Key Highlights

The company achieved a volume growth of around 4% in CY 18 as compared to a 5% volume growth in CY 17 on YoY basis.

Increase in raw material prices affected the entire CY 18 margins and lower demand resulted in company not been fully able to pass on the rise. The company will increase the prices in CY 19 as the year progresses.

The company spent around Rs 16-17 crore in R&D facilities in CY 18 for implementing the acquired technologies from the Parent for manufacturing certain wire enamels and hardeners. The company continues to seek new product development locally under the technology transfer agreement with the Parent.

The company also developed various electrical and instrumentation products which can be used for electric vehicles and also for defence systems. Is in talks with various auto companies and other defence companies for the orders.

The benefits of all these should eventually result in higher sales and better margins. However given the current environment, difficult to time the growth in CY 19.

Company has developed significant capabilities in all areas of its operations including new products and technologies which put it in a very strong position to deliver improved financial performance over the next years. The demand drivers are in place and the company is waiting for some improvements which should come. But difficult to determine the timing and pace.

The company also plans to invest in Ankleshwar unit and to build up capacities for future growth. In support with the Parent, new product introduction will take place in this unit.

Overall, the demand of the company's products is linked to the IIP growth. While the directions is same, its generally higher than IIP due to company's vast product portfolio and niche presence.

Company has still not seen any big impact of GST or make in India or reduction in imports from China so far. These are significant changes and if they go on an expected line, then will benefit the company significantly.

Paint and plastic additives is one such product line which will be introduced in next couple of years. Parent has nearly a billion Euro of revenues from this segment and is very strong in technology and R&D.

Export to Parent stands at around 5% and most of the exports are to South Asian countries. This will increase with more and more R&D led new products being introduced by the company in India. Going forward, management expects the company to do well due to more product introduction from the Parent and better prospects for electrical industrial and power segment.

Growth will be more towards H2 of the year, but overall growth should be better both in volumes and some price increase will lead to better margins in CY 19.