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Aditya Birla Nuvo & PCBL Report Results

India’s two leading carbon black producers have reported their most recent results.

Aditya Birla Nuvo, parent company of Hi-Tech Carbon, reported consolidated revenues of Rs. 3,661.6 crore for Q3 FY 2008 (quarter ended December 31, 2007), up 58% from the same quarter last fiscal year. The carbon black business had its best ever quarterly revenues of Rs. 245.3 crore, up 25% from 3Q FY2007. Net Income (PBIT) was Rs. 37.4 crore, up 18% compared to Q3 FY2007, though high input costs lowered operating margins. Carbon black export volumes more than doubled during the quarter based on expanded capacity. (Note: HTC added capacity at Chennai in July 2007).

The press release is here. Financials are here. Presentation is here.

The Presentation includes a significant piece of information about HTC’s proposed new plant at Patalganga. From Slide 4, Key Highlights: “Carbon black business, though received environmental clearance for greenfield expansion by 120 K MT in Western India, will decide after examining other sites.” The project is mentioned again on Slide 27, Value Businesses: “Evaluating greenfield expansion by 120 K MT in Western India along with other sites.”

So it appears that the Patalganga plant is under review. The Patalganga plant was initially announced at 60 KTPY and then was expanded to 120 KTPY. Last month there were rumors (unconfirmed) that HTC had scaled the project back to 60 KTPY, at least initially. It is possible that Birla and PCBL (see below) were involved in a bit of one-upmanship with the spate of expansion announcements that came out of India last year.

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Phillips Carbon Black Ltd. released results for Q3 FY 2008 (the quarter ended December 31, 2007). PCBL achieved its highest ever quarterly sales volume (64,918 tonnes), reflecting a 3% increase over Q3 FY2007. Export volumes declined about 2% to 15,227 tonnes compared to Q3 FY2007 due to stronger domestic demand. Gross sales during the quarter were Rs. 31,073 lakhs, up 1% from Q3 FY 2007. Operating margins (EBITDA) improved during the quarter to 14.00%, up from 10.98% in Q3 FY2007, driven by improve operational efficiency, better yield, and cost management.

Results are here. Management discussion here.

Highlights of the discussion:

  1. The expansion at Mundra is on schedule for startup during 4Q FY2009 (i.e., the first quarter of 2009). The Environmental Impact Assessment study has been completed, equipment orders placed, and the contract for civil construction has been awarded. The foundation stone ceremony (Bhumi Puja) was held on January 24, 2008.

  2. The expansion at Cochin is on schedule for startup 2Q FY2010 (i.e., the third quarter of 2009). The Environmental Impact Assessment is still underway.

  3. PCBL raised carbon black prices on January 1, 2008 to mitigate higher feedstock costs. Management expects that higher prices, coupled with higher production, improved operational efficiencies, and cost management, will maintain current EBITDA levels during Q4 FY2008.

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