Marketing assets

Sticking to the basic skill pays off

Vinod Saraf, who started specialty chemicals company Vinati Organics from scratch, has been cautious in his forays into new areas, despite the advantage of launching it just before economic liberalization in 1991. He continued with the flagship product Iso Butyl Benzene (IBB) until 2007, and diversified into the manufacture of acrylamide tert-butyl sulfonic acid (ATBS) in 2006, key ingredients used in pharmaceuticals and petroleum products.

Vinati, the world’s largest manufacturer of IBB and ATBS, has a global market share of 65% for both products. About 75% of its production is exported. The company reported an EBITDA margin of 37% – EBITDA of ₹353 crore on revenue of ₹954 crore – last fiscal year. Net profit fell 19% year-on-year to ₹269 crore due to Covid disruptions.

Sticking to knitting has paid off for India’s top emerging companies, despite the headwinds in the economy. institutions) are sole proprietorships.

India Grid Trust, which debuted this year ranked 48th, recorded the highest EBITDA margin at 84.71% among the Next 500 companies. One of the largest infrastructure investment trusts (InvIT) focused on power transmission and sponsored by private equity giant KKR, the company posted an EBITDA of ₹1,421 crore on sales of business of ₹1,677 crore in FY21. However, net profit declined by 34% YoY to ₹334,000,000 due to lower energy consumption during lockdown . The trust, which owns 7,570 km of transmission lines and 100 MW of solar assets, has a net debt of ₹11,796 crore.

Its peer, IRB InvIT Fund, also entering #213 for the first time, reported an EBITDA margin of 80.2% in FY21. With a portfolio of 20 road projects, including seven national highways under operation and maintenance (O&M) contracts, the trust, sponsored by IRB Infrastructure Developers, claims a 20% stake in the ambitious Golden Quadrilateral project. The company’s EBITDA was ₹917 crore in FY21, on revenue of ₹1,143 crore, due to underlying mature toll road assets and low maintenance costs.

Wind Farms CLP India Pvt. Ltd., the Indian arm of China Light and Power, came third with an EBITDA margin of 75.32% and ranked 397 on the list. Among financial institutions, Credit Suisse AG had the highest margin at 87.39%, followed by Repco Home Finance with 86.75%.

As the American writer Max Lerner once said, the turning point in the growth process is when you discover the fundamental strength that survives all wounds. The past two years have been a testing period for business in India. Almost all high EBITDA margin companies faced negative revenue growth in FY21. However, they managed to survive on less profit and rebounded as the economy picked up speed, mainly due to their focus on basic skills.