Some notes I prepared while listening to call
agri inputs:
* indian farmers likes brand because of they give predictable yields
* kefun, oshean brands have done really well
* selective launching 1-2 every year
* challenges in monsoon, muted growth possible in second half
* biovita relaunched
* in-licensed products have gone to 70% – I think this is giving much better margins
CSM
* CSM growth flat in q2, customers take the deliveries in 2H
* plant 2 at Jambusar started in sept, plant 3 by end of year q3 in dec
* order book of 610m
* A molecule takes around 2 years to ramp up from early stage to commercial production
* PI does not have much impact of crash in global agri prices due to it is mainly into molecules in early stage of the cycle, only matured products will see impact
* infact they are getting more and more enquiries from global companies for out sourcing – in 1H they saw 20% more enquiries in CSM
* the impact of global agri commodity crash is that farmers will look to shift crops which have better prics and try to reduce costs which will impact mature agri input products. PI is in early stage products will not be impacted much.
* started working on pharma and speciality chemicals – this is pilot stage – target 10-15% sales from these segments in next 3-5 years
- Strength of the company includes handling complex process chemisty/reactions and r&d and moving products from early lab synthesis to commercial production and key tie ups/trust with global agri MNCs that they will respect their IPs
FY16 outlook
- blended growth (agri input + CSM) will be 15% growth with 100-150 point improvement in margins
- 300-350cr from two newly commissioned plants in jambusar in H2
- fy16-17 slight tapering of tax rates due to jambusar being in SEZ ( My take is this will be offset will be higher depreciation of two new plants )
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