Last Week Pick of the week: Balaji Amines Limited (Bse Code: 530999)

Last week Pick of the week: Balaji Amines Limited(Bse Code: 530999): Buy at 40.50, The research report is updated on the blog for the benefit of all the blog visitors.

Balaji Amines Ltd., INDIA, an ISO 9001: 2008 certified company, specialised in manufacturing Methylamines, Ethylamines, Derivatives of Specialty Chemicals and Natural Products.

The products are mainly used in API's, Agrochemicals, Paint industry, Refineries and host of other industries.

                
Balaji  Amines Limited, one of the leading manufacturers of Aliphatic Amines in India was set up in the year 1988 to cater to the growing requirements of value based Specialty Chemicals. BALAJI AMINES commenced manufacture of Methyl Amines in the year 1989 and subsequently added facilities for manufacture of Ethyl Amines and other derivatives of Methyl Amines and Ethyl Amines.


BALAJI AMINES`s state-of-the-art manufacturing facility is located at Tamalwadi Village, near Solapur (Maharashtra State, India) The facility is fully equipped with latest technology like digital computerized controlled systems, which facilitates the control of operations from the control room in addition, BALAJI AMINES possesses an excellent R&D facilities and laboratory, which helps in conducting basic research and also to fine tune the process. And other manufacturing facilities are at Osmanabad, Maharashtra, and Bollaram, Hyderabad.

Balaji Amines Ltd is one of the largest Amines & Amine derivatives player in India. This field is limited to a handful of players as the technology is not freely available.  Over the years, BALAJI AMINES has been developing newer products and technologies to maintain its leadership position, through its in-house R&D department. As of now, BALAJI AMINES is one of the lowest cost producer in the industry. Methlyamine (20,000 MTPA) and Ethylamine (6,000 MTPA) are their core products and with leadership position, the earnings from these products remain stable. Over the last 4-5 years, the co has been doing a lot of R&D to develop new high potential products. Here is a snapshot of the R&D expenses:

 New Products are – NMP, Morpholine, PVP etc. Among these, NMP & Morpholine have started doing well and BALAJI AMINES has plans to triple the capacity (in phases) of NMP by the end of this year. PVP is a high potential, high margin product and the company has been able to break into the monopolyof international players like BASF, Huntsman etc. BALAJI AMINES is waiting for regulatory approvals like EU – GMP, USFDA etc to market the product and scale up production. If successful, it can be a big trigger as the margins will be very high in this segment.

Morpholine is likely to enjoy better margins as it may attract anti-dumping duty in India.

Clients:  BALAJI AMINES caters majorly to the Pharma industry and has relationship with some of the leading players like – Sun Pharma, Dr Reddy's, Ranbaxy, Matrix etc. It also supplies to Agro Chemicals, Refineries, Rubber etc industries.

    Triggers:

With a host of new products lined up through sustained R & D efforts the management is confident of maintaining a positive growth path in the coming years.


Balaji Amines is expanding the capacity from 6000 MT to 22000 MT, which is to be completed by Q4 FY11.

    Balaji Amines trying to get mandatory approvals for commercial exploitation of its new product – PVP which has high potential.

     Balaji Amines has also planned a major expansion of its core product – Methyl & Ethyl amines.

   2.5 Mw Co- Generation Power Plant at Tamalwadi, Solapur has been commissioned in July, 2009.

The company with a view to expand and diversify into new area of Business, envisaged construction, development and leasing out properties for hotelThe company plans to utilize the available vacant lands in upcoming areas of Solapur for these purposes. Company has proposed to setup a Hotel with 100 rooms and banquet facilities with an investment of Rs. 40 Crore. The project will be completed over a period of 1 year 6 months  from now. The company has also entered into an agreement with the ‘SAROVAR’ group of hotels for operating  and managing the property.

Share Holding Pattern: Corporate Bodies hold a healthy 18.57% of the total shares.

BALAJI AMINESAJI AMINES LTD.
Scrip Code :  530999		Quarter ending :  Sept 2010
Shareholding belonging to the category  "Public" and holding more than 1% of the Total No.of Shares
Sl. No.	Name of the Shareholder	No. of Shares	Shares as % of Total No. of Shares
1	Bhagyanagar Wood Plast Ltd	150,684	2.33
2	Reddy V Y	137,844	2.13
3	Vinitha Nalla	191,688	2.96
4	Kishan Reddy Nalla	229,600	3.54
5	Vijaya Nalla	159,700	2.46
6	Vineel Reddy Nalla	236,844	3.65
7	Digvijay Singh Puar	97,330	1.50
	Total	1,203,690	18.57

Financials:

    For Q2 FY11 the net profit stood at 99.91 millions as against 75.76 millions.

    Balaji Amines has a Book value  of 140.

      From a modest beginning, the company has come a long way. The turnover has grown consistently a CAGR of 27.61% over last 11 years from 23 Cr turnover in 2000 to 262 Cr turnover in 2010.

             For FY 2012, BALAJI AMINES may very well do a turnover of over 500 Cr.

 The Target price of the company is only for the paid clients.