It was a subdued third quarter for Vinati Organics. The performance slipped on account of shutdown at one of their customers plants. Moreover, margins too decline on back of higher raw material prices.
The YoY Profit after tax was down 6 percent at Rs 31.67 crore versus. The YoY margins were also down 26.8 percent versus 33.3 percent. However, Revenues were up 13 percent year on year (YoY) at Rs 185 crore versus Rs 164 crore.
Throwing more light on the Q3 performance Vinati Saraf Mutreja, ED, Vinati Organics in an interview to CNBC-TV18 said largest customer of Iso-butyl Benzene (IBB) is facing a prolonged shutdown and IBB is one of the key revenue drivers for the company.
However, in the long-term it is good because they are debottlenecking their capacity and the consumption in 2019 would increase.
Moreover, the company also exports IBB to China and some of the Chinese customers faced closures due to environmental reasons and that also impacted sales of IBB in Q3, which in turn contracted margins as well as revenues.
Meanwhile, 2-Acrylamido 2 Methylpropane Sulfonic Acid (ATBS) segment saw strong volume growth and the competitor has exited the business.
The other reason for margin compression was the spike in raw material prices, said Mutreja, adding that the end product prices would increase by Q4 and Q1FY19 onwards.
Going forward for FY19, the volume growth would be 10-15 percent on account of ATBS and IBB and EBITDA margins would be around 25 percent, she said.
On the capex front, she said they would be investing about Rs 850-900 crore in next three years.
She said they usually look at minimum RoI of around 15-20 percent and so, the payback period would be 5-6 years.
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