Balaji Amines Q3FY18 Concall Summary

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Financial Highlights

Balaj Amines Q3FY18 Financials Highlights.png

For the nine months period:

  • Gross sales of Rs.620 crores, which is 16% more than nine-months of the same period last year
  • profit before tax Rs.126 crores, which is 29% more than last year for the same period
  • profit after tax increased by 18.17% it stood ~Rs.80 crores as against Rs.67.7 crores
  • Exports stand at Rs.119 crores as against Rs.93 crores for the nine-month of the same period, which is  a ~27% to 28% increase
  • EPS is Rs. 24 against Rs. 20 that is an increase by 18%
  • Overall value growth is ~15%
  • Volume growth of 17% in Q3with 15% volume growth for the nine-month period
  • Expected volume growth for FY2018 is 10% to 15% and 15% to 20%to value growth subject to the falling prices
  • Ammonia forms the top line, while, methanol is declining due to ~7-8% fall in oil prices
  • EBITDA margins to be maintained in the range of 20% minimum and 22% maximum
  • Morpholine sales value to be Rs.60 - 65 croresin the 1000 crores
  • Acetonitrile sales value to be Rs. 60 - 70 crores (adding to the topline) at volumes of 5000 tonnes at Rs.150 per kg
  • Exports have increased from Rs.28 Crores in Q1 to Rs.40 Crores in Q2, Rs.15 Crores in Q3
  • Atleast 20% to 25% of company’stop lineis expected to come from exports (China’s environmental development)

Debt:

  • Existing term loans are getting nil by June 2019
  • For the total Balaji specialty project, debt to be Rs.100 croresect
  • For 90 acres mega project, maximum total debt to be Rs.120 crore
  • In Q3, other expenses were Rs.39 crores against Rs.51 crores in the same period last year (reason: change in taxation, GST impact)

Capex:

  • Present capacity in morpholine is 3000 tonnes and additional capacity added at 7000 tonnes; the company will be doing morpholine volume of incremental 5000 tonnes at Rs 130 per kg in its first year
  • Out of the Rs. 400 crores of planned capex in April for mega project, around Rs.150 crores to Rs.200 crores would be spent in FY2019 and rest would be in FY2020
  • Expected turnover from the capex is minimum of Rs. 500 crores annual turnover when capacity utilization reaches 80-90%
  • Rs.100 Crores to Rs.150 Crores capex needed for expansion in engineering
  • In around four years, when the mega project and Balaji Spefiality run at full capacity, the combined revenue of Balaji Amines and Balaji Specialty would be Rs.2000 crores

Corporate developments/ news

  • Both morpholine and acetonitrile brands are ready, which will start after NOC from the Wildlife, which is expected to come by end of February 2018
  • Di-methyl Amine Hydrochloride expansion, for 7500 tonnes for the existing capacity, which the company isexpecting to start the first quarter of mixed financial year
  • The company has picked up 52% stake in specialty company that is Balaji Specialty Company, which is expected to come into the production by October 2018
  • The Government of Maharashtra has given approval for one of company’s mega project for which company got the allotment of 90 acres land and the land digging can take place in Oct, Nov’18
  • Because of China’s environmental development, with no antidumping the company has reached 800 to 900 tonnes per month which is equivalent to ~10000 tonnes; if antidumping comes in the coming year,the capacity would increase to at least 20000 tonnes
  • Approvals from the Bird Sanctuary Wildlife clearance expected by end February
  • Competitor Alkyl Amines is tripling its capacity from 12000 to 30000 PPA by FY2020; Balaji Amines’ business won’t be affected much
  • Company did not applied for re-certificate of morpholineand acetonitrile; but received re-certificate for morpholine
  • The BalajiGreentech land (~13.5 acres) deemed to stay idle for some more time
  • The company plans to hold methylamine capacity increase, waiting for the moment gap in the industry to be filled
  • The company wants to focus on its core business chemical industry and maintain their hotel business in its present status (no expansion plans here)

Upcoming products:

  •  The first product is MIP monoisopropanolamine with 15000 metric tonnes capacity
  • The second product coming up is methyl isobutyl ketone MIBK, which is 20000 tonnes capacity
  • The third product is Diphenylamine which is about 10000 tonnes capacity

DMAC business

  • The revenues from DMAC business to be Rs.1000 to Rs.1050 crores in FY2019 including DMAC HCL utilization, DMA utilization morpholine sales
  • Currently there is 18 tonnes to 20 tonnes per day capacity
  • Expected improvement in prices as well as full utilization of the plant

Bajaj Speciality

  • Company is expecting about Rs.124 crores revenues in the first year operation
  • Rs.6 crores to Rs.7 crores from the bottomline
  • In the following year, the company is expecting~Rs.300 crores to Rs.350 crores with the EBITDA margins of about 18% to 20%
  • The total capex required are ~ Rs.190 crores (Rs.100 Crores in the loan, rest is equity); Rs.95 crores already spent; Rs. 20 crores to Rs. 30 crores of working capitalrequired separately
  • Company expects the commercial production will start from October this year
  • The company will be doing 70-80% capacity this year (year 2), 95% in year 3, undertaking expansions for the product
  • Company does not plan to take up to 100% stake as of now

Product: PVP K-30

  • Capacity is 2 tonnes easily and 2.5 tonnes with little changes (per day, presentlcial
  •  Price: Technical grade is about Rs.300 and pharma grade is more than Rs.5fi
  • Outside country, apart from China,  there are three people- BSF(Germany), Ashland (USA) and Balaji(India)

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