Key highlights from Alkyl Amines Chemicals Ltd (ALKYLAMINE) Q4 FY22 Earnings Concall
Q&A Highlights:
- Karan Khanna of Ambit Capital asked if gross margins will be closer to the range seen in ’11-’14 or if margins should revert closer to 50% odd seen earlier. Yogesh Kothari MD replied that margins are stabilizing and probably will improve as the company pass on some of the increases in its cost on to customers. At the moment, the company is optimistic that the margins will improve going forward.
- Karan Khanna of Ambit Capital asked about the volume growth for FY22 over FY21 and the utilization for the new plant in 4Q22. Yogesh Kothari MD said that most of the 25-35% growth rate on the topline has been largely due to price, about two-thirds to 70% has been price and the rest volume. On acetonitrile, the company expects to hit 60-70% of utilization of the capacity between the two plants.
- Rajiv Rupani asked about the price per kg of acetonitrile. Yogesh Kothari MD replied that price of acetonitrile is varying between INR250-280 and it depends on how much imports have come in and how much stocks are there.
- Rajiv Rupani also asked if the company is expecting to see the price of acetonitrile going down below INR200 a kg. Yogesh Kothari MD answered that it’s always possible if there is more supply than the demand. Also there are imports which is a possibility.
- Rajiv Rupani asked about the capex for higher amine, what products will be launched going forward and the new specialty chemicals produced. Yogesh Kothari MD said the company is putting up a large plant at Kurkumbh for making ethyleneamines. The company’s capacity will be quite high vs. existing capacities. And existing plants also have the ability to change to other amines.
- Manish Kumar asked if there is any market share loss as the domestic competitor have done more as compared to ALKYLAMINE. Yogesh Kothari MD said it is due to a product (diethylformamide) that ALKYLAMINE does not manufacture is what’s aided the co-producer to gain market share.
- Senthil Kumar with Joindre Capital enquired about the breakup of other expenses for FY22 as it increased significantly in 4Q22. Yogesh Kothari MD replied that other expenses includes the company’s power, water, fuel expenses. And in fuel and power, the energy costs have substantially increased over the last 3 months, and coal price has almost tripled from a year ago.
- Rajive Rupani asked if the company has the capability to produce diethylformamide. Yogesh Kothari MD answered that currently the company does not have the capability but has the process. At some stage, the company might produce diethylformamide. Before that, ALKYLAMINE will be adding more ethyleneamines capacity, which is need for making DMF.
- Rajive Rupani asked about the company’s current ethyleneamines capacity and how much is the company adding. Yogesh Kothari MD said ethyleneamines is about 20,000-22,000 tonnes a year and the company is looking to increase that to about 35,000 tonnes.
- Rajive Rupani asked about acitic acid price outlook going forward. Yogesh Kothari MD replied that last year acitic acid prices impacted the company a lot with prices going up very high. Now it’s starting to stabilize but still it’s on the higher side vs. a year ago.
- Harsh Shah from Marcellus Investment asked about driver of capex increasing from what was guided in 2Q22. Yogesh Kothari MD said it’s a combination of two things; one being slightly ahead of schedule in the company’s implementation and also price rise. Next year, ALKYLAMINE expects to spend about INR300 crore.
- Reena Shah from Elara Capital enquired about the capacity additions in FY22 and the ones expected to come in terms of volumes in FY23. Yogesh Kothari MD replied that last year the capacity expansion have been on acetonitrile which got commissioned towards the end of 3Q22, a 18,000 tonne plant in Dahej. In FY23, the company hopes to commission towards 4Q23 or 1Q24 an ethyleneamines plant of about 35,000 tonnes.