FINE ORGANIC INDUSTRIES LTD - Q1 FY 18-19 RESULTS REVIEW

FINE ORGANIC INDUSTRIES LTD

Q1 FY 18-19 RESULTS REVIEW

·       Fine  Organic  Industries  Ltd  is  the  largest manufacturer  of  oleochemical-based additives in  India. 

·       Produces a wide range of specialty plant derived oleochemical-based additives used  in  food,  plastic,  cosmetics,  paint,  ink,  coatings  and  other  specialty  applications in  various  industries. 

·       Company has got strong distribution network within India and globally.

·       State of art manufacturing facilities - at Ambernath, Badlapur and Dombivali in Maharashtra.

·       Jul 02, 2018 : The share price closed at Rs 822.80 on listing day, a gain of 5.08 percent over its issue price of Rs 783 on BSE.

·       The Rs 600-crore initial public offer was oversubscribed by 8.99 times during June 20-22, 2018.

·       The IPO had comprised of offer for sale of 76,64,994 equity shares by the promoter group.

The subsequent Q1 FY 19 results of FINE ORGANIC INDUSTRIES LTD are examined hereunder :

·       Revenues have grown 39% YoY (240 cr)

·       EBITDA has grown 145% (53 cr)

·       EBITDA Margin has grown to 22.2%(13.2%)

·       PAT has grown 181%(37 Cr)

·       PAT Margin has grown to 15.4%(7.6%)

·       Equity stands at 15.33 cr from previous quarter and at 5.11 Cr before that.

·       Current Market price is Rs.976 and based on it, PE ratio works out to 20.18

·       FV is Rs.5. Volume of transactions is 1,72,806.

Mr.Mukesh Shah, MD said “ A successful listing on the stock exchanges has been a very proud moment for all of us. 

We had a successful FY2018 with growth across our product lines both in volume and rupee terms .However, we are operating at our peak capacity utilizations in Q1FY19 and therefore have already undertaken capacity expansion programme.

We expect these additional capacities to operationalise at different points of time over a period of next two years.

Fine  Zeelandia  has  completed  setting  up  of  a  facility at  Patalganga.  Trial  runs  were  conducted  and  currently standardisation of products is being carried out. 

The said facility will manufacture food premixes for the bakery and confectionary products.

R&D  has  been  the  pillar  of  growth  over  the  years  and our  products  require  specialised  skills,  processes  and equipment to manufacture additives from base oleochemicals, which we believe  is a complex process, which gives us significant advantage over any new entrants in the industry. 

Our long – standing relationships  with  our Customers, Manufacturing  capabilities  along  with  in-house  project execution  capability  and  in-house  R&D, helps  us  maintain  our leadership  position  and be  a key  supplier  of additives across the globe.”

CUSTOMER PRESENTATION DETAILS :

·       2018 : JV signed with ADCOTEC Germany for Food Additives

·       GOING FORWARD : More than doubled capacity to 131 KTPA.

·       Expand into new products like food premixes and Food Nutrition additives

·       One of the Leading manufacturers that developed proprietory technologies to manufacture green additives.

Diversified Product Port folio for High Growth Industries :

Slip Agents : Friction reducing additives

Anti-Stats : Mitigates build-up of electrical charges

Lubricants : Flow improvers and mould release agents

Processing Aids : Helps in melting high molecular weight polymers

Anti-Fogging : Converts water droplets formed on plastic films into a continuous transparent water layer

Emulsifiers : Extracts desired aesthetic structure and texture

Preservatives : Preventing food from spoilage or toxic

Food and Beverages : Used in biscuits, voluminous sponge, chewing gums, etc.

Cosmetic & Pharmaceutical :Added to creams, gels, lotions, varnishes, etc.

Rubber : Additives for elastomers to reduce dampening /

abrasion

Paint and Coating : Anti-settling agents, emulsifiers, anti-sagging agents

Feed Nutrition : Replace harmful antibiotics & improve feed nutrition

Portfolio of 387 Products

Fine Organics well positioned to Benefit from Favourable Industry Dynamics :

1.         Limited Players

2.         Highly Regulated

3.         Very High Entry Barriers

4.         Significant customer stickiness

Strategically Located Mfg Facilities :

Current operational facilities

1.         1^st Ambernath Facility 49,500 TPA

2.         Badlapur Facility             6,400 TPA

3.         Dombivli Facility             8,400 TPA

4.         Total capacity               64,300 TPA

Proposed Expansion Plans : 

5.         2^nd Ambernath Facility    5000 TPA (Contract Mfg)

6.         Patal Ganga                   10,000 Trial Runs started

7.         3^rd Ambernath Facility     32,000 Q1 FY 20

8.         German facility               10,000  Q1 FY 21

Indian Plants are located close to Nhavaseva Port – Ideal for exports

For its 387 Products, 631 direct customers are there and 127 distributors are available.

In Q1 FY18-19, exports are 55%, domestic are 45%

Focus is on Innovation backed by strong R&D for New Product development. 

Company has in house capabilities for Plant designing and engineering. It lowers capital expenditure and quicker commissioning.