Advanced Enzyme's target for FY17: 100% capacity utilisation

Advanced Enzyme Technologies posted a stellar listing on the stock exchanges today and the stock was up around 40 percent around 10 am post listing.The company had fixed the issue price at the higher end of price band of Rs 880-896 per share.Talking on the future outlook for the company, VL Rathi, Promoter Director of the company told CNBC-TV18 that the company has a strong and stable market and management and huge growth potential. Their healthcare nutrition and bio technology divisions will be a marjor contributor towards growth, he said.According to him there is a huge market for bio technololgy globally because developed countries are ready to spend on better quality products or bio friendly solutions but India too is changing, he said, adding that they are witnessing a good growth rate in India too.

He is also very confident of maintaining margins at around 40 percent because of their unique customer base and proprietary model.

They hope to move towards 100 percent capacity utilisation by end of the year which is sure to aid revenue growth, said Rathi. We would also look at expansion, he added.

Advanced Enzymes is a research-driven company with global leadership in the manufacturing of enzymes and are committed to providing eco-safe solutions to a wide variety of industries like Human Health Care and Nutrition, Animal Nutrition, Baking, Fruit & Vegetable Processing, Brewing and Malting etc.Below is the verbatim transcript of VL Rathi's interview to Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Latha: Give us some idea of where do we go from here, you are trading at 28 times bang as the bell went, what will your growth be for FY17? A: Thank you so much for starting with us with such a fabulous response. We really appreciate and thanks everybody to believe in our company. Company has a very strong and stable marketing and management and we can see that we have to do with two different portals which is healthcare, nutrition and biotechnology and we see that both of these portals are fabulous. We can see the growth coming primary from the beginning in the nutritional and healthcare area and then as we are moving forward over the years we have a tremendous and big global market and biotechnology where we are already present in several different forms and several different sectors and that will keep on growing right now for us. Sonia: You for the last three years maintained your margins above 40 percent that’s a very good track record. Is that something that you can maintain for next couple of years as well 40 percent plus margins? A: Well, thank you for bringing that one up it is 40 percent margin is simply because we have very unique customers in proprietary product which we supply to our customers. We are solution based company which is basically an enzyme based solution company and that is where we keep our margin so strong. I don’t see any problem going forward to keep those momentum continue. Latha: Can you give us some idea of revenue growth as well, the last number we have is of course over 30 percent revenue growth. Does it go like this or can it even get better because I understand when you last reported your financials to Securities and Exchange Board of India (SEBI) it was a 40-45 percent capacity utilisation, which means you really can have burgeoning revenues when you improve your capacity utilisation? A: You have put very rightly that as we start using the capacity we will have a much better growth also and that is what we are striving for, because we are completely integrated company and we do manufacturing, very strong R&D along with global market presence in so many different sectors, so we are sure that market we saw it the market has a tremendous potentials for our products to grow as everybody is going for eco-friendly solutions and they want cost effective solutions and we have that capability in future going forward. Sonia: You also signed up with Sanofi to be their exclusive supply partner, once that kicks in from 2018 what kind of an upside to you see in your revenues purely from that arrangement and any other clients with which you have signed up any exclusive supply arrangement? A: Well, usually the clients which we supply is unique because you don’t need to sign up, they just stay with you for years to come because the solutions are so cost effective and the results are fabulous, so they don’t see any reason to move anywhere else. Second part of your question is regarding Sanofi and as they come on board, obviously, in our industry there is a time lag there from the start to actual uses, but there are so many different companies like that in our pipeline and hopefully they will pan out, but we see that growth will progress continuously in a double digit. Latha: By end of year you will be able to do full capacity utilisation 100 percent? A: That is our goal always because we see it is there and we already have plans to future expand, so capacity is already set up for it and as we progress we will continue to grow. Latha: So logically this year you should do revenues higher than 50 percent because your expanded capacity will be used. A: It will be gradual, it doesn’t happen overnight in our business, but we will be using this capacity. Sonia: But just wanted to ask you about the growth for the industry as a whole globally, where do you see it 5 years from now, how much can the business grow and in India how much can the enzyme market grow as well? A: Imagine that enzyme business is growing is basically a market right now is developed countries where people can afford to spend some more money or better quality products or bio friendly solutions and as India is now changing, India is now a global player right now fastest growth rate in the world and as the basic economics change in India we see a tremendous growth prospect in India to grow for our business also.