Camlin Fine Sciences Limited

Date:10th May 2016

Current Market Price = 99.65

Market Cap = 963.28 Crore
52Week H/L=129/76
Credit Rating CARE BBB+

OVERVIEW
Camlin Fine Sciences (CFS) came into existence after its demerger from Camlin Ltd in December 2006. It is a
provider of high quality shelf life extension solution. Companys products are mainly used as food, pet food
preservatives as well as used by industries like pharmaceutical, dye, biodiesel, petrochemical,
agrochemical, textile, tanning Industries are some of them.

Company operates in three major segments: Antioxidants, Aroma and Performance chemicals

Food grade antioxidant has market of US$180mn and 60% (108$mn) of it is dominated by TBHQ & BHA;
company had sales of 51$mn in FY15 thereby having a blended market share of 50%

Performance chemicals segment focuses on sale different chemicals which are used in industries like
Petrochemical, pharmaceutical, agrochemical and fragrance Industry.

Company did a backward integration by acquiring Borregard Italia (CRS Europe) which is the major global
producer of two key raw materials Hydroquinone, Catechol with combined capacity of 8000MTPA

Recently company started Aroma segment with products like Vanilin and Ethyl Vanilin for which major raw
materials are Guaiacol(performance chemical) and Cathecol(produced by CFS Europe)

Company started its journey as a manufacturer of food Synthetic Antioxidants particularly in

Tertbutylhydroquinone (TBHQ) and Butylatedhydroxyanisole (BHA) having total capacity of 6000 tpa

Segmental Breakdown of Revenue

Antioxidants

20%
1%
23%

Breakdown of Revenue by Geography

56%

23%

Perfomance
Chemicals
Aroma
Others

77%

India
Rest of the
World

LENDING RATIONALE
Well Positioned in niche business: CFS has
become a market leader in food Antioxidants with
capacity of 6000 tpa (4400 tpa in FY15). Other global
players are mostly big names such as Eastman, Solvay
but mostly for captive consumption and other are small
players with no global clout, quality and scale

Backward Integration: Post acquisition of

Borregard Italia company marked its entry into
performance
chemicals
and
supply
of
Hydroquinine(HQ) which is key raw material for
producing antioxidants

Capacity Expansion to drive growth: Company

has decided to come up with a new green field plant
by FY 17 at dahej SEZ with a capex of Rs 250 cr. For
manufacturing HQ (9000 tpa), cathecol (6000 tpa)
(key raw material for aroma and performance
chemicals) and Vanilin (6000 tpa).

Company has moved into various high-value

downstream products like Aroma business and
blending of antioxidants which being a customized
product will improve margins further. Company has
already established two blending units at Tarapur
and Brazil

Company expanded the capacity of manufacturing

performance chemical Guaiacol by 100% and vertol
capacity by 67% in FY16
Companys aroma products are more preferred in
western markets then Chinese due to health hazards
of toluene based products

LOANS

Term Liabilities
RTL 28.06 cr.
Repayment over the period of next five years in
quarterly installments, interest rate ranges between
12.05% to 13.35%
FCL 5 cr.
Repayment over the period of next five years in
quarterly installments, interest rate ranges between
4.89% to 4.95%
Short Term borrowings WC 120 cr. in the form of
cash credit in foreign currency

OPPORTUNITY

Apart from the Dahej Capex of Rs250 Cr. Company

plans to acquire companies in the markets where it
is currently not present.

NEWS

One of the company bought 65% stake in Mexican

Financial Performance - Consolidated

(Rs. Cr )

firm for $7.8 million (Feb, 2016)

KEY CONCERNS
Foreign currency fluctuations: As 77% of revenues
comes from rest of the world therefore company faces
foreign currency risk
Financial Risk Managerial Risk

Business Risk: With backward integration company

has mitigated business risk to great extent

FY 2014-15

FY 2013-14

Total Income

570.57

517.16

382.85

Net worth

134.86

93.30

65.38

EBIT

76.65

59.50

43.59

ICR

3.22

2.41

2.17

DSCR

2.32

1.61

1.88

Intangible Assets

13.20

3.94

7.28

TNW

121.66

89.36

58.10

TOL

294.80

279.31

304.08

TOL/TNW

1.39

1.84

5.23

Interest

23.82

24.65

20.10

92.89

71.28

57.20

11.78

13.61

EBITDA

FY2012-13

Depreciation

16.24

PBT

52.81

34.83

23.47

PAT

55.02

28.71

15.09

Avg ROCE (3 years)

0.24

Shareholding Pattern
Q3FY2016

Q2FY2016

39.94
39.94
1.621.62
58.43
58.43

KEY CONCERNS

Foreign currency fluctuations: As 77% of revenues

comes from rest of the world therefore company faces
foreign currency risk

Business Risk: With backward integration company has

mitigated business risk to great extent by ensuring raw
material availability at proper price and amount

Though company has started new antioxidants blending

facilities which is a high-margin product but most of the
customer base of company are large blenders therefore
revenue may hit in near term
Financial Risk: Looking at the trend of the last three
years company has improved its financial ratios

Revenue and Profit Trend

Revenue
200

Growth

20.0%
15.0%
150
11.07%
10.0%
3.45%
5.0%
100
0.0%
-7.67%
-5.0%
50
-11.37%
-10.0%
0
-15.0%
Q3FY15Q4FY15Q1FY16Q2FY16Q3FY16
17.41%

PAT
10
8
6
4
2

PAT Growth
200.0%

147.35%

150.0%
100.0%

42.80%
0.37%

-24.80%

-4.39%

50.0%
0.0%
-50.0%

Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16