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Last Updated : Sep 16, 2016 12:51 PM IST | Source: CNBC-TV18

Do not need money for capex over next 2-3 yrs: Advanced Enzyme

Do not need any money for capex over next two-three years, says CL Rathi, MD of Advanced Enzyme Technologies.

The company doesn't need any money for capex over next two-three years, said CL Rathi, Managing Director of Advanced Enzyme Technologies.

Advanced Enzyme is looking at replacing chemicals with enzymes in nutrition business, said Rathi.

Speaking to CNBC-TV18, he said there is huge opportunity for expansion.


Below is the verbatim transcript of CL Rathi's interview to Latha Venkatesh & Sonia Shenoy.

Sonia: Tell us a bit about your new strategy, the focus of your company to replace chemicals with enzymes. What kind of growth triggers do you see from here on and over the next one year what could the growth look like on the topline?

A: The strategy is not new. We all need to replace chemicals, hazardous chemicals and make everything environmental friendly and enzyme is the way forward. So opportunities of using enzymes are limitless but challenge is to know right enzyme, producing it in appropriate quantities which are commercially viable and replacing the chemicals in the entire process or even in our consumption. However, drugs are also considered as chemical, so in nutrition also we need to replace enzymes as a first line of action, first line of defence rather than going for a drug. So this being the entire scenario the possibility of expanding the business is limitless yet challenges are very high.

Hence, coming to growth prospects, I did mentioned earlier that we would have 20 percent plus growth in our sales revenue and it will translate more into profitable revenues as well because we are very technology savvy company, research driven company.

Latha: Your EBITDA has grown in the last year, 50 percent improvement in EBITDA. In FY16 your EBITDA is at Rs 140 crore. Is that kind of growth sustainable, can you do Rs 200 crore of EBITDA this year, for instance? 

A: I cannot comment on that but for next two-three years we do not need to spend any money on capex because there are not other depreciation, our gross income is going to be same and thereafter you look at deduction of various kinds, so it would be sustainable to the current level that we are.

Latha: Current level yes, but the point is the way in which it has grown. So should we expect that your revenues next year, if you are speaking about 20 percent growth. In FY17 you should be able to generate Rs 370-380 crore. On that can your EBITDA be about Rs 200 crore?

A: Not Rs 200 crore but around Rs 175-180 crore.

Sonia: How are your expansion plan shaping up in the export markets; the US, west Asia, Europe, how is demand looking like there?

A: The US has been doing well. However, as I told you earlier, we are very US focused because our US company has presence for last 30 years and there are 40 people working, there are two manufacturing plant in US. Therefore, we would continue to expand in America; north America, central and Latin America.

We made US centric strategy about five years back and now we are also working on expanding Asia, Middle East, Europe and we see good potential in all the segments there.

Sonia: Your market share is still pretty low globally. It is just about 1 percent. Over the next five years, what kind of market share would you envisage for exports?

A: When you look at 20 percent topline growth then whatever the number comes out in the way the market globally has been of about 5-6-7 percent globally, so that would give a reasonably higher level than the current level. Yes, we have lot of headroom to go but there are a lot of challenges as well because the research is the key, getting right people at each place and to be culture oriented to each market are the major challenges because this kind of business cannot grow without appropriate people and technology is to back them together.

First Published on Sep 16, 2016 12:16 pm