What has been the volume traction and pricing for your key products in the last few months?
Prices have been quite stable and the Chinese situation has also been stable which also influences prices in India. For example, H-acid, vinyl sulphone price have been hovering around Rs 375 to Rs 400. Vinyl Sulphone, another key product, is ranging between Rs 220 and Rs 250. Pricing for the last three to four months have been quite stable and we expect that going forward also, prices would remain at a reasonable level.
You are seeing opportunities from the China slowdown as well. You are looking to capture more market share in exports with a revision in your product portfolio. Are these strategies all over the medium term?What is going to be your key growth driver?
We have identified some new products which would be added in our portfolio. Certain capital investments are already projected for that. These are the products which would replace Chinese supplies globally as well as Chinese supplies to India. We try to replace those products and our growth would be coming from an addition of new products, replacement of Chinese supplies and capturing more export market share. These are three drivers we expect to drive growth in 2019.
You have also commissioned disbursed dyes capacity in Q2. What is the sales contribution that you have pencilled in for the year, the ramp up that you have aimed and your EBITDA margin profile on the back of this?
On a full-year basis, it would add somewhere around Rs 250 to 300 crore as a top line and we are expecting the average EBITDA margin to range from 16% to 20% depending on the market price.
You have got an environmental clearance for a capex of Rs 150 to 170 crore. Where would you be spending it?
Again as I mentioned, this would be speciality chemicals. Speciality chemicals related to dye sector as well as certain chemicals related to non-dye sector. Those sectors are also into other areas such as pharma intermediates, rubber chemical. There are certain chemicals and specialty chemicals which we are adding at an incremental profit margin, incremental bottom line growth and there are many products. Our plants are not product specific but process specific. We have several products which have been identified and those products are going to be added in portfolio.
So based your strong first half performance what kind of growth momentum are you aiming at to close the year with?
We are expecting at least 15% to close compared to last year. 2019-20 onwards, we are expecting to close at a minimum 20% growth in the next two to three years.
Could you give me a breakup of who how export as well as domestic growth is going to pan out?
Both would be going parallel. At least 60-70% of the incremental growth would come from exports and about 30% from domestic sales.
Last time we spoke about the DyStar case. Singapore International Court had given the ruling in favour of your company and as per that, Senda will have to buy 37.6% stake, The valuation is underway but what fair market value can your shareholders hope for and when do you think the money will come through?
Let me update you on the status currently, Senda, which is Longsheng subsidiary, has filed an appeal in Singapore Supreme Court. As we speak today, we are going through the final battle in the Supreme Court of Singapore which is expected to get completed in April 2019. Post verdict from the Supreme Court, we expect the transaction to go through. So, it would be somewhere in the middle of 2019.
As far as value is concerned, the valuation today is under the direction of the court. The number would be precise and frozen through the valuation process. It would not be appropriate for me to speculate any value at this moment, but if you look at DyStars overall performance for the last three to four years, it is almost 100% profit after tax every year, established track record, profit after tax and if you apply these earnings multiples, you can have a judgement of what kind of fair market value can be expected from this case outcome.