Camlin Fine Sciences Ltd Management Discussions.


The Company’s (sometimes referred to as "CFS") strategy of moving closer to the customers is a conscious endeavor by understanding local needs, providing them with reliable products, and enhancing customer service across sectors. Despite several challenges in FY2017-18, CFS was aligned to its business growth goals.

A glimpse of CFS operations in India and other regions in FY2017-18 stated below:

A. Shelf life Solutions:


With a considerable amount of time invested with customers on increasing awareness on the need for shelf life enhancement have helped the business to cater to appropriate solutions in the Indian market. It showed a modest and steady gain in sale of antioxidants for oils and fats industry.

During the year, CFS expanded its product offering to address the market needs for enhancing shelf life to segments such as oils, fats, bakery, snack foods, beverages, noodles, spices and seasonings etc. The Shelf Life Solutions business in India has shown remarkable growth in FY2017-18 with more than 80% growth compared to FY2016-17. Using Company’s core strength of technical expertise, global shelf life solutions experience and support from its state-of-the-art application laboratory has helped in the development of new products and contributed to this substantial growth. CFS will continue its efforts to strengthen the relationship with these industries.

With in-depth understanding of the Shelf Life Solutions business and using technical knowledge, the Company extended its markets to other geographies such as ASEAN (Association of Southeast Asian Nations) and Middle East countries. It also focuses on expanding to other food sectors such as edible oils, processed food and snack foods. The growth is expected to continue in the coming years with focus on expanding customer base and increasing market share. The Shelf Life Solutions business in India, Rest of Asia and Middle East market together showed more than 40% growth in volumes and value and is expected to grow at a similar rate in FY2018-19.

Animal Nutrition:

In FY2017-18, the Company expanded its India Shelf Life Solutions business with the launch of Animal Nutrition portfolio. Using technical expertise and the concept of improving Feed Conversion Ratio [a measure of how well a species convert feed intake into live weight], CFS focused on providing quality nutrition, feed safety, disease control and to better animal performance.

In April 2018, CFS signed a Joint Venture Contract with Pahang Pharma (S) Pte. Ltd., Singapore (Pahang) for incorporating a holding company, shareholding in the proportion of 51:49, named CFS Pahang Asia Pte. Ltd. in Singapore (hereinafter referred JV). The JV aims at research, development, production, trade and dealing in animal feed ingredients and products for Malaysia and other South Asian countries through its subsidiaries. Pahang’s strong presence in ASEAN markets along with its technical expertise can bring-in synergy with CFS’ capabilities. The portfolio of complementing products gives customer access to a wide, reliable offering.

Continuous improvement projects were conducted to add value to customer’s business, to enhance their trust and satisfaction. The Company looked at sourcing reliable suppliers, quality, cost-effective raw materials and ingredients, testing protocols for evaluating shelf life of food and feed samples, performance studies, application support, etc.


The food and flavour segment is consistently and steadily growing. Customers favour catechol route of manufacturing over ONCB route for its nature-identical vanilla flavour i.e. vanillin. It follows an environment -friendly, clean method of producing vanillin. CFS adheres to global standards of safety and quality; most trusted by the food and flavour industry. Today, CFS is one of the global leading vanillin producers and has boosted its presence in the world market catering to food, fragrances, pharmaceuticals, feed sectors etc.

In July 2017, CFS acquired 51% stake in erstwhile Ningbo Wanglong Flavors and Fragrances Company Limited now CFS Wanglong Flavours (Ningbo) Co. Ltd. (Wanglong). Wanglong uses a patented process in its 3,500 sq.m (approx.) dedicated facility in the coastal city of Yuyao, China. CFS has built a robust manufacturing chain with complete traceability in Ravenna (Italy), Tarapur (India) and Yuyao (China) to produce vanillin from catechol. CFS recommenced its vanillin production in September 2018 and scaled-up the capacity. CFS’ robust manufacturing chain can provide greater control with assurance of product stability, its steady supply with complete traceability.

The Company’s vertical integrated platform boosted the development and production of aroma chemicals for fragrance applications. It has helped to widen its offering to fragrance customers. New R&D projects for specialty chemical products for flavours, fragrances, & allied industries are under development.


During FY2017-18, the Performance Chemicals division focused on deeper market penetration, bringing business growth in existing and newer geographies. The Performance Chemicals business developed customers for newer applications in Pigments & Dyes, Polyurethanes and Agrochemicals industries with growth in volumes compared to FY2016-17. The production capacity for Guaiacol was increased to cater to its vanillin requirement. Overall the business brought a value growth of 38.24%.

Lockheed Martin (LM), a global security and aerospace company headquartered in the United States of America, is engaged in the research, design, development, manufacture, integration and sustainment of Advanced Energy Storage technology. CFS has entered into a long term preferred supply agreement for supply of a specialty chemical, which is required for its energy solution, has now progressed from pilot-to-commercial scale.

II. CFS Subsidiaries:

CFS’ global shelf life solutions business focuses on food sectors viz. Fats & Oils, Bakery, Sauces & Dressings, Spices & Seasonings, Meat & Poultry, Snacks & Nuts, etc. The thriving food antioxidants market provides considerable growth opportunities across sectors. As the world’s leading vertically integrated producer of TBHQ and BHA, it is well positioned to provide shelf life products to these food sectors. CFS has expanded its shelf life solutions business into other segments such as petfood, rendering, biodiesel, aquaculture, animal nutrition etc., across Asia, Europe, US, Central and South America. Today, CFS delivers not only reliable products but also offers technical solutions in a competitive landscape.


Food market for CFS do Brasil had been highly competitive especially with antioxidant straights like TBHQ. It forayed into the market with its traditional and natural antioxidant blends which opened the doors to a wide range of food sectors. In FY2017-18, its strong technical capabilities has won more than 60% of antioxidant business from a key oil producer. CFS do Brasil is very optimistic about creating a sizeable business with both traditional and natural shelf life solutions covering the entire Latin America market in FY2018 – 19.

Brazil is one of the biggest producers of petfood. In the last three years, the market has observed some changes with large petfood brands moving to a "natural" claim. It has allowed CFS to show its expertise to offer and deliver new antioxidant solutions. With enhanced shelf life requirement by the petfood industry, CFS bundled other line of additives for the petfood market in Brazil. During the year, it expanded in other Latin American market to provide solutions for petfood and rendering industry. The recent suspension of Ethoxyquin gave opportunity to present appropriate alternative Shelf Life Solutions. CFS do Brasil was nimble enough to develop and offer solutions that could add more stability to customer’s products.

The road ahead is positive for biodiesel industry. Argentina manages to produce biodiesel of excellent quality at a very competitive price and its exports to other continents. It is possible due to foreign investors and large capacity plants located strategically in the most productive ports of the country. Fortunately, the big news for the market arrived when flows from Argentina to EU market resumed in September 2017 following the reduction of antidumping duties. In March 2018, the CFS do Brasil has incorporated a separate entity named CFS Argentina S.A to cater to the customers in Argentinian market.

CFS Argentina developed Xtendra antioxidant formulations for biodiesel producers with the goal to supply to all biodiesel markets. The Company received "No Harm test and Relative Efficiency" certification for its two formulations/products from AGQM (Germany). CFS do Brasil has tapped potential producers of Biodiesel and aims to get substantial market share from both Brazil and Argentina with the priority to get a good price and performance ratio.

Overall, CFS do Brasil focuses on improving brand visibility, providing quality products, ensuring customer service and a sound distribution network with its growing presence in South America.


The trend in US continues for consumers opting to shun selective food additives such as synthetic colors, preservatives, stabilizers and emulsifiers, even though there are no evidence of these ingredients provoking any health concerns. While the use of synthetic antioxidantsintheU.S.remainsmuchlargerthannatural, the growth of these ingredients has slowed compared to natural alternatives. CFS America provides several natural alternatives under NaSure brand along with traditional antioxidants. Using our technical strength, CFS America conducted studies in its state-of-the art application laboratory that can support its efforts to penetrate other food sectors such as meat & poultry, snack foods, with new products in the coming year.

Petfood or Rendering is a mature market with the number of North American pet owners remaining unchanged in recent years. However, pet owner demographics are changing and the growth in this market is being driven by humanization and premiumization trends. The U.S. petfood market primarily uses natural antioxidants and CFS America is well poised to offer these products. It has expanded its laboratory capabilities that allows more effective and efficient responses to the needs of North American pet food customers. Additionally, alternative pet food forms have emerged. It has completed a year long study with a leading university that evaluated the need for antioxidants in the new alternative pet food forms. This technical report will support CFS America’s efforts to penetrate this rapidly growing petfood market in the FY2018-19.

CFS America launched its Animal Nutrition portfolio in mid 2017-18. It has identified distributors for feed ingredient product lines. It will continue to build on this support system in many parts of the U.S in FY2018-19. With reduction in use of antibiotics and in some cases total elimination, allowed the market to explode with new products. The animal feed market is a potential area for CFS America in FY2018-19.


CFS Dresen is a reputed player in the Mexico and Central America region and has been able to position itself as a trusted partner by offering customers with effective products, technical solutions, competitive pricing, customer support and on-time delivery. This combined package as a marketer reflected in its 30% growth in total sales over last year.

With acquisition of 65% stake in Dresen Quimica S.A.P.I de CV in May 2016 strengthened CFS’ Animal Nutrition portfolio. Using Dresen’s knowledge and technical know-how, it worked on development of products for the livestock in collaboration with other CFS subsidiaries to expand the portfolio in different markets. CFS Dresen will focus on expanding its customer base by adding new customers to grow the businesses, while continuing its efforts to maintain relationship with existing customers. CFS Dresen further focuses on expanding its business in Gautemala, Peru, Colombia and the Caribbean islands.

CFS Dresen’s continuous participation in exhibitions and other promotional activities has given a boost to project the global vision of the company. In FY2018-19, it aims to be a trusted provider for food and feed industries.


Sale and Distribution of some of the key catechol downstream products has been in line with CFS Europe’s goal. FY2017-18 opened up distribution channels for Guethol. Continuous improvement programs to improve efficiencies were undertaken. The Company sees a huge potential for its overall Performance Chemicals business in FY2018-19.

CFS Europe is constructing its blending plant (dry and liquid products) and R&D laboratory closer to its diphenol plant at Ravenna, Italy. The work for setting-up an administrative office and warehousing facility in the same premises is completed. It aims to begin its operations in this financial year with necessary certifications in place.

CFS Europe has begun its new business development activities for shelf life solutions business in food and animal nutrition sectors. Significant portion of efforts would be on new business development projects, to provide technical expertise and quality products to cater to the market needs in FY2018-19.


The diphenol manufacturing facility for Hydroquinone and Catechol at Dahej is progressing. The estimated timeline for the completion of plant construction is Q4 of FY2018-19.


In international markets, there are always associated risks, however at the same time, there are more potential gains one can receive. CFS maintains a strategic approach to risk management and approaches it intelligently to reap its rewards and accelerate growth. The Company’s expansion strategy includes expansion into various countries around the world. It is the de-risking ability of the Company which makes the difference.

In international markets, the risk associated with currency fluctuation has been mitigated by effective forex management along with judicial use of natural hedge provided by exports against its imports in view of the Company being the net exporter on the currency front.

As regards inflationary pressures and its impacts on the cost of manufacturing gets monitored regularly to ensure that they would not affect the operating margins of the Company. Correspondingly, the steps taken by the Company for process re-engineering, process improvements, yield improvements, technological up-gradation and other cost saving measures have resulted in cost optimisation.

Lack of clarity on future government policies continues to be an area of major concern for the industry. The exact impact of this cannot be assessed until the proposed changes are actually introduced and implemented.


In line with the overall growth objective and strengthening of infrastructure base, the Company had invested in Information Technology (IT) viz. SAP Enterprising Resource Planning system for leveraging its business values. Through implementation of SAP the Company has improved its operational efficiencies, inventory minimization and cost optimization not only for its Indian operations but also in its overseas manufacturing operations at Italy, Brazil, Mexico and the US.

The Company views SAP as a strategic tool to enhance its operational efficiencies, through various functional integration.


The major items of the financial statement on standalone basis is shown below:

( Rs. In Lakhs)
2017 – 2018 2016 – 2017
Net Sales & Other Income 41,425.85 35,043.90
Profit / (Loss) before Interest 1,498.09 3,493.58
& Depreciation
Interest 2,398.85 2,323.91
Depreciation 906.15 1,158.97
Profit/(Loss) before exceptional item and tax (1,806.91) 10.70
Less : Exceptional Item - -
Less: Provision for Tax (Net) (389.03) 89.85
Profit /(Loss) After Tax (1,417.88) (79.15)
Other Comprehensive Income 12.43 (10.19)
net of tax
Total Comprehensive Income (1,405.45) (89.34)
for the Year
Balance available for
Dividend paid - 464.33
Corporate Dividend Tax - 94.53
General Reserve - -
Balance Carried Forward 5,633.14 6,938.96


The Company has adequate internal control procedures commensurate with its size and nature of business in India and also at its subsidiaries abroad. The Company has clearly laid down policies, guidelines and procedures that form a part of the internal control systems. The adequacy of Internal Control Systems, which encompasses the Company’s business processes and financial reporting systems, is examined by the management as well as by its internal auditors at regular intervals. The internal auditors carry out audits at regular intervals in order to identify weaknesses and suggest improvements for better functioning. The observations and recommendations of the Internal Auditors are discussed by the Audit Committee, to ensure effective corrective action.


Food waste is a global sustainability issue that needs to be addressed. When customers buy from CFS, they are looking for more than high-quality and reliable products. That’s where the Company plays a vital role in bringing food sustainability by reducing food loss in the manufacturing chain. CFS has identified food segments that need shelf life enhancement and would be working on collaborative application projects to support the cause. It is a conscious effort to reduce food loss and its scarcity; preparing humans for a better future.

As a Corporate, CFS is accountable for effecting social change with its business practices and profits. The Company believes that corporates have the power to solve social issues and bring-in a difference. CFS’ involvement in development projects such as environment, healthcare, child education in different states of India helped people to attain a sense of belongingness, to be more self-dependent, and live their life with dignity. CFS has been continuously supporting Shushrusha Citizen’s Co-Operative Hospital Limited, Akhil Bhartiya Vanvasi Kalyan Ashram, Sangopita- A Shelter For Care and Vivekananda Kendra in their endeavor to improve quality of life and sustain humanity. During the Financial Year 2017-18, the Company has spent Rs. 45.50 Lacs towards CSR activities.


Employees are face of an organization to its customers. The Company emphasizes on more sensitive approach towards both business and people. It encourages employees to adopt ethical, responsible and transparent practices.

CFS cares for employee wellbeing. With the business spread across internationally, the Company is highly conscious and supports employee and their family’s wellness. It’s about ‘one worry less’ in their lives so that it makes them more focused on their jobs and feel secured.

Rapid changes in the increased pace of urbanization have left employees trying hard to pull work-life balance especially with the Company having significant number of women employees. With introduction of flexible working hours, employees face less stress of commute, better time management, provides conducive work environment, reduced absenteeism and made people more involved at work. The Company also believes in giving opportunities for professional and personal growth by handing over responsibilities, giving liberty for decision-making, developing ownership to nurture talent and shape young leaders.

The Company empowers employees with training programmes on introducing newer systems and technology, preparing them for the change. As on 31st March 2018, the Company has 309 permanent employees.

For & On behalf of the Board
Dilip D. Dandekar Ashish S. Dandekar
Chairman Managing Director
Place : Mumbai
Dated : 24th May, 2018