Sumitomo Chemical India Limited CC-Sep23.pdf · 2023-10-30
So, see, I think, overall, if you look at the last four, five years' history, our margins before integration of two entities, if you see, both of these entities were earning about 12% to 13% EBITDA level margins. And in both the entities, the fixed cost, if you look at it, it was about 19%, 20%. Then we integrated the entities, started the process in 2017, '18 and completed in 2019-'20. So over that two years, three-years period and two, three years after that, we have been able to maintain our fixed cost, which has come down to (to be read as ‘from’) about 19%, 20% of revenue to about 12%, 13% of revenue. So that has added to the profitability. In addition to this, all our specialty segments, the product portfolio even in the off-patented segment, the focus on the premium branded business, instead of the low end of the generics and the off-patented products, we have been able to improve our gross margins. So, to combine, I think over last four, five years, we have been able to improve our margin profile at a EBITDA level from 13% to about 19%, 20%. We continue to be confident about this kind of profitability levels in the medium to long term. But in the current year, because of challenging environment and situation, we have taken a little bit of a hit. And as our CFO, Mr. Anil Nawal, also mentioned, I think in the Q1, we had a kind of a very low margin at a gross profit level. But if you look at the Q2, our margins at a gross profit level is much better as compared to Q1. It is still not at the historical levels of last year, but I think on a sequential basis, we have made improvement in the margins in last few months.
And just to add to Mr. Shah, I think so this is a very, very niche kind of a R&D and the technology which we have got access to through this acquisition, which we did not have in- house. And some of these technologies are very complementary to our existing businesses. And we believe that the technology is world-class. It has a lot of, I think, working potential both in India and globally. And as Mr. Shah mentioned, I think this is very much in line with the integrated pest management and integrated plant nutrition management proposals and initiatives by government in India and across the globe. And we are very, very bullish and confident that this company, with this core, niche R&D technologies, can scale it up very, very fast the business potential.