Savita Chemicals (SCL):

© SCL is primarily a base oil processor with product range comprising of Transformer Oils (65% of revenue), Liquid Paraffin/White Oils and Lubricating Oils. Transformer oil is predominantly used in transformer, utilized in power industry. Liquid Paraffins & white oils are used in cosmetics, pharmaceutical and personal care products. While automotive sector and industrial units constitute major markets for lubricants.

© With huge capacities planned in power generation, demand for transformer oil is expected to be strong (as 1 mw of new power generation capacity requires 7 mva of transformer capacity) and SCL which has 40% market share in transformer oils is expected to be a key beneficiary of capacity addition of 100,000 MW planned under 11th Five Year Plan. In addition to strong domestic presence, SCL is exporting transformer oil to South Africa, South East Asia, Australia & Middle East and is exploring newer markets to increase its exports.

© In lubricating oil segment, SCL is present in both automotive (85% of lubricant sales) and industrial (15% of lubricant sales) segment. Good growth in 2-wheelers, 4-wheelers and CVs is expected to drive demand for auto lubricants. SCL has tie-up with Idemitsu Kosan, Japan to market its lubricating oils under ‘Idemitsu’ brand name thru network of dealers and auto part shops. With increase in industrial activity, there is good scope for industrial lubricants too. Company has also launched its new brands in the market with good success.

© In liquid Paraffin, SCL’s major customer is Johnson and Johnson (J&J) along with others like HLL, Marico and Dabur. SCL is the only company in India to have J&J approval and is even supplying to J&J’s European outlets. Company’s exports to J&J are major contributor to overall exports. In international market, company is focusing on building long-term supply arrangements for various multinational customers for Transformer Oils and Liquid paraffin and expanding deliveries into newer territories.

© SCL is enhancing wind power generation capacity to 30.8 mw (26.3 mw in FY 2008) by putting up additional wind power projects to avail of tax benefits along with good realisations for power being sold to SEBs after captive consumption. As wind power makes company eligible to claim carbon credits, its encashment in near future, will improve profitability of the company further.

© To cater to increasing demand for all three product lines, company is working on a Greenfield project (@ capex of Rs. 15-20 crore) for petroleum products, augmenting capacity by ~ 30%.

© Cash rich company having surplus cash & cash equivalent worth Rs. 30 crore, i.e. Rs. 20/- per share as on March 31, 2008.

For FY 2008, Net Sales were up 13.1% to Rs. 918.98 crore. OPM% improved smartly to 9.8% (6.9%). Despite 24% lower other income of Rs. 11.91 crore and 88.5% higher interest cost of Rs. 2.86 crore, PBT soared up by 40.6% to Rs. 85.01 crore and PAT grew @ 31.1% to Rs. 61.97 crore.