Camlin Fine Science Limited --- Looks interesting but some way to go

(Suneel) #85

link does not work. can u upload pdf pls?

(maheshkumar) #87

Just try googling :
Philips capital camlin fine"

(Vijay Sivasankaran) #88

Found this through Google - Camlin Fine

(maheshkumar) #89

Sales up
Losses up
Will benefit in taxes when turnaround will happen
On cusp of turnaround


Would you explain how is it turning around? IMO, there is highly stretched balance sheet,

(nitin.verma) #91

Camlin signs up with Lockheed Martin as a preferred supplier for a period of eight years. Sign of good times ahead?

(ankitkhemka7) #92

Actually, it is for 8 years… I wonder which chemical they would be providing for an energy storage company…

(sanjay210) #93

Hello everyone,

This is my first post, and I found this forum while researching Camlin Fine.

Full disclosure - I have a chemical industry background. I have no investments in CFS.

What is the view of the community here on their recent QIP? Does this stock still create a buzz?

(Rudra Chowdhury) #94

page 2 might help.

(sanjay210) #95

Flow batteries are still in a very early stage, hence the contract without any value. The real challenge is converting the di phenol into the corresponding quinone which has to be stable in ambient conditions. Not only that, the quinone must be non hazardous.

Seems like a the proverbial silver bullet!

Where is CFS planning to obtain the phenol for its Dahej plant? Deepak’ plant is far off. Importing phenol will make CFS uncompetitive.

These are just some of the very basic questions that investors must have answers to.

(Anindya) #96

Concall Q3 FY18

  • 38.57% standalone revenue growth. Consolidated revenue up 51.75% Q-o-Q and 43% Y-o-Y.

  • Camlin transforming into larger product engineering business from single product business.Key growth drivers
    a)Blends , on track internationally and India
    b)Vanillin – Took over Chinese company wanglong in July and after annual maintenance started operations in September. Now operating at 50-60% capacity. This quarter is also expected to be around 60% capacity and plant will be shut for 15 days due to Chinese new year.

  • Lockheed Martin – First plant to be finalized in Apr to June quarter , estimate production will start in early 2020.Revenue potential estimated at $30 million as of now.Final margin yet to be negotiated, preferred supplier and Camlin has right to supply 80% requirement of the product. Capex born by camlin with guarantee from Lockheed.

  • EBITDA down due to below reasons –Total impact 10.75 Crs.

1.Selling guaiacol to subsidiary-20% local purchase rule in china and one local supplier made distress sales at 3.25 to 3.5$ /kg. Camlin lost 50 to 70 cents per kg and total 4.5-5 crores loss in INR but distress seller now sold off business so price is back to 4.5$/kg. Camlin testing new technology to reduce price of guaiacol and increase margin.

2.USD dipped from 65 to 63.93 and similar for euro.90% business in USD and Euro.5.68 crores loss due to this,2Crs realized loss.3.68 Crs net updation in debtors creditors.If USD stays at same level it will be a realized loss.

3.Kemin US stopped buying as Camlin is now a competitor , Camlin used to offer discount for bulk buying throughout the year but since Kemin was buying partially Camlin disputed that. Now they settled the claim of ~1cr and made provisions considering cost of legal expenses etc. in USA.

4.Increment and bonus ~ 90 lakhs

  • Sales
    Shelflife solutions basic products
    TBHQ – 32 Crs Q3 last year ,37 Crs Q2 FY18 and 34 Crs Q3 FY18.Now Camlin selling TBHQ to subsidiary for blend conversions so captive consumption is increasing.
    Performance business 52 Crs Q3 Fy17 45 Crs Q2 FY18 and 62 crs Q3 FY18

Blends – 34 crs Q3 FY17 52 Crores Q2 FY18 and 55crores Q3 FY18.Sales could have increased more but month of December is only 15-20 days in US /Europe
Aroma last year only 5.76 Crs as no major vanilin facility owned by Camlin.8.53 Crs sales in FY18 Q2 and 45.96 crs in Q3.Increasing trend as only 65% capacity utilization as of now .Next year planning 90-95% capacity utilization.

  • Subsidiary Performance

CFS europe-Sales down to 69 Crs vs 75 Crs last quarter (80-88% capacity utilization).loss was 66 lakhs now 1 Cr profit this year.

CFS Mexico -Sales marginally up from 42.88 Crs to 43.43 Crs. Profit up from 6.4 Crs to 8 Crs despite 15-20 day sales in December

Vanillin 32 crores turnover,prices gone up to 10.25 to 10.5,last quarter made 3 Crs loss as plant did not start .Now loss only 66 lakhs. this quarter will have 3 week loss due to new year in china.

  • Hedging policy

Camlin has a natural hedge due to import and annually around 3-4 crs of foreign exchange gain or loss. They do some tactical bookings but mostly natural hedge due to imports. Sudden spike in foreign exchange creates issues(once happened in last year during UP election).Debtor exposure 125 crs in books and hedging cost is 3-4% which is almost equal to annual figure mentioned above. Foreign exchange has not been a major factor .

  • Guaiacol

They have a patented process giving considerable cost savings of about 15% savings in margin. Camlin doing 5 crores investment to increase capacity from 80 tons to 300 tons.They will sell small quantity in market for Pharma but 90% will be consumed internally.

  • Operating margins

Margins different based on where Plants are in their journey.Blend in mexico margin 20%+ , Performance chemical and shelf line 15-18% .Blend margin depends on what size they reach.Camlin product basket is similar to kemin but not exactly same. Gross margin will be 35-40% but EBITDA depends how quickly sales ramp up and reach a reasonable size. Guaiacol 15-20% margin overall business 15-20%.

  • Dahej Plant

In Dahej for Hydroquinone and catechol total 140 crores CAPEX and 26 crs spent till now.Cost advantage of 20-25% over Italy. Hydroquinone and catechol Joint products infact catechol capacity more.From 1 kg Ratio of Hydroquinone to catechol is 45:55 and 1:1 between catechol and Guaiacol and 1:1 between Guaiacol and vanillin.

  • Blends business customer addition

Latin America now about 40 customers, added 20 mexico customers, 4 customers in Europe target is 15 customers next year.5 customers in US and looking to scale up

Total Debt 305 Crs , cost of debt 10.85-11%.Working capital requirements will go up.

  • Future Path

USA next 4-5 years expect same sales as mexico. USA market takes time to crack. Camlin now only 2nd company that makes catechol to guaiacol to vanillin the full chain. Planning to build capacities in blends and have foothold in aroma and increase basket in chemicals. Animal nutrition and blend margins are similar. QIP and warrant money(I think they said 25% money received) now in mutual funds and Dahej plant work already started(target completion December).
Animal nutrition line in shelf line solutions business launched in India (last quarter) Brazil (this quarter) and Usa (last quarter).In Performance and Industrial chemical for antioxidants margin will come from guaiacol and increase in TBHQ.Overall Company now getting good response and selling to global companies and barring few hiccups growth is on track.

Note - Few points I might have heard wrong,please correct if you see any discrepancies.Invested from lower levels.

(sanjay210) #97

Any particular reason why they had another investor meet so soon after this one?

The stock seems to have corrected sharply post the meet. I wonder if there is any correlation?

(Darkwanderer79) #98

(sanjay210) #100

Not surprising, since the Italian plant has been closed for a long time.

They have a slim chance of setting up the dahej plant, but if CFS has to procure catechol at market prices, even if highly discounted, it will find it very difficult to compete with Solvay in vanillin.

(Darkwanderer79) #101

(Divyanshu Taneja) #102

Results are out , loss narrows , there is also a meeting for fund raising upto 250 cr was this pre decided to raise debt , for what purpose they want money? Sir @aveekmitra your views

(Divyanshu Taneja) #103

I think the move of cfs to raise debt of 250 cr will going to become a headache in future will company be able to service this debt , this move will require minimum 25 cr of interest payment every year plus for future to retire this debt from balance sheet every year minimum profit to be made is minimum 50 cr is it possible?

(Divyanshu Taneja) #104

EGM notice

(Divyanshu Taneja) #106

Big names entering visa capital purchased 625000 shares

(Rudra Chowdhury) #107

Recent Updates from Management based on a Brokerage Sponsored Interactive Event

• CFIN guides for 30% growth in its self‐life business (including blends) for the next 3‐4 years. The blend business will see much faster growth than the antioxidant ingredient business.
Currently, CFIN has presence in four applications:
(1) animal food (~70% of self‐life business),
(2) human food,
(3) pet feed, and
(4) biodiesel.

For FY19, CFIN expects in the blend business:
(1) Brazil to have a margin of 12‐13%,
(2) EU margin in range of 10%,
(3) US will break‐even, and
(4) Mexico will see strong double‐digit sales growth and margin in the range of 20%.

• CFIN’s vanilla plant in China achieved capacity utilisation of 60% in FY18 with EBITDA margin of 3%. Expect to achieve optimal utilisation in next couple of year with significant margin expansion. The global demand for vanilla is ~20,000TPA.

The global vanilla market is growing at rate of 2.3% of which Asia, China, India, Indonesia (countries with high population) are growing at a much faster rate compared to developed markets like EU and US. Also, CFIN does not see any risk of environmental policy in China for its plant, as it is in the industrial area.

• CFIN expects Dahej plant for manufacturing of Hydroquinone (HQ) and catechol (CH) to be commissioned by Q4FY19; FY20 will see a fully commercialised operation. The Dahej plant will help CFIN to reduce its procurement costs by atleast US$ 1‐1.5 per kg (from US$ 3.5/kg) which will help it to expand CFIN’s margin profile from FY20. The estimated capex for Dahej is ~Rs 1.5bn; expects asset turnover of 2x.

• Italy subsidiary reported –ve 3% EBITDA margin operations in FY18 due to:
(1) 50 days plant shutdown for certification (regular process once in 10 years),
(2)strengthening of Euro against USD, and
(3) fall in HQ and CH prices. CFIN does not have any plans to shut down its Italy operation. Expects improving HQ prices to improve the profitability of its Italy subsidiary.

• CFIN indicates that the Lockheed Martin (LM) project will be finalised in a couple of months and expects LM supply to start during calendar 2019. Expects initial supply of ~5,000 TPA with a margin of ~20%. The supply arrangement will be on “take or pay”. CFIN has entered into a preferred supply agreement with Lockheed Martin Advanced Energy Storage, United States of America, in relation to supply of specialty chemicals for a term which shall be valid through 31 December 2025.

• Large part of QIP fund of Rs 1.5bn will be towards Dahej and its working capital requirement. 25% of warrant issue (i.e., Rs 210mn of total Rs 840mn) is already received for current expansion plan and remaining Rs 630mn will be used for LM project.

• CFIN has taken an enabling resolution to raise ~Rs 2.5bn, primarily for all its expansion projects over the next two years. While CFIN does not have any plan to dilute equity further and is looking to raise debt it has evaluated the partial FCCBs funding option as well. Indicates peak debt range of Rs 5.0‐5.5bn (Rs 3.66bn in FY18) factoring both Dahej and LM projects.

• Expects overall improvement in operating performance in FY19 led by:
(1) increased blends revenue growth,
(2) higher capacity utilisation (at China and Brazil), and
(3) visible improvement in subsidiary performance.

• CFIN guides for revenue of Rs 9‐9.5bn with EBIDTA margin of +12% in FY19. Also indicates that EURO softening against USD will help the company to expand margins further. In FY20, CFIN expects revenue of Rs 14bn with EBITDA margin in the range of 17‐18% (considering Dahej commercialization).