Management Interviews - Globus Spirits, Prataap Snacks, Berger Paints, Ceat

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Investing 25-30 crs into premium IMFL business every year. Sales is small now but it’s a high growth business
Economy brand business growing at about 8-10% every year
Rajasthan is a biggest state, followed by Haryana and then West Bengal
Bihar Distillary – Is for ethanol policy – Large part of capacity will go to OMCs – Will start in next 2 months – Will add about 100 crs of revenue to our business on annual basis – Margins will be north of 20%
Have taken price increase and that lead to increase in margins
Margin increase due to ethanol is not yet played out
12% margins can be safely assumed this year and will increase once ethanol is played out
Rajasthan is over 30% of our revenues and most profitable state, don’t see much change in buiness due to elections
There will be some capex in Bihar and Haryana for ethanol

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Will not take debt for acquisition of Avadh snacks, already have cash on books of about 140 crs and cash reqd is 145 crs
Avadh snacks revenue is 140 crs; Ebitda margins are 7.5-8.5%; No.4 in Gujarat Category
They have small debt of 2-3 crs Rs
Gujarat is 4-5% of India’s population – they consume around 12-14% of Indian snacks
Revenues of Prataap snacks from Gujarat is just 12-25 crs in a year
Will take our holding from 80% to 100% in next 4-5 years; until then Avadh promoters will run the business for us
We have a growth target of 18-20% and margins of 7.5%
Will target revenues of 1250 crs this year

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RM Prices – Moderation in some and some gone up
Re devaluation will impact us as 25-30% of RM is imported
We will take a price increase of 1-1.5% in September
Ebitda margins will be static or some drop if we are unable to take price increase
Saboo coating acquisition – Speciality products – Glass coating, Plastic coating – Earlier it was a Noth Indian company – We are planning it to take to different geographies
Volume growth was at 17% in Q1 due to base effect; In Q2 it might not be 17% but can expect a good volume growth
Market share – 19% in decorative business
Capacity utilization – 70-72% in normal months and 90-92% in seasonal months
Going to set up a plant near Lucknow in UP which will come up in 2020

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Our physical rubber inventory will be around 3-4 weeks
We have a mix of rubber sourcing i.e. imports and local
We are facing some supply issues from Kerela in last 2-3 weeks leading to production stoppage
Local rubber prices have moved up from 125/kg to 133/kg (Kerela). As far as international prices are concerned – they are rangebound around 1450 $
Availability of carbon black have improved in last 2 months.
Re depreciation has also impacted delivery costs in terms of imports
2 Wheller demand is good in last 2-3 months; also seen growth in both OEM and Replacement market
We are working for additional capacity addition based on our long term capex plan
Likely to incur 1000 cr capex in Halol for TBR – Will be commissione din Q3 of this FY
Setting up greenfield plant in Southern india for Passenger Vehicles – Est capex is 2000 crs
Capex spend will be in phases ; funded through internal accruals (1/3^rd) and debt (2/3^rd) – Debt to Equity at end of FY19 could be 0.7-0.8

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Management Interviews – Globus Spirits, Prataap Snacks, Berger Paints, Ceat