Thread by @ValueEducator

#PriviSpecialty Q3 22 Concall Highlights 🧪

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Operational Highlights

1. Revenues from operations stood at ₹394 Cr in Q3FY21 with gross margins at 26.64% and EBITDA margins at 15.32%

2. The rise in input cost was overcome as a result of cost improvement.

3. Addition of ₹2.2Cr one time exceptional expense for Mahad overflooded facility
Insurance claims are expected and will be reflected in March FY23

4. Fourth quarter is expected to be much better.

5. Galaxmusk and camphor are huge volume products and will be sold initially in the spot market as most of the requirement by customers is in the second half.Volumes will be reflected in next few quarter as top 25 clients enter annual contracts

6. High sales in pine based products, demand for specialty is expected from April-May FY23
Utilisation levels (optimum utilisation -85-90%)
Pine- 100%
Specialty- 70%
Phenols- 100%

7. As steam is necessary for manufacturing, the power expense contributed heavily followed by freight cost

8. Acetic anhydride which was costing (₹70-₹90) shot up to ₹200, however the prices have corrected to about ₹150.

9. Sulfuric acid and phosphoric acid prices also contributed to the rise in expense

10. 65-70% revenue from contract basis and rest from spot market

11. Menthol is expected to drive the revenues beyond ₹3000 Cr

Business Strategy

1. The first 9 months of FY23 will be more of existing products. FY24 new products contribution is expected to be 40%
Prices are revised and quoted higher from january 1st 2022 (margins are expected to be higher in next quarters)

2. R&D focuses on reusing chemicals and assets, process and yield improvement.

3. Tech transfer with Givaudan is happening. Acquired land and applied for EC. The designs and layout have already begun.

8-10 process will be manufacturing 42 products of which 14 products have already met the standard of Givaudan and 10 products are under R&D.
14-15 molecules (excluding Givaudan) under R&D out of which 5-6 are successful

4. Only few players in India manufacture specialty chemicals, the competition is more on the international front.

5. Global player enter into annual contracts whereas domestic players enter into shorter period contracts

6. Targeting 80-85% contribution in revenues from contractual basis
Price escalation and capacity expansion will drive the future growth
Not a B2C business, prefer to stay in B2B hence no requirement of marketing

7. Most players have 10-15-30 day credit period policy, Privi avoids following such steps
Succession decisions are expected to be announced soon.

8. Margins hierarchy- Specialty > Pine based > Citral/Sandal > Phenols

Capex updates

1. Commissioned Prionyl on 31st of Dec 2021 and 14th Jan recorded the first invoice for facility.
2. Spot market is targeted for the year and new contracts will come on annual basis.