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Analyst Meet / AGM
17-Feb-15
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Conference Call
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Adi Finechem
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Additional volume of expanded capacity by Q4FY16 itself
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Adi Finechem held a conference call to discuss the results for the quarter ended December 2014 and way forward. Senior Management of the company addressed the call
Highlights of the concall
- Total income from operations rose 6% on a YoY basis in Q3FY'15 to Rs 37.19 crore while EBITDA fell 39% to Rs 5.94 crore. PBT was down 46% to Rs 4.47 crore while bottomline of the company increased 19% to Rs 2.95 crore.
- On a QoQ basis Total income from operations rose 11% while EBITDA grew 24%. PBT was up 19% and bottomline 19%.
- For 9MFY'15 Total income from operations rose 6% to Rs 113.64 crore but EBITDA fell 11% to Rs 19.9 crore. PBT was down 11% to Rs 16.36 crore while bottomline of the company decreased 13% to Rs 10.65 crore.
- ADI Finechem is a specialty oleochemical manufacturing company situated near the city of Ahmedabad in the western region of India. By-product fractions of natural oils and fats generated during refining of Sunflower and Soyabean oils are company's raw materials. ADI Finechem fine chemical products portfolio has applications in manufacturing of resins for Paints, Inks adhesives etc. The company also manufactures specialized products for neutraceutical industry.
- The company is expanding its capacity from 25,000 tonne to 45,000 tonne at a cost of Rs 21 crore. Following a delay in receipt of key equipment, the expansion plan got delayed from September 2014 to December 2014 earlier and now from December 2014 to March 2015. The management is confident of selling additional volume and achieve optimum utilization of expanded capacity by Q4FY16 itself
- Adi Finechem is the only producer in India of dimer acid/tocopherol accounting for 53.2% of FY14 revenue and a low-cost producer of others.
- The company won't have any negative impact because of the fall in crude oil prices. There is perception in the market that oleochemical products of AFL can be manufactured through the synthetic route from crude oil. However, Linolic acid cannot be manufactured by the synthetic route, while dimer acid can be manufactured synthetically, but from toll oil. Toll oil is produced during the manufacture of paper and its prices are not correlated to crude oil prices. Hence, the sudden fall in crude oil prices won't impact realisation of Adi Finechem
- Unlike other chemicals whose prices have collapsed because of dumping by China oleochemicals doesn't face stiff competition from China. Average realisation of various oleochemicals is lower compared to transportation costs involved, thereby restricting dumping from China. The company is selling its products at FOB price of Chinese suppliers (plus transportation costs), but is yet reporting a healthy margin. Similarly, because of high transportation costs, the company won't be able to export oleochemicals.
- Tocopherol, which accounted for 35% of revenue for Adi Finechem is entirely exported. At present, tocopherol is undergoing a downturn following oversupply. Generally, tocopherol follows an 18-month cycle. It was on an uptrend from 1QFY12 to 4QFY13, where its prices increased from Rs 155 per kg to Rs 572 per kg. Downtrend started from 1QFY14, where prices declined from Rs 572 per kg in 4QFY13 to Rs 300 per kg currently. The management expects the downtrend in tocopherol to get over by the next two-three quarters.
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