- For price and margin point they are yet to hear updates from finance ministry for global businesses related to duty presence.

- The Company has based an estimate to see a growth of 6 to 7% from domestic market on avg 10 year period.

- There is decline in spread in April and May due to covid working environment. Demand will come back soon properly when market gets back normal.

- The companies peer in PAN business is not for outer sales But for self consumption, so they have low fear for that.

Financials
- During this Quarter the Pat levels has increased by 2425% and on yearly basis it's up by 801%.

- There was huge jump in EBITDA as well.

- The Company has made a prepayment of 42cr which was realted to the term loan obtained for PA-4 unit.

- Company has Operating conversion cost due to its state of the art facilities with push of innovation.

- They receive most of their orders from western region , where the gain upper hand due to strategic location.

- In total 69 cr of loan was paid out which have made DtoE = 1

- There has been a reduction in their tax levels from 35% to 20's range.

- They expect to become net debt free in upcoming 6 months.

- Company WC cycle is less then 40 days which is best in the total industry on Chemcials sector.

- For financial cost reduction, new banks model have been brought with presence of big banks like HDFC and other 2.

- In india, as lowest producer in PAN , they can grow easily at 8%. And as plants are increased with centralised work there is a lot of saving.

- For above 3 banks are here for PA4 , good balance of psu and private banks will help us avail lower interest.

- For term loan, the company has cost of 2 cr or less which will be met.

- This don't need to worry about Raw material supply as major of that is been received from Reliance due to their correct location this have made their operational cost lower.

- Reliance additional capacity is provings supply, in Singapore there is Exxon so there is availablity.

- Company has witnessed increased in employees cost due to some employees retirement for which provisions were been made.

- There has been a change in their catalyst as well in previous Quarters.

Capex and capacity
- There has been an capacity addition of phthalic Anhydride at PA4 unit. It have reached its optimal untilisation.

- Advance Plasticiser is expected by the company to begin in June 21 looking at covid situation.

- This Plasticiser plants estimate cost is 40cr

- Another Greenfield project is in the plan of Company to increase its PAN capacity by 80,000 MTPA along with boost to other products.

- For this company has made an estimation of 600cr which is spread in 3 years before commissioning.

- The application with environment ministry is done and detailed engineering is been carried out, once environment clearing out they will start at optimal levels.

- Currently all their plants are working at optimum capacity.

- Upgrade plant will make a total about 220000 MTPA of PAN AND about 7660 MTPA of MAN.

- For n butain plant even with tax deduction they still face difficult due to the present supply mismatch of material and not just that the cost is 2 times their predicted sales.

- On global level, Capex is Majorly done in India and China, apart from it there is no new from other countries.

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