Oriental Aromatics Ltd conducted their con-call today at 2 pm.
“ Aspire to become global player in the specialty aroma chemicals and use these synergies to be the most prominent company.”
Here are the key takeaways…
“ Aspire to become global player in the specialty aroma chemicals and use these synergies to be the most prominent company.”
Here are the key takeaways…
Business update
- Company has reported stable performance during this period.
- Company is very bullish towards its future quarters.
- In terms of business demographics for FY21, Their domestic to international ratio stands at 71:29.
- Company has reported stable performance during this period.
- Company is very bullish towards its future quarters.
- In terms of business demographics for FY21, Their domestic to international ratio stands at 71:29.
- As global players want to enter their market they look for existing players like the company to get the best on domestic front. This has also brought positive impact on the business future.
- In next 2 years, all the three major divisions will grow to a whole new levels and looking very bullish in future.
- The margins won’t be impacted in any negative way and will be more stable then before. Like 36% gross margin line.
- The margins won’t be impacted in any negative way and will be more stable then before. Like 36% gross margin line.
- The company has a strong value chain from the sourcing of raw materials to blending and creating applications.
- The company faced a fall in its volumes post closure of its Bareilly site for 20 days.
- The loss seems to be compensated by future strategies.
- The company faced a fall in its volumes post closure of its Bareilly site for 20 days.
- The loss seems to be compensated by future strategies.
- With additional inventory the incremental inventory would be around 30cr, this was a strategic shut down to enhance the life of the boilers.
- On demand front, It looks strong with penetration of FMCG and across global the requirement is more.
- On demand front, It looks strong with penetration of FMCG and across global the requirement is more.
- In aroma ingredients space a lot of innovation is made and with this china plus 1 has also supported the business.
- The company is focused towards bulk production and this with strategic special aroma will do wonders for them.
- The company is focused towards bulk production and this with strategic special aroma will do wonders for them.
Capex and Innovation
- During this period, they successfully commissioned their dedicated specialty aroma ingredient plant in Vadodara.
- Commerical shipment from this plant has began.
- During this period, they successfully commissioned their dedicated specialty aroma ingredient plant in Vadodara.
- Commerical shipment from this plant has began.
- Company has also successfully completed the capacity expansion of its Bareilly plant.
- This will increase capacity by almost 70% for a product and post validation this expects to be top line contributor for FY23.
- This will increase capacity by almost 70% for a product and post validation this expects to be top line contributor for FY23.
- Total investment is around 140-150 crore is planned for the year.
- On Bareilly expansion, was a process re-engineering expansion on brown field deal.
- Due to this expansion, company might able to add 35cr per year based on capex expense of 5cr
- On Bareilly expansion, was a process re-engineering expansion on brown field deal.
- Due to this expansion, company might able to add 35cr per year based on capex expense of 5cr
- All expansion will be done keeping in mind the profitability and acceptance of them by the customers.
- There will be a mentioned product acquisition cost that will be defined for best deals for the company.
- There will be a mentioned product acquisition cost that will be defined for best deals for the company.
- For pilot run, a product is validated to a set of customers and with advancement in them, products will be brought to the public.
Financials
- With comparison to FY21 the operational revenue of the company is at the lower levels.
- Their PAT levels are also at lower levels.
- The company has witnessed margin and profitability pressure due to significant rise in their input cost.
- With comparison to FY21 the operational revenue of the company is at the lower levels.
- Their PAT levels are also at lower levels.
- The company has witnessed margin and profitability pressure due to significant rise in their input cost.
- But are relieved from this pressure as most of it is passed on to customers and linked to that they expect margins to recover in quarters to come.
- looking on their debt front, since FY20 they have maintained D/E to the minimum levels.
- looking on their debt front, since FY20 they have maintained D/E to the minimum levels.
- On gross margin front, as assumed the industry will have proper pricing, the company will generate good and better margins.
- The company still has higher inventory prices deals and due to this they have renegotiated the deals with customer.
- The company still has higher inventory prices deals and due to this they have renegotiated the deals with customer.
- The company is focusing more on procuring raw material at better price to make their business run in a more comfortable manner.
- For Baroda expansion 30 cr loan and rest is done through internal accruals.
- In next 3-4 quarters, their capex expense will be huge amount.
- For Baroda expansion 30 cr loan and rest is done through internal accruals.
- In next 3-4 quarters, their capex expense will be huge amount.
- Looking at current portfolio and stable pricing and proper rampup, at full capacity the revenues might jump to 1.7x from their current base levels.
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