Informist, Wednesday, Jun 19, 2024

--Astral CFO: Upcoming Hyderabad unit to start making pipes from Jul

--CONTEXT: Astral setting up 70,000-tn pipemaking unit in Hyderabad

--Astral CFO: Hyderabad unit pipe output seen 25,000 tn in phase 1

--Astral CFO:To begin paint sales under 'Astral' brand from next week

--CONTEXT: Astral bought Gem Paints of Karnataka in 2023

--Astral: PVC, chlorinated PVC pipe cos may raise prices 15% from Jul

--Astral CFO: Rise in pipe prices on jump in PVC polymer costs

--Astral CFO: Pipe price hike to boost co's realisations, margins

By Sunil Raghu

AHMEDABAD – Astral Ltd is set to begin commercial production of pipes from its upcoming Hyderabad plant from the first week of July, company's Executive Director and Chief Financial Officer Hiranand Savlani said.

Astral is setting up a 70,000-tn-per-annum capacity pipemaking plant at Hyderabad in Telangana and a 60,000 tn per annum unit at Kanpur in Uttar Pradesh. "We should be able to begin commercial production from the Hyderabad unit from July 1 or first week," Savlani told Informist. "We plan to operationalise 25,000 tn capacity at Hyderabad in the first phase."

In March, Informist had reported, quoting Savlani, that the Hyderabad plant would be operational from June.

Savlani said construction work on the Kanpur plant had begun, adding that the company expects to begin commercial production at the unit by the end of the current financial year. This, he said, will help Astral realise full revenue from this plant in the next financial year.

Astral defines its business in two verticals – plumbing and paints being the first, and adhesives the second. Plumbing includes pipes, fittings, water tanks, faucets and sanitary ware. The company's current installed capacity across eight plants is nearly 350,000 tn per annum.

The current capacity utilisation of Astral plants across the country is 65-70%, Savlani said, adding that he expects utilisation to rise in the second half of the year. Generally, the second half is operationally better for the pipes industry. He said this would help Astral achieve the 15% revenue growth target for 2023-24 (Apr-Mar), in line with its guidance.

Savlani also believes that the PVC (polyvinyl chloride) and CPVC (chlorinated polyvinyl chloride) pipemakers in the country may be forced to raise pipe prices by up to 15% from next month, as the price of the key input, PVC polymer, has gone up 12-13% in the last three months.

Interestingly, lower PVC polymer prices during Oct-Dec put pressure on Astral's earnings and led to an inventory loss to the tune of 200 mln rupees. "The realisations that saw a peak of 162 rupees per kg during COVID times, fell to a low of 72 rupees since and are now at 88-90 rupees per kg. The (pipe) price hike would help improve our realisations and margins," the official said.

Other than the pipemaking business, Astral is also set to begin sales of paints under the brand name 'Astral' from next week. Last year, it sold about 2 bln rupees worth of paints, but under the brand name 'Gem Paints'. In 2023, it had acquired Gem Paints Pvt Ltd, a Karnataka-based manufacturer of decorative and industrial paints, along with varnish, coatings and home decor products across 28 brands.

For now, the company will sell Astral paints only in Gujarat and Karnataka. "We hope to first achieve sales of 3.5-4 bln rupees. Our current manufacturing capacity in Karnataka has enough to generate 7-10 bln rupees in sales," Savlani said.

At 1218 IST, shares of Astral traded 1.3% lower at 2,227.90 rupees on the National Stock Exchange. End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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