Can someone help with the product mix contributing to ‘Others’ line item revenues and also the reason of sudden drop in value in FY20 vs.last year ?
BQ interaction (link):
- CAPEX of 150 cr. for 4 new specialty chemical products (brownfield products; forward integration of butyl phenol products; niche products meant for exports; ROI ~ 20%); should be finished by Q1FY22; capacity utilization will be ~50% by FY22 and will go up to 90% by FY23-24
- Most of supplies come from Indian companies
- IBB demand which was very strong in Q1 has normalized to normal levels
- ATBS demand is slow currently
- Butyl phenol plant ready and currently making 3 out of 4 products
- Q2 and Q3 will see effects of pandemic induced slowdown on revenues
- Wants to double revenue in 3-4 years (targeting 15-20% growth)
What is the status of ATBS capacity expansion?
Looks like ATBS capacity expansion is delayed. 25 percent capacity was planned in FY20, 50 percent in FY21 and 75 percent FY22, refer second link and might be due to slow demand currently and don’t see any capacity addition in ATBS listed in below links,
Why is company continuously failing to spend prescribed expenditure of CSR:
FY’20
FY’19
FY’18
FY’17
FY’16
FY’15
Whatever amount unspent till 31.03 of previous FY is spent during next FY that’s why at the end of FY some amount remain unspent.
The amount unspent is so minimal as compare to their profit and cash balance that it could deposit/donate to somewhere. why would someone carry forward it and spoil the AR?
Guys please know what a csr is first before creating a storm in a teacup
Does anyone have any idea why the new company is registered as a 99% Subsidiary and not 100% Subsidiary? What is the technicality here?
Subscription upto 99% makes veeral as a subsidiary of Vinati, while 100% subscription would have marked it as a wholly-owned subsidiary. Building a subsidiary has several tax and legal advantages over wholly owned subsidiary. It also gives flexibility to parent to offset subsidiary losses with profits of other businesses falling under the parent umbrella. For more, please refer to link
Nirmal Bang has initiated coverage on Vinati Organics
mgmt has clearly been guiding towards 30% ebida margin going forward,( due to lower contribution from higher margin ATBS and higher margins from new products with lower margins) but still most research including above is assuming 37%-39% ebida margin which means co could disappoint on earnings. any views on this?
Moderated margin guidance is majorly attributable to lower margin (relative to ATBS) product pipeline (inc. butyl phenols) available with the company. More than margins, focus should be on ROCE trajectory. Company can still do well at new margins (~30%) in the long term given new products sales fructify in line with targets and ATBS hangover ends.
CNBC interaction (link):
- Oil and gas industries account for 10-15% of overall revenues; hoping for revival to happen in April 2021
- Butyl phenol plant has started and will start contributing revenues from November, real ramp by will be in Q4FY21
- FY21 sales should be 10% lower than FY20
- New CAPEX of 200cr. to be invested over the next one year with a revenue potential of 300cr. (starting FY23) – this is to expand butyl phenol basket from 4 to 6 (forward integration); These products are specialty chemicals used in industries such as agrochemicals, plastics, etc.
Disclosure: Not invested
Vinati has applied for Production Linked Investment scheme by GoI for Bulk Drug.
PIL - Production Linked Incentive scheme for promotion of domestic manufacturing of critical Key Starting Materials, Drug Intermediates and Active Pharmaceutical Ingredients in India.
The changes announced in the scheme as per the latest press release:
- Deletion of the provision which restricts the sales of eligible products to domestic sales only, for the purpose of eligibility of receiving incentives, bringing the scheme in line with other PLI schemes and encouraging market diversification.
- Change in the minimum annual production capacity for 10 products viz Tetracycline, Neomycin, Para Amino Phenol (PAP), Meropenem, Artesunate, Losartan, Telmisartan, Acyclovir, Ciprofloxacin and Aspirin. Minimum annual production capacity is a part of eligibility criteria under the scheme.
When it comes to PLI scheme, then we have also applied for PLI and two schemes of PLI is relevant for our company.
Durg PLI Scheme – where drug intermediaries, like we make IBB for ibuprofen, similarly, for many years, we are working on a product called PAP for Paracetamol. So, we have applied for that under the PLI scheme.
The second PLI Scheme, which is about to come is more specific for the chemical sector and there are two-three chemicals of our interest but the scheme has not been finalized yet. When it is finalized, we will apply in it too.
ATBS constitutes 40 percent or so margin. With increased uptick in price of crude there will be more demand for ATBS which is seen in Dec’20 and hence margin improvement in 2021.
Vinati Saraf on Expectations from the Budget for the Chemical sector:
Vinati Organics came out with results today.
Overall flattish. Sales bit subdued compared to previous year’s quarter while bit improvement compared to last quarter.
The Board of Directors of the company have approved a scheme of amalgamation of Veeral Additives Private Limited into Vinati Organics Limited. The results do not give effect to the amalgamtion and the same will be given effect post approval of scheme by NCLT.
Management has stated in the notes that Q3 was affected by covid, and this is in lines with their earlier guidance.
In my view, PAP is the next big optionality which is pending since long. Let’s see how it unfolds. Overall yet another steady result.
Discl: Invested; Views are personal, only for educational purpose; Please do your own due diligence