Highlights of the Concall

• Total Income grew by 18% to Rs. 245 crore in Q2FY'17 from Rs. 208 crore in Q2FY'16. EBITDA increases by 60% to Rs. 45 crore from Rs. 28 crore. EBITDA margin improves by 481 bps to 18.1%. Profit Before Tax higher by 186% to Rs. 37 crore from Rs. 13 crore. Profit After Tax increases by 247% at Rs. 24 crore compared to Rs. 7 crore.

• Total Income grew by 17% to Rs. 501 crore in H1FY'17 from Rs. 429 crore in H1FY'16. Both Fragrance and Flavours businesses drive overall growth in H1 FY2017. Domestic segment grew by 26% owing to strong demand and better realizations; Performance in the international markets was subdued with 1% growth

• EBITDA increases by 36% to Rs. 95 crore from Rs. 70 crore. EBITDA margin improves by 265 bps to 19%. Margins expand primarily owing to higher realisations and better raw material buying efficiencies; increase in volumes continue to assist margin performance given the operating leverage in the business

• Profit Before Tax higher by 100% to Rs. 82 crore from Rs. 41 crore. PBT growth significantly ahead of EBITDA growth owing to notable savings in interest costs owing to strengthened balance sheet, change in depreciation policy leading to lower depreciation charge and change in policy for accounting Research and Development expenses – to carry forward development costs incurred during the first half on eligible products under development aggregating to Rs. 4.49 crore. Profit After Tax increases by 96% at Rs. 52 crore compared to Rs. 27 crore.

• Fragrance division reported 9% growth in H1FY17. Domestic revenues were up 19% while overseas revenues were lower by 8%. Overseas business reported subdued performance owing to slower demand witnessed in some markets and registered lower realisations due to depreciating foreign currency

• Fragrance division operating profit margins higher at 16% in H1FY17 compared to 12% in H1FY16

• Contribution of flavours business increased to 11% in H1FY17 from 5% in H1FY16.

• In H1FY17 flavours segment registers robust 144% increase in revenues y-o-y. Domestic and exports business grew 178% and 109% respectively. Improvement in operating profit margins – at 24% in H1FY17 vs 20% in H1FY16

• The company executed business transfer agreement (BTA) with Gujarat Flavours Private Limited (GFPL) for acquisition of the Company's flavours division. The company expects to complete the acquisition process in Q3 FY2017. GFPL is a Vadodara-based 34-year old entity; the company's flavour division reported a topline of Rs. 10.5 crore in FY16. Acquisition is in-line with the company's plan to pursue strategic tuck-in acquisitions to increase its market share in the Flavours business

• Global consolidated F&F (Fragrance and Flavour) industry with 12 players is controlling 83% of market share and top 4 controlling 57% of the market in CY13. FMCG companies greatly depend on the reliability, quality of service and the F&F company's technical know-how.

• Indian F&F market is expected to grow at around 10% vs 5% of global market (2013-16). Indian market comprises of more than 1,000 players. Top 5 players control ~70% of Indian F&F industry. Global MNC F&F houses have a market share of ~60%.