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Vinati Organics eyes 20-25% revenue growth; to fund capex via internal accruals

Updated : August 07, 2018 02:58 PM IST

Vinati Organics on Tuesday said company is eyeing 20-25 percent revenue growth and profit after tax (PAT) around 30-35 percent.

In an interview to CNBC-TV18, Saraf Mutreja, executive director, said that the rise in the market share of two Methylpropane Sulfonic Acid (ATBS) segment was due to exit of Lubrozol.

Earlier, the market share was 45 percent, which has now risen to 65 percent, she added.

According to Mutreja, Vinati Organics does not have any long-term debt and the capex of around Rs 200 crore will be funded through internal accruals.

Vinati Organics is already working at full capacity in the ATBS segment and would be increasing capacity by 15 percent by October.

Since ATBS based polymers are used in oil exploration, the demand for that product also surged and this has helped Vinati Organics to renegotiate the contracts, which in turn aided margin improvement for the segment, Mutreja said.

Talking about PAP (para amino phenol) manufacturing she said, "Ours will be a greener, cleaner one-step process than China. In China, they use PNCB, while Vinati will be using Nitrobenzene. Once the pilot project is successful, the company would decide on whether to go commercial with the product."

If the pilot project is successful, it's likely to add Rs 600 crore to the revenues.

Talking on demand and prices, Mutreja said the Ibuprofen prices went up after the BASF plan was shut down for some time, but IBB prices haven’t changed much over the last few months.

The IBB market share for Vinati Organics is 70 percent and that of IB (Isobutylene) is 80 percent in India. ATBS, IBB and IB together contributed 80 percent of company's revenue.

The company is also the market leader in key segments and nearly 88-90 percent of its revenues come from IBB, IB and ATBS.

Vinati Organics posted a good set of first quarter earnings. Revenue was up 25 percent, while EBITDA (Earnings before interest, taxes, depreciation, and amortisation) rose by 41 percent.

Operating profit margin was up at 34.6 percent against 30.6 percent year-on-year. PAT was up 24 percent at Rs 64.25 crore against Rs 52 crore year-on-year.
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