Vinati Organics Sees No Disruption In Supply Chain Due To Coronavirus Outbreak
None of the raw materials used by Vinati Organics are imported from China, Managing Director Vinati Saraf Mutreja says.
While most analysts expect the outbreak of the novel coronavirus—that has so far killed more than 2,000 people in China—to hurt supply chain of domestic specialty chemical makers, Vinati Organics Ltd. sees no disruption.
“None of the raw materials are imported from China by the company,” Vinati Saraf Mutreja, managing director at Vinati Organics, told BloombergQuint in an interview. “In fact, the demand for the company’s main product ATBS, a water treatment chemical, may see an uptick as China is a competition and the concerns there will work in the company’s favour.”
Due to this disruption in China, Mutreja said enquiries for ATBS has increased. Vinati Organics—with a market capitalisation of Rs 10,550 crore—is one of India’s largest specialty chemical makers and the world’s largest manufacturer of ATBS.
Emkay Research, however, said sales of Isobutylbenzene—used as a raw material in making painkillers—might get impacted due to the coronavirus outbreak. The compound accounts for 20 percent of the company’s revenue, the brokerage said, adding the sales will take a hit in the first quarter of the financial year ending March 2021.
But Mutreja said sales of IBB would also see an uptick. That’s because factories producing this product in China are shut and other producers, including domestic companies, have increased the production of Ibuprofin (painkiller) for which IBB is the key raw material, she said.
Mutreja expects the fourth quarter of this fiscal to be better than the previous three months and the company’s top line to grow between 15 and 20 percent over the next three years starting FY21.
In the third quarter, Vinati Organics' net profit fell 5.5 percent year-on-year to Rs 67 crore, according to an exchange filing. Its revenue dropped 21 percent to Rs 238.5 crore.
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On Wednesday, Vinati Organics' shares rose as much as 6 percent intraday after the management’s clarification. That’s compares with a 0.65 percent gain in the Nifty 50 Index.