Vinati Organics declared the financial results for the quarter ended and year ended March 2011 and conducted conference call on 24^th May 2011, to discuss the same and its future growth strategies. Vinati Saraf Mutreja –Executive Director and NK Goyal, Senior, CFO addressed the call

Financial Information:

Vinati Organics reported 44% growth in net profit to Rs 16.72 crore for the quarter ended March 2011, primarily on account of 41% growth in net sales to Rs 87.83 crore. Operating profit margins remained almost flat at 24.1% resulting operating profit to grow by 45% to Rs 22.12 crore. With increase in interest cost by 64% to Rs 1.11 crore and depreciation by 15% to Rs 1.46 crore, PBT before forex gain was up by 47% to Rs 19.54 crore. After accounting forex gain of Rs 0.06 crore compared to Rs 0.75 crore in corresponding previous period, PBT after forex gain was up by 40% to Rs 19.61 crore. Further, decrease in tax rate by 340 basis points to 14.8% resulted net profit to increase by 44% to Rs 16.72 crore.

Highlights of the Call are:

• Total sales grew by 44% to Rs 91.62 crore for the quarter ended March 2011, on the back of increased contribution from 2-Acrylamido-2-Methyl Propane Sulfonic Acid (ATBS) capacity.
• Net sales from ATBS surged by 79% to Rs 175.6 crore for the year ended March 2011. Further, ATBS production capacity also increased from 10000 MT to 12000 MT by plant de-bottlenecking. Interestingly, ATBS contributes more than 55% of net sales in FY'11.
• The Isobutylene (IB) production will be majorly used for captive use and rest will be sold in market. The setup of 12000 MT plant of IB as backward integration for ATBS at Lote.
• The Company total production capacity was 24000 MT in 2010 and increased to 38,500 MT in 2011. Further, it's planning to expand total production capacity to 46,000 MT by FY 2012 with increasing high margin product capacity (Focus on ATBS).
• The total production capacity of 38500 MT for the year ended March 2011, includes ATBS –12000 MT, IBB - 14000 MT, IB –12,000 MT and TBA 500 MT.
• Revenue share of high margin products ATBS & Na-ATBS increased from 36% in FY'09 to 55% in FY'11. Further, IBB revenue share declining from 58% in FY'09 to 32% in FY'11.

• The management feels that ATBS has robust demand in the market and expects demand to improve further. In addition, ATBS capacities are running with almost 100% capacity utilization levels.
• It expects ATBS capacity to increase 15000 MT by the September 2011 and 18000 MT by December 2011.
• It expects the revenues contribution from ATBS expected to improve to 55-60% for the FY'12 and going forward its share will increase to 65-70%. Further, IBB expected to contribute 30% to the revenues and the remaining revenues expected to come from the Bi-products and monomers.
• Its top 5 customers are the MNC's, which are into manufacturing chemicals and contributes40-50% to the revenues.
• The tax rate expected to be around 30% (effective tax rate 32%) for the FY'12. The increase in ATBS share expected to counter rise in the tax rate for the FY'12, as it was high margin business. The capex expected to be Rs 80 crore for the FY'12.
• The company expects revenues to grow 30% for the FY'12. Further, It expects revenues to reach Rs 600 crore by FY'13 and Rs 1000 crore by FY'15.