Key highlights from Laxmi Organics Q3FY23 concall:
CMP: βΉ 272
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CMP: βΉ 272
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1. The company capitalized the second phase of their large SI plant in Q3 and has completed the debottlenecking in their AI division.
2. The capacity after debottlenecking is more than 2,32,000 TPA for the AI division
2. The capacity after debottlenecking is more than 2,32,000 TPA for the AI division
3. The company has seen good volumes in Q3 for its AI division and been able to maintain market share despite the downcycle of key feedstock acetic acid. The demand was stable in this segment for this quarter after significant pressures in Q2 from European markets.
The demand has stabilized due to the softening of energy prices in Europe. The AI business still remains a cash cow for the company.
The AI business is largely exposed to Europe whereas SI business has exposure to Europe and other geographies. For SI business, the company is constantly adding new products in the pipeline and has diversified into US, China and some other Asian markets.
4. The AI business usually runs at 85% capacity utilisation.
The company maintains an inventory of about 60 days and is able to pass on prices even when there is a fall in raw material prices which helps them maintain their absolute EBITDA. The company has done this for the
The company maintains an inventory of about 60 days and is able to pass on prices even when there is a fall in raw material prices which helps them maintain their absolute EBITDA. The company has done this for the
AI division where the prices of key feedstock acetic acid are seeing a downtrend right now. The company tries to maintain its margin and constantly do the operations irrespective of the fluctuations in raw material prices and at any point in time they hold
only 45-60 days of inventory.
5. Though the freight costs have started coming down, there is an issue with the availability of containers which has improved by the end of January. The cost decrease has not been the same for all regions however, the company expects the improvement in freight costs to continue.
6. The company has completed all the formalities related to the transaction of the 92 acre land which they bought at Dahej . The company plans to manufacture products which have a specialty nature in the facilities which will be set up here. The company has prepared a detailed
investment plan for Dahej and is waiting for the Board approval.
7. The company commissioned a plant for SI in Q2FY23 for which it has got benefits in Q3 and the company has commissioned another plant in Q3 for SI and will receive benefits in Q4 once the production begins.
8. In the SI business one should look at the change in product.
8. In the SI business one should look at the change in product.
9. These products will have end-uses in agrochemicals and pharmaceuticals and will cater to the demand in both the domestic and international markets.These products will majorly be import substitutes for the domestic market.
10. The company will initially focus more on agro and industrial molecules as Pharma will take some time for regulatory approvals.
11. The company is also in process of tie-up with global majors to cater to their requirements.
The customers of the company in this business are waiting for the company to begin production.
12. Chlorine and HF will be the key starting raw materials for the company from which
The customers of the company in this business are waiting for the company to begin production.
12. Chlorine and HF will be the key starting raw materials for the company from which
they will make their fluorinated derivatives and the margins for this business would be similar to other specialty chemical companies in the top tier. The company has been able to secure HF supplies via agreements.
13. The revenue potential of the FI capex is β¬25 to β¬30 million euros where the company is planning to achieve part of it in the first year of operations
14. As the company delayed this FI capex, some of their customers could not manufacture their products using products
14. As the company delayed this FI capex, some of their customers could not manufacture their products using products
from Laxmiβs FI division and some companies had to source these products elsewhere. The company does not need to compensate any of its customers for delay in the FI capex.
15. The company uses hydro and wind power for energy generation and is planning to add solar power by end of March 2023.
16. The insurance claim discussion for FY21 floods is at an advanced stage of discussion with the surveyor. The surveyor will submit their final report to
16. The insurance claim discussion for FY21 floods is at an advanced stage of discussion with the surveyor. The surveyor will submit their final report to
the insurance company once the discussions are done.
17. The company recently merged its subsidiary YCPL with itself and has terminated operations for its subsidiary in Middle East as it had no operations for one year.
17. The company recently merged its subsidiary YCPL with itself and has terminated operations for its subsidiary in Middle East as it had no operations for one year.
18. The company has planned two capexes out of which one will be for FI where they plan to manufacture new products and derivatives. The other capex will come in Dahej and the company plans to make the capex announcement once it gets the board approval. These capexes are expected
to come online in FY25.
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