Hi Aniket,
Thanks for appreciating the effort.
1) Margins have improved for 2 reasons –
a) Proportion of conversion sales have increased, if you observe sales have come down while EBIDTA has increased.
For eg FY 13 had sales of Rs 46cr & EBIDTA at Rs 3cr while, FY15 had sales of Rs 24cr and EBIDTA of Rs 5cr.
b) Increase in lactose capacity exclusively for Kerry (from 3500tons to 11000tons).
As of now Lactose India numbers include lactose exclusively done for Kerry and small work for sanofi (pls refer Mitin's reply above). Bigger kicker will be higher utlisation of kerry capacity and Lactulose (which will happen over next 2 years). Many companies outsource smaller ingredient or component work to specialists take for Eg AIA engineering...what AIA does (grinding balls) constitutes small ( in terms of cost) for mining and cement companies but AIA enjoys very good margins with almost monopoly. AIA cost is small and sticky for mining & cement companies. Lactose India with high market share and long history could have been chosen by kerry for similar reasons. Rs 10cr for Kerry would be too small, while they get supplies from Lactose India (Pls refer to Kerry transaction to understand)2) Yes you are right contracts into these companies would require significant sales effort and track record. Lactose does have a track record and Kerry approached them for capacity expansion. According to management many of their clients insisted Lactose India to manufacture Lactulose (Lactulose is 3rd derivation from Lactose after processing…pls google further to understand the same). Thus Lactulose capacity has been put up after such requests/demand from clients.
Pls go through their site www.lactoseindialimited.com….it contains good info.
Hope that helps.
Thanks.
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