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Key Highlights • Strong Financial Performance • Growth in European segment. • Significant sales from a global MNC account. • Operational launch of a new facility in Indonesia. • Turnaround in Flavours segment. • Insurance coverage to mitigate losses from Vashivali fire incident.
• FY25 Projections • Anticipated sales run rate of over $10 million from new MNC account. • Expected revenue of $10-12 million from Indonesian unit in its first year.
Capital Investments • New Production Unit • Investment of $4 million to $5 million. • Full production expected by June, targeting $10-12 million in first-year revenue.
• European Operations • Operating at 85% capacity utilization. • Projected 10% growth for FY25; potential €3 million to €4 million investment needed for North Africa and Middle East markets.
Gross Margins and Market Strategy • Improved Gross Margins • Current gross margin at 44-45%, expected to be sustainable. • Backward integration in Global Ingredients segment contributing to market leadership.
• "China Plus One" Strategy • Aimed at maintaining profitability amidst Chinese competition. • Projected 12% CAGR growth for FY25 and FY26 with sustainable gross margins around 16%.
Q&A Highlights • Concerns Addressed • Higher tax rate due to one-off deferred tax reversal. • Jakarta facility to enhance capacity but not directly contribute to revenue. • Net debt expected to remain below Rs. 550 crores.
• Growth Expectations • Anticipated Rs. 150 crores in free cash flow. • Establishment of a U.S. subsidiary for future growth.
Long-term Growth Strategy • Investment in R&D • Focus on expansion in Southeast Asia and Europe. • Sustainable growth rate of 8-10% in saturated markets; over 12% in new geographies.
• Operational Capacity • Indian facilities operating at over 85% utilization. • Strong international demand and ongoing expansion in Europe.
Conclusion • Future Outlook • Confidence in continued demand growth despite macroeconomic risks. • Emphasis on innovation and operational resilience following the Vashivali incident.
Earnings Call Overview • Date: February 8, 2024 • Transcript submitted to BSE and NSE on February 14, 2024 • Management discussed: • Strong revenue growth from new accounts and demand recovery • Significant order wins from a global MNC • Plans for a new manufacturing facility in Indonesia
Revenue Growth and Market Strategy • Anticipated double-digit growth in the European market (10-12% CAGR through 2025-2026) • Focus on organic growth in the U.S. fragrance and flavors market (~$7-8 billion) • New products contributed 2-3% to sales in the last quarter
Operational Efficiencies • Increased production volume without significant capex • Current capacity utilization below 50%, indicating potential for growth • Aim to improve Return on Capital Employed (ROCE) from 12% to over 20% in 4-5 quarters
Market Position and Competition • Holds 20% market share in India's fragrance sector • Competes against MNCs with a combined 60% market share • Competitive advantage attributed to R&D, innovation, and local market understanding
Financial Management • 30-40% of cash profits to be distributed as dividends or share buybacks • Recent acquisitions in Europe performing well • Employee costs rising due to new hires and performance bonuses
Q&A Highlights • Gross margin profile for global RFQs remains lower than company average • Debt stands at Rs. 526 crore; raw material costs declining • Strategy to improve flavors segment margins by focusing on profitable markets • Plans for localized approach in the U.S. market similar to Europe • Revenue growth projected at 12-15%, driven by market share expansion and flavors growth • Concerns about pricing power and raw material cost fluctuations addressed
Conclusion • Management remains optimistic about future growth despite challenges • Emphasis on efficiency gains for margin improvements • Call concluded with an invitation for further questions from participants.
Earnings Performance • Date of Call: November 6, 2023 • Revenue Growth: 10% increase • EBITDA Growth: 25% increase • Core Fragrance Segment: 13% growth • Flavours Division: 4% revenue decline due to international challenges
Strategic Developments • Acquisition: 19% stake in Holland Aromatics to enhance synergies • R&D Investments: Ongoing commitment to growth and innovation
Management Insights • Medium-term Revenue Guidance: 12% growth confirmed • Debt Position: No immediate repayment plans; maintaining net debt to EBITDA ratio below 2x • Market Dynamics: Strong domestic sales from large corporate clients; focus on SMEs and e-commerce
Margins and Capacity • Current EBITDA Margin: 16.7%, with potential for improvement • New Factory in Indonesia: Expected to enhance capacity for Southeast Asia and Middle East
Growth Outlook • Projected CAGR: 12% for fragrances, 15% for flavors • Upside Risk: Potential contributions from new RFQs
Challenges and Opportunities • Destocking Trends: Concerns in the Flavours segment, but optimism for recovery • Raw Material Pricing: Spot prices declining, but contract fulfillment remains uncertain • Backward Integration: Aiming for 100% in Global Ingredients to reduce dependency on China
Domestic Market Performance • Q2 Performance: Strong, with festive season sales accounted for • Volume Growth Confidence: Assurance of gaining market share through new customer engagements
Additional Notes • Working Capital: Higher than desired, but expected to normalize with sales growth • Employee Expenses: 14% year-over-year increase due to salary increments and variable pay adjustments • Clarification on Real Estate Rumors: S.H. Kelkar facility in Mulund remains operational
Conclusion • Engagement with Multinational Corporations: New customer opportunities identified despite low market share • Invitation for Further Inquiries: Management open to additional questions from participants.
Key Highlights • Date of Call: August 8, 2023 • Transcript Submission: August 16, 2023, to BSE and NSE
Financial Performance • Growth: • 7.7% overall growth in operations • 12.1% growth in the Indian market • 3% growth in the European segment • Operating EBITDA: Increased by 33.4% year-on-year • Flavour Division: Experienced downturn due to softer international demand
Management Insights • Future Growth: Optimism despite external challenges • Revenue Projections: • Dependent on product commercialization timelines • Expectations for commercial orders by year-end • Capacity Utilization: • European operations at 85% • Indian operations at 45%
Margin and Debt Management • Margin Sustainability: Stable margin above 16% anticipated • Debt Levels: Increased due to higher sales and working capital needs; plans to streamline in the coming months
Volume Growth • Fragrance Division: 6% increase • Flavours Division: Flat growth; projected CAGR of 12-14%
Strategic Initiatives • Backward Integration: Efforts to reduce reliance on Chinese suppliers • Global Ingredients Business: Aiming for breakeven in the second half of the year
Market Expansion • Indonesia Strategy: Establishing a local factory to enhance supply chain reliability • Sourcing Strategy: Dependent on product destination; utilizing surplus capacity in Indian factories
Challenges and Opportunities • Fragrance Business: Market share consolidation among larger clients • Global Market Challenges: Economic turmoil in Egypt and Sri Lanka, but growth potential in Southeast Asia
Future Plans • CAPEX: $4-5 million for a plant in Indonesia; Rs. 14-15 crore for upgrades • New Product Development: Robust demand with ongoing projects generating Rs. 50-70 crore annually
Conclusion • Overall Outlook: Positive growth trajectory with strategic focus on high-margin products and operational efficiency.
Submission Details • Date of submission: June 6, 2023 • Transcript submitted to BSE and NSE • Call held on June 1, 2023
Company Performance • Stable performance despite challenges in the Global Ingredients segment • Cost pressures noted in the Global Ingredients segment • Recovery observed in the Flavours segment • Final dividend declared: INR 2 per share (highest in recent years)
Strategic Initiatives • Backward integration project in India to secure local raw materials • No further investments in a Chinese plant due to geopolitical concerns • Management confident in achieving sustainable growth despite modest FMCG outlook
Q&A Highlights • Margins: Expected around 15% for Q4 • RFPs: Submissions made for projects worth Rs. 300 crores; awaiting client feedback • Capital Expenditure: Plans to collaborate with Indian chemical sector partners to minimize large capex • Italian Subsidiary: Stable performance despite market headwinds • Debt Levels: Current debt at Rs. 470 crores; ongoing reduction with potential temporary increases due to investments • Inorganic Growth Strategy: Focus on stabilizing current operations before pursuing acquisitions • Revenue Growth: Price growth led the quarter; volume growth flat; stable outlook for raw material prices
Closure of China Plant • Decision made as part of Global Ingredients strategy • Impairment charge taken; plant to remain idle • Focus on backward integration in India expected to complete by year-end • No impact on servicing existing clients or cash flow for Fiscal 24
Conclusion • Management invited further questions and thanked participants for their time.
Conference Call Overview • Date: February 3, 2023 • Transcript submitted to BSE and NSE on February 10, 2023. • Management addressed poor performance, particularly in the Global Ingredients division.
Key Challenges • Global Ingredients Division: • Faced raw material price inflation. • Heavy reliance on Chinese suppliers. • Flavour Domestic Business: • Strong growth domestically, but exports affected by inventory destocking.
Strategic Initiatives • Backward Integration: • Collaborating with local farmers to cultivate aromatic plants in India. • European Operations: • Streamlining through mergers to enhance efficiency. • Product Development: • Engaging in a multi-year project with a large global FMCG player.
Financial Outlook • Proposals: • Over Rs. 100 Crore submitted to global FMCG clients. • Anticipated business proposals worth Rs. 400-500 Crore. • Margins: • Gross margins may be lower, but net margins are stable due to higher volumes. • Debt Management: • Current debt at Rs. 522 Crore, targeting reduction to Rs. 450 Crore in six months.
Market Conditions • Domestic Market: • Traction in fragrance and flavors space is muted due to macroeconomic factors. • Global Market: • Demand for product basket remains stable despite challenges in contract manufacturing.
Future Growth Prospects • Inflation Impact: • Growth prospects depend on easing inflation and market conditions. • Capacity Utilization: • Current utilization below 50%; potential EBITDA of Rs. 2-3 Crore per quarter at 70-80% utilization.
Partnerships and Collaborations • Keva Aromatics: • Developing a supply chain for aromatic essential oils to mitigate procurement challenges. • Competitive Landscape: • Estimated three to four competitors in the $350 million product category.
Conclusion • Management expressed optimism about future growth and ongoing efforts to improve operational efficiency and gross margins. Further inquiries were welcomed at the end of the call.