OPM fell 240 basis points to 23.8% limiting OP growth to 17% to Rs 42.22 crore.

Other income jumped 77% to Rs 1.76 crore and interest cost soared 211% to Rs 4.90 crore.

As depreciation increased 56% to Rs 3.70 crore, PBT grew just 7% to Rs 35.39 crore.

Taxation grew 19% to Rs 12.73 crore (tax incidence grew from 32.4% to 36.0) after which PAT limped 1% to Rs 22.66 crore.

The company incurred forex loss of about Rs 2.50 crore as compared to forex gain of about Rs 7.50 crore for Sep'12 quarter.

Six month results

For the six month ended September 2013, Vinati Organics registered 34% rise in sales to Rs 329.44 crore.

However, OPM dived from 23.5% to 20.6% slowing OP growth to 17% to Rs 67.83 crore.

Other income almost doubled to Rs 3.42 crore and interest cost zoomed 139% to Rs 9.66 crore.

As depreciation increased 60% to Rs 7.35 crore, PBT grew 7% to Rs 54.24 crore.

Taxation grew 17% to Rs 18.93 crore but tax incidence grew from 31.7% to 34.9% which finally saw PAT growing by a paltry 2% to Rs 35.31 crore.

Of the total sales of the company as on Sep'13, about 60% come from ATBS and related products and rest come from IBB and related products. Vinati Organics is the largest manufacturer of IBB in the world with over 60% market share.

The company is also the largest producer of ATBS. ATBS is a specialty monomer. Company has a market share of about 45% and the rest market is dominated by a Japanese and a US company. About 30-35% of total sale for ATBS would be to oil and gas industry, in which management expects a multifold growth to happen. As per management, demand for ATBS worldwide is expected to remain strong due to development of enhanced oil recovery polymers.

ATBS is predominately used in oil & gas industry, paints, cosmetics, water treatment, textiles, personal care, paper, mining etc. Current capacity of ATBS stands at about 26000 MT, and the company utilized capacity to the tune of about 17000 in Sep'13 quarter.

IBB is predominately used in Pharmaceutical industry and in Perfume and is also used as a specialty solvent in various other industries. Its intermediaries and by some value addition it can also be used in paints and coatings, agrochemical and pesticides industry, FMCG industry, solvent extracts, LCD, tyre, gasoline etc.

New plant commissioned

AAM, Polymers and HPMTBE Plant have already been commissioned. ATBS expansion & TBA projects are nearing completion. The company has 5000 MT of HPMTBE capacity and capacity utilization as on Sep'13 stood at 50%. TBA capacity stood at 750 MT and 35% is the utilization capacity. Diacetone acryl amide (DAAM) is yet not started as trial production is still going on. DAAM has installed capacity of about 1000 MT.

No major capex ahead

The company's depreciation for the six month ended September 2013 have soared 60% to Rs 7.35 crore.

However, there are no major capex lined up except some extension existing ones. At the most capex will be around Rs 100 crore in next couple of years.

Postpones setting up of co gen power plant

The company has earlier planned to set up a co gen power plant at cost of about Rs 50 crore, but Maharashtra government has allowed the exchange of power trading activities, which ensures lower power costs and hence for the time being, the company has postponed its expansion in power plant.

Valuation

The share price trades at Rs 112.