Fine organics AGM :
Chairman speech :
We continue to face the challenges brought by the macro economic factors such as cost inflationary challenges including logistical costs.
Globally the trend is to adopt more ecologically friendly products as people become more conscious about the need for environmental preservation. Green chemistry-based products are becoming increasingly important in today’s rapidly changing environment. Consumers are transitioning to Green chemistry as a renewable and sustainable alternative for their products.
We, at Fine Organics, are a well-known and globally recognized Company in the area of green performance additives. Our value creation strategy operates in an environment influenced by both internal and external factors.
Today we have a wide range of specialty additives created from oleochemistry, used in foods, polymers, personal care, coatings, feed nutrition and many other applications
Our manufacturing facilities are at Ambernath, Badlapur, Dombivli and Patalganga, allowing us to deliver in around 80 countries through our offices in U.S. & Europe and over 180 distributors to our more than 5,000 end users. Our unique offerings for our customers across the globe, backed by prudent R&D capabilities.
Innovation is a back-bone of the Company and R&D is a continuous process in our Company. Our strong R&D and innovation capabilities has allowed us to deliver FINE solutions to our customers. We have team of more than 20 Scientists and technicians. Our R&D spend is less 1% of our total revenue because our R&D is more of knowledge intensive than capital.
We are glad to share that we could manage to operationalise the second phase of our Patalganga Facility as per targeted timeline, which is catering to growing Indian food industry. We have also formed a Joint Venture Company in Thailand which will help us in expanding our product basket and further strengthening of our global presence.
We intend to further increase our production capacities by putting up a new plant in Gujarat for new and existing product lines with process improvements and technological upgrades.
The supply chain disruptions and input price volatility hit the company’s profitability in the initial half of the year. But our commitment to service customers at the contracted price allowed us to strengthen our existing relationships. To tackle the volatile environment, we restructured our business model and aimed to engage into shorter-term contracts with customers, wherever possible. This helped us maintain margins in coming quarters.
Some notes from Q&A :
In oleochemicals, we have 450+ products, some are highly profitable and some are less profitable
Competition : Cargill, Palsgaard, Corbion, Emery.
RM : 70% domestic 30% import
When we started green additives when market was non existent. We started making food emulsifiers no market for that. We took long to develop our own market, it turned our advantage, we taught them how to use, helped us long way. That was a mistake, too early.
Emulsifiers : when volumes started growing we didn’t have enough money, RM is vegetable oils and no credit, it is cash and carry in 3 days, difficult to manage WC cycle, converted mistakes to advantages.
1997-98 : some speciality additives in R&D. When we wanted to commercialize, we didn’t have machinery, we went to europe/US. We didn’t have money for those machines. We came back, developed own Engineering R&D, unless we do it ourselves we cannot afford
Now we require less Capex, we design own plant to suit our products, own process.
All 3 turned own advantage.
Now a big hurdle : capex for other player very large, and create own engineering capabilities.
This growth will be there as long as we expanding. Naturally the growth will come, we are aware of customers, markets, we know we can sell and then only we invest.
We have expansion plans in Gujarat. Our growth is slow and sustainable. We have expanded for sure
Fungibility : many products made in same plant but not all. Some rules act food additives plant cant be used for non food.
Focus on cosmetics : Mainly in India in Skincare.
We are coming with home care green surfactants Free of pertrochemical.
We are actively looking at new products (in Gujarat facility )
We will focus on olechemistry as of now. We dont want to go in fermentation.
RD is working on new products (some which helps in energy consumption, RD is slow process other things to be considered).
Are we focussing only on export. Till 19999 100% in india.
2000 onwards, we did some exports since no market in India. We kept on getting export market.
Last few years, 40% domestic 60% export
70% exports 30% domestic (last year).
Domestic will always be priority and hence with Indian customers we want to grow we will not short supply in India and then only export
Hence future, 60: 40 domestic : export
We believe domestic helped us grow and hence we will not be disloyal to them.
We are actively looking at capex in Gujarat, government is yet to give us allotment letter, we will inform on capex plan.
RD is backbone of fine organics. There is continuous development in RD it takes long time to commercialize 3-5 years to get approvals after development (government, country and customer), one needs patience in this business, expensive in time.
The reason for increase in quarterly revenue : Rise in Q4 and Q1 Is due to realization and some volumes.
Shortage of container across globe.
We despite challenges we supplied across 80 countries. We dont know how long tough macros will remain. We have become agile to not hamper growth
Our endeavor to sustain : 18-20% EBITDa margin.
Production capacitdity : 1lac tonne per year.
Utilization : optimum capacity
Increase in freight has increased sharply due to container shortage. Freight rates are not normalized.
Disc : Invested.
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