Capitaline

Analyst Meet / AGM 11-Jul-13

Analyst Meet

Astec Lifescience

Aims to register net sales of about Rs 230 crore in FY'14

In interaction with Ravindra Inani, CFO
Key highlights

Of the total sales for FY'13 on standalone level, more than 90% is from crop protection business and the rest are from Pharma intermediaries.

Of the crop protection business, the Nufarm contract is a herbicide contract while the rest are all fungicide business. Nufarm contrat is a 10 year contract which was about Rs 25 crore turnover in FY'13 and management expects to double to turnover in FY'14, as in FY'13 it was operational only for 6 months. The contract is a costs plus model and works at Ebidta level of around 14-15%.

On product category wise break up of sales for FY'13, about 75% came from Catalogue sales, 18% from contract manufacturing and rest from Retail business. Of the catalogue sale, about 70% is domestic and rests are exports. Catalogue sale is a B2B sale and some of the corporate like Syngenta, Rallis, Clorinova, Excel, United Phosphorous etc are its major customers.

The company also has a contract manufacturing contract with Sumitomo which will commence from end of July'13 and management expects it to register about Rs 10 crore sale in FY'14.

In Catalogue product business the company primarily manufactures trizolfungicide and Tebuconazole. Tebuconazole is manufactured for Bayer and was about Rs 20 crore in FY'13. Trizolfungicide is not registered in India, but worldwide this is a USD 1.5-2 bn market. The company is looking to introduce 3 more products during FY14 and this business is an 18% EBIDTA margin business.

In Retail business in India the company started operations in FY13 and did sales of 10 crs. It is present in Stales like Karnataka, Gujarat and Maharashtra. During FY14, the company is looking to add Punjab, Haryana and MP. The company wants to go slow in Retail, as it is a small company and needs to establish scale and size first and then moving into retail in a big way.

In Contract manufacturing as of now for the current 2 contracts, no further capex is required. But if the company does more such contracts, then new capex will be done.

Overall, the current season starting June'13 has begun very well in terms of rainfall and demand for crop protection business.

The company is optimistic about FY'14 and expects standalone net sales of around Rs 230 crore for FY'14 and Ebidta margin to hover around 17-18%. The bottom line will improve further, as there are no further capex and interest costs will be lower in FY'14. Also company aims to prepay some term loans.

Strangely, the company is seeing some signs of ease of liquidity and payment terms, as compared to Mar'13 quarter.

Company is a net exporter. It has not hedged any of its imports of raw material and ECB, and some exports are hedged. Net to net, company could have gained some thing on forex, but the opportunity was missed.

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