Fine Organic Industries Ltd Management Discussions.


The Indian economy registered a growth rate of 6.8% during 2018-19 as compared to 6.7% in 2017-18 as per the Central Statistical Office. The growth was supported by the robust demand in manufacturing, infrastructure and construction sectors. While the first half of the year witnessed recovery in investment as well as private consumption, it was in the later half of the year that the economic growth slowed down. Factors like global trade disputes between the US and China, rupee depreciation, oil price volatility and financial liquidity stress caused by NBFCs had an impact on the momentum. Despite these challenges, India retained its tag of fastest growing economy in the world.


The outlook for Indian economy looks stable, as during the year, various strategies were implemented to improve the liquidity in the Indian market. Also, it is observed that Indias (GDP) growth will be supported by the continued recovery of investment and robust consumption amid a more expansionary stance of monetary policy and expected impetus from fiscal policy. Further, implementation of structural reforms and easing of infrastructure bottlenecks, coupled with fiscal consolidation and quality exports are key factors that will enable Indias GDP growth according to the World Bank and the International Monetary Fund (IMF) outlook analysis reports.


Figure 2: Specialty chemicals; 1/3 rd of Indias market Indias specialty chemicals market


The global basic oleochemical market size was valued at $ 19.10 billion in 2018 and is estimated to reach $ 25.91 billion by 2019 Oleochemicals market is anticipated to witness a CAGR of 5.8% between 2019 to 2025. The Asia-Pacific region will continue to dominate the market during the same time span. Growing demand for naturally derived products of food & beverages and from other industries are expected to be the major factors driving the oleochemicals market. The key applications markets include cosmetics and other industries & personal care, food & beverages and polymers, among others.




The Company produces additives such as emulsifiers, esters, preservatives and other additive blends for the food industry. These products act as additives in maintaining the quality and freshness of the food products, impart better product structure integrity and helps in increasing the shelf life of food products like Bread, Margarine & Peanut butter etc.


The global Food Emulsifiers market is estimated to have touched $ 2,878 million in 2018, of which 12.7 is contributed by Soya lecithin. The market for emulsifiers from plant sources is estimated to be valued at USD 1,921.2 million in 2018. It is projected to grow at a CAGR of 5.4% to reach USD 2,495.1 million by 2023. The whole Food Emulsifier market is further expected to register a CAGR of 5.6% during FY 2019-23 and is projected to reach $ 3.70 billion by 2023. The Asia Pacific region continues to dominate the Food Emulsifier market. Further, increasing consumer demand for premium and convenience food products due to change in the preferences of food habits, lifestyle and rising disposable income in developing economies, will propel the demand for food emulsifiers. Besides, increasing consumers for healthy food products and clean-label food ingredients will lead to increase in demand for different food emulsifiers in the markets across the world. (source:, techsciresearch. com,


Indian Food Emulsifiers market is expected to reach $ 144.8 million by 2023, witnessing a CAGR of over 7.36% between 2018-23, in value terms. The market is driven by growing popularity of processed and convenience foods among the working population. Desk-bound lifestyles have not only increased the demand for packaged and convenience foods but are also raising obesity levels among consumers. This has led to a large demand for trans-fat products, which will drive the food processors to use emulsifiers and reduce the calories and fat. The food emulsifiers have their major applications in various segments such as bakery and confectionary, dairy, ice creams, biscuits, chocolates, bread, coffee creamers, soft drinks and malt beverages among others. (source:


• The number of end-use applications are growing due to multi-functional attributes of emulsifiers.

• The aeration property of selected emulsifiers is projected to widen its scope of application and drive the market growth.

• Demand for vegan food products is driving the plant- sourced Food Emulsifiers market.

• Changing lifestyle and increasing preferences incline customers to buy processed foods such as breads & cereals, frozen and packaged foods. This, in turn will drive the consumption volumes of processing ingredients, such as food emulsifiers in the food & beverage industry.

• A rapidly growing population and greater levels of urbanisation will boost the demand for processed food products, thereby driving the demand for food emulsifiers.

• In Asian countries, like India and China, with increasing disposable income and busy lifestyles, demand for packaged, processed and ready-to- eat food is increasing. This translates into healthy demand for food emulsifiers.

• The per capita consumption of premium quality food & beverage products is growing.

• The demand for healthier and better-for-you products is rising.

• Application in bakery products and dairy & frozen desserts is increasing.


Plastics additives are chemicals added in a polymer to modify its properties, improve its strength, durability and heat sensitivity. It is also added to enhance process ability, performance or appearance of the polymer. These additives find their widespread applications in construction, packaging, automotive, consumer goods, wires & cables, PVC pipes in agriculture, among others. Our additives are also used in WPC-Wood Plastics products for home & office furniture and floorings, in medical tubing, in blood bags and disposable plastic syringes and toys.


The global plastics additives market is expected to reach an estimated $50 billion by 2023 with a CAGR of 4.2% from 2018 to 2023. The market is majorly characterised by increasing demand for plastics in various end-user markets and increasingly stringent safety standards for smoke and flammability. Opportunities arising from construction, packaging, consumer goods and automotive industries round the world, will further drive plastic additives demand. (source:


The Indian plastics additives market size is expected to witness a CAGR of 8-10% over 2016-21 and is estimated to reach ? 90,000 million by 2021. The growth is majorly driven by its end usage properties to the end products such as durability, flexibility, antioxidant potential and microbial resistance, among others. The demand for plastic additives is growing in line with increasing demand for plastics in packaging, construction and automobiles. (source: crisil)


• Packaging is the largest end user for the plastics industry, accounting for more than one quarter of the total plastics usage. The rapid development of e-commerce has greatly promoted the development of the packaging industry in India.

• Replacement of conventional materials by plastics is seen in case of several applications such as automobiles and construction.

• The demand from under-penetrated Asia-Pacific region is seen rising.

• Rising demand for high performance plastics in major end-user industries like packaging, automotive, consumer appliances and construction is driving consumption of plastic additives.



Global cosmetics market is expected to reach US$ 429.8 billion by 2022, registering a CAGR of 4.3% during the FY 2016-2022. Changing lifestyles, rising demand of skin and sun care products due to varying climatic conditions, evolution of natural, herbal and organic beauty products are the potential enablers for the market growth. Thus, manufacturers are also using the natural ingredients or products based on natural raw materials for manufacturing the end products. (source:


Cosmetic additive demand growth in India will depend on growth prospects for end-use cosmetics sector. Cosmetics industry is anticipated to grow at 10-12% CAGR over 2016-17 to 2021-22. The industry is driven by increasing disposable income, rising awareness towards body aesthetics along with demand for herbal cosmetic products. There is a huge demand coming from youth population owing to adoption of Western culture & lifestyle and increasing number of beauty salons. Moreover, increasing per capita expenditure on personal appearance will also lead the market. (source: crisil)


• The rising disposable income in urban and rural India causes young generation continue to aspire for better standard of living.

• Increase in the number of healthcare problems associated with traditional cosmetics leads to shift towards organic cosmetics containing products derived from natural raw materials.

• Products with multiple benefits such as those with anti-ageing properties, moisturizing care and suntan protection are becoming popular in the skin care cosmetics industry.



Demand growth for rubber additives in India will depend on the growth prospects for the end-use elastomers sector. Domestic demand is expected to grow at a CAGR of 6-7% between 2016-17 and 2021-22. Industrys major growth can be attributed to the increasing manufacturing of tyres owing to visible growth in industrial and automotive sectors. Besides, declining raw material prices and favourable Government initiatives support rubber production. With increasing investments in production facilities of rubber processing chemicals, the demand will continue to rise. (source: crisil)


• Increasing demand for automobiles in India demands for more tyres, hoses, tubes and various other rubber parts leading to growth in rubber market.

• The per capita consumption of rubber in India is only 990 gm against 9 to 16 kilos in Japan, USA and Europe, which paves the way for under-penetrated market in India.



Paints and coatings additives demand growth in India will depend on the growth prospects for end-use paints and coatings sector. The paints and coatings industry is expected to grow at an 8-10% CAGR between 2016-17 and 2021-22. The market is mainly driven by the growing demand from the industrial and architectural segments. Also growing inclination to green paint is a major opportunity for the market .There has been a significant rise in the construction of hotels, shopping malls, high- rise buildings, and infrastructure sector including roads, bridges. This consequently leads to increase in the demand for various coatings and their additives in the market. (source: crisil)


Increasing levels of income, education and increasing urbanisation are generating opportunities and helping the paint market to grow considerably. In addition to this, usage of enamel and emulsion paints over traditional white wash, increasing penetration in the rural market will further create space for development within the industry.


• Slowdown in end-user industry: Demand in the oleochemical derivatives industry depends on varied other sectors growth and the economic development. Any slowdown in these sectors growth across regions will impact the industrys fortune.

• Substitutes: With the ever-changing technologies, new solutions are being developed at a rapid pace in industrial research labs and universities around the world. Apart from food industry, the oleochemicals face large competition from their peer petrochemicals.

• Vegetable oil prices: Domestic vegetable oil prices depend on global demand-supply dynamics as well as domestic output. Duty changes (by the Indian Government and exporting countries) can result in price fluctuations, and hence volatility in demand.


Established in 1970, Fine Organics is the pioneer and the largest manufacturer of oleochemical-based additives in India and a renowned player globally. It manufactures and sells over 400+ oleochemical-based additives used in the foods, plastics, cosmetics, paints, inks, coatings and other specialty applications in various industries. It is one of the six global players in the food additives industry and one of the five global players in the plastics additives industry. Currently, it has manufacturing facilities located at Ambernath, Badlapur, and Dombivali with combined capacities of 69,300 TPA. as on March 31, 2019

Food Additives

The Company manufactures various food additives such as Emulsifiers, Anti-fungal agents, and other speciality products which help food to get the desired aesthetic structure and texture along with maintaining quality and freshness.

Plastics Additives

The Company produces various additives for Polyolefins, Polyolefin Compounds and Masterbatches, Foamed Products, Rigid PVC products and Engineering Plastics such as Dispersive agents, Slip Agents, Anti-stats, Flow improvers, Lubricants, Processing Aids and Anti-fogging additives which help in reducing friction, mitigating build- up of electric charges and also help in processing high molecular weight polymers and improve appearance of final products, improve performance at the level of end use of final products, increase production output and help to reduce its costs.


The Company posted a strong growth in net revenue over the past year with an increase of 21.9% from र 85,628.50 lakhs in 2017-18 to र 1,04,397.20 lakhs in 2018-19. Revenue from operations(net off taxes) increased due to growth in volumes and better realisation. EBIDTA of the Company recorded an increase of 35.5% from र 16,397.61 lakhs in 2017-18 to र 22,225.17 lakhs in 2018-19. The EBIDTA margins rose from 19.15% in 2017-18 to 21.29% in 2018- 19. PAT of the Company recorded an increase of 27.31% from र 10,133.50 lakhs in 2017-18 to र 12,901.37 lakhs in 2018-19. The PAT margins rose from 11.83% in 2017-18 to 12.36% in 2018-19.

2017-18 2018-19 % change
Inventory Turnover 10X 13X 30

(Net Credit Sales / Average Inventories)

2017-18 2018-19 % change
Interest Coverage Ratio 46.10 114.38 148.11

(Earnings Before Interest & Taxes / Interest expenses)

2017-18 2018-19 % change
Current Ratio 2.52X 4.14X 64.29

(Current Assets / Current Liabilities)

2017-18 2018-19 % change
Debt Equity Ratio 0.11X 0.05X 54.55

(Net Debt / Net Worth)


Raw Material: The Company being a manufacturing firm, it is entitled to procure raw material from different vendors due to its large volume. Therefore quality, availability, disruption in supply due to constraints in sourcing (suppliers end), price fluctuations and non-renewal of contracts plays a major role. The Companys long standing relationships and long term deals with the suppliers allow availability of raw materials at competitive prices.

Quality: All our products and manufacturing processes are subject to stringent quality standards and specifications. Any failure on our part to maintain the applicable standards and manufacture products according to prescribed specifications, may lead to loss of reputation and goodwill of our Company, cancellation of the order and even lead to loss of customers. Our in-house process development and management enables us to keep track of quality at each stage of the process, thereby maintaining the highest level of quality consistency.

Innovation: Becoming obsolete and ineffectiveness in knowing future developments can lead to serious failure and losses. The Company has inculcated the culture of innovation and instilled a firm belief that R&D is a key element of growth. In line with this thinking, the Company has over the years made regular investments in R&D to expand its bouquet of product offerings and to streamline manufacturing process. This helps in meeting various needs of customers and varied industries.

Regulatory Bodies: The Government of India and the State Governments in India have broad powers to affect the Indian economy and our business in numerous ways. Any change in the existing policies of Government of India and/or State Government, or new policies affecting operations of our business, could adversely affect the supply/demand balance and competition and negatively affect our cost structure. Moreover, changes in environmental regulations could inhibit or interrupt the Companys operations, or require modifications to its facilities, which can eventually affect returns and profitability. The Company ensures to abide by all the necessary requirements of the regulatory bodies and ensures environmental-friendly manufacturing processes.

Competition: We operate in an increasingly competitive market and our results of operations and financial condition are sensitive. This may materially and adversely affect our competitive pricing and other factors. Increasing competition may result in pricing pressures and decreasing profit margins. To mitigate this risk, we develop and add new products to our basket which helps us diversify into different categories. We also are engaged in expanding geographies to add new customers.

Dependency on industry: Our Company is heavily reliant on the demand from application industries such as food, plastic etc. Any downturn in the application industries could have an adverse impact on our Companys business and results of operations. The Company caters to a host of end applications which reduces its exposure to such risk. Also, the Company caters to those industries whose demand are on the rise with the developing economy.


The Company allows its employees to evolve through their quality skills. It tries to maintain employee retention levels. Also, it conducts various programs for developing the skills of their employees. Alongside professional training, we focus on conveying our corporate values, leadership, integrity, flexibility, efficiency and establishing a corporate culture based on trust, respect for diversity and equality of opportunity. Our responsible approach towards our employees includes fair treatment at work, flexible worktime arrangements and a pleasant working environment.

During the year, the Company had organised training programs in different areas such as team building, communication skills, presentation skills, 5S, QMS (Quality Management System). As on March 31, 2019, the Companys employee strength stood at about 658.


The Companys internal audit system has been continuously monitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The Audit Committee reviews reports presented by the internal auditors on a periodic basis. The committee makes note of the audit observations and takes corrective actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure efficiency and effectiveness of internal control systems.


The Management Discussion and Analysis report containing your Companys objectives, projections, estimates and expectation may constitute certain statements, which are forward-looking within the meaning of applicable laws and regulations. The statements in this Management Discussion and Analysis report could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the governmental regulations, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business and other incidental factors.