Business Updates:
• 66.87% of revenue came from Export Market.
• Around 66% of the growth is driven by volume.
• Formulation segment grow at 5%.
• Ramping up R&D facility both for API and formulation.
• CAPEX previously planned has been in inline.
Price in API:
• In September price has gone and has stabilize and after that the price is stable.
• As per current market scenario, mgmt expects 19-20% is doable, but its still not a new normal.
CAPEX:
• Current API capacity revenue of additional 25%.
• Brown Facility and new green facility will be the main growth driver for the next 3-5 years, in order to achieve revenue target of 4,500+ cr in next 4-5 year.
• 40cr will go in this Q.
• Green field start in next year
PLI:
• Company have applied for few products, and company expects one molecule to get but this will be announced in April. This product is for capital consumption (of around 60-65 cr), and 60-65 cr will external sales.
• This will have CAPEX of 120 crores.
• Government has also add export which again helps the business.
Post PLI scenario:
• In the absence of PLI scheme company has already able to grab 70% of the market share from China.
• Hence PLI will be just a supportive add on for the business.
Company is planning for 7 products
2 for intermediates, 2 would be PLI product,1 would be Chloro Sulphur for internal consumption, another will be skin care
• Chloro sulphur will have good margin.
• Metformin will have similar margins and export approval will also add margin
Metformine capacity is 1100Mt per month.
China+ Policy:
• This will definitely help the business as Aarti has good business diversification and diversified customer will help the business well.
Anti Dumping:
• There are other local player in the market, hence they can also raise price.
• This will help stabilizing the margins.
• It was started in September and now it will be 4-5 year
Geographical Revenue:
• Almost 90% of the business from America and then from Europe.
• This benefit is not big as company as import too.
Capital Raising:
• With lower D/E and with D/E target of 0.7 (which is favorable for the business), company is planning for Term Debt (at 6-7%) and internal accruals for the CAPEX.
• Current Debt is 334 cr, out of which 186 is Term Loan.
• 9M CFO of business is around 140 cr
Specialty Sales (From CAPEX of 600cr):
• Specialty Sales has revenue potential for 1500cr . After captive consumption, external sales will be 1170-1200cr.
• Brown field expansion will decrease cost , and this will help compete with competitor which will further work on margin.
Next Growth target.
• Next year company expects more on the volume growth (around +10%) than on the price growth.
• Company seems margin sustainable.
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Business Updates:
• Contributor for this year was the robust product basket.
• Formulation contribution of 39%.
• See product filing in image
• Continue investing in infrastructure.
• De-bottle-necking the plant continuous to remain online.
• Expanding capacities in key API.
• See the segment revenue breakup in the image.
• Dedicated a special plant location for CRAMS Facility.
• Richcore will be named as Lauruas Bio and acquired 100% in Richcore
Business Updates:
• Closed with 300 customer.
• Plants started in phases. Recovery of textile sector in pandemic was slow.
• Price of certain products has reach to pre-covid level.
• With new capacity company is going to do filaments yarn and spurt yarn.
• Bio-degradable fibre has capable of bio-degrade in land and ocean within an year.
• company will be also starting short cut fibre which have application in cement industry.
• Company is also working on re-cycle footprint which will have edge in the market over long term.
Munger: What was interesting was how talented they were and then also got in so much trouble. It also demonstrates general system of finance involving derivatives is irresponsible.
Warren: Here you had extremely experienced people operating with their own money.
• They went broke. Why do people risk losing something very important to gain something that’s totally unimportant? The added money has no utility whatsoever.
- MDF segment has margin of 24% during the quarter. There was price hike during the quarter as some raw material prices also went up. Company is planning 200 bps improvement in margins
- The current quarter looks good so the company is planning for 100 percent to 110 percent capacity utilization for both plants.
- The company have divided forex loss in 2 parts: 7 crore in interest and 1 crore above EBITDA.