Key highlights

During Dec'15 quarter, volume growth was seen across the segments. Margins improved due to better product mix and better efficiencies.

The company introduced new Pharma and personal care intermediates products in Specialty chemical segment which generated a healthy response. Further additional product offerings are also on way. These new products will contribute around Rs 25 crore of sales in FY'16, but its contribution will increase significantly from there on. The margins on these products are also relatively higher.

During Dec'15 quarter the company successfully completed the first tranche of QIP of Rs 83 crore. Reputed investors like Franklin Templeton, Government Fund Norway, ICICI Venture Fund participated in the placement. Next tranche of QIP will be done at appropriate time.

The entire funds will be used for the Phenol project, which the management expects to commercialize in next 24 months ie somewhere around April 2018. Total costs of the project is around Rs 1200 crore which will be on a debt equity of 60:40. Entire Rs 780 crore debt is tied up which will be all rupee denominated debt for 13 years on ballooning repayment basis.

Management expects around Rs 70 crore from the proceeds of land parcel in April'16 which will also help in financing the Phenol project.

Seed marketing of Phenol was started by the company in Dec'15 quarter.

The company will have a Phenol capacity of around 2.5 lakh tons. The total market demand of Phenol in India is growing around 5-7% every year and market is currently around 2.5 lakh tons of which 80% are imported. There are 2 local players who are smaller in size and capability and one of them is earning Ebidta of around 15%. Thus the demand in local market will absorb entire production of the company

As per the management, due to worldwide recession, demand is hardly growing. Further back to back below monsoon worldwide also affected the demand of Agrochemical business. In such a scenario, only way to grow sales is through increasing the market share.

Further the sale of higher margin and value added products will increase going forward. The company is aiming to tap more newer markets and geographies.

OBA (optical brightening agent) sales for FY'16 will be around Rs 175 crore and at that rate the unit will be operating at around 35%. Management is confident of sales of around Rs 250 crore which will make the plant operating at around 50% of capacity and also to break even at Ebidta level in FY'17.

During the quarter, employee costs were higher due to impact of Bonus act and higher provision of gratuity.

There was around Rs 1.18 crore of forex gain in Dec'15 quarters, which helped in lower interest costs.

Total debt as on Dec'15 stood at Rs 523 crore as compared to Rs 595 crore as on Dec'14.

Speciality segment margins were higher and stood at around 24% at Ebit level because of the new products and overall better product mix in sales. Management is confident of around 30% margins in speciality segment in next couple of years.

Overall, management is not worried that much due to global recession and is confident of higher volumes and margins going forward.