Key Highlights

Sales growth of 7% in Dec 18 quarter was largely price driven. The company despite increasing pricing of finished products was not able to pass on the steep increase in raw material costs which affected the overall margin in Dec 18 quarter.

The landed costs of some raw materials and some intermediates from China continued to remain high and rupee depreciation also affected the overall costing.

Apart from input cost, there was some one off adjustments like around Rs 2.5 crore towards provision on debtors due to Ind AS which will be reversed in coming quarter. On 9 months basis, there was some stock write off adjustments amounting to around Rs 4.5 crore.

The company is taking lot of aggressive steps to mitigate the whole impact of the uncertainties in raw material costs. Investing Rs 100 crore Phase 1 expansions in Dahej for formulation unit which will get -into intermediates and technicals for these intermediates as well. Also investing another Rs 130 crore for expansion of existing portfolio of molecules for export market. Investments are going on in increasing the capacities of molecules for international market, revenues will start flowing from June onwards. Entire capex is from internal accruals.

Overall in about 5-6 years, the company expects to invest around Rs 800 crore for capacity expansion, backward integration and launch of new molecules.

The company is continuously working on improving its share of specialty portfolio in the overall mix.

Board has approved the merger between Metahellix and Rallis India which will be completed in next 6-9 months.

The company is working on products which are in pipeline. There are about 17 molecules on which the company is working on and 3 will be introduced in FY 20.  

Focus will remain on collection

Demand for certain products are very strong in international market and the company is increasing capacities for the same. Internationally, a certain degree of buoyancy was seen compared to domestic market. Some herbicides portfolio has seen some increased offtake due to some regulatory aspects as well.

Rabi has generally not been good since past couple of years for the company and in general for the industry as well. Thus overall, while rainfall may be slightly below normal, the uneven spread is hurting the overall volume growth of the portfolio.

Rural economy is good. Its definitely better than last year.

So overall, FY 19 seems to be a tough year on margin front with difficult for companies to pass on the rise in raw material cost, the management is confident of the price increases next year.