ANUPAM RASAYAN Q2FY23 Earnings Call Highlights
Robust R&D department allows co to develop niche products with complex chemistry and this ensures that anupam is strategically placed with partners and customers.
Most often, Anupam enjoys the open transparent model. Many times, Anupam is the primary or single supplier. This strategy has resulted in Anupam having 27 multinational customers.
Anupam had no business with multinationals Japanese customer in 2016, but today works on four products for them.
5.4 megawatt solar power plant got commissioned in October 2022. Now have a total of 17.9 megawatt capacity, resulting in annual savings of around INR 14 crores from FY '24 onwards.
Unit 6 in Sachin, GIDC has the lowest capacity of all the six manufacturing units in the company. Covered for loss of assets and loss of profit. Given all facilities are multi-purpose units, do not see any significant impact of the fire and plant closures on financials.
Announced signing of two contracts with one of the major European crop protection company, for supplying of two new life science specialty chemicals. Were able to deliver these products in a short period on the urgent request of customer. These contract wins are a testament to chemical strength, ability to deliver products based on the requirement of customers. Most of these products were being manufactured in Europe and now the customer has decided to source these products exclusively from Anupam going forward.
Working with a few more MNC clients, both in Europe as well as in the US, and expect 20 to 25 niche products to be added in Anupam's product portfolio in the near term as part of Europe-plus-one strategy. This has been in the works since last 1.5 years to 2 years. But with the Europe-plus-one situation, this has got an added urgency from the customer side now.
Successfully onboarded one of the largest specialty chemical companies based out of North America.
During the quarter, commercialized one new product, taking the total products tally to 49. This new product commercialized comes under LOIs and contracts that were signed in FY 2022.
Continue to see upward bias in all the contracted volumes with major customers.
CapEx of INR 250 crores to support the LOIs and contracts signed worth INR 2,620 crores.
Accelerated CapEx for fluorination products, which is of INR 420 crores. This will be divided into two projects, with Project one at Sachin is for INR 190 crores, and Project two at Jhagadia is for INR 230 crores. Given all the CapEx projects mentioned are brownfield in nature, it is important to understand that it will be majorly plant and machinery CapEx with an incremental asset turnover of 1.75x. This will also give an incremental ROCE of 20%+. Endeavor would be to finish this CapEx in the coming 18 to 24 months.
Now started seeing a reduction in the inventory days. Inventory days have reduced from 296 days to 273 days. This is a result of the proactive steps taken by team by revising the pricing mechanism, clause and contracts to six months and reduction of cautionary inventory. Further, this has led to healthy OCF of INR 97 crores for H1 FY '23, which is higher than PAT for the period. Will continue to see the increase in operating cash flows which will further improve the return ratios.
There is a huge demand from customers coming in for new products that have been planning for the last two years and based on those demand that is why have expanded the CapEx currently, and that is why have gone forward for the QIP.
Margins should be better for the new fluorination molecules, but will look at similar margins for now.
There will be leaning towards catering to those 14 molecules which have been identified. But over and above that, there will be enough capacity there.
For the 14 fluorination products, have been in discussion with these customers for a long time. Have been developing these products in R&D and lab. So it is not that co is starting the process now. The process was done for last three to four years and more. Today, with the Tanfac coming in, the supply security coming in is when the customers are now converting into demand.
In terms of interaction with the customers, customers have been pushing for a lot many more products, the kind of demand and the kind of confidence and the urgency with which the customers are requesting for the products and the supply, it's quite unprecedented compared to what anupam has been seeing in the last few years.
Europe Plus One strategy as well as the China Plus One is really playing out very hard.
Will keep on tightening the premise and focusing on a shorter cycle as much as possible.
Around 60% to 70% of contracted revenues are now on a six-monthly basis.
Less than 20% of RM purchase will be imported.
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