Anupam Rasayan sees profitability improve on sharp reduction in interest cost

Improved profitability on the back of reduction in interest cost has helped multiply profits for speciality chemicals maker Anupam Rasayan India Limited.

The company's profits for the first quarter of FY22, ended June 30, jumped over 10 times to ₹32 crore against ₹0.3 crore in the corresponding quarter a year ago. Standalone revenue from operations stands at ₹227 crore against ₹135 crore in the same quarter last year.

EBITDA (incl. other revenue) increased by 101 per cent to ₹65 crore during the quarter, from ₹32 crore in the same quarter last year.

The company's Chief Financial Officer, Afzal Malkani, said that profitability has improved following a reduction in the finance cost.

"Our profitability was 8 per cent during fiscal 2021, but it has improved to 13.5 per cent this quarter due to the reduction in interest cost. Our finance cost has significantly reduced to ₹6.5 crore only against ₹18 crore reported in the same quarter last year. This was after the repayment of our ₹560 crore debt," Malkani told Businessline .

On total standalone revenue of ₹238 crore (against 135 crore), the company reported total expenses of ₹194 crore (against ₹132 crore) and profit before tax of ₹44 crore (against ₹2 crore) for Q1 of FY22 (against Q1 of FY21).

Anand Desai, Managing Director, said, "We have clearly defined strategic objectives of increasing capital efficiency, capturing profitable growth and generating positive cash flow which will lead to significant increase in RoE and RoCE; this all is reflected in our superior EBITDA margins of 27 per cent, an increase of 300 basis points both QoQ and YoY."

On the operational side, Malkani said the company has achieved a growth of 73 per cent on revenue during the quarter, higher than the company's average annual growth rate which is typically in the range of 30-35 per cent. "We get about 60 per cent of total revenue from our contractual agreement with our key buyers, for whom either we are either the sole supplier or second supplier. We don't see any major challenge in maintaining the annual growth rate of 30-35 per cent," he said.

Fifty five per cent of the company’s revenue comes from exports, which include 25 per cent from European markets, 10 per cent each from Japan and Singapore, 5 per cent from China, and the remaining from the rest of the world.

"We expect to maintain export growth momentum with all geographies contributing equally," he added.

Segment-wise, Malkani said that life-sciences chemicals vertical, which includes crop protection, agro chemicals, personal care, and pharmaceuticals products, contributed about 88 per cent of the total revenue, while the speciality chemicals segment, including dyes and polymer additives, contributed 12 per cent of the revenue.

"All our segments have grown equally during the quarter. But during the first quarter of fiscal 2021-22, 75 per cent growth came from recently-commercialised units and products," he said, adding that the newly-commissioned Unit-5 and Unit-6 at Jhagadia and Sachin achieved higher capacity utilisation at about 70 per cent. Both units were commissioned in March 2020.

Anupam Rasayan shares gained 0.33 per cent on the BSE to close at ₹712.95 on Friday.

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