Vinati Organics

(Vivek Mashrani, CFA) #146


Same is the case with ATBS, it produces most cost effective high quality ATBS and constantly gaining market share since last 3-4 years.

Regarding IB, its is the raw material for ATBS hence part of it is used by Vinati itself while it has monopoly in India for this, hence majority is consumed in domestic market and rest is exported. Infact they are doing additional capex for IB as well as debottlenecking existing capacity to meet demand.

Yes, on concern-2, first of all the ban is not on IBB but talks is on ban of ipubrofen medicine >> if FDA ban materializes it will definitely impact the sale of IBB (but they have been thinking on this since long) and hence I think management is reducing its exposure and diversifying its product portfolio. For India if it is banned in OTC then you should try asking for it in nearby medical store without prescription to see how well the law is being followed :slight_smile:

Disc.: Invested and my views may be biased

(ricky_) #147

So right now it may not be necessary to exit. Your opinion please.
And thanks for all your contributions in this thread. They are valuable.

Disc: Invested and worried

(Vivek Mashrani, CFA) #148


Thanks a lot.

I think the decision to stick or exit is purely personal decision. I generally sell only when there is new variable which I have not thought of initially or there is serious impairment in quality of earnings or any corporate governance issues with management.

In case of Vinati, yes, FDA ban of ibuprofen is a potential challenge for growth of IBB. But we need to understand that IBB is used in many other pharma products + perfume industry + as specialty solvent (Source: Annual report 2015; Pg. 17).

So we need to first analyze how much of total % of IBB produced is exported to US (and which is used specifically for ibuprofen) and see its overall impact on earnings and is this factored into price or not.

Also, there might be such challenges in terms of ban or environmental issues etc going forward as well since this is the nature of industry. But I think Vinati has been able to adapt to the requirements and diversified into new products, green production capabilities etc.

So the point is while selecting the company we should see its adaptability to changes since change is constant. For example, Infosys was writing codes in COBOL initially but with advent of Java and C++ it had evolved and now it is evolving in terms of areas like analytics, digital and social media.

Hope these little insights were useful. In my opinion we should constantly monitor results to see signs of any business impairment which I haven’t seen till now.

Disc: Invested

(sagararya) #149

You are right but one has to also consider the capacity expansion as well in light of slowing demand…many times management increases capacity by extrapolating fast growth…ATBS was growing fast initially due to low global share which is now 45%…IB is used for captive demand as well as agrochemicals which are again both showing slowdown and yet the management has increased capacity…IBB has its inherent risks which we are all aware of…regarding the success of new products-your guess is as good as mine.

I like the management and their approach…I like the business model too…my only overhang is the valuation…given risks in the business I believe the stock is over valued and hence would wait for a good correction (if any) to enter

(Vivek Mashrani, CFA) #150

Vinati organics declared its result today…

(Nitin Mukhi) #151

widout a single penny from past year export benefits…PBT for Q4 is similar to tht of previous year…this gives an indication tht ATBS volumes are increasing…IB volumes expected to pick up in line with growth in agro chemical demand…plus some of the capacity additions will come online…

even though robust volume growth expected in fy17, eps is expected to be more or less flat…because last 32cr of export benifits were sitting in the PBT…which will not be available this year…

i think at 470-480, the stock is fairly valued.

(Venkatesh) #152

Does the exports benefits come under the other operating income? Why will it not be there in FY17?

(vaibhav) #153

MOSL came up with a report on Vinati:

(Gaurav Agarwal) #154

Today Vinati Saraf gave an interview on CNBC, check it out on this link.

(Vivek Mashrani, CFA) #156

Vinati Organics annual report has been released. Will post the notes soon:

Discl: Invested

(Vivek Mashrani, CFA) #157

AR notes with key points:

Ongoing/upcoming capex:

  • Couple of customized niche products
  • Capacity expansion of IB
  • New plant for PTBT/PTBBA, TB Amine
  • 8MW co-gen plant

Capex to cost 200 Cr. funded entirely through internal accruals

Above initiatives+growth in existing products is expected to contribute incremental sales in excess of 100 Cr. in FY17

Indian chemical industry expected to grow at 11-15% pa for next year

We are the only Indian manufacturer of ATBS; the largest producer of IB in India; the largest producer of IBB &ATBS in the world; and retain market leadership in all the 4 key products of our product profile.

ATBS Capacity 26,000 TPA;Exporting to more than 25 coutries
IBB Capacity 16,000 TPA; Largest producer in the world with market share >65%

AGM on 6 August 2016; 1Q results in 4th week of July 2016

Revenue split:

  • Domestic 33%; International 67%
  • IBB 31%; ATBS 46%; IB 9%; HPMTBE 6%; Others 8%

(Kunal Parikh) #159

Hi everyone,

Source: Moneylife ‚ÄúVinati Organics: Error in Annual Report‚ÄĚ

‚ÄúSchedule 23 of the annual report for FY15-16 consisting of employee benefit expenses has the same figures for FY14-15 and FY15-16 for each of the four individual heads. For instance, the figure for ‚Äėsalaries, wages & allowances‚Äô is the same for both the years at Rs3,194.24 lakh. However, the figures in the ‚Äėtotal‚Äô column for both the years are different. The auditors have certified these financial statements and these have been submitted to the Exchanges‚ÄĚ

(Abhinav Mehrotra) #160

They have posted the individual 2015 figures in AR16 wrong but the total is correct if you compare to the figures in AR15.

(Kunal Parikh) #161

But for 15-16, individual break up has to be incorrect(which is the error pointed out by Moneylife). It might have been a printing mistake(although these have been submitted to exchanges). Moneylife is pointing at certificates by auditors here and ideally such errors or practices should be avoided by companies.

(Vivek Mashrani, CFA) #162

Company came out with its 1Q’16 results, overall very good result with decent revenue growth and good growth on PBT. Net profit growth slightly lower QoQ due to higher tax payments which typically is the case in first quarter.

The revenue from new products seems to be adding to the top-line and bottom-line.

Discl. Invested

(Venkatesh) #163

@vivek_mashrani Why is the other operating income halved. Can you tell me what exactly comprises this line item

(Abhinav Mehrotra) #164


Refer to the screenshot below of the AR16. Other Operating Income or Revenue is mainly scrap sales and export benefits. Hope this answers your query.

(Growth_without Debt) #165

This is general practice of many companies to inflate sales and earnings by other income like selling scrap, waste, capitalisation of waste land, etc. Surprise thing is that this will happen in bull run of stock market ( some time company sell scrap at higher price though real price in market down!)

(Bhaskar Jain) #166

Promoters had said earlier they will buy below 500 but on 5th August they bought 0.27% above 500 levels. Good sign.

(Vivek Mashrani, CFA) #168

There are 2-3 more SAST releases…they have bought 4-5 lac more shares from the market above 500. Looks like something is cooking.