Key Highlights

Roughly, the user industries can be classified into sectors such as agriculture, construction, automobiles, FMCG, Paints, printing, Paper, footwear and Nutritional care. There is a clear slow down visible in almost every sector except nutritional care which is growing well.

The Dahej plant did see improvement in capacity utilization but higher raw material costs resulted in losses for the plant. Aims to improve the capacity utilization further in the coming year.

The company launched new products for crops like cotton, corn, rice which generated good volumes in FY 19 in agri segment.

Exports account for around 13% of total sales. There has been a constant pressure seen in demand from exports. The Parent also highlighted about pressure in demand in international market which is here to stay for few more quarters.

There has been a change in business approach by the Parent. Pigment business has been shifted from BASF India to a wholly owned subsidiary company of the Parent. Construction chemical business also will be revamped going forward. The optical brightening agent (OBA) business was sold to Archroma India. The Parent wants Indian company to focus on Agri, Nutritional care and related business going forward.

The company incurred a capex of around Rs 70 crore in FY 19 for introduction of new products and some maintenance capex. No major capex planned in near term.

Overall, FY 19 was a very difficult year where sales growth was lower than expected and higher raw material costs which could not be passed on, impacted the margins.

Near term outlook is difficult to share given the delayed pick up of monsoon and lower demand environment. However given the performance of FY 19, FY 20 should be better.