Rajesh Rathi Managing Director of the company addressed the call:

Highlights of the call:

Six months sales grew 17% to Rs 719.66 crore. PBT grew 34% to Rs 73.15 crore.

The company's core business is manufacturing of Pigments which are Colorants used in paints, Plastics, Printing Inks and Cosmetics industries.

Last quarter was challenging despite the company balanced well between growth and margins.

It is the largest pigment player in India and with 35% market share.

The company has come from being a non existent to the 5th largest producer in the last 7 years.

It is seeing significant traction in the three large overseas markets i.e. Europe, North America and Asia.

Top three global plastic and paint customers have enrolled it as a strategic supplier.

The company is amongst the top two suppliers in the Plastic Industry in Europe, India and Middle East.

Major capacity expansion has been lined up by the company up over next 5 years' under MOU signed with Government of Maharashtra for Rs 1,000 crore investments.

The company discontinued its agri business since April 2018 as it was low margin business.

It sold its master batch business to Americhem Inc. The transaction was concluded in June 2018. Master batch business was divested to focus and grow aggressively its Pigment business. It also would show its no conflict approach to the customers.

Some raw materials increased sharply during Q2.

Depreciation in Rupee impacted import costs.

The management expects stability on raw materials pricing to come in by end of Q3.

The company resorted to price increase in Q2 and same will continue in Q3 to cover recent increase in RM cost

The company is planning capex of Rs 200 crore for capacity increase and backward integration projects. About 60-65% will go for capacity increase, 30% will go into backward integration and the rest in infrastructure.

This capex will come on stream in a staggered manner which will be between Q3 and Q4 and early next year. It refused to share the capacity and increase in capacity.

Current capacity utilization is 80-85%.

The company will pursue cost control.

Funds received from divestment of masterbatch and Agro Formulations business will be deployed in capex for expansion of Pigment business.

Raw material price is going up since June 2018. Despite price increase it still has not recovered the overall increase in raw material price.

Inventory is being built up to cater to normal demand increase in Q3.

Other income went from positive to negative as last year there was a forex gain yoy. This year due to volatility and weakening of rupee the market to market situation of the receivable payable and on hedges there is a forex loss.

Foreign currency loan is designated as a hedge against future imports. Mark to market happened on the reporting date.

Movement in rupee increased significantly post July 2018.

Raw material could increase some more in the coming months and then stabilize.

Debt equity ratio was 0.52 against 0.81 in March 2018.

In Q3 the company will create some capacity by debottlenecking. There will also be planned shut down for maintenance.

Exports to grow by 20% in Q3.

Strategy is to become top 3 pigment player globally in next 5 years.

Q3 should look similar to Q2 but Q4 should be much better.