KANORIA CHEMICALS & INDUSTRIES LTD (KCIL, Bse Code: 506525)

KANORIA CHEMICALS & INDUSTRIES LTD (KCIL, Bse Code: 506525) :  Targets are only for our paid members

Incorporated in 1960, Kanoria Chemicals and Industries Limited (KCIL) is engaged in the

manufacturing and selling of chemical intermediates in India. KCIL operates in two business

segments: chloro chemicals and alco chemicals. The company primarily offers chlor-alkalis, chlorine  derivatives and water treatment chemicals, as well  as alcohol-based intermediates. Exports  contributed ~11% of total revenues in FY10. 

KCIL is one of the leading chemical manufacturing companies in India producing alco chemicals and chloro chemicals. The chloro chemicals business segment which  contributed ~72% to consolidated revenues in FY10 includes the production of caustic soda and chlorine, as well as various chlorine derivatives that cater to a range of user  industries such as aluminum, paper, textiles, soaps and detergents, petroleum refining, and pharmaceuticals. The alco chemicals segment which contributed ~28% of  consolidated revenues in FY10 is engaged in the production of ethanol from molasses and formaldehyde from methanol, which is further synthesized into several products  for industrial applications. The products of the company include pentaerythritol, sodium format, acetaldehyde, hexamine and others. KCI has three manufacturing facilities,

one at Renukoot in the state of Uttar Pradesh (U.P), which manufactures chlor-Alkalis, chlorine derivatives and water treatment chemicals; the second at  Ankleshwar  (Gujarat), which manufactures alcohol and alcohol based intermediates; and the third is at Visakhapatnam (Andhra Pradesh), which manufactures formaldehyde and  hexamine. KCI also operates two 25MW thermal power plants in Renukoot, and enjoys cost advantage as a result of backward and forward integration. The company’s  portfolio comprises of over twenty products, with a market leadership in six and substantial shares in all others. The company also exports its products to overseas markets.  Exports contributed ~11% to total revenues in FY10. 

Investment Rationale:

• Regular Dividend paying company, which paid 30% dividend for the past 6 years.

• Diverse product base with established market position

 

• KCIL is a leading manufacturer of chemical intermediates in India, manufacturing over 20 products. These includes at least six products where it has market leadership in India, namely caustic soda, aluminium chloridem, ploy aluminium chloride, pentaerythritol, hexamine and formaldehyde. It is one of the largest manufacturers of caustic soda in eastern India. Its products cater to a range of user industries, such as aluminum, paper, textiles, soaps and detergents, petroleum refining, and pharmaceuticals.

• On 23rd January 2011, The company has started commercial production at its Greenfield project vishakapatnam, Andhra Pradesh with an installed capacity fo 105000 TPA of Formaldehyde.

• The company is selling its chloro chemicals division comprising of manufacuturing facilities at Renukoot, Uttar Pradesh and Salt works at Gujarat to Aditya Birla Cehmicals (India) limited for a cash consideration of Rs.830 crores. KCIL is going to utilize the money for more acquisitions and capacity expansion of its other facilities.

• Strategic tie-ups with SEA and MFFPL  The company entered into joint venture (JV) with Soluciones Extractives Alimnetaries (SEA) of Spain during FY10. The company also entered into joint venture with Minerva Flavours and Fragrance Pvt  Ltd (MFFPL) for setting up a flavours and fragrance facility at Vishakhapatnam (Andhra Pradesh).  KCIL group is a minority stake holder with a 26% stake. The total estimated capital outlay for the JV  is Rs 214 mn. The total investment made by the company during FY10 in the JV was Rs 16 mn.

• Regular Capacity Expansion: Every year the company is expanding its products production at various facilities so as to catch the increased market needs.

Share Holding Pattern: Promoters Hold 57.05% of total shares,

Corporate Bodies and Individuals(who are holding more than 1%) is : 25.59% of the shares. Below are the details of Corporate bodies holding.

Which leaves 17.36% (97 Lakhs +) of shares to public.