Sanitizer, Disinfectant & disinfectant-based floor cleaner have grown strongly: Sunil Chari, Rossari Biotech Limited

Sunil Chari, Managing Director and Promoter, Rossari Biotech Limited, talks about Q2FY21 numbers, segment-wise recovery targets, CapEx, acquisitions and export markets among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: You have witnessed decent growth in Q2FY21. Tell us about the segments that performed the best and what is the growth outlook for the company in future? 

A: We work in three segments, Home, Personal Care and Performance Chemicals (HPCPC), Textile Speciality and Animal Health and Nutrition. The HPCP segment has growth quarter-on-quarter and year-on-year 31% and the animal health and nutrition has grown 22%, while the textile speciality is nearly the same as the second quarter of the last year. So, we are seeing good traction in all three segments.

Q: How was the festive demand for you? What kind of recovery you foresee in different segments and what growth targets have been kept from each of them?

A: During CORONA, we have seen that the sanitizer and disinfectant sales are still strong. Customers are still scared due to which I think the sales of sanitizer and disinfectant will continue because of the second wave in Europe and the US due to which people are scared here too. Now, the offices have started opening, so, I think our sanitizer sales will increase. At the same time, restaurants and hotels are running full and especially, we saw that sales are good at a lot of resorts outside Mumbai. So, even in the FMCG segment, many FMCG companies are our customers and we saw a good demand in sanitizer, disinfectant and disinfectant-based floor cleaner, dishwasher, handwash and all these have strong growth.

Q: What is your current CapEx and how much incremental growth is expected there with a top line and bottom line point of view in FY22?

A: We have established a new plant in Dahej, Gujarat, at an investment of around Rs 100 crore on it. Practically little CapEx is remaining and rest of the CapEx has ended. So, what we see is now that in the next 3-4 years, we do not see major CapEx like Rs 100 crore. The company is debt-free and our CapEx is complete and our capacity is around 2.5 times more than the last year’s capacity. So, we are sitting in a very very good position, today. Besides, cash of Rs 100 crore is lying at the bank, which we would like to deploy for acquisitions. Our Dahej plant will be ready in March 2021 and the first phase of the plant has been started in July, this year, so, I think, FY22 should also be good for us. 

Q: You will deploy cash on acquisitions. So, let us know about the kind of acquisitions that you are eyeing at and the ticket size of acquisition that you are seeing and the geographies where it will happen?

A: Our board and outlook are very conservative because we respect the capital a lot because we have reached this position after starting it from zero. So, the acquisitions will happen in our core chemistry, surfactants, acrylic, enzyme and silicone, and their adjacent chemistries. We don’t have to acquire to increase the sales but we can get into the segments which are within these core chemistries and we will be very happy to acquire. Primarily, the focus would be on the return of capital employed and return of liquidity. Our board will approve the acquisitions only when these two ratios are present in the company that we are acquiring. We had a lot of acquisition opportunities and since the last two years, we are sitting on cash of Rs 100 crore and we are debt-free. This is not a good position from a financial point but we are growing very strongly without having debts on books. Even in the last quarter, we were at a zero CC or zero term-loan. So, we are eagerly looking at acquisition which fits this norm.

Q: Can you tell us about the markets that you are looking at? At the same time, when the government and the world has a focus on India as a manufacturing hub and we are talking about the Atmanirbhar Bharat and several kinds of anti-dumping duties are slapped on imports from China, Korea, Malaysia and so on. How it will benefit your business?

A:  Export opportunities are increasing for us. But, primarily, our company has had its focus on the domestic market because it is so big and now, we have a bid road to travel in the domestic market. However, we see increased traction from the US market for sanitizer and disinfectants and hand washes. So, these are the categories, we see growing substantially in the future.

Q: What kind of growth is expected from the export market? Also, name the segments where growth will be seen and elaborate from the revenue point the contribution from the export market Vs domestic and can the ratio change in the coming future?

A: Our export has been around 9-10% in the last years and I think, it will remain the same because the domestic market and export market will grow together. The new enquiries are from animal health and nutrition and the HPCPC segments and I think that these segments will grow faster because their base is small and the textile speciality chemical will continue to grow. So, all the three businesses, we are in looks good for us to grow simultaneously.

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