Tag: production linked incentives

Vinati Organics targets 15-20% revenue growth for FY25

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Vinati Organics, a company that specialises in speciality chemicals and is based in Maharashtra, had a tough third quarter this year (Q3FY24). Its earnings before interest, taxes, depreciation, and amortisation (EBITDA) declined by 22%, and its profit after tax (PAT) decreased by 28%.

In an interview with CNBC-TV18, Vinati Saraf Mutreja, MD of Vinati Organics said the next financial year will be better with recovery in the existing products and some of the new products coming on stream. He expects revenue growth of 15-20% in FY25.

Also Read | Vinati Organics sees capacity utilisation improving in FY25, stable margins

The company’s revenue decreased from ₹516 crore in Q3FY23 to ₹448 crore in Q3FY24. Additionally, its EBITDA declined from ₹148 crore to ₹115 crore. Consequently, the operating profit margin decreased from 28.6% to 25.6%, and the profit after tax decreased from ₹107 crore to ₹77 crore.

Discussing the strategies known as “Europe-plus-one” and “China-plus-one” in the chemical industry, Saraf mentioned that India is well-positioned to fulfil the demand. She highlighted various government incentives, such as production-linked incentive (PLI) schemes, attracting interest from multinational companies (MNCs) and those based in Europe and the USA. These companies are now looking at India as an alternative supplier, making the “China-plus-one” strategy a lasting trend. Indian companies stand to benefit from this shift in the coming years.

Many countries relied heavily on China for various products, but during the COVID pandemic, when China shut down, the limitations of this dependency became clear. This realisation prompted the adoption of the “China-plus-one” strategy, emphasising the importance of diversifying the supply chain.

Also Read | China plus one strategy is playing out in pharmaceutical space, says expert

Over the past year, the Vinati stock has declined by more than 8%. The company’s market capitalisation is currently at ₹17,497.62 crore.

For the entire interview, watch the accompanying video

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Cabinet approves PLI scheme for 10 sectors; here’s how industry leaders reacted

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Narendra Modi government on Wednesday approved offering Rs 2 lakh crore worth of production-linked incentives (PLI) scheme to 10 more sectors to boost domestic manufacturing.

Confirming the CNBC-TV18 newsbreak, the information and broadcasting minister Prakash Javadekar said production-linked incentives will be offered for sectors such as white goods manufacturing, pharmaceutical, specialised steel, auto, telecom, textile, food products, solar photovoltic, and cell battery.

The scheme will help encourage domestic manufacturing, reduce imports, and generate employment as the government works to bolster economic growth. The financial outlay for the new scheme will be Rs 1,45,980 crore.

The five-year PLI scheme, which aims at making Indian manufacturers’ competitive globally, was approved by the union cabinet, Javadekar told reporters.

Elaborating on the decision, finance minister Nirmala Sitharaman said the PLI scheme will provide great incentives for manufacturers and help the country move towards the objective of ”Aatmanirbhar Bharat” (Self-Reliant India).

The Cabinet also decided to extend the viability gap funding scheme to the social infrastructure sectors. The scheme is currently available only for projects concerning economic infrastructure.

“The Cabinet has taken two very important decisions… both of which, if you ask me at a time like this, are going to give a right impetus to the economy, because we are looking at Aatmanirbharta,” Sitharaman said, adding that they will help in making India part of the global value chain.

The PLI scheme, she said, will also provide encouragement to the critical sunrise sectors by ensuring necessary support from the government in addition to creating jobs and linking India to the global value chain.

The 10 sectors that will be entitled to get the incentives include Advance Chemistry Cell (ACC) battery. It is entitled to get Rs 18,100 crore. Other sectors are electronics and technology products (Rs 5,000 crore); automobiles and auto components (Rs 57,042 crore); pharmaceuticals and drugs (Rs 15,000 crore); telecom and networking products (Rs 12,195 crore); textiles products (Rs 10,683 crore); food products (Rs 10,900 crore); high efficiency solar PV modules (Rs 4,500 crore); white goods (Rs 6,238 crore) and speciality steel (Rs 6,322 crore).

“Over the next five years, this is today estimated, that the new PLIs that we are bringing in for these 10 identified sectors will involve an expenditure of about Rs 2 lakh crore. So this is something which we are very happy to announce that the Cabinet has given clearance for this…,” Sitharaman said.

An official release said the approved financial outlay over the five-year period for these 10 sectors will be Rs 1,45,980 crore. Under another PLI scheme, an outlay of Rs 51,311 crore has already been approved.

“We are yet again proving that the policy that we are taking up even in PLI through which we want manufacturers to come to India is clearly to say we want to build on our strength but yet link with the global value chains.

“… so this PLI is also aimed at getting investments into the country. The government is giving financial support that these financial incentives will make it attractive to produce in India and selection of sectors have been based on that,” Sitharaman said.

An official release said the scheme across these 10 sectors will make Indian manufacturers globally competitive, attract investment in the areas of core competency and cutting-edge technology, ensure efficiencies, create economies of scale, enhance exports and make India an integral part of the global supply chain.

The PLI scheme will be implemented by the concerned ministries/ departments. The final proposals of PLI for individual sectors will be appraised by the Expenditure Finance Committee (EFC) and approved by the Cabinet.

Savings, if any, from one PLI scheme of an approved sector can be utilised to fund that of another approved sector by the Empowered Group of Secretaries. Any new sector for PLI will require fresh approval of the Cabinet.

SIAM welcomes the announcement of PLI scheme. “We thank the Government of India for echoing its confidence in the Indian Automobile industry, as the industry was eagerly waiting for this scheme to increase its competitiveness and take the growth of the sector to the next level. We look forward to the details of the scheme that would be rolled out by the ministry of heavy industries & public enterprises.”

FICCI  President Sangita Reddy said the announcement of the PLI scheme for 10 sectors by the government today is a major boost for the manufacturing sector.

The sectors covered under the PLI scheme are strategic, technology-intensive, and also important from the perspective of employment generation in the country, Reddy added.

“Indian economy offers huge opportunity for these sectors not just from the domestic market perspective but also to make India an export hub for these products. FICCI thanks the Government for the announcement and also hopes to hear about such progressive schemes for more sectors.”

Kamal Nandi, President – CEAMA and Business Head & Executive Vice President – Godrej Appliances said this is a welcome move by the Union Cabinet towards making India self-reliant.

The industry and economy as a whole is still recovering from the pandemic. The production linked incentives of Rs 1.46 lakh crore spread over 5 years will go a long way in boosting indigenous manufacturing in various sectors including consumer durables/white goods, he added.

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Government to provide production-linked incentives to more sectors: Niti Aayog

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government will introduce the production-linked incentive (PLI) scheme for more sectors to boost domestic manufacturing, Niti Aayog Vice Chairman Rajiv Kumar said on Friday.

Addressing a virtual event organised by industry body FICCI, Kumar also highlighted the government’s efforts to push electric mobility or e-mobility in the country.

He said “85 percent of vehicles on the street are two- and three-wheelers and we want to shift them to electric mobility going forward. We have finalised standard of charging for two- and three-wheelers,” he said.

On opportunities and facilities for investors, Kumar said, “We will, while attracting FDI, also repose our faith and trust in those who have already invested in India. And we want to recognise them by giving much better logistics, much better infrastructure.”

For this reason, “we have brought out what is called PLI scheme which will be valid for about 9-10 sectors very soon,” Kumar added.

The government has already introduced the PLI scheme for pharmaceutical, medical devices, mobile phones and electronic manufacturing companies. It is now considering to extend the scheme to other sectors as well.

The Niti Aayog vice chairman, however, did not specify which sectors might be made eligible for the incentives.

“The objective of the PLI scheme is to incentivise investors in this country to put up globally comparable capacity in scale and competitiveness,” he said..

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Could benefit from the PLI scheme, says Laurus Labs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Department of Pharmaceuticals has relaxed rules in the production linked incentives (PLI) scheme for Active Pharmaceutical Ingredients (APIs), drug intermediaries and medical devices. Satyanarayana Chava, Founder and CEO at Laurus Labs believes the company has some products where they could get some benefit out of this scheme.

“With these modified norms, we will probably try to apply for a few molecules but that is not going to be significant for us,” he said.

Laurus Labs came out with a strong set of earnings in the second quarter. Margins come in at a multi-quarter high. While discussing the quarterly numbers he said, “The growth came from all three divisions and that is the trend we expect to continue.”

Chava is confident of maintaining gross and EBITDA margins going ahead. “We have very good visibility for our revenue growth and we are reasonably confident to maintain gross margin and EBITDA margin as well. We are confident that we will be able to maintain the EBITDA between 29 percent and 30 percent,” he said.

Net debt for the company stands close to Rs 1,000 crore. When asked about his plans for reducing the debt, he replied, “We don’t want to bring it down beyond this level because we have very large capital expansion plan ahead of us.”

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Govt plans Rs 2.18 lakh crore for PLI scheme for next 5 years; new investment strategy to save Rs 3.08 lakh crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government is planning to save about Rs 35,000 crore to help manage the fiscal load put by the production-linked incentive (PLI) and phased manufacturing programme (PMP) schemes, its initiatives to attract investment into the country.

Highly-placed government sources told CNBC-TV18 that this savings will be achieved by the transition from MEIS to Remission of Duties and Taxes on Exported Products (RoDTEP), which is likely to lead to Rs 3,08,624 crore in savings between FY21 and FY26 — about Rs 34,666 crore in the current fiscal.

“To usher in investments in the country, the government is planning to keep a financial outlay of Rs 2,18,481 crore between FY21 and FY26, which is the five-year period to promote PLI schemes,” sources said and added that with regards to RoDTEP, the benefits that are likely to be given to exporters between FY21 and FY26 is estimated at Rs 77,156 crore.

Although these are part of the initial proposal, it will be announced formally soon, sources added.

CNBC-TV18 was first to report that the government is looking at a three-pronged strategy to attract investments in the country over the next five years to boost the economy. According to this strategy, the government is likely to come up with sector-specific PLI schemes and PMP to protect the domestic industry and a comprehensive review of free trade agreements.

Auto and components, large electronics manufacturing projects are poised to get highest allocation of PLI, with the benefit of an outgo for FY21 at an estimated Rs 5,334 crore.

CNBC-TV18 had first reported that Niti Aayog is likely to move a cabinet note on an umbrella policy framework on the proposed PLI scheme, which would lay out the 10 sectors identified by the government which have massive manufacturing potential.

According to sources, “The proposed sectoral PLI benefits between FY21 and FY26 are pegged at Rs 57,042 crore for auto and components, Rs 40,951 crore for the large electronics manufacturing, which has already been approved by the government.

Similarly, Rs 30,000 crore has been proposed for specialised pharma products, Rs18,100 crore for battery storage and Rs 15,195 crore for telecom and networking products.

“Rs 15,400 crore for the food processing sector, Rs 10,683 crore for greenfield textile projects, Rs 6,322 crore for the speciality steel sector and Rs 4,500 crore for the solar PV module too have been planned and kept aside,” sources said.

“The government also feels that white goods segment, especially the air conditioners and LED TVs have a huge potential to boost manufacturing and a PLI support of Rs 6,238 crore,” sources said.

“Other important sectors where the PLI benefits have been announced and approved already are Rs 5,630 crore for pharma API and key starting raw materials (KSM), Rs 3,420 cr for medical devices and Rs 5,000 crore for electronics (laptops, IoT, computer hardware), this will give an initial fillip to the manufacturing economy,” sources said.

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Umbrella policy soon for more PLI and PMP schemes to boost domestic manufacturing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government of India’s think tank – Niti Aayog is soon likely to move cabinet proposing an Umbrella policy on Performance Linked Incentive Scheme (PLI) and  (PMP) schemes to attract more investments in the country, highly placed sources told CNBCTV18.

In its proposal, NITI Aayog is likely to push for PLI schemes where later on this umbrella policy can be adopted by the line ministries to work on the sector specific PLI and PMP schemes.

The government is now planning PLI benefits for 9 additional sectors and some special manufacturing parks and benefits for the MSMEs as well through these schemes, sources added.

“The Financial outlay for PLI schemes will be kept at Rs 39,097 crore for current fiscal and with a proposal that the PLI scheme funds can be increased by 10 percent per annum, which will be operational for five years. The allocation has been arrived at noting the savings that the government aims to make on account of shift of MEIS scheme to RoDTEP,” sources added.

The sectors where PLI scheme is likely to get approved include Specialty chemicals, Capital Goods, Technology products, White goods, Networking products, Automobiles & auto components, Textiles, Food Processing and Advanced battery cells.

These 9 sectors are in addition to the 2 sectors – API and medical devices and mobile and electronic equipment where the government has already announced PLI schemes.

Also Read: Government mulling production linked incentives for more sectors

Whereas on the PMP proposal, Niti Aayog plans that the sectors will get duty protection for a limited period, sources added.

The sectors identified for PMP by the government are Furniture and bedding, Plastics, Optical, photographic & Surgical instrument, Toys, games and sports equipment and Low-value electronics.

It would be important to see how soon the proposal makes it to the cabinet for formal approval.

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Government mulling production linked incentives for more sectors

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After launching production linked incentive (PLI) schemes for electronics, pharma, medical equipments, the government is now discussing similar PLI schemes for more sectors.

“Discussions are going on between the Finance Ministry, Niti Aayog and line ministries and soon as the contours get finalized, the schemes will be sent for a cabinet nod for a formal announcement,” sources told CNBC-TV18.

Some of the sectors, where a PLI scheme could be announced soon include chemicals, fertilizers, solar equipments, including solar cells and panels, power equipments manufacturing, electric vehicle components, batteries and auto parts and components, sources said.

Stakeholders will also be asked for their views and inputs to ensure that schemes take off immediately with the launch, they said.

The aim behind coming up with more PLI schemes is to promote Atmanirbhar Bharat programme and to ensure that India becomes self-reliant and imports are reduced drastically.

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India working on production linked incentives for 4-5 sectors

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India is working on offering production linked incentives for 4-5 sectors to boost manufacturing in the country, a top finance ministry official said on Thursday.

The incentives would be offered to sectors to push manufacturing and help those that have been pushed to the brink, Tarun Bajaj, economic affairs secretary at the Ministry of Finance, told a virtual conference, without providing more detail.

The conference was organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).

Earlier this month, the government announced production linked incentives for large scale electronic goods manufacturers for five years, to boost manufacturing and attract investments in mobile phone manufacturing and electronic component units.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow