Vinati Organics Limited (524200) Earnings Call Transcript

From [ Vini, ] let's go across to Vinati Organics. That's the next management on the show. The company reported actually a mixed set of numbers, lower input costs led to strong margin expansion. To discuss the past quarter and more importantly, the way ahead, we have with us Vinati Saraf Mutreja, the Managing Director at Vinati Organics.

Vinati, always good to have you on the show. Thanks a lot for joining in today. Well, let's focus on the way ahead. And you had mentioned in the past, over the next 3 years or so, you're looking at a 20% CAGR growth in terms of revenue with margins in the vicinity of 26%, 27% or thereabouts. But let's talk about this year first. How confident are you of that 15% revenue growth that you were talking about for FY '26? The first half of the year has been a mild growth out there. So that's why I want to understand for the year, what kind of revenue can you do? And also margins, first half of the year, you've done well out there. It's closer to around 30%, but still you're talking about 27%. So guidance on both these 2 parameters.

See, when I say revenue growth, I think I should correct myself and call it volume growth because revenue is a function of volume and price. And so while year-on-year and quarter-on-quarter, we are seeing volume growth of our products, especially coming from the new products, the additives business as well as from our subsidiary as well as ATBS, now we have started the new line, which just got commissioned a few weeks back. So given all of that, yes, we see volume growth. Of course, the prices of raw materials have fallen, freight prices have fallen, which has also led to a reduction in prices of my end product and, hence, you see a margin expansion as well. So it's actually been a very good set of first half or good Q2 and looking forward to Q3 and Q4 as well.

Okay. So just to revise that, then for this year, if you could talk about volume growth, revenue growth and margin, just clear the air, what should the range be now?

Exactly. So volume growth remains 15%. Like I said, volume coming from our expansion, additional volume coming from the new ATBS line as well as the new product. Revenue growth could be a little less, maybe 10%, 12% because there is a price correction given -- and margins, I would still maintain 27% simply just to be conservative, and since we will be entering new markets as well.

Okay. All right. Talking about expansion then, if I'm not mistaken, I think your Phase 1 of the ATBS capacity has been commercialized this month itself. You could correct me on that. What is the initial volume? So there I think the total capacity was around 10,000 tonnes. And the second capacity will come on stream in April. Are volumes fully booked?

That's fully booked. At least for Phase 1 is looking good. It has started, yes, in this month. And we are ramping up production since we do have an order backlog. And the Phase 2 will -- is set to get commissioned around April, May 2026. That's right.

Okay. All right. So you're saying that demand is strong enough, right, with...

And it is a 10,000 tonne expansion, you're absolutely right. That does increase our capacity by 25%.

By 25%. What will be the new capacity then?

40,000. Again, depends on which quality, but 40,000 tonnes, yes, per annum.

All right. Let's talk about a couple of other products, MEHQ as well as Guaiacol. They have not contributed meaningfully to the revenues. I think they were to do, I think, INR 350 crores, INR 400 crores or thereabouts. What did they do in the past quarter, if you could help us out with that? And what is leading to this delay in terms of ramp-up?

Sure. So when I say INR 350 crores, INR 400 crores, that was the overall revenue projection from VOPL, our subsidiary, which includes at least 5 or 6 products, MEHQ and Guaiacol being one of them. The other products, which are yet to be commissioned is PTAP, there is 4-MAP. Anisole, we had just -- is also yet to be commissioned. So it was a combination of these products. Yes, there has been a delay in MEHQ, Guaiacol because we did go in with a new process and a new technology, and that is taking some time to stabilize. Having said that, we have got the quality right, our product samples are approved. In fact, our trial orders on a commercial basis also, we have supplied and they've approved. So next year is looking positive for these products.

Okay. And on the antioxidants part, you are now producing the largest amount of antioxidants in India?