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Last Updated : Mar 08, 2016 05:39 PM IST | Source: CNBC-TV18

Crude price hike won't affect margins: Vinati Organics

Speaking on the company's plans for FY17, Vinanti Saraf Mutreja said that she expects a revenue of Rs 200 crore from the capex of Rs 150 crore in the coming fiscal.

Vinati Organics margins will not be affected by the recent spike in crude oil prices, says Vinanti Saraf Mutreja, ED of the company.

In an interview with CNBC-TV18, she said that the export market looks strong and demand has grown since the last quarter.

Speaking on the company's plans for FY17, Mutreja said that she expects a revenue of Rs 200 crore from the capex of Rs 150 crore in the coming fiscal.

Below is the verbatim transcript of Vinati Saraf Mutreja’s interview with Mangalam Maloo and Ekta Batra on CNBC-TV18.

Mangalam: A lot of your raw material is linked to crude and in the last one month itself, we have seen crude prices spike a bit. In fact Brent is hovering around USD 40 per barrel mark, so, will there be a concomitant effect on your margins going forward or will you manage to protect them?

A: Our price, the way our contracts have formulated, the price is based on a formula which is the cost of import plus plus something. All our imports are linked to crude prices but our prices also change every quarter for some of the products and for some other products, they change monthly.

So for the ones that change on a monthly basis, if the crude has gone up, our inputs will go up then we will see a slight spike in the price realisation also. Now, of course the products which prices change quarterly, we will have to wait and watch.

As far as margins are concerned, our margins which stay fixed at dollar per kilogram so that really remains unaffected. Percentage margin does change based on the price realisation.

Ekta: How are your exports doing currently?

A: Export markets look quite strong. Isobutylbenzene (IBB) which is used in Ibuprofen is about 60-70 percent exported mainly to North America and China and demand remains as it is. 2-Acrylamido 2-methylpropanesulfonic acid (ATBS) which is 80-90 percent exported to Europe, North America as well as South East Asia, demand has seen a good pickup in the last quarter or so coming from various industries such as water treatment, personal care, detergents, textiles, etc. So, exports are doing quite well.

Mangalam: You had plan of investing about Rs 150 crore in FY17 for your capacity expansion, so, what are these capacities likely to be and what is the effect that you are likely to see on your revenues on the back of that?

A: Yes the total Rs 150 crore in investment should result in maximum revenue potential of about Rs 200 crore. Now, this Rs 150 crore is split across three major product segments. The first one being isobutylene derivatives. Two of those products will be para Tertiary Butyl Toluene (PTBT) as well as para Tertiary Butyl Benzoic Acid (PTBBA) which is used in personal care. It will also include Tertiary Butyl Amine (TB Amine) which is made in the ATBS plant in the same location.

The other two product streams are, one is of course a forward integration between IBB and Ibuprofen, mainly called IBAP. The third one is a customised product for a Japanese as well as American customer. So these net-net should result in Rs 200 crore revenues for us.

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First Published on Mar 8, 2016 03:56 pm
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