Vidhi Speciality Foods Ltd

About the Company:

Vidhi Specialty Food Ingredients Ltd., a Mumbai-based Company incorporated in 1994, is engaged in the manufacture of food colors as ingredient for foodstuffs, pharmaceuticals, confectionery, pet foods, healthcare, dairy, soft drinks and cosmetic industries.Company manufacturers Superior Synthetic Food Grade Colours. It provides synthetic organic coloring products. Its product line includes synthetic water solubles, aluminium lakes, granular, FD&C certified colors & lakes, and blends. Exports account for 96% of total revenue of the Company.

Company is the third largest manufacturer of synthetic food grade dyes globally with a capacity of above 2500 MTPA. Over the last 20 years,Company has established strong relationships with global majors like Nestle, Mars, Pedigree and Sanofi among others. It has manufactured 2800 Metric Tonnes of food colors during FY16 against 2275 Metric tonnes in the previous year and further it plans to expand its capacity to 8000 MTPA over the 4-5 years.

The Company is working on a capex plans that include increasing its existing product lines, diversification into new products along with backward integration for manufacturing the raw materials.

In Company’s Vision for 2020, they wants to become Rs.500 crore turnover company with substantially better EBIDTA margins by reducing low margin trading business and its foray into niche segments which will give higher profit margins.

Highlights of the Company:

One of the leading manufacturers of food color in India.
Export to more than 80 Countries.
The food colors of Vidhi are being distributed and consumed in over 80 countries across 6 continents.
Its products are distributed to some of the largest Consumer / Healthcare / Food & Feed companies in the world.

Vidhi has built up on technical services, marketing capabilities and production in bulk quantities to face competition from domestic as well as global. In this way, Vidhi enjoys a position of one of the leader in food color manufacturing Industry.

Competition for the Company:

The interesting point is that there are only 4 major companies operating in this particular business segments.The Company’s along with their capacity are as follows:

Sensient Technologies (20,000 MTPA).
Roha Dyechem (9000 MTPA).
Vidhi Speciality Foods(4,200 MTPA).
Emreld USA (2,200 MTPA).

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Positives for the Company:

Experienced Management Team.
2nd Largest manufacturers of food color in India.
Demand is higher than the supply of the product and due to this gap of demand and supply,the margin of the profit has been increased.
Working on diversification into production of new products.
Company growth at 21% CAGR over the last 5 years, while the industry has witnessed a growth of 4-5%.
Strong Marketing capabilities and production in bulk quantities, is helping company to face competition from domestic as well as global majors.
Capex plan will translate into growth in sales along with healthy margin.
Aiming Rs. 500 Cr. in top line by 2020 with 20% OPMs, Capacity of around 8,400 MTPA.
Consistent Dividend Payer.
CMP is around Rs.60 & Market cap is around Rs.300 crores ($46 million)