Interview with Fineotex Chemical Limited
India is a strong contender for global investments because of the availability of critical raw materials, supply chain and educated skilled and affordable labour, states Aarti Jhunjhunwala, Executive Director, Fineotex Chemical Ltd.
In Q4FY22, the company's revenue has increased robustly by 80.1%. Can you brief as to which is the main factor driving the strong growth in revenue?
Our anticipation and preparedness to meet the growing demand during resurging times post Covid has helped us to plan for rapid capacity addition and product diversification. This has put us in a favourable position to quickly take advantage of the situation.
Our strong supply-side logistics helped us to maintain good inventory levels to take care of ramped up production; good distribution and collection for healthy cash flow; efficient process management in maintaining a good production line, all backed by our strong employee morale. Our average growth over the last three quarters is at 70%. Also, the Ambernath plant has given us the flexibility and the capacity to meet the demand and its production line has greatly contributed to our strong performance in Q4 FY22.
Fineotex Chemical bears a conservative approach to funding acquisitions, capacity expansions and greenfield/brownfield developments. How do you plan to allocate capital to reach a target capital structure of being net debt neutral?
Fineotex, in the last 11 years post the IPO, has acquired an overseas company – Biotex. This acquisition has shaped up successfully over the years. Biotex has always been cash-rich and at the same time, we have a much more disciplined capital deployment approach. We always look at good synergy and growth prospects in the businesses and grow inorganically. At the same time, we will also be prudent enough to raise capital because of our strong internal accruals. The current capex is being funded by internal accruals and also, we are a net debt neutral company.
What competitive advantages does the company sense due to the government's initiative to simplify the customs and tariff system, as well as expand PLI Schemes?
Over the last two years, India has gained enormous goodwill in the way it managed Covid internally and supported the global need for vaccines. This goodwill has transcended into its trade relationships across the globe. India is also a strong contender for global investments because of the availability of critical raw materials, supply chain and educated skilled & affordable labour. Globally, there has been a lot of attention towards India and many international companies are focusing on having their production setup in India. Surely, Government of India (GoI) is taking advantage of these, pitching the same to global investment community and accordingly, will streamline its investment policies to attract further investments and facilitate technology transfers.
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