Pondy Oxides & Chemicals’ response to queries of investors, analysts post Q3 FY22 earnings call

Following Pondy Oxides and Chemicals’ Q3 FY22 earnings call, which was held on February 9, we received a lot of queries from analysts and retail investors. The POCL management team went through those queries and reverted to us with their responses.

Q: Your chairman speech at the last AGM explains that the new EPR regime will have a paradigm shift in the Lead Recycling business. Can you briefly explain this?

A: Through EPR and Battery Waste Management Rules, the Government is focusing on recyclers and dealers to tie up with OEMs for bringing back the batteries into the organized sector. Through the above developments we expect to see an improvement in domestic scrap collections and further improvement in the organized collection of scrap.

Also read: Pondy Oxides and Chemicals Ltd. Q3 FY22 Earnings Call Transcript

Q: Is the Lead scrap collection, already taking place in India, as per this EPR policy guideline and how seriously is the government implementing it?

A: We are already collecting batteries from the domestic market as part of the EPR and Battery Waste Management Rules. The Government is very serious and is focusing on a smooth implementation and sustainability for the same and also strictly following the battery makers to ensure compliance. At the end this will benefit both the recycling sector and the environment and also help in improving the percentage share of the organized sector.

Q: As a result of this EPR regime, will the recycling industry get better organized. I believe, today the organized sector share is only 30%?

A: That is a correct interpretation. Through the EPR Regime and the Implementation of the Battery Waste Management Rules and further notifications through GST, we expect that the organized sector shall substantially improve from the aforesaid % in the coming years.

Q: Does Pondy Oxides have any plan to expand Lead recycling capacity in light of EPR regulation?
A: By the end of Q4 2022, our production capacity is expected to increase to 1,32,000 MT p.a.

Q: Both Exide and Amar Raja, the leading battery manufacturers, have plans to enter / expand Lead recycling capacity. What impact will it have on Pondy Oxides?

A: We do not see any material impact on POCL and the Lead Industry. We specialize in recycling and are one of India’s leading nonferrous recycling companies and India’s largest Secondary Lead Metal Manufacturing Companies. In spite of both Exide and Amara Raja entering into recycling capacity which will primarily cater to their compliance obligation to Battery Waste Management Rules (BWMR) and Extended Producer Responsibility (EPR), basis the market size, even if both the leading OEMs enter the recycling segment there is still substantial space for us to grow. This recycling capacity will mainly offset their import demand.

Q: What has been the capacity utilization for different plants in Pondy Oxides in FY19, FY20, FY21 and 9MFY22? What improvements do we see going ahead?

A: We have improved the capacity utilization to 70% currently and will eventually see the capacity increase to 75% by the end of next financial year and will continue to sustain the same.

Q: As a suggestion further, I would request you to evaluate listing on NSE too (today you are listed on BSE only) which could dramatically improve your visibility.

A: Your point is much noted and appreciated. We are exploring and looking into the same as well.