Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Operating revenue for the quarter increased by approximately 10.3% year-on-year to INR215.8 crores.
- EBITDA increased to INR22.2 crores, showing growth compared to previous quarters.
- The fragrance and flavor division continues to perform strongly, acquiring new customers and growing business with existing ones.
- Successful commissioning of the hydrogenation plant at the Vadodara site, with encouraging leads from trial productions.
- The greenfield project in Mahad is at an advanced stage of commissioning and expected to contribute to the top line from the second half of FY 2024-2025.
Negative Points
- Temporary reduction in production volumes due to routine maintenance at the Vadodara site.
- Increase in the price of certain inputs from the fragrance division, which could impact margins.
- Peak debt for the financial year is expected to be INR280 crores, which includes both term loans and working capital.
- The company is cautious about the impact of geopolitical uncertainties and elections on future quarters.
- The new capacities will take two to three quarters to reach full utilization, delaying immediate revenue benefits.
Q & A Highlights
Q: Last quarter, you mentioned that camphor did not contribute much to the revival in margins. How has that changed now? Also, how did the maintenance shutdown affect production numbers this quarter?
A: The camphor division is now seeing a healthy demand due to the festival season and improved quality differentiation. We have successfully passed on the price increase of raw materials to customers. The maintenance shutdown had no significant impact on the top line, and the process reengineering will improve future efficiencies and margins.
Q: What revenue contribution can we expect from the new capacities at full capacity?
A: We expect the new capacities to contribute 1.7 times the investment for brownfield projects and 1.2 times for greenfield projects.
Q: Can you provide a revenue breakdown from camphor and aroma chemicals?
A: The revenue is roughly divided into one-third each among fragrance and flavors, camphor and terpene chemicals, and specialty aroma ingredients, with minor variations depending on seasonal sales.
Q: What will be the peak debt for the various expansions?
A: The peak debt for this financial year is expected to be INR200 crores for the parent company and INR80 crores for the subsidiary, totaling INR280 crores. This includes INR85 crores in term loans and the rest in working capital.
Q: Will the current positive results continue for the next three quarters?
A: We are confident about the next two quarters and expect to stay within our guidance. The new capacities coming online should contribute to top line growth.
Q: How has the 1,000-day plan for major CapEx progressed?
A: All planned CapEx has been implemented, and we expect the new hydrogenation and Mahad plants to start contributing to revenues in the second half of FY 2024-2025.
Q: What is the long-term margin guidance, and can we expect to hit 14%-17% EBITDA margins in the next financial year?
A: We aim to achieve 10%-12% EBITDA margins for now. We will reassess after the next two quarters, but we are optimistic about future performance.
Q: What is the overall CapEx outlay for the next two to three years, and how will it be funded?
A: We are cautiously optimistic and will focus on consolidating current capacities. Future CapEx will be considered based on business stability and market conditions. We aim to reduce debt and maintain conservative financial ratios.
Q: What is the expected incremental depreciation from the new facilities?
A: We expect additional depreciation of around INR8 crore to INR10 crore annually from the new CapEx.
Q: What will be the peak revenue once the current CapEx is fully utilized?
A: We aim to achieve a peak revenue of around INR1,200 crores based on current selling prices and market conditions.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
