Omkar Speciality Chemicals Ltd has been granted process patent for an advance intermediate namely "5-IODO-2-METHYLBENZOIC ACID."
Speciality chemicals manufacturer eyes revenue growth of 20-25 percent in FY15, says CMD Pravin Herlekar, adding that the company will maintain profit after tax (PAT) margins of 7-8 percent in this fiscal, which will improve in FY16.
Below is the verbatim transcript of the interview:
Q: Can you take us through what the details of this process patent is, how beneficial would it be for the company and to which geographies does it apply?
A: We are research and development (R&D) based company. We have a R&D centre where we have about 30 scientists working in that and we always keep doing some innovative work and keep launching about 6-7 molecules every year. Then whatever new innovations we are doing, we have been applying for patents whereby we can protect the business by way of intellectual property right (IPR). So this is just a part of that and we already have applications for 12 patents, which are pending for clearance out of which one has just come recently. This is a molecule for which we have developed a new innovative process, which is very cost effective and this is an upcoming molecule and we expect to do good business in very near future on this product.
Q: Is there any way that you can quantify what the benefit will be for your company on the back of this patent or the market opportunity or how much of margins can benefit on the back of that?
A: We cannot quantify as this is something that can happen like a blockbuster or it can be a windfall for the company. If it happens that way and there are every chances that this can happen.
Q: How many patents do you have already?
A: We have already applied for 12 patents.
Q: Which one do you think will have the maximum success rate at this point?
A: Each one has got a success rate, each one can get converted to patent.
Q: What about the existing patents?
A: We have started this exercise about a couple of years ago and this is a first one which we have got registered.
Q: How are you doing in terms of your total profit and loss (P&L) if you could throw some light in terms of what your quarterly run rate in terms of revenues as well as margins could look like?
A: Last year we closed at Rs 240 crore and we are expecting to maintain a growth rate of over 20-25 percent year-on-year (YoY). This particular year we are expecting to commission some of our new units, which are in the pipeline. With the addition of those units, we will be able to ramp up the revenues. So we look forward for next few quarters as well as FY16 to support us in terms of new capacities which are coming in.
Q: FY15 revenue growth can be seen at 20-25 percent? What about your margins? Can you improve your margins?
A: We are working on our profit after tax (PAT) margins of about 7-8 percent and these will be maintained for the time being and then going forward by FY16 with the cost getting averaged out, the margins are further going to improve. Earlier, we have been working at about 10 percent PAT margins for many years but then during the last couple of years, we were in the expansion mode and then other infrastructural expenses were happening, manpower cost was increasing because of that our margins came under pressure but now again with the capacity getting ready, cost will get averaged out and the margins will be improved.
Q: So what will it improve to?
A: It should go back - as a first step it should go to 10 percent level, which was there earlier and then it should improve further to about 11-12 percent.
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