Mr Puneet Khurana director and Mr Vipin Chandok CFO of Everest Kanto Cylinders shared their outlook on the industry and company, in a conference organized by Emkay Global Services. The same is as follows:
Everest Kanto Cylinders has a consolidated capacity of 1 million units, of which, Indian capacity accounts for 0.7 million units (expected to go up to 0.9mn units). No plans of capacity expansion in US and China. Also, having second thoughts on planned capacity addition in Dubai of 0.1 million units.
Kandla plant has an operational capacity of 0.1mn. Of this 25000 units is for plate cylinder and rest for steel cylinder. Output from this plant is mainly used for exports (Pakistan etc). Plate cylinder enjoys better margins. Earlier, plates were imported from Italy. Going ahead, it plans to procure it from SAIL at a 25% discount to current import prices. It expects to break even at 40% capacity utilization. Company is also planning to expand the capacity by 0.2 million units.
China capacity of 0.2 million is mainly used for exports. Current utilization stands at 30% and is expected to go up to 45%. Operations continue to remain a drag as domestic demand failed to pick up as expected. EKC started exporting finished cylinders this year as compared to semi finished cylinders last year.
Everest Kanto Cylinders also exports 0.15 million cylinders to Iran (from its Dubai plant). Despite better realizations and a potential market size of 1mn cylinders in Iran, EKC is restricting its exposure to 65% of exports due to the volatile nature of the market and strong government incentives induced demand. US operations are expected to be cash positive by end of this quarter. Dubai demand also continues to remain strong.
In the domestic market, Everest Kanto Cylinders supplies to all OEMs except Maruti. OEM sales accounts for 45% of overall sales as compared to 60% earlier.
Industrial cylinder capacity stands at 0.26 million units. However, realizations at INR 3,000 per cylinder are lowest amongst all categories.
(Sourced from www.myiris.com)
