Operating margin of the company rose 260 bps to 16.9%. Operating profit as a result increased 37% to Rs 46.37 crore. Cost of material consumed as a percentage of net sales (net of stock adjustment) fell 300 bps to 55.3% while Employee benefit expense roe 60 bps to 12.1%. Other expenses decreased 160 bps to 15.1%.

Other income fell 39% to Rs 1.38 crore while interest cost increased 364% to Rs 7 crore while depreciation rose 79% to Rs 12.14 crore. PBT was up 2% to Rs 28.61 crore.

Effective tax rate decreased to 33.7% from 35.8% leading 6% increase in PAT to Rs 18.98 crore. Considering share of profit or loss in associate and JV, Bottomline decreased 1% to Rs 18.46 crore.

Segment wise, Fragrance revenue stood at Rs 243.5 crore, up by 15% YoY led by demand uptick in the domestic and global markets and accounted for 90% of sales. PBIT from the same was up by 21% to Rs 35.59 crore and accounted for 91% of total PBIT with PBIT margin at 14.6% as compared to 14% for June18 quarter.

Flavours segment revenue stood at Rs 28.03 crore up by 14% YoY driven by a healthy growth in overseas markets and accounted for 10% of sales. PBIT from the same was down 4% to Rs 3.72 crore and accounted for 9% of total PBIT with margins at 13.3% as compared to 15.6% for June 18 quarter.

In the last 18 months, the Fragrance and Flavours (F&F) industry had faced unprecedented levels of uncertainty in raw material supplies leading to volatility in global raw material prices. However, over the last few months the industry has been witnessing signs of stability in supplies. The Company believes that if this environment continues over the next few months, the raw material situation will fully normalize.

The company has forayed into a new product category of Industrial use of fragrances (consumer durables and automobile accessories) by initiating pilot projects with certain market leaders. The company is optimistic of strengthening these offering in the domestic market in the coming quarters, which should further enhance the category's future growth prospects

Commenting on the performance, Mr. Kedar Vaze, Whole Time Director and Group CEO at SH Kelkar and Company said,

"I am happy to share that we have reported a strong start to the new fiscal with a 15% topline and 21% EBITDA growth on a Y-o-Y basis. This was led by healthy uptick in demand in our core business categories and broad-based normalization seen across the operating environment. During the quarter, especially post elections, we witnessed a strong revival in new product and brand launches in the domestic FMCG market. This, along with improving momentum in client engagements and buoyant international markets, led to a growth of 15% in our core fragrance business. We have also delivered a healthy 14% growth in the flavours division.

On the operational front, we recently expanded into the Industrial use of fragrances (consumer durables and automobile accessories). This new category is a huge milestone in our innovation journey and offers significant potential for future growth. During the quarter, we also launched over 25 variants of roll-ons in the retail market, under the Branded Small Pack (BSP) segment. I am pleased to share that these roll-ons have received positive response and we are now currently working on more new launches within this segment, which should enable us to further expand this category.

As we look ahead, we continue to see an immense potential in all our business categories over the longer-term. Although there are cautious sentiments in the domestic FMCG industry right now, we are currently witnessing steady traction in terms of order enquiries and leads, especially from the mid and large sized FMCG customer segments. Going forward, we believe, a revival in our industry, improving momentum in client enquiries for new product launches along with the implementation of our strategic growth measures, should drive our performance in both the domestic and global markets. Overall, we look forward to delivering healthy and sustainable results in FY 2020."

Performance for year ended March 2019

For FY'19 S H Kelkar reported 2% increase in its consolidated net sales to Rs 1043.6 crore compared to corresponding previous year period while net profit of the company was down 6% to Rs 88.48 crore compared to FY'18.

Operating margin fell 280 bps to 12.7%. Operating profit as a result decreased 16% to Rs 132.07 crore.

Other income increased 8% to Rs 27.88 crore while interest cost increased 251% to Rs 13.95 crore while depreciation was up 31% to Rs 31.15 crore. PBT before EO was down 26% to Rs 114.85 crore. The company had nil EO items compared to net EO expense of Rs 12.85 crore related to termination cost in relation to its restructuring its operation at PFW Aroma Ingredients, Netherlands. PBT after EO fell 20% to Rs 114.85 crore.

Effective tax rate decreased 1180 bps to 23.5% leading 5% decrease in PAT to Rs 87.84 crore. Considering share of profit or loss in associate and JV, Bottomline decreased 6% to Rs 88.48 crore.

The scrip is currently trading at Rs 118