Granules India Ltd

Concall Notes from Aug 10 2022
Things look positive from here. The management wants to focus on FCF generation.

• Key Raw material PAP prices have started to come down. Availability has improved. Company would also source from Indian Suppliers apart from China based on who provides better rate and stable supply.

• There was a rise in Working capital in the past because of the Supply disruptions and company had to stock more inventory. This should normalize and company is focusing on FCF generation

• 250 Crores allocated for Share buyback and promoters also would participate in buyback

• Capex plan for FY23 is 300 Crores. 100 crores for DCDA plant. 75 crores for acq of Biotransformation plant and lab. This will help in Enzyme led projects

• Current debt at 613. Long term Debt is 300 crores. Earlier it was prudent to save the money rather than repaying debt because of better reates at that time. Now since the interest rate is increasing, company wants to reduce it. There will be no long term debt in 2 – 3 years.

• Company got approval for PLI scheme in DCDA manufacturing at 8000 tonnes per month. This will help in Backward integration for Metmorfin. Primary purpose if for internal consumption which will reduce the cost than importing from China

• Cash to Cash cycle had a hit because of larger inventory owing to supply disruption and aiming to bring it normal

• Margin improvements – won’t be able to hit 30% but will be able to maintain with lag in passing of Price increase and decrease.

• Focus areas – Biotransformation and Enzymes
  Focus Geos – Europe, South Africa and LATAM for next 3 years, Launching paracetamol in Europe

• Company wants to focus on FD more