Restaurent brands Asia.pdf (48.5 KB)

True, most of the corporate employee’s claims processed through TPA( mostly via mediassist). They get most of the revenue from corporates through group policy.

Tech will be used to automate few dull tasks or will enhance productivity but scrutinizing small things will require human. I don’t know much about the complexity of processing a claim but Health insurance companies will try to outsource this kind of task so they can focus on the core business.

Arihant Conference April 24

History

• Agrochem + Performance Chemical Manufacturer (API + Industrial chem)
• Agchem division : Dera Bassi
• 2nd unit: Lalru: acquired division; Performance Chem (API + API intermediate)
• Pune: Food additives (for Coke and Pepsi etc.)
• 4-5 decades old company
• Started as a partnership between Excel Industries & Punjab govt.
• 50-55% direct exports and rest domestic sales often are also mostly catering to exports.
• 1st product: Oxalic acid in 1970’s.

Recent History

• FY23 top line: 1000cr. topline
• Have turned around in last 3-4 years; almost doubled top line with EBIDTA margins in teens now.
• We did this by focussing on infra updates; upgrading talent pool across all deptts. Hence relatively newer team
• CEO Mr gupta has been for 3 years.
• Mainly into agchem. (be)
  • Spec chem: Halogination, esterification, nitrogenation
• Capacity utilisation: 9m24; DB over 70%; Lalru – 49-50%; Pune 90% + utilisation
• Last 3-4 years have spent over 100cr in the last few years. From internal accruals.
• Has helped improve gross margins
• Clients: Laurus Labs, Lupin, Nippon, Daichi, Bayer, Pepsi Co.
• 55-60% is exports key is Europe; LATAM is growing fast
• Board: > 50% independent directors

Going ahead…

• Continue to focus on agchem
  • Some were launched in 24 although the sector is in turmoil due to heavy inventory
  • Expecting some turnaround Q2FY25
  • Planning timeline according to this.
  • Some existing and some new customers
  • although from 10 years have clients in Japan however there are some new customers.
• Strengthened R&D, BD teams
• Some molecules that had been planned for H2FY24 have been postponed for FY25. Roughly 5 molecules for FY25.
• There are some other new molecules in pipeline and hope to launch 2-3 molecules each year.
• Volumes pick up over time and takes 2-3 years to reach peak capacity.
• Space to plan for one more line at DB or Lalru. If required beyond we will need another new site.
• Over the next 3-4 years 20-25% topline to come from new products. ==So maybe a topline of 200-250 cr topline possible from new molecules in 3-4 years.==. Had previously guided for a 1500cr. Top line in 3-4 years
• We are looking at molecules which have market size of 800-1000cr. Some of niche molecules could be lower for niche applications usually with tech transfer. We are typically looking for molecules which don’t have much competition and can be in the list of chemistries we could do.
• Seeing China + 1 but rather happening slow.
• Capex plans manufacturing block roughly costs 50cr. Which we are looking for in FY25 which we have space in DB. Further we would need new space primarily though internal accruals. Overall, capex 100-150cr. till FY26. Keeping both options open M&A (Brownfield in Pune or Gujarat) or a new site.
• Interest costs: due to some indirect tax that we have paid off in FY23-24. Going ahead depending on working capital we hope debt profile should be within limits.
• Asset turns are at 2.5 -3. (so a 50cr. could generate 150cr. Revenue). A new capacity takes 1.5-2 years to reach peak.
• What are we hearing from customers?: There was a huge channel build up while now it is mainly molecule specific. Till they are taken up there would be still challenges for the next 2 quarters. For us we have good visibility for FY25 and have good orders for Q1FY25 (reflective of good herbicide demand). We expect things to start improving from then. Pricing currently seems to be at lowest. KSM were 25% of usual price. For now its wait and watch mainly. Clients are saying to wait for few months to gain more clarity.

Management feels the challenges should last not more than a quarter or two.

• Vision: Aim to grow 15-18% annually in top line. Could also look at some inorganic route expansion if it comes our way.
• Credit cycle is a bit stretched a bit in the market right now however don’t see any red flags. Anticipate FY25 to be a turnaround year.
• Revenue Mix: How will this evolve?
  • Mainly agchem business
  • Key driver will be agchem only however planning to add spec chemicals.
  • API or Performance chemicals; some promising products have been shortlisted for development in the next 3-4 years.
  • Our Edge: some are hazardous chem. we are looking at that too large scale development.
• Margin profile: Has been fairly stable due to our upgradation of tech, product upgrades ie RM efficiency improvement which happens continuously in the last few years. Also, the new niche multistage molecules we are adding should lead to higher margin profile in the 3-4 years. Currently looking at 13-15% but hope it reaches to 18% in 3-4 years with new molecules.