Highlights of the Concall

• Consolidated Q2FY20 income from operations grew 10% to Rs 400 crore compared to Q2FY 19. For H1FY20 income from operations grew 10% to Rs 797 crore compared to H1FY 19

• Specialty pigments portfolio volume grew 6% YoY for Q2FY20 and Non Specialty portfolio grew 6% YoY

• The company continued with the prices through especially in Azo which is a part of speciality product while there was marginal pricing pressure in non speciality segment

• The quarter saw some uncertainties on account of government plan to ban on single use plastic. As a result there was lot of confusion and indecision in the market in September quarter due to lack of clarity which led to rescheduling of some of the orders from Q2 to Q3 for masterbatch customers. This coupled with general economic slowdown led to lower volumes for the quarter. However the company expects to grow in coming quarters.

• Exports as a % of revenue stood at 48% in H1FY20 as compared to 47% in H1FY19

• Q2FY20 Gross Margins stood at 42.6% as compared 42.8% in Q4FY19 and 41.8% in Q1FY20. For H1FY20 Gross Margins at 42.2% as compared to 43.5% for H1FY19

• EBITDA Margins stood at 1 .8% as compared to 12.8% in Q2FY19. For H1FY20 EBITDA Margins stood at 16% as compared to 14.9% in H1FY19.

• The raw material prices were fairly stable during the quarter

• Capex incurred during the quarter was Rs 55 crore. For H1FY20 capex spent was Rs 85 crore. The company has pushed forward some of the capex programs in August and September 2019 due to heavy monsoon. So in Q3FY20 expected capex is Rs 50 crore.

• In addition to above capex the company has approved the proposal for incurring fresh capital expenditure amounting to Rs. 126 crore. This fresh capital expenditure is primarily aimed at augmenting production capacities at Roha and Mahad. These investments are proposed to be funded through the blend of debt and internal accruals.

• The company has commercial launched a very important high performance yellow pigment during the quarter (only 2^nd serious player to launch the product) which goes into plastics and coatings and has a market size of about Rs 250 crore growing at the rate of 3-4%.

• The company had planned to launch two products in FY20- one is launched (yellow pigment) and the other one is on track.