DASDA was a factor in FY20
In FY21 and FY22, company started producing IPA which is used to make sanitizers. IPA is made from acetone for which the company had a plant which was commissioned just in the nick of time around FY19-FY20. The business is related to the phenols segment (Phenol and Acetone) which normally has commodity chemical margins but due to the pandemic, sanitizer was in high demand which led to abnormal realizations for IPA. Refer quotes from fellow VPers below
As the pandemic subsides, the phenolics business which is now ~60% of revenues will revert to the mean commodity chemical margins. From what I remember, the phenolics business is in a subsidiary while majority of the remaining businesses are held directly in the listed entity. So a quick subtraction from consolidated – standalone financials will give you a sense of how the phenolics business margins have fared over the last 3 years
Also note chemical companies across India had a dream run during the COVID years as prices shot up due to supply disruptions leading to extraordinary/abnormal margins. What we are witnessing now is only a reversion to the normal. The extra cash flows generated during these 3 years have helped some of the small / mid size players move into the next orbit and given them a war chest which they are now utilizing to get into larger projects and punching above their weight.
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