By IE&M Research
Ambani Organics Limited
Listed on NSE SME (AMBANIORG)
Ready to move on fast track
Ambani Organics Limited is a manufacturer, processor, importer, supplier, and exporter of water-based specialty chemicals. It has manufacturing facilities and a dedicated in-house Research & Development and Quality Assurance/Quality Control Team. Company offers a range of over 100 specialty chemicals under the “AOPL” brand, which are used in various industries and for various applications. Some of the industries they cater to are Paper, Textile, Adhesive, Paint, Construction and Carpet Industry. Company’s products include binders, PVA Emulsions, Acrylic Emulsions, Textile Auxiliaries, Detergent formulation, Acrylic Polymers, Adhesives, Styrene Acrylic, Defoamer, Dispensers; Butyl Acrylate based Terypolymer, Thickeners, and Paint Driers etc. Ambani Organics has also obtained GOTS (Global Organic Textiles Standards) certification for some of its textile industries chemicals.
The Company recently got listed on NSE SME platform. The Issue comprised a Fresh Issue and an Offer for Sale. The Objects of the Fresh Issue was to raise funds for funding long-term working capital requirement; and funding expenditure for general corporate purposes. The Issue opened on Jul 6, and was listed on July 18, 2018 which was a Fixed Price Issue IPO. The Issue size was 1,368,000 equity shares of `10 aggregating up to `9.03 crore with a face value of `10 per equity share. The Issue price was `66 per equity share and the market lot was 2000 shares.
What change you feel since now you’re
leading a listed company?
There may be some psychological change in the perception otherwise as the company is concerned we used to do everything what was required to maintain the data and paper work. Even when the due diligence was taken care of at our place they expected it to last at least a month but to their surprise it got over within 7 days. On the compliance front we were always quite up to date. So we don’t feel much of a difference on administrative level.
However, as a result of being on NSE platform, certainly the whole team is charged up, ready to deliver on the expected line as we are being watched now. So that kind of sense and positivity of a new level has come up in our employees. But on personal level I find no change after getting listed. I must mention that I started my career in 1988 and till today my suppliers, venders and buyers are the same.
Let us know about the Company?
It was installed in 1988 and we took over in 1996. We at present have three units in adjoining areas – Omega Woven Mills, Om Maruti Glasswool and Wirenetting Products Pvt Ltd beside Ambani Organics. Earlier we were only into emulsion that means making it for textile, paint, paper, carpets and all that. Now we also make Metal Octoates which are used in FRP industry, PVC industry, paint industry and is also used for lot of other catalyst kind of application in other industries. We supply to GSFC. We recently placed bid for currency press. They use some of our products in printing of currency notes. Let’s see how the tender goes.
Your total installed capacity is 2500 MT, but the utilization is almost half. Was it only working capital crunch or there are any major roadblock?
Yes, the total installed capacity is 2500 MT including all three units and right now we’re able to utilize only about 42%. Earlier it was majorly a working capital crunch but on top of it incidentally a fire took place and everything had gone haywire. We were also under-insured and that again made things difficult. Still immediately after that we started production since we had lot of orders. However, there were many small erection works going on continuously which exactly got over just 8 months before. So now very soon we should cross more than 50% which will gradually happen.
Now as the listing has taken care of funding long-term working capital requirement, what next?
We are installing some accessories to enhance and to get most out of the installed capacity. Right now we are just waiting for those accessories and instruments to arrive that we have ordered and I feel everything should be done by November – December. For that the erection work is almost over. All this will certainly increase our topline and bottom line – much higher than what is even projected right now. In our line the overhead expenses are almost the same even if we increase the production. So that will have very good impact on our profit. We’ve a big yet reachable target as both the problems – the construction work after the fire incident and the working capital crunch have been taken care of. Now there is absolutely no problem and the company is definitely ready to fly.
The Company offers a range of over 100 specialty chemicals. Do you feel that also is a kind of distraction?
Not at all. In fact, it’s done deliberately. Remember, we don’t do any losing business. The Company is structured in such a way that we are catering the textile, paper, adhesive, paint, construction and carpet industries and we never try to dominate any one particular segment. Our eggs are equally distributed. Because of that our production, sales and turnover never drop down. Like in rainy season textile and paint goes down but we don’t feel any heat as all the time something or other has an offseason and something or other has its season on. So we are well covered for such situations and well balanced. Now all of sudden PVC industry has gone down as plastic bags is banned so the demand of the ink related to plastic bags also has gone down. We never wanted to be only in one industry. We always had the vision to service all and that way have structured the company. Even we have designed our employee strength taking all this into account. So what you find burdensome is in fact deliberately done to take the benefit of our full potential.
We also have a very good R&D division. This team comprises of highly educated, qualified and trained individuals. Since many new machinery and other things are coming to India people approach us with their unique demand. In our lab we try to establish a product which is suitable to them. From this we get a major thrust.
Which segment is contributing more revenue?
Our all six verticals are doing fine, contributing to our topline almost equally. We don’t want that any one segment gives us more mileage and another gives us less. The moment we want to shoot up our sales we don’t need any extra manpower; we just realign the staff and get things done faster. Machinery and the basic know-how are same.
How GST has affected you?
Implementation of GST is a very positive step and we are very happy with it. Earlier we used to face problems with so many forms and taxes. Then problem was with transportation. Now all that is gone. Supply has become easy. Our vendors are also happy as it is 100% cenvatable and no one loses anything. Prior to this there were small players who were not interested in excise. Now they are much happier and business has become easier and better.
Now what’s the most challenging part as a promoter?
The most challenging aspect for me is making my shareholders wealthy. There are 100 steps to climb and right now the company is at 4th step. It has nearly 96 more to climb. And that certainly is going to make the company a lot bigger than what it is right now. We have a long way to go and I can assure that within 7 to 10 years we’ll add a zero to our topline and bottom line. Our turnover was `67 crore and it’s going to be 670 crore within that time. Investors should trust us and we assure them that we won’t let them down.