Highlights of the Concall

• During the quarter the company witnessed a strong revival in new product and brand launches in the domestic FMCG market especially from the mid and large sized FMCG customer segments, especially post elections,

• The company is witnessing signs of stability in raw material supplies over the last few months. In the last 18 months, the Fragrance and Flavours (F&F) industry had faced unprecedented levels of uncertainty in raw material supplies leading to volatility in global raw material prices. The company believes that if this environment continues over the next few months, the raw material situation will fully normalize.

• Q1FY20 revenues from operations stood at Rs. 271.5 crore as against Rs. 236.0 crore, higher by 15% YoY. The growth was driven by a robust uptick in demand in the domestic fragrance business, steady sales momentum in domestic flavours business coupled with a broad-based normalization in the operating environment.

• The international flavors and fragrance business continues to be healthy, registering a growth of 25% YoY

• EBITDA margins grew by 220 bps YoY at 17% led by steady stabilization in raw material supplies along with the several cost-optimization measures undertaken by the company, including the optimal utilization of its Mahad plant in Maharashtra during the latter half of the quarter.

• Interest costs increased to Rs. 7 crore and depreciation stood higher at Rs. 12.1 crore, primarily owing to the commissioning of new facility at Mahad.

• The adoption of new accounting standard resulted in increase in depreciation cost by Rs. 3.25 crore and finance cost of Rs 1 crore.

• Fragrance division delivered a growth of 15% YoY driven by healthy uptick in demand in the overseas and domestic markets. Domestic revenue grew by 10%, while overseas revenues marked a strong improvement of 26%

• Flavour division witnessed a healthy momentum during the quarter driven by increased client engagements and uptick in overseas markets. Domestic revenue grew by 7%, while overseas revenues marked an improvement of 20%

• The company has forayed into a new product category of Industrial use of fragrances in consumer durables and automobile accessories. It has entered this new fragrance category by initiating pilot projects with certain market leaders. The company is optimistic of strengthening these offering in the domestic market in the coming quarters.

• The company has launched 25 new variants of "Keva Roll-ons‟ in the retail market under the Branded Small Pack (BSP) segment. The roll-ons business now has a large portfolio of 47 product SKUs spread over Traditional, Arabic and French notes of fine fragrances to address a diversified consumer base

• Keva Roll-ons launches have received good initial response. Going forward, the company expects the launch of roll-ons to further strengthen its BSP segment and enhance brand visibility for the brand "Keva".

• The company is cautious on its acquisition strategy and would not be very aggressive.

• Net Debt increased to Rs 348 crore at the end of June 2019 from Rs 299 crore at the end of March 2019.

• The company expects to complete the acquisition of Italy based -Creative Flavours and Fragrances SpA' (CFF) to be complete by Q3 of FY2020 and will be EPS accretive.

• The company expects a strong double digit growth in volume and Bottomline in FY20- both in domestic and exports market.