It took us 30 years to achieve a PAT of Rs. 100 Crs and only 6 years for us to jump to a PAT of over Rs. 300 Crs.
The global agrochemicals, polymer, pigments and pharmaceutical companies have been transforming their procurement models. They are gradually moving away from cost arbitrage-based vendor establishments to knowledge arbitrage-based strategic partnerships.
Amidst this operating context, your Company has benefited and will continue to benefit tremendously from the trend of rationalisation of vendor base.
In the Financial Year gone by, we secured two multi-year contracts from marquee customers, giving us the revenue visibility of Rs. 14,000 Crs over the contract tenure. This speaks volumes about our long-standing relationships with our clients and the trust they have in us.
In FY 2017-18, the global crude oil prices rose by 33%. The pass-through mechanism in our business model shields us from the raw material price fluctuations. Our thrust on integrated product chain and consistent quality of products gives us an additional edge over our competitors.
We are also exploring new growth opportunities beyond Benzene derivatives Chemistry. In September 2017, the Nitrotoluene facility at Jhagadia (Gujarat) became operational, and by the end of FY 2017-18, it reached 40% utilisation. We expect this facility to achieve its peak utilisation over the next 3-4 years with an estimated revenue visibility of Rs. 350-400 Crs per annum.
The pharma segment is also gaining significant momentum. While the revenues have been growing at over 20%, the EBIT has doubled in the last 3 years. Our optimism in this segment remains strong.
We derived over 80% of our revenue in FY 2017-18 from customers that have an engagement with your Company for more than 5 years.
We have 3 R&D facilities of which 2 are dedicated to our pharmaceutical API business and one to the speciality chemicals business. We have an in-house team of over 150 scientists dedicated towards developing breakthrough products through the consistent research effort.
We plan to invest approx. Rs. 75 Crs in setting up the 4th R&D & scale-up unit at Navi Mumbai that will facilitate the further enhancement of product portfolio and also help to further improve our manufacturing processes.
Our top 10 customers make 27% of our bottom-line and our geographical and industry-wise exposure is reasonably balanced as well.
Our pharmaceutical business is at an inflection point. With major fixed costs having already factored in, any potential rise in the volumes will boost our segmental profits substantially.
Our Xanthine derivatives business is also likely to do well with the demand for caffeine products going steadily up. Xanthine derivatives are the stimulants and find applications in Beverages, Nutraceuticals, and Pharmaceuticals. In medicine, they are mainly used as bronchodilators, especially for the asthma symptoms. We have two dedicated plants to manufacture Xanthine derivatives.
We are focussing on high-margin therapy areas such as oncology and diabetology for the expansion of our intermediate as well as API business. We are targeting 20-25 small molecules, which will help us capitalise on the patent cliff and the outsourcing trends over the next 6-7 years. We might also consider brownfield expansion of our pharma-dedicated facilities, if required.
The Speciality Chemicals manufacturers in China are facing raw material shortage, rising energy costs, higher labour costs and incremental effluent treatment and compliance charges. China’s weaker cost competitiveness in international trade and product disruption due to wheeling of large manufacturing plants are contributing to slowdown in the Chinese chemicals industry and its exports. India, a known alternative hub for chemicals could bag a multi-year exports opportunity. China’s prolonged self-imposed slowdown offers a much longer window of at least a few years for Indian chemicals peers to establish themselves in the international market by building global clients and ultimately tapping the export opportunity.
A larger part of your Company’s speciality chemicals segment comprises benzene derivatives. It is the largest producer of benzene derivatives in India and one of the leading manufacturers globally. Your Company’s global market share in various products ranges between 25-40%.
Your Company has wide array of growth opportunities due to its presence across various end-use applications and a larger customer base. Your Company currently exports nearly 45% of its products at various locations including North America, Europe, China and Japan.