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  • C O M P A N Y R E P O R T India 27 Sep 2011 Vinati Organics Rs 67.5 Sector: Chemical Carving Niches of Global-scale o...BSE Sensex 16,524 Vinati Organics (Vinati) is a specialty chemical company with a truly differentiatedNifty 4,971 business, specializing in growing niche products into global scale. Having already52 week high (Rs) 97.4 attained global leadership in its two key products – IBB, and ATBS, Vinati is now52 week low (Rs) 61.1 rapidly diversifying its product mix, while keeping its business model intact. While this transition is on, the company has also delivered standout numbers in terms ofBloomberg VO:IN sales growth, profitability and capital efficiency.NSE VINATIORGABSE 524200 Diversifying sales mix: While IBB contributed as much as 70% of sales in FY07, byEquity Shares (m) 49.37 FY13, its share will be down to 18-20%. The single largest contributor to sales wouldFace Value (Rs) 2 be ATBS, which has the potential to grow for several years at double digit rates,Market Cap (Rs mn) 3335 driven by new applications and growth in existing applications. Growing strongly: Its performance of FY07-11 has been standout. Sales have grown Share Price Performance at over 40% CAGR. EBITDA margin has expanded to over 20%. ROE and ROCE(%) Vinati Sensex are at 43% and 34% respectively. The current product mix has enough ammunition to1 week -2.53 -3.36 drive revenue growth at more than 30% over FY11-13. Vinati also has a robust1 month 6.38 4.26 product pipeline, which could drive sales beyond FY13.3 month -6.31 -10.266 month -3.22 -12.18 Differentiated business model: Vinati’s global leadership in its key products and1 year -14.28 -17.86 high margins are not by accident. The company has a clear focus on entering only niche chemical products, where technology is not easily available. The company has the ability to source the right lab-scale technology and then scale it up to commercial Shareholding Pattern (Jun’11) levels. It appears this is a skill set its peers cannot easily replicate.Promoters 74.99FIIs - Reducing risk: The risk profile of the company reduces with each year. TheDII 0.05 dependence on IBB is less. Cash profits crossed Rs 520mn in FY11, giving VinatiBodies Corporates 1.73Others 24.96 greater internal resources with which to plan expansion. Vinati is a good stock for investors with a medium to long term holding horizon. The stock can outperform due to both its superior growth rates, and likely re- rating, as investors give weight to the company’ differentiated business model. Our price target for March’13 is Rs 120, based on PE of 8x. FY08 FY09 FY10 FY11 FY12E FY13E Revenue 1463 1905 2318 3167 4226 5867 Revenue growth (%) 78.3 30.2 21.7 36.7 33.4 38.9 EBITDA 253 340 527 640 823 1207 EBITDA margin (%) 17.3 17.8 22.7 20.2 19.5 20.6 PAT 152 251 400 520 530 757 ROE(%) 41.9 46.7 48.8 42.8 31.2 32.3 ROCE(%) 33.8 31.9 34.3 30.0 25.6 27.6 P/E (x) 4.7 2.8 8.8 6.6 6.3 4.4 EV/EBITDA (x) 4.1 3.5 7.9 6.4 5.0 3.1 (Rs mn unless stated)
  • Company Report: Vinati Organics 27 Sep’11 Investment Rationale Business with a moat “In business, I look for economic castles protected by unbreachable ‘moats’.” -Warren Buffett You don’t normally associate an SME business with ability to break into exiting global business bastions and achieve with global leadership. SMEs are generally me-too players. There are dozens of such listed me-too companies in practically all sectors - IT, pharma, textiles, construction, real estate, chemicalsVinati is amongst global Specialty chemicals industry is also not without its fair share of me-toos. Thereproducers in its are several producers of textiles chemicals, leather chemicals, constructionproduct lines, chemicals, plastic additives – all of which you may classify under ‘specialityhelped by chemicals’.technology Vinati is different. This is not by accident; this is by careful thought, planningleadership and rigorous management discipline. Very early on, the Vinati management decided the criteria on which it would grow: look for products where it could achieve global leadership, where margins were good, and technology hard to come by. As you can guess, some of these factors are inter-related. Margins wouldn’t have stay good for too long, if technology was easily copyable. With this background, now look at Vinati’s product folio. IBB: purer than thou Vinati’s first product was Isobutylbenzene (IBB), where it is today the global leader. It has about 60-65% of the global market. Vinati has maintained itsLeading global leadership in this market for quite some time now. Check some features of thisproducer of IBB, business. Vinati got the basic technology done from a French lab, and figuredtechnology scaled out on its own how to scale it up to commercial levels. And now, Vinati canup in-house make this product with a purity level better than anyone else in the world. The result: a secure market, most leading global buyers are its customers. There you have it: a business with a moat. ATBS: history repeats itselfSecond largest The success with 2-Acrylamido 2-methylpropanesulfonic Acid (ATBS) provedglobal producer of Isobutylbenzene (IBB) was not an accident.. Here again, Vinati is now theATBS largest producer in the world. There is no competition in India, or anywhere else in the developing world, and no new capacities are coming up in the developed world. We think Vinati has provided ample proof that it can build globally relevant businesses, with a technology edge, thereby deriving and maintaining strong margins.Four-S Research 2
  • Company Report: Vinati Organics 27 Sep’11 Aggressive growth performance The numbers Vinati has delivered in the last few years are what any listed company would be proud of. Revenues have grown at over 40%, EBITA has grown at 78% and PAT at 89%. Growth in Revenue, EBITDA and PAT historically 3,500On a strong growth 3,000path in recent years 2,500 Rs mn 2,000 1,500 1,000 500 0 2007 2008 2009 2010 2011 PAT 41 152 251 400 520 EBITDA 86 253 340 527 640 Revenue 820 1,463 1,905 2,318 3,167 Impressive margin performance Vinati’s strong growth in top line has come with strong profitability performance. The latter is a clear reflection of the success of its management philosophy of building businesses with superior economic characteristics Consistently bettering margins 25%Margins have 20%improved, atestimony to its 15%technological EBITDA marginleadership 10% PAT margin 5% 0% FY07 FY08 FY09 FY10 FY11 Enough drivers for future growth There are more than enough drivers to push the future growth for VinatiATBS market still Organics. Carefully calibrated capex strategy to expand the productiongrowing, new capabilities will drive the top line for coming years. Installed capacity isproducts lined up to expected to reach from current levels of 38,500TPA to 46,000TPA by this yearFour-S Research 3
  • Company Report: Vinati Organics 27 Sep’11drive continuing end and 60,000TPA by FY13. Being world leaders in the major segments itgrowth operates in and by being preferred vendor of its major customers, Vinati will continue to enjoy high demand from its customers. The company is also looking to venture into some high technology, high return special chemical products; its R&D team expects breakthrough in a few areas it is working on. The company is banking on similar strategy to build capacities, like it did with IBB or ATBS, once these technologies become commercially feasible. Strong balance sheet Conservative financials The prudence on the P&L side – what to produce and how much – also extendsVinati has always to the balance sheet side. Vinati has always had conservative financials, and it continues to do so even now. Its balance sheet ratios are much better than peermaintained a strongbalance sheet group. For example, Vinati ended FY11 with a debt equity ratio is 0.5, presenting eminent possibility to management for financial leverage. Strong management of balance sheet numbers has ensured good capital efficiency. Vinati’s ROE and ROCE ratios at 43% and 34% respectively are also substantially better than most competition. ECB, FCCB combo at good termsObtained loan from An interesting point is the funding route it took in FY11, as part of its lastIFC at favourable round of expansion. The company raised US$ 16mn from IFC through FCCBterms and ECB route. Out of this only US$5mn FCCBs are issued by company as of now to IFC with conversion price of Rs 100 per equity share. This funding is available to Vinati Organics at generous rate of around 3-4%. Although Vinati Organics has not used or taken disbursement of this fund, this shows Vinati Organics’ strong financial condition. Business is derisking One reason why SMEs get low discounting from the market is the higher business risk. You can break down this risk into many parts:The company’s  Financial: ability to service debt, ability to withstand sudden changesexpanding size will in cash flows, ability to finance growth etcreduce many of the  Operational: ability to sustain margins, ability to negotiate withtraditional SME suppliers.risks  HR: ability to attract and retain talent And so on. You could add a few more bullets here. As companies grow, this risk reduces. Vinati, we believe, is rapidly crossing important milestones in this derisking process. In its current lines of business, Vinati has very little demand side risk. It has several key global chemical majors as its customers, many of whom are relationships of several years. Financial risk for the current round of expansion is well covered. This round ofFour-S Research 4
  • Company Report: Vinati Organics 27 Sep’11 capacity expansion will take Vinati to a revenue size of Rs 5.51bn, and a net profit size of Rs 757mn. This makes it financially highly secure. Business Portfolio Risk Let’s take an easy one first. In the last few years, the sales mix has changed sharply. Whereas a few years ago, Vinati was heavily dependent on IBB, nowSales mix hasdiversified there are more products in its product line. So while you could say earlier: What if the IBB market collapses? What if a new producer enters the market?considerably, (while none of this happened) – The risk from such events is much less now.reducingdependence on IBB, The product mix is diversifying; the company is less dependent on any one molecule.a mature product What’s more, ATBS, the biggest revenue earner now, is still in early stage of its product life cycle. New applications are emerging, and the management believes there are more as yet undiscovered applications. In other words, ATBS market can be much bigger. This is not all. The management is working on several new products. The business mix could look very different 3-5 years down the line. Management already has announced introduction of 4 new products in portfolio by the mid- end of FY13 with overall capacity of 15050TPA. These could yield a sales of around Rs 125 crore. New Products Capacity (TPA) DAAM 1000 HP-MTBE 6000 DIB 5000 DEA 3050 Growth riskStrong cash flows Will the company be able to finance growth? – This is a critical question yougive Vinati an can ask about many SMEs. With Vinati, given its superior margins and strongenhanced ability to cash flow, this issue is rapidly becoming less growth For FY11, its operating cash flow was Rs 313mn. At this number it becomes far easier for Vinati to expand, compared to say in FY07, when the operating cash flow was Rs 15.6mn. In other words, Vinati is reaching a sort of critical mass. From here on, the growth risk – ability to finance growth – reduces significantly. Attractive ValuationsThere is little Vinati, we believe, is a good bargain at current levels. The forward PE hasdownside risk at drifted downward over the last few months, indicating the market is not quitecurrent valuations. factoring in the growth likely to happen at Vinati.We expect 15% Our price target of Rs 120 for March’13 is based at a PE of 8x. We believereturns based on given superior business model of the company, its valuations would trend upFY12 numbers over a period of time.Four-S Research 5
  • Company Report: Vinati Organics 27 Sep’11 Risk factors Few products in its sales mix …. Company mitigating it by improved product portfolio High dependency of Vinati Organics on its two flagship products i.e. ATBS and IBB might give some jitters to its probable investors. Although Vinati isCompany workingon this risk with world leaders in those markets, any disruption in these product markets will impact Vinati organics badly.planned furtherdiversification of Historical record suggests that demand and profitability have been reasonablyrevenue mix secure for Vinati. In IBB, its oldest product, Vinati has shown consistent sales. Vinati is looking to diversify this risk by expanding its product portfolio to include other special chemical products. High promoter holdingHigh promoter Promoters hold almost 75% stake in Vinati Organics resulting in lower freeholding is one float for investors. This has resulted in low trading volumes for the scrip.reason for lowtrading in the stockFour-S Research 6
  • Company Report: Vinati Organics 27 Sep’11 Peer Benchmarking The peer set: midcap speciality Chemical companies With a market capitalisation of around Rs 3.35bn, Vinati is a midcap speciality chemical company. The table below gives key headline data for the midcap Vinati is a speciality chemical space. As can be seen, while Vinati is smaller than the median chemical company comparable in this list on the basis of sales figures, however, in terms of profitability of the business, whether via EBITDA or PAT, Vinati scores way better compared to almost all peers. The wide dichotomy in business parameters like operating margins is explained by the fact that several of the peers in chemical space are more into commodity chemicals, rather than truly speciality chemicals. Himadri and Clariant, and Balaji to some extent, are the companies which come closest to Vinati in terms of profitability of the business. Himadri Chemicals is a leading manufacturer in its major products: coal tar by products and derivatives. Clariant is a global chemical giant with strong technological competency. Balaji Amines manufactures a class of chemicals called ‘Aliphatic Amines’. Its story is similar: amine technology is a closely guarded process with only a few handful companies having access to such technology. Balaji developed its technology indigenously and has improved it further over a period of time. Sales 3 yr PAT 3 yr Market CAGR EBITA CAGRCompany Cap EV Sales (%) EBITDA Margin (%) PAT (%)Aarti Industries 3,602 8,759 14,839 1.1 1,979 (10.7) 815 (3.2)Balaji Amines 1,110 2,674 3,571 19.1 629 31.5 266 32.7Chembond 1,208 1,332 2,068 20.6 254 50.5 135 29.7Clariant 19,422 19,224 9,747 2.7 1,585 21.8 1,124 29.5Deepak Nitrite 1,777 2,334 6,722 8.4 570 2.7 258 (8.6)Himadri Chemicals 18,824 26,237 7,001 36.0 1926 49.5 1,144 56.0Shasun Chemicals 3,274 6,447 8,397 6.0 762 NA 266 NAThirumalai Chemicals 742 3,131 7,685 27.8 461 NA 184 NAAverage 6,245 8,767 7,504 15.2 1,021 24.22 524 22.7Vinati 3,335 4,085 3,167 28.9 640 37.2 520 43.8 (Rs mn, unless specified) Comparing key P&L items Note the CAGRs The key factor to note in the above table is the 3 year CAGR ratios for sales, EBITDA and net profit. On each of those counts, Vinati fares on par or better than peer averages. If compared with better valued peers like Himadri Four-S Research 7
  • Company Report: Vinati Organics 27 Sep’11Sales and net Chemicals and Clariant, Vinati Organics performs exceedingly better thanprofits have grown Clariant and comes close to performance of Himadri Chemicals on all theat 30-40%. fronts. Vinati has maintained these outstanding CAGRs for last three years resulting from strategy of building up the scale for its niche products once commercial technology is developed which is not easy to imitate. Vinati has expanded its ATBS plant from 5000TPA in 2009 to 12000TPA in 2011 resulting in better growth in sales and also in EBITDA and PAT. While the growth rate will slow down somewhat over the next 1-2 years, we still expect growth of more than 15% in revenues and earnings. Similar growth rate is expected in further future with new products coming into picture in full force. Profitability: Impressive past margins with confident outlook Vinati Organics has achieved impressive margins historically, achieved consistently year by year. Vinati achieved 22% EBITDA margin and 16% PAT margin for FY11 which is well above their industry peers posting 13% EBITDA margin and 9% PAT margin.Vinati’s operating Vinati has improved its margin level steadily from EBITDA 10.5% in FY07margin is much and 4.9% of PAT margin to margins of current levels signifying improvingbetter than peers business mix and operational excellence. This consistent improvement in margins for Vinati is result of company’s strategy to develop high margin product and build capacity for the same. This is evident from current product portfolio with ATBS contributing to 55% of its top line. While compared to Himadri Chemicals and Clariant, Vinati scores better than Clariant on PAT and EBITDA margins and is at par with Himadri Chemicals on PAT margin showcasing that Vinati Organics’ profitability performance is at par with the best in its peers. FY11 Margin (%) Company EBIDTA PAT Aarti Industries 13.3 5.5 Balaji Amines 17.6 7.5 Chembond 12.3 6.5 Clariant 16.3 11.5 Deepak Nitrite 8.5 3.8 Himadri Chemicals 27.5 16.3 Shasun Chemicals 9.1 3.2 Thirumalai Chemicals 6.0 2.4 Average 13.8 7.1% Vinati 20.2 16.4Four-S Research 8
  • Company Report: Vinati Organics 27 Sep’11 Balance sheet ratios Much better on leverage compared to peers Debt Equity Interest Coverage Company FY10 FY11 FY10 FY11 Aarti Industries 1.0 1.0 2.4 2.6 Balaji Amines 1.1 1.5 3.8 4.0 Chembond 0.4 0.7 7.2 9.9 Clariant 0.0 0.0 141.0 610.4 Deepak Nitrite 0.4 0.3 3.8 7.1 Himadri Chemicals 0.6 1.0 3.7 5.4 Shasun Chemicals 2.8 3.9 -0.8 1.2 Thirumalai Chemicals 2.3 2.0 2.1 1.8 Average 1.1 1.3 3.2* 4.6* Vinati 0.6 0.5 10.5 12.3 *excluding Clariant ratiosOnly Clariant, Chemical industry is more capex driven with organizations trying to gain scalewhich is an MNC, to improve operating margin putting strain on their balance sheet. Buthas better balance compared to industry peers and industry averages, Vinati Organics has muchsheet ratios than better debt-equity ratio and interest coverage ratio signifying solid financialVinati position. D/E and interest coverage ratio better than even Himadri Chemicals denotes Vinati Organics’ prudent conduct while considering debt option for capex. Vinati has also displayed remarkable sagacity in choosing which debt to take and from where. In January’11, Vinati got approval for a funding of $16mn from IFC in ECB and FCCB at approximately 3% interest rate. The exchange rate risk is naturally hedged, given exports that Vinati does. Also, the IFC loan is certainly good for its profile value. Better liquidity ratios Vinati has better liquidity ratio as compared to almost all of its peers for both current ratio and also cash ratio. This denotes Vinati has much better ability to meet both its short term and long term obligations compared to most of its peers, putting company at in better position to leverage its financials. Vinati Organics’ demeanour to keep its liabilities in check while keeping eye on its assets is visible from its consistent better current ratio for last few years. Among its peers only Himadri Chemicals has scored better than Vinati Organics here. Whereas Vinati Organics has ratios much higher than peer average.Four-S Research 9
  • Company Report: Vinati Organics 27 Sep’11 Current Ratio Cash Ratio Company FY10 FY11 FY10 FY11 Aarti Industries 2.8 3.0 0.0 0.0 Balaji Amines 3.2 3.5 0.1 0.1 Chembond 2.2 2.5 0.1 0.3 Clariant 1.3 1.0 0.0 0.1 Deepak Nitrite 2.5 2.4 0.1 0.1 Himadri Chemicals 6.0 6.7 0.2 0.4 Shasun Chemicals 1.9 1.7 0.0 0.1 Thirumalai Chemicals 2.1 1.7 0.0 0.0 Average 2.7 2.8 0.1 0.1 Vinati 4.8 4.2 0.1 0.1 Better capital efficiencyExceptional ROE Higher profitability due to efficient management and impressive productand ROCE portfolio is evident from much higher ROE and ROCE ratio than almost all of its peers. Only Clariant, which has global leadership in several areas, has comparable or better numbers. This signifies Vinati Organics’ management has managed to take correct decisions to invest money in right technology and products. ROE (%) ROCE (%) Company FY10 FY11 FY10 FY11 Aarti Industries 19.9 16.9 14.5 15.3 Balaji Amines 25.9 26.5 20.3 23.4 Chembond 27.2 24.1 32.2 29.5 Clariant 32.5 31.5 42.1 39.5 Deepak Nitrite 9.2 11.3 10.7 12.8 Himadri Chemicals 19.2 14.5 11.1 11.2 Shasun Chemicals -20 26.5 -5.7 9.0 Thirumalai Chemicals 46.0 17.7 14.5 9.7 Average 20.0 21.1 17.5 18.8 Vinati 48.8 42.8 34.3 30.0Four-S Research 10
  • Company Report: Vinati Organics 27 Sep’11 Comparing Peer Valuation Company CMP EV/ (`Rs) Market Cap EV P/E (x) EBIDTA (x) D/E (x) Aarti Industries 47.0 3,602 8,759 4.4 4.4 1.0 Balaji Amines 34.3 1,110 2,674 4.2 4.3 1.5 Chembond 190.0 1,208 1,332 8.9 5.2 0.7 Clariant 728.5 19,422 19,224 17.3 12.1 0.0 Deepak Nitrite 170.0 1,777 2,334 6.9 4.1 0.3 Himadri Chemicals 48.8 18,824 26,237 16.5 13.6 1.0 Shasun Chemicals 67.5 3,274 6,447 12.3 8.5 3.9 Thirumalai Chemicals 72.5 742 3,131 4.0 6.8 2.0 Average 6,245 8,767 9.3 7.4 1.3 Vinati 67.6 3,335 4,085 6.4 6.4 0.5(Rs mn unless otherwise specified)Vinati deserves a Vinati Organics is currently quoting at a discount to peer group averages onpremium over peer both P/E and EV/EBITDA ratios. We believe Vinati Organics should quote at agroup in valuations premium to peer averages given its superior management quality, strong leadership in its product lines, technological edge, better capital efficiency and better balance sheet quality. The valuation numbers reflected in the above table which place Vinati valuations in line with, or marginally lower than its peers, do not quite reflect the business fundamentals.Four-S Research 11
  • Company Report: Vinati Organics 27 Sep’11 Valuation: Price Target Likely growth not captured 1yr Fwd pe band chart 120Given expanding 9x 100size, strong 7xprofitable growth 80rate, Vinati’s Rs 60valuation is set to 5xexpand 40 3x 20 0 16-Sep-07 16-Sep-08 16-Sep-09 16-Sep-10 16-Sep-11 Vinati has consistently traded above 5x forward PE barring a brief period in 2008 when the global financial crisis pulled every stock down. The stock also enjoyed a valuation of above 7x in FY10 and FY11.We believe Vinati Valuations have drifted downward in recent months, an indication that thevaluations willexpand if it shows market perhaps doubts the company’s ability to maintain strong growth. ThereP&L growth in is certainly a flat profit outlook for FY12, but Vinati should return to growth in FY13 as new products enter production. There has also been a marginal delayFY12 in capacity build up at the ATBS unit, by 4Q FY12, ATBS will be at full capacity as well. We believe the market will bid up the valuations once its sees continued growth coming in from ATBS and the couple of niche compounds the company has recently introduced. While we think Vinati deserves a premium valuation as stated above, we are basic our price target on Vinati matching peer averages by FY13. At a PE of 8x, we expect a price of Rs 120 by March 2013. This corresponds to an EV/EBITDA of just over 5x, which is still less than peer averages. Key Valuation Ratios FY09 FY10 FY11 FY12 FY13E P/E Ratio (x) 2.8 8.9 6.4 6.3 4.4 EV/EBITDA (x) 3.5 7.9 6.4 5.0 3.1 EV/Sales 0.6 1.8 1.3 1.0 0.6 Dividend Yield (%) 3.5 1.4 1.9 2.0 2.8Four-S Research 12
  • Company Report: Vinati Organics 27 Sep’11 Vinati’s Business Vinati - Business model Vinati Organics Limited was established in 1989. It is focused on manufacturing speciality chemicals with the help of best in class technology and efficient manufacturing process.Vinati is highly Within the field of speciality chemicals also, Vinati has been very choosy infocussed onprofitable niches what to do. It has consistently worked to find niches where it can build viable technologies and build global leadership. This has worked very well till date for Vinati Organics. It has managed to maintain strong focus on R&D, has found and captures niches, and overall has managed to grow revenues while maintaining good profitability. Focus on Higher Margin Products Vinati has always concentrated on higher margin products and historically has managed to maintain better margins than other peers. Vinati started with IBBHas consciously in 1992, then developed capability to manufacture higher margin ATBS whichchosen high margin pushed its overall margins to the current level. With an aim to expand marginschemicals further, Vinati is expanding current ATBS capacity and also has plans to manufacture other higher margins products like Diacetone Acrylamide (DAAM), High Purity Methyl Tert Butyl Ether (HP MTBE) and Di-Ethyl Aniline (DEA) in near future. Vinati has also integrated backward for further improving margins by setting up an IB plant. IB is major component in ATBS production and a major costVertical factor too. With in-house IB capacity Vinati looks to better margins for ATBSintegration by at least 2-3%. Also new DIB plant will work as further forward integration for IB plant utilising surplus IB plant capacity than current ATBS requirement. Positioned for continuing growth The company is undertaking major capacity expansion projects currently where it would be expanding ATBS product line from current 12000TPA toATBS volumes will 18000TPA by Dec 2011. ATBS is one of the company’s higher marginexpand into FY13 product. Vinati has already done backward integration for ATBS by setting up an IB plant which is major component in ATBS.New products such Vinati Organics is also setting up a facility to start production for new highas HP-MTBE, margin products: High Purity Methyl Tert Butyl Ether (HP-MTBE) 6000TPA,DEA, DIB to be Di-Ethyl Aniline (DEA) 3050TPA, and Di-IsoButylene (DIB) 5000TPA alongadded with capacity expansion for: N-Tertiary Butyl Acrylamide (TBA) andFour-S Research 13
  • Company Report: Vinati Organics 27 Sep’11 Diacetone Acrylamide (DAAM). The company will have a capacity of 1000TPA for DAAM and 1000TPA for TBA by this Dec 2011. This expansion plans show the company’s craving for growth and confidence in their capability to venture into newer products. Aggressive Growth in Production Capacities All fig in TPAProducts ATBS: Key to growthATBS is the new 2-Acrylamido 2-methylpropanesulfonic Acid (ATBS) has become the flagshipflagship product product from Vinati Organics. Vinati Organics is second largest producer of ATBS in the world after Lubrizol of USA. Vinati started production of ATBS in 2002 with a plant at Lote, in Maharashtra, with capacity of 1000TPA. The company was attracted into ATBS production not only to diversify its product line, but also by the high margin from the segment. With growing demand for ATBS across globe from customers of various industries like oil industry to water treatment to acrylic fiber and technology barrier for new entrants to enter in this market Vinati Organics has strike the right note here. These factors will help Vinati Organics to maintain higher margins for ATBS. Vinati since then has progressively built-up the capacity for ATBS, making it the biggest contributor to top line by 2011. The company currently has a capacity 12000TPA for ATBS, with plans to expand it to 18000TPA by Dec 2011.Four-S Research 14
  • Company Report: Vinati Organics 27 Sep’11 ATBS Capacity 20000ATBS capacity set 15000to expand to 18,000tons by Dec’11 10000 5000 0 2002 2006 2009 2011 2012E All Figures in TPA ATBS: Limited supply, increasing market demand Entry in ATBS market has done wonders for Vinati Organics. ATBS market is not only growing rapidly, driven by its use in various new and emerging applications, but supply of ATBS is stagnant. Most competitors have stagnant capacity and no known plans for expansion. This gives Vinati Organics ample opportunity to capture the growing ATBS market. ATBS % contribution to topline 60% 3,500 50% 3,000 ATBS 2,500 40% 2,000 30% Total 1,500 20% 1,000 10% 500 0% - FY07 FY08 FY09 FY10 FY11 All Figures in Rs mn ATBS : Wide applications with many unexploited opportunities Acrylic fibre: ATBS is widely used in acrylic fibre industry where it is appliedATBS growth is on the fibre before fibre dying process.getting driven by its Oil Fields: ATBS is used in oil fields in deep-drilling situations, whereuse in new ATBS’s characteristics of high stability at higher temperature and higherapplications. salinity help. With global oil prices consistently going up oil companies are getting more convinced to go deeper to dig out oil to improve recovery factor of their oil wells. This has opened up a large market for ATBS applications as ATBS’s higher cost will be rationalised by ever increasing oil prices.High oil prices will Water Treatment: ATBS is used effectively in Boiler plants and Coolingbenefit ATBS Tower as corrosion inhibitor for silt control. Due to its special characteristicsdemand ATBS is used to improve corrosion resistance and as a de-scaling agent inFour-S Research 15
  • Company Report: Vinati Organics 27 Sep’11 boilers. In cooling towers again, ATBS is used as descaling agent. Other: ATBS is also used as by many industries like paper industry, mining industry as a flocculent agent. ATBS is also used in personal care products like shampoos etc as surfactant. It is also used in high rising tower/building construction sites for other uses. Unexploited opportunities: Vinati maintains the view that many unexploited application exists for ATBS which will increase ATBS market exponentially in near future.Products Isobutyl benzene (IBB): Market Leaders with stable market Vinati Organics is the largest manufacturers of Isobutyl benzene (IBB) in theAlmost 2/3rds world with 14000TPA capacity and annual production of 12000 tonnes. Vinati holds almost 60-65% of total IBB market worldwide, in a worldwide market ofshare of the globalmarket in IBB 20,000TPA. IBB is the first specialty chemical product from Vinati Organics, which they started producing in year 1992 with capacity of 1200TPA. Periodic capacity expansions driven by strong export growth has led the company to become the world’s largest manufacturer of IBB with a strong customer base across the world.IBB tech not freely Vinati has sourced the technology to manufacture IBB is from Institut Francaisavailable du Petrole (IFP) in France on which it did internal research to make it commercially viable, becoming the first company to manufacture IBB based on this technology. With this technology Vinati Organics has managed to manufacture IBB with record purity level 99.8% against prevailing international standards of 95.5% purity. This showcases company’s capacity to adopt latest sophisticated lab based technology and to convert it into very successful commercial technology with the help of in-house research center.But it is a mature Starting with modest capacity of 1200TPA in Mahad, Maharashtra, Vinatiproduct now steadily grew its production capacity to present capacity as shown in the graph below. With higher operating efficiency and by wining trust from their client Vinati Organics has managed to win all the major clients from its competitors pushing them out of competition. IBB Capacity (TPA) 15000 10000 5000 0 1992 1996 1997 2006 2008Four-S Research 16
  • Company Report: Vinati Organics 27 Sep’11 IBB was the key product for Vinati Organics since its inception for almost 2 decades, before ATBS overtook it in FY11. IBB reached revenue of Rs 1.02bn in FY11. With the recent stagnant nature of the IBB market and comparative lower margins Vinati has no plans to increase capacity here, with more focus on de- bottling and improving efficiencies on operational side to improve bottom line for IBB segment.Application Pharma: Major Pharma customers with some use in perfume industry IBB is used as basic raw material for manufacturing the bulk drug Ibuprofen which is used as an anti-inflammatory analgesic. IBB is the major raw material for Ibuprofen bulk drug which is produced in mass volume all over the world. It is also used in perfume industry in Europe. IB: Backward Integration with focus on ATBS marginsSet up an IB unit as Vinati has ventured into backward integration for ATBS line by setting up aa backward 12,000 TPA Isobutylene (IB) production facility in its Lote premises. Of theintegration to total IB capacity, up to 60% production will be used captive for the ATBSATBS plant where Isobutylene (IB) is major constituent. When the company reaches its full capacity of 18000TPA for ATBS, it will use around 6500Tonnes of IB for captive use, with the rest of IB production to be sold in open market. The company plans to sell rest of IB production in domestic market which has approximate market of 3-4000TPA as also looks to sell in Asia region as Asia is shortage of IB in market recently. With largest manufacturing capacity for IB in India with only other close competitor Salva Chemical with much lower capacity (4000TPA), Vinati Organics is set to gain leading position in this market segment too. Applications Whereas IB will be used in Vinati Organics to manufacture in ATBS, IB is also used to produce Isooctane which is used as fuel additive. Isobutylene is also used in the production of methacrolein. Polymerization of isobutylene produces butyl rubber (polyisobutylene). IB is also in Agro-chemical industry as an active ingredient for pesticides. Many pharmaceutical companies are also doing research to come up techniques to efficiently use IB for their process. Venturing into new products DAAMDAAM is a low The first new product coming is DAAM, with a 1000TPA plant setup, at thevolume, but high Lote site by Dec 2011. This is a high margin product with much highermargin product realisation value than other products in Vinati’s portfolio. With expectation to contribute more than Rs 300mn at full capacity DAAM will push Vinati’s top line and margins further.Four-S Research 17
  • Company Report: Vinati Organics 27 Sep’11 August’11 announcement3 new products Vinati Organics announced three new products in August 2011. These are:announced in High Purity Methyl Tert Butyl Ether (HP-MTBE), Di-Ethyl Aniline (DEA) andAug’11 Di-IsoButylene (DIB). All these are linked to the production chains involved in existing product lines of Vinati. Hence the capacities will come up at their existing plant locations Mahad and Lote. These products will entail a capex of Rs 500mn with company aiming to complete capex by second quarter of FY13. These follow the usual Vinati new product route: identify molecules with limited competition and develop technology through research tie-ups and in- house resources. HP-MTBE: Ingredient for Pharma companyMain raw material With domestic market size expected to be larger than 3000TPA and lone Indiansame as IB supplier Savla Chemical meeting only half of this demand, Vinati Organics is aiming to capture and grow the market with a new 6000 TPA setup. The company holds the advantage of experience of main raw material MTBE, which is also the raw material for its other product IB. Vinati Organics has developed technology for HP-MTBE in-house with some external aid. HP- MTBE is expected to contribute around Rs 320mn to company’s top line at full capacity. Di-Ethyl Aniline (DEA) Ingredient for agro- industry, perfume and healthcare industryWill be sole Introduction of DEA presents Vinati Organics with a domestic market ofmanufacturer of 1700TPA which is expected to reach 2500TPA soon. There is no domesticDEA in India manufacturer, providing ideal opportunity to capture entire import market with right pricing strategy. With a setup of 3000MT, easy availability of its raw material locally and in-house developed technology with some external aid, Vinati will be well positioned to become lone and largest manufacturer of DEA in India. Di-IsoButylene (DIB): Intermediate for chemical industryDIB as forward Similar to other products, Vinati Organics has again chosen to enter thisintegration to IB product as there is no domestic competitor in India. Local consumption isplant currently around 1500TPA, met through imports, and with potential to reach 3000TPA in next two years. DIB also has a potent export market in China as major players in DIB are present only in US and Europe. DIB will also act as forward integration for its existing IB plant with DIB utilising surplus capacity of IB plant as its ingredient. Pipeline Para amino phenolPAP currently at While the company now has several molecules in the pipeline, the big one,pilot plant stage. which it has publicly mentioned so far, is para amino phenol or PAP for short.Four-S Research 18
  • Company Report: Vinati Organics 27 Sep’11Company could The company is working on pilot plant, and if that is successful, they will godecide by Dec’11 for commercial manufacture. The decision on this could be taken by December’11. PAP is potentially a big product, which can make a significant contribution to the top line. Revenue Mix: Focus on Diversification Vinati’s revenue is driven by two major products, IBB which was their prime product for almost 2 decades, and ATBS which is Vinati Organics’ current focus. Vinati is progressively diversifying its product portfolio moving from single product era a decade back to more than 4-5 products under its currentShare of IBB now portfolio. With existing plan to introduce few more products in its pool,down to 32% revenue mix will further diversify. Vinati by choice has maintained limited product portfolio as company believes in entering into niche speciality chemical segment only, with the goal to hold leading position in each of the segment’s market. Starting with single product portfolio with IBB in 1992 Vinati now has multiple products under its kitty other than IBB like ATBS, Na-ATBS, IB, TBA, DAAM and many more in the pipe line. This has helped Vinati to come out of situation of over dependence on single product while still maintain leading position in their product segments. Increasing diversified Revenue Mix 100% 80% Other-products 60% NA-ATBS ATBS 40% IBB 20% 0% FY07 FY08 FY09 FY10 FY11 Global scale of operationsVinati exports 75% Vinati Organics exports nearly 75% of its production to USA, Europe, Asia,of its turnover Middle East and China, and has some of the largest chemical companies in the world as its clients. Its top five customers constitutes about 40-50% of top lineFour-S Research 19
  • Company Report: Vinati Organics 27 Sep’11 Financial Analysis and Growth Outlook Revenue grew at 41% CAGR for last 5 years Despite having seemingly few products in its portfolio, Vinati Organics has maintained a scorching pace of growth in recent years.New products have The Company’s net revenues grew at a CAGR of 41% over FY’07-’11 to Rsdriven revenue 3.25 bn from Rs 820mn in FY07. The growth has been driven by majorgrowth capacity expansions in last few years along with entering into new product segments. Strong revenue growth trend to continueWe expect sales to The top line however is expected to grow at CAGR of 36% over FY’11-13 ongrow at over 30% the support of more expansion expected in ATBS line from current 12000TPACAGR over FY11- to 18000 TPA with the plant expected to run at full capacity by FY13.13 IB plant in Lote will start utilising its full capacity by next year and Vinati’s other products like DAAM will also start contributing to top line by next with full capacity. Also new products like HP-MTBE, DEA and DIB also contributing in FY13 substantially although major effect of this expansion will be more visible in the years ahead. With all these future plans Vinati organics is expected to cross sales of Rs 5.5bn by FY13 posting CAGR of 30% over period of FY11-FY13. FY11-FY13 revenue growth 6,000 5,000 4,000 3,000 2,000 1,000 - FY09 FY10 FY11 FY12E FY13E All Figures in Rs mn Product PerformanceIB and DAAM will ATBS and IBB are the major products offerings from Vinati Organics whichalso contribute to constitute 54% and 33% of revenue to Vinati Organics respectively. IB andrevenues in FY12 DAAM product is also starting to make headway in Vinati with managementand FY13 expecting to Rs 274mn contribution in FY12 from IB and Rs 160mn is expected from DAAM in FY13. Whereas three new products are expected to contribute around Rs 750mn in FY13 pushing revenues higher.Four-S Research 20
  • Company Report: Vinati Organics 27 Sep’11 Revenue mix changing to higher margin products 1,400 1,200 1,000 IBB 800 ATBS 600 NA-ATBS 400 Other-products 200 - FY07 FY08 FY09 FY10 FY11 All Figures in Rs mn ATBS ATBS segment grew at a 4-year CAGR of 79% to revenue of Rs 1.79bn in FY’11, from Rs 174mn in FY’07. ATBS is also the most profitable segment for Vinati Organics, so strong growth in this segment has helped Vinati to improve its profitability. ATBS revenue growth 2,000Strong growth seen 1,500in ATBS segment 1,000 500 - FY07 FY08 FY09 FY10 FY11 All Figures in Rs mn A major 6000TPA capacity expansion for ATBS is expected to be completed this year, taking the total capacity to 18000TPA. Vinati is expected to increase ATBS production to full 18000 TPA capacities by FY13 to push up total revenue from ATBS to around Rs 3.3bn in FY13.Four-S Research 21
  • Company Report: Vinati Organics 27 Sep’11 Boost in ATBS Revenue ExpectedATBS revenue 4,000could cross Rs3.3bn in FY13 from 3,000Rs 2.1bn in FY11 2,000 1,000 - FY09 FY10 FY11 FY12E FY13E All Figures in Rs mn IBBIBB, a mature IBB product line has shown the result of market stagnation with sedate growthproduct now, will of 14% CAGR in last 4 years. IBB contributed Rs 1.07bn of revenue in FY11have a sedate to Vinati’s top line, from Rs 630mn in FY07. Due to stagnant nature of thegrowth market, steady revenues are expected from IBB product line in the future. The positive part is, Vinati is expected to maintain top position in the market. IBB Revenue 1,500 1,000 500 - FY07 FY08 FY09 FY10 FY11 All Figures in Rs mn Solid performance on margins with better future expected Vinati has increased its EBITDA at an impressive CAGR of 70% from FY07 to FY11. This growth was achieved with focus on higher margins; EBITDAEBITDA margin margins touched 20% in FY11 from 10.5% in FY07. In absolute terms,hit 22% in FY11 EBITDA crossed Rs 640mn figure in FY11 from Rs 86mn in FY07. This growth in EBITDA margin is mainly due to increasing revenue contribution from higher margin product line. Vinati has impressively pushed up revenue contribution from ATBS product, a high margin product, from mere 19% in FY07 to significant 55% in FY11. Post capacity expansion ATBS contribution to revenue is expected to reach 58% by next year. Higher margins are also attributed to improved operational efficiencies.Four-S Research 22
  • Company Report: Vinati Organics 27 Sep’11 EBITDA 700 28.0% 600 23.0% 500 400 18.0% EBITDA 300 EBITDA margin 200 13.0% 100 0 8.0% FY07 FY08 FY09 FY10 FY11 All Figures in Rs mn Strong EBITDA Growth Expected 1,400 21.0% 1,200 20.0%Substantial 1,000EBITDA growth 19.0%expected in near 800 18.0% EBITDAfuture, while 600maintaining solid 17.0% EBITDA margin 400margins 200 16.0% 0 15.0% FY11 FY12E FY13E All Figures in Rs mn Higher net profit with steady margin improvement Vinati Organics’ net profit has grown at CAGR of 89% in last 4 years. Net profit expanded from Rs 40.5mn in FY07 to Rs 520mn in FY11. Net margin was around 16% in FY11 and has been above 10% for fourth consecutive years now.Four-S Research 23
  • Company Report: Vinati Organics 27 Sep’11 PAT & Net Margin Growth 600 23.0%FY11 net profit at 500over Rs 50 crore 400 18.0%gives Vinati astrong base to 300 PATexpand on 13.0% PAT margin 200 8.0% 100 0 3.0% FY07 FY08 FY09 FY10 FY11 All Figures in Rs mn FY11-13 net profit growth Company is expecting to expand its current net profit of Rs 520mn to Rs 757mn by FY’13. With current outlook Vinati Organics is expecting to maintain margins in double digits also with support coming from ATBS and other existing and new products with higher margins. Expected PAT growth 800 700Net profit will grow 600strongly in FY13,lifting FY11-13 net 500profit growth to 400about 20% CAGR 300 200 100 0 FY09 FY10 FY11 FY12E FY13E All Figures in Rs mn Capex and Funding Vinati has done capital expenditure of around Rs 200mn this year for de-Rs 1.3bn of capex bottling of their existing Lote plant. Now Vinati will be looking for capitalin FY12 will finishcurrent round of expenditure of around Rs 800mn in FY12 which will be done for ATBS plantexpansion. capacity expansion as mentioned earlier along with TBA and DAAM capacity expansion. In addition Vinati will be doing another Rs. 500mn capital expenditure in FY12-13 for capacity setup for new products viz. DIB, DEA and HP-MTBE.Four-S Research 24
  • Company Report: Vinati Organics 27 Sep’11Funded through Vinati does have the luxury of approved IFC loan of US$16mn in terms ofIFC loan US$11mn ECB and US$5mn of FCCBs which are convertible into Company Equity Shares at Rs. 100 per share. Vinati is looking to fund existing capex plan with the mixture of its own reserves and debt funding.Four-S Research 25
  • Company Report: Vinati Organics 27 Sep’11 Financial Annexure Income StatementIncome Statement FY07 FY08 FY09 FY10 FY11 FY12 FY13Gross Sales 905 1614 2035 2384 3293 4394 6101Less : Excise Duty 84 150 130 67 126 168 234Revenue from Operations 820 1463 1905 2318 3167 4226 5867Decrease/(Increase) in Stock 8 -18 29 -59 -12 -35 -46Raw Materials Consumed 543 962 1190 1387 1844 2613 3561Manufacturing/Other expenses 66 91 125 210 345 320 445Payments to and provision foremployees 53 66 88 115 149 206 287Administrative & Other expenses 64 110 132 137 202 298 414Total Expenses 734 1210 1565 1790 2527 3402 4660EBITDA 86 253 340 527 640 823 1207Depreciation 27 30 33 50 64 101 114EBIT 59 224 307 478 575 723 1093Other Income 22 40 53 84 97 133 185Financial Expenses 20 33 41 44 47 107 128Profit before tax and ExceptionalItems 61 231 319 518 625 749 1151Exceptional Items 0 0 0 0 0 0 0Profit before tax 61 231 319 518 625 749 1151Tax 20 79 68 118 105 219 394Profit after tax before minorityinterest 41 152 251 400 520 530 757Reported net profit 41 152 251 400 520 530 757 (All values in Rs mn)Four-S Research 26
  • Company Report: Vinati Organics 27 Sep’11 Balance SheetBalance Sheet FY07 FY08 FY09 FY10 FY11 FY12E FY13EShareholders EquityShare Capital 66 99 99 99 99 99 99Reserves and Surplus 233 328 550 893 1338 1868 2626ESOPs 0 0 0 0 0 0 0Total equity capital 299 427 649 992 1437 1967 2724LiabilitiesSecured Loans 210 282 448 570 708 1408 1708Unsecured Loans 47 61 61 61 61 61 61Deferred Tax Liability 48 53 59 87 117 165 212Total Liabilities and OwnersEquity 604 822 1217 1710 2324 3602 4706 0 0 0 0Assets 0 0 0 0 0 0 0Goodwill on consolidation 0 0 0 0 0 0 0Gross Block 563 640 711 1109 1487 2487 2787 Less: Depreciation 203 232 264 313 375 472 586Net Fixed Assets 360 408 447 796 1112 2014 2201Work-in-progress 16 109 434 384 360 0 0Investments 0 0 0 0 32 32 32Inventory 82 121 121 189 350 297 413Debtors 197 221 279 359 519 581 806Cash and Bank Balance 9 14 19 18 19 726 1335Other Current Assets 0 0 0 0 0 0 0Loans and Advances 57 107 75 106 186 300 392Total Current Assets 345 462 493 671 1075 1903 2946Current Liabilities 104 129 117 98 173 232 322Provision 13 29 40 43 81 115 151Total Current Liabilities 117 158 157 141 254 347 472Net Current Assets 228 305 336 530 820 1556 2474Total Assets 604 822 1217 1710 2324 3602 4706 (All values in Rs mn)Four-S Research 27
  • Company Report: Vinati Organics 27 Sep’11 Cash Flow StatementCash Flow Statement FY07 FY08 FY09 FY10 FY11 FY12E FY13ENet Profit/(Loss) before Tax 55 231 319 518 625 749 1,151Depreciation 27 29 33 49 64 101 114Interest paid 20 33 33 34 39 81 97Unrealised Foreign Exchange (Gain)/Loss(net) 0 0 5 -17 -14 - -Provisions for expenses and liabilities 0 0 15 20 31 - -Excess Liability written back 0 0 0 0 -1 - -Other Provisions and write offs (net) 0 0 -9 -9 -1 - -Others charges and liability 2 -10 -1 -1 -27 - -Operating Cash flow before Wcap 102 293 394 594 717 931 1,362(Increase)/Decrease in Trade/OtherReceivables -91 -73 -16 -102 -167 -61 -226(Increase)/Decrease in Inventories -3 -39 1 -68 -161 53 -115Increase(Decrease) in Trade/Other Payables 35 41 -26 -39 45 93 125Cash Generated from Operations 43 221 352 385 434 1,016 1,146Direct Taxes Paid -28 -98 -55 -97 -120 -225 -345Operating Cash flow- A 16 123 297 288 313 791 801 0 1 - 0 0 0 0Cash from Investing activities- B -68 -33 -396 -348 -385 -640 -300Change in Borrowings 64 32 167 122 138 700 300Adjustment for foreign exchange year endrevaluation 0 0 -6 17 13 - -Interest paid -12 -20 -33 -34 -39 -81 -97Dividend paid 0 0 -25 -35 -34 -48 -70Tax on dividend 0 0 -3 -7 -6 -16 -23 0 0 - 1 2 3 4Cash from Financing activities- C 52 12 99 64 74 555 109Change in Cash= A+B+C 9 -5 0 3 2 706 610Opening Balance 5 14 -6 -6 18 19 726Closing Balance 14 9 -6 18 19 726 1,335 (All values in Rs mn) Four-S Research 28
  • Company Report: Vinati Organics 27 Sep’11 Ratio AnalysisRatios FY07 FY08 FY09 FY10 FY11 FY12 FY13Per share numbers (Rs)EPS 0.7 3.1 5.1 8.1 10.5 10.7 15.3DPS 1.2 2.0 2.5 1.0 1.3 1.3 1.9Book Value 6.1 8.6 13.2 20.1 29.1 39.8 55.2Profitability (%)EBITDA margin 0.1 0.2 17.8 22.7 20.2 19.5 20.6Pretax margin 0.1 0.2 16.7 22.3 19.7 17.7 19.6Net margin 0.0 0.1 13.2 17.3 16.4 12.5 12.9Return on avg. Equity 0.1 0.4 46.7 48.8 42.8 31.2 32.3Return on avg. Capital employed 0.1 0.3 31.9 34.3 30 25.6 27.6Growth Ratios (%)Revenue growth 0.4 0.8 30.2 21.7 36.7 33.4 38.9EBITDA growth 0.5 1.9 34.2 55.1 21.3 28.7 46.6Net profit growth 1.0 2.8 37.8 62.4 29.8 2 42.8Activity/Turnover RatiosAsset turnover 1.7 2.5 2.2 1.8 1.7 1.6 1.6Working Cap turnover 4.1 5.5 5.9 5.4 4.7 3.6 2.9Debtor Days 73.3 52.1 47.9 50.2 50.6 47.5 43.1Inventory Days 35.8 25.4 23.2 24.4 31.1 28 22.1Payables Days 39.4 29.0 23.6 17 15.6 17.5 17.2Liquidity RatiosCurrent Ratio 3.0 2.9 3.1 4.8 4.2 5.5 6.2Cash Ratio 0.2 0.1 0.1 0.1 0.1 0.1 2.1SolvencyDebt Equity 0.9 0.8 0.8 0.6 0.5 0.7 0.6Leverage Ratio 2.0 1.9 1.9 1.7 1.6 1.8 1.7Net Debt / EBITDA 2.9 1.3 1.4 1.2 1.2 0.9 0.4Interest Coverage 3.0 6.9 7.4 10.8 12.3 6.7 8.5Valuation RatiosP/E Ratio 5.7 4.7 2.8 8.8 6.4 6.3 4.4EV/EBITDA 5.6 4.1 3.5 7.9 6.4 5.0 3.1Dividend Yield (%) 3.4 2.8 3.5 1.4 1.9 1.9 2.7Four-S Research 29
  • Company Report: Vinati Organics 27 Sep’11About Four-S ServicesFour-S Services provides customised business and financial research to organizations across the globe. Thecompany also provides Investor Relations consulting to corporates based on in-depth sectoral and companyresearch. The company has an impressive client profile and a team of analysts covering the key sectors includingFinance & Banking, IT & Telecom, Retail, Media & Entertainment, Pharmaceuticals, Infrastructure andManufacturing amongst others. For further information on the company please visit www.four-s.comDisclaimerThe information contained herein has been obtained from sources believed to be reliable but is not necessarilycomplete and its accuracy cannot be guaranteed. No representation, warranty, guarantee or undertaking, expressor implied, is made as to the fairness, accuracy or completeness of any information, projections or opinionscontained in this document or upon which any such projections or opinions have been based. Four-S ServicesPvt. Ltd. will not accept any liability whatsoever, with respect to the use of this document or its contents. Thisdocument has been distributed for information purposes only and does not constitute or form part of any offer orsolicitation of any offer to buy or sell any securities. This document shall not form the basis of and should not berelied upon in connection with any contract or commitment whatsoever. This document is not to be reported orcopied or made available to others.The company may from time to time solicit from, or perform consulting or other services for, any companymentioned in this document.For further details/clarifications please contact:Alok Somwanshi Ajay Ajay.jindal@four-s.comMumbai Office: Mumbai Office:101,Nirman Kendra, Opposite Star TV, 101,Nirman Kendra, Opposite Star TV,Off Dr E Moses Road, Mahalaxmi, Off Dr E Moses Road, Mahalaxmi,Mumbai – 400001 Mumbai – 400001Tel: +91-22-42153659 Tel: +91-22-42153659Four-S Research 30