MIRA INFORM
REPORT
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Report
Date : |
17.03.2008 |
IDENTIFICATION DETAILS
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Name : |
KANORIA
CHEMICALS AND INDUSTRIES LIMITED |
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Registered
Office : |
"Park Plaza" 71, Park Street, Kolkata- 700016, West
Bengal |
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Country
: |
India |
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Financials
(as on) : |
31.03.2007 |
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Date
of Incorporation : |
17.12.1960 |
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Com.
Reg. No.: |
21-24910 |
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CIN
No.: [Company
Identification No.] |
U00000WB1960PLC024910 |
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TAN
No.: [Tax
Deduction & Collection Account No.] |
CALK00137E |
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Legal
Form : |
A Public limited Liability Company. The Companys Shares
are listed on the Stock Exchange. |
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Line
of Business : |
Manufacturer of Caustic Soda 100% (NaOH), Pentaerythritol,
Aluminium Chloride and other chemicals. |
RATING & COMMENTS
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MIRA’s
Rating : |
A |
RATING
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STATUS |
PROPOSED CREDIT LINE |
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56-70 |
A |
Financial
& operational base are regarded healthy. General unfavourable factors will
not cause fatal effect. Satisfactory capability for payment of interest and
principal sums |
Fairly Large |
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Maximum
Credit Limit : |
USD
7778800 |
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Status
: |
Good |
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Payment
Behaviour : |
Regular |
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Litigation
: |
Clear |
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Comments
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Subject is a well established company having satisfactory
track. Financial position is good. Payments are correct and as per commitments. The company can be considered good for any normal business
dealings at usual trade terms and conditions. |
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LOCATIONS
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Registered
Office : |
"Park Plaza" 71, Park Street, Kolkata- 700 016, West
Bengal |
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Tel.
No.: |
91-033-22806692 , 2499472, 22499473, 22499474 |
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Fax
No.: |
91-033-22470263, 22499466 |
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Email
: |
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Website
: |
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Corporate
Office : |
Indra Prakash, 21 Barakhamba Road, New Delhi – 110001 |
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Tel.
No.: |
91-11-23716580 / 81 / 83, 23722582, 23755174, 23357192, 23357194 |
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Fax No.: |
91-11-23717203, 23355824 |
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Factory
: |
v
Renukoot Chemical Works P.O. Renukoot, Distt. Sonebhadra, Uttar Pradesh - 231217 Tel:
+91-5446-252075, 252044, 252055 Saltworks P.O. Samakhali-370 150, Gandhidham
(Gujarat) Alco Chemicals Segment Ankleshwar Chemical Works 3407, GIDC Industrial Estate, P.O.
Ankleshwar-393 002, Dist. Bharuch (Gujarat) Bio-Compost Plant Village Sengpur, Taluka:
Ankleshwar-393 002, District Bharuch (Gujarat). Wind Farm Vill: Dhank Jaluka: Upleta, Dist:
Rajkot (Gujarat) v
Ankleshwar Chemical Works Kanoria Chemicals & Industries Limited Tel: +91-2646-253012 - 14, 251960 - 61, 252041 - 42 |
DIRECTORS
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Name : |
Mr. R.V. Kanoria |
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Designation
: |
Chairman & Managing Director |
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Name : |
Ms. Supriya Gupta |
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Designation
: |
Director |
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Name : |
Mr. H.K. Khaitan |
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Designation
: |
Director |
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Name : |
Mr. Ravinder Nath |
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Designation
: |
Director |
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Name : |
Mr. G. Parthasarathy |
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Designation
: |
Director |
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Name : |
Mr. S L Rao |
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Designation
: |
Director |
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Name : |
Mr. B.D. Sureka |
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Designation
: |
Director |
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Name : |
Mr. A. Vellayan |
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Designation
: |
Director |
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Name : |
Mr. T D. Bahety |
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Designation
: |
Wholetime Director |
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Name : |
Mr. O P. Patodia |
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Designation
: |
Wholetime Director |
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OTHER
PERSONAL |
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Name : |
Mr. N K Sethia |
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Designation
: |
Company Secretary |
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Name: |
J P Sonthalia |
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Designation
: |
Managing Director and Additional Director |
MAJOR SHAREHOLDERS
|
Names of Shareholders |
No. of Shares |
Percentage of Holding |
|
FII/Foreign Nationals &
NRIs/OCB |
102866 |
0.61
% |
|
Financial Institutions |
1293471 |
7.73
% |
|
Banks & Mutual Funds |
604285 |
3.61
% |
|
Promoters, Directors & their
Relatives and Associated Companies |
10739622 |
64.19
% |
|
Other Bodies Corporate |
2144817 |
12.82
% |
|
Individuals and Clearing Members |
1846439 |
11.04
% |
|
Total |
16731500 |
100.00 % |
|
Names of Shareholders |
No. of Shares |
Percentage of Holding |
|
Vardhan Limited |
82,44,292 |
49.27% |
|
Mega Resources Limited |
15,41,380 |
9.21% |
|
RV Investments Dealers Limited |
10,70,040 |
6.40% |
|
Life Insurance Corporation of
India |
4,33,483 |
2.59% |
|
IFCI Limited |
4,00,000 |
2.39% |
|
Kirtivardhan Finvest Services
Limited |
3,84,969 |
2.30% |
|
Punjab National Bank |
3,60,000 |
2.15% |
|
Aekta Limited |
3,33,401 |
1.99% |
|
United India Insurance Co. Limited |
2.66.581 |
1.59% |
|
Saumya Vardhan Kanoria |
1,85,480 |
1.11% |
|
Total |
1,32,19,626 |
79.00% |
BUSINESS DETAILS
|
Line
of Business : |
Manufacturer of Caustic Soda 1 00% (NaOH),
Pentaerythritol, Aluminium Chloride and other chemicals. |
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Products
: |
ITC Code No. 281512.00 Product Description Caustic Soda 1 00% (NaOH) ITC Code No. 290542.00 Product Description Pentaerythritol ITC Code No. 272832.000 Product Description Aluminium Chloride |
PRODUCTION STATUS
|
Particulars |
|
Unit |
Installed Capacity |
Actual Production |
|
1) Caustic Soda 1 00% (NaOH) |
|
M.T. |
52,000 |
48,051 |
|
By-Products |
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(a) Liquid Chlorine |
|
M.T. |
40,560 |
35,743 |
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(b) Hydrochloric Acid (Commercial
Grade) |
|
M.T. |
11,284 |
25,069 |
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2) Stable Bleaching Powder |
|
M.T. |
15,000 |
17,089 |
|
3) Lindane |
|
M.T. |
330 |
177 |
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4) Power Generation (Net)
(Electricity)(MW/MU) |
|
M.T. |
50 |
19,795 |
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5) Aluminium Chloride |
|
M.T. |
17,000 |
11,635 |
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6) Salt (Salt Works) |
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M.T. |
- |
37,810 |
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7) Pentaerythritol |
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M.T. |
6,000 |
6,025 |
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8) Sodium Formate |
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M.T. |
3,900 |
3,572 |
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9) Acetaldehyde |
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M.T. |
10,000 |
10,203 |
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10) Formaldehyde (37%) |
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M.T. |
75,000 |
71,261 |
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11) Hexamine |
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M.T. |
4,000 |
4,486 |
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12) Industrial Alcohol (KL) |
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M.T. |
22,500 |
14,777 |
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13) Acetic Acid |
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M.T. |
6,000 |
5,098 |
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16) Ethyl Acetate |
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M.T. |
3,300 |
319 |
GENERAL INFORMATION
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No. of
Employees : |
About 400 |
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Bankers
: |
v Allahabad Bank v UCO Bank |
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Banking Relations : |
Satisfactory |
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Auditors
: |
Singhi & Co. Chartered Accountants 1-B, Old Post office Street,
Kolkata – 700001 |
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Associates/Subsidiaries
: |
Ř KPL International Limited Ř Prajapati Chemicals & Allieds
Limited |
CAPITAL STRUCTURE
Authorised
Capital :
|
No. of
Shares |
Type |
Value |
Amount |
|
25000000 |
Equity Shares |
Rs. 10/- each |
Rs. 250.000 millions |
|
1000000 |
Cumulative Preference Shares |
Rs. 100/- each |
Rs. 100.000 millions |
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Total |
|
Rs. 350.000 millions |
Issued,
Subscribed & Paid-up Capital :
|
No. of
Shares |
Type |
Value |
Amount |
|
|
Issued |
|
|
|
16785600 |
Equity Shares |
Rs. 10/- each |
Rs. 167.856 millions |
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Subscribed & Paid-up Capital |
|
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|
16731500 |
Equity Shares |
Rs. 10/- each |
Rs. 167.315 millions |
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Add : Forfeited Shares |
|
Rs. 0.026 millions |
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|
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|
Rs. 167.341 millions |
FINANCIAL DATA
[all figures are in Rupees Millions]
ABRIDGED
BALANCE SHEET
|
SOURCES OF FUNDS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
|
SHAREHOLDERS
FUNDS |
|
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|
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|
1] Share
Capital |
167.300 |
167.341 |
197.341 |
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3]
Reserves & Surplus |
1777.400 |
1648.257 |
1444.039 |
|
NETWORTH
|
1944.700 |
1815.598 |
1641.380 |
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LOAN
FUNDS |
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|
1]
Secured Loans |
2390.700 |
2619.316 |
1637.428 |
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2]
Unsecured Loans |
1417.700 |
100.000 |
130.000 |
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TOTAL BORROWING
|
3808.400 |
2719.316 |
1767.428 |
|
|
DEFERRED
TAX LIABILITIES |
|
404.066 |
394.250 |
|
|
|
|
|
|
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TOTAL
|
5753.100 |
4938.980 |
3803.058 |
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APPLICATION OF FUNDS
|
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FIXED ASSETS [Net Block]
|
4328.600 |
3383.562 |
2670.239 |
|
Capital work-in-progress
|
421.700 |
1085.649 |
672.813 |
|
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INVESTMENT
|
56.800 |
56.817 |
56.107 |
|
DEFERREX TAX ASSETS
|
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CURRENT ASSETS, LOANS & ADVANCES
|
|
|
|
|
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|
Inventories
|
550.500
|
471.439
|
381.633
|
|
|
Sundry Debtors
|
539.300
|
373.578
|
330.543
|
|
|
Cash & Bank Balances
|
751.500
|
19.697
|
18.627
|
|
|
Loans & Advances
|
196.700
|
211.337
|
144.629
|
Total Current Assets
|
2038.000
|
1076.051
|
875.432
|
|
Less : CURRENT LIABILITIES & PROVISIONS
|
|
|
|
|
|
|
Current Liabilities
|
914.400
|
552.299
|
357.713
|
|
|
Provisions
|
177.600
|
110.800
|
113.820
|
Total Current Liabilities
|
1092.000
|
663.099
|
471.533
|
|
Net
Current Assets
|
946.000
|
412.952
|
403.899
|
|
|
|
|
|
|
|
TOTAL
|
5753.100 |
4938.980 |
3803.058 |
|
PROFIT & LOSS ACCOUNT
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
Sales Turnover [including other income]
|
5081.900 |
3161.058 |
2932.012 |
|
|
|
|
|
Profit/(Loss) Before Tax
|
287.300 |
302.760 |
279.524 |
Provision for Taxation
|
923.000 |
39.195 |
52.947 |
Profit/(Loss) After Tax
|
195.000 |
263.565 |
226.577 |
|
|
|
|
|
|
Export Value |
NA |
126.464 |
173.608 |
|
|
|
|
|
|
Import Value |
NA |
155.803 |
33.834 |
|
|
|
|
|
Total Expenditure
|
4794.600 |
2534.404 |
2352.190 |
QUARTERLY
RESULTS
|
PARTICULARS |
30.06.2007 |
30.09.2007 |
31.12.2007 |
|
Type |
1st
Quarter |
2nd
Quarter |
3rd
Quarter |
|
Sales
Turnover |
1056.800 |
1035.600 |
1108.800 |
|
Other
Income |
83.800 |
24.800 |
9.100 |
|
Total
Income |
1140.600 |
1060.400 |
1117.900 |
|
Total
Expenditure |
872.300 |
783.100 |
866.200 |
|
Operating
Profit |
268.300 |
277.300 |
251.700 |
|
Interest |
69.300 |
65.500 |
64.700 |
|
Gross
Profit |
199.000 |
211.800 |
187.000 |
|
Depreciation |
77.500 |
77.700 |
78.200 |
|
Tax |
14.300 |
24.200 |
42.200 |
|
Reported
PAT |
102.700 |
109.000 |
62.700 |
KEY
RATIOS
|
PARTICULARS |
31.03.2007 |
31.03.2006 |
31.03.2005 |
|
Debt-Equity Ratio |
1.74 |
1.30 |
0.96 |
|
Long Term Debt-Equity Ratio |
1.50 |
1.25 |
0.87 |
|
Current Ratio |
1.02 |
0.93 |
0.83 |
|
TURNOVER RATIOS |
|
|
|
|
Fixed Assets |
0.82 |
0.70 |
0.72 |
|
Inventory |
9.64 |
8.22 |
9.44 |
|
Debtors |
10.79 |
9.95 |
10.72 |
|
Interest Cover Ratio |
1.86 |
3.52 |
3.42 |
|
Operating Profit Margin(%) |
15.90 |
17.88 |
17.59 |
|
Profit Before Interest And Tax Margin(%) |
9.98 |
12.07 |
11.99 |
|
Cash Profit Margin(%) |
9.05 |
13.33 |
12.47 |
|
Adjusted Net Profit Margin(%) |
3.13 |
7.52 |
6.87 |
|
Return On Capital Employed(%) |
9.56 |
10.65 |
12.59 |
|
Return On Net Worth(%) |
8.19 |
15.38 |
14.18 |
LOCAL AGENCY FURTHER
INFORMATION
FIXED ASSETS
v Goodwill
v Land and Site
v Development
v Lease hold land & Site
Development
v Biddings
v Plant & Machinery
v Railway Siding & Weigh Bridge
v Vehicles and Forklifts
v Furniture and Fixture
v Offices Laboratory
v
Capital
Work In Progress
v
Equipments etc.
Subject is one of the leading chemical
manufacturing companies in India producing aloc chemicals and Chloro
Chemicals.
KCIL's Renukoot Chemical works (located at UP) is a fully integrated chemical
complex primarily concentrating on manufacture of Chloro chemicals, to name a
few alkali products like Caustic Soda and its bye product chlorine, Lindane,
Aluminium chlorate. This unit was erected in collaboration with Krebs &
Company, Switzerland to produce caustic soda. Since then the KCIL is
continously-adding capacity of this unit along with forward and backward
integration.
Since power and salt are the major cost component involved int the Chlor alkali
business the company has undertaken backward integration project and
implemented 25 MW Coal based captive power plant at Renukoot salt works at
Gandhidham at Gujarat. Under this forward/backward integration programme the
6875 tpa anhydrous aluminium chloride plant was commissioned during the year 1996-97
and the 25 MW power plant was commissioned on April 1997.
This plant also manufactures benzene hexachloride in technical collaboration
with Kureha Chemical Industry and C Itoh and Company, Japan and stable
bleaching powder with technical know-how from Nobel Dynamit and Friedrich Unde,
Germany.
The Alco chemical unit of the company is located at Ankleshwar, Gujarat. Is the
first plant to adopt the membrane technology to manufacture pentaerythritol. It
entered into an agreement with Asahi Glass Company, Japan, for modernisation
and further research and development. Its pentaerythritol plant is the first
manufacturer of nitration grade erythritol in India. The company's product
range includes formaldehyde and acetaldehyde.
The company's Ankleshwar division was awarded ISO 9002 for all its products in
Apr.'96. It also received an export house status in Apr.'96.
During April, 2002 the company entered into a MOU with Sachtleben Chemie GmBH
of Germany for which the latter will supply know-how and also to provide
technical and marketing assitance of Water Treatment Chemicals. It is also in
the process of expanding the Formaldehyde capacity.
The eventful year that has gone by, witnessed high pace of action
at both Divisions of KCI, the Chlor Alkali complex at Renukoot and the Alco
Chemicals manufacturing facility at Ankleshwar.
The Company continued to reap benefits from its strategy to
reduce costs, improve efficiencies in operations and enhanced production of
certain product lines.
Expansion projects at Renukoot have nearly doubled Chlor
Alkali manufacturing capacity to 90,000 TPA of Caustic Soda. Power generating
capacity has been enhanced by adding a 25MW thermal plant. These projects were
undertaken on a turnkey basis by Uhde India Limited and Thermax Limited
respectively, with an investment of approximately Rs. 1800 millions. Since
these projects were commissioned towards the end of the year, real impact on
turnover and profitability would be visible in the coming year.
The upsurge in the Aluminium industry has considerably
increased the demand for Caustic Soda. KCI is positioned well to cater to this
demand. The next phase of expansion is expected to be taken this year and would
increase the Caustic Soda manufacturing capacity to 1,30,000 TPA by December
2007. The projects, including additional production of Chlorinated products,
envisage a capital deployment of about Rs. 1500 millions.
This expansion initiative will further de-risk their existing
business and enable us to cater to the increased demand for Caustic Soda in the
Eastern region of India and also for value added Chlorinated Derivatives.
Improved Chlorine utilization and enhanced energy efficient Caustic Soda
capacity is likely to result in improved profitability.
The operations at the Alco Chemicals Division of the Company
during the year under review progressed well. Increasing efficiencies in
manufacturing processes led to higher production. The endeavour of the Division
to become a 'zero effluent1 chemical complex is expected to fructify soon. Some
environment technologies developed and employed at the complex for the first
time in the country, have today become industry benchmarks.
The Company has always taken pride in its central ethos of
sustainability. It has forged ahead in innovative use of technologies and a
desire to excel that goes beyond merely adhering to statutory requirements.
Internally this has been a rewarding experience for the Company, which has
demonstrated that environment friendliness, and efforts to utilise waste can
positively impact profitability. KCI's initiatives in environment management
have received a string of awards. Last year they reported about the two ICMA
awards for water resource management and introduction of environment management
technology with widespread impact on the chemicals industry, and the TERI award
for excellence in environment management. During the year 2005-06, KCI was
conferred three awards, namely the Golden Peacock Eco-lnnovation award, the
Greentech Environment Excellence award for outstanding achievement in
environment management in the Chemical sector, and the National Award for Fly
Ash Utilisation jointly awarded by the Ministry of Power, the Ministry of
Environment & Forests and the Department of Science & Technology,
Government of India for commercial utilisation of fly ash generated by the
Company's power plant at Renukoot.
The otherwise commendable performance of the Company during
the year under review was marred by an accident at the Chlorine filling section
of KCI's Chloro Chemicals Division at Renukoot. The accident, which appears to
have been caused by a rupture in one of the Chlorine tonners, proved fatal for
six employees of the Company and injured some others. The Company has made
every effort for compensation and rehabilitation of the affected people and
their families. It has also undertaken comprehensive investigations to pinpoint
the cause of the accident and would take all necessary safety measures to minimise
the possibility of such events occurring in future.
Directors Report
LOOKING AHEAD:
After successful commissioning of the first phase of environment friendly
Membrane Cell Technology based Chlor Alkali plant, the second phase expansion of
Chlor Alkali plant with similar Technology and installed capacity of 110 TPD is
under progress at Renukoot and this will take the capacity up to 365 TPD from
255 TPD currently The plant is scheduled for start-up by end March 2008. The
Company is also increasing the capacity of downstream Chloro derivative
products.
INCREASE
IN CAPITAL:
The Company has allotted 2,034,000 fully paid up Equity Shares of Rs.10/- each
for cash at a premium of Rs.90/- per share, on preferential allotment basis, to
International Finance Corporation on 1st May 2007 and accordingly the paid up
capital of the Company stands increased by Rs.20.34 million.
DIVIDEND:
The Board of Directors recommend, for consideration of shareholders at the
Annual General Meeting, Dividend of 30% (Rs.3/- per share) on the Equity Shares
of the face value of Rs.10/- each that have been allotted up to 2nd May, 2007
(being the date of this Directors' Report) and any further Equity Shares, that
may be allotted by the Company on conversion of Foreign Currency Convertible
Bonds prior to 12th July 2007 (being the Book Closure date for the purpose of
dividend entitlement), for the year ended 31st March 2007.
FOREIGN CURRENCY CONVERTIBLE
BONDS:
During the year, the Company issued Foreign Currency Convertible Bonds of US$20
million which are listed at the Luxembourg Stock Exchange. These Bonds are
optionally convertible into equity shares at any time from 5th June 2006 to
prior to close of business on 27th May 2011 and unless converted, are redeemable
on 7th June 2011, subject to the terms of issue. As at the end of the year, the
entire FCCBs were outstanding.
SECURED DEBENTURES:
The Board of Directors confirms that the moneys raised through issue of Non-Convertible
Secured Debentures have been utilised in accordance with their relevant terms
of issue.
CREDIT RATING:
The Company has been assigned a PR1+(PR one plus) rating to the commercial
paper programme up to Rs.100.000 millions
by Credit Analysis & Research Limited.
This is their highest rating for short-term instruments and it signifies strong
capacity for timely payment of short-term debt obligations and lowest credit
risk.
CHLORO CHEMICALS SEGMENT
Industry structure and development:
The industry referred to as Chlor Alkalis
includes the production of Caustic Soda and Chlorine as well as various
Chlorine derivatives that cater to a wide range of user industries, such as
aluminium, paper, textiles, soaps & detergents, petroleum refining and
pharmaceuticals. The products are also extensively used by the chemicals
industry as building blocks for downstream products.
With high energy and transportation costs, the Chlor Alkali industry in India
is by and large localised. Typically, it caters to markets within a finite
distance from the manufacturing facility. Being hazardous in nature, these
chemicals require careful handling and storage, particularly Chlorine, a
co-product in the manufacture of Caustic Soda. Competitiveness in the industry
is often reflected in the effective and commercially remunerative utilisation
of Chlorine.
The industry in India has been growing at around
4-5% per annum during the past few years and with increased demand from users
such as paper, alumina processing, mining & minerals and paper industries,
is expected to grow faster as far the Indian market is concerned.
KCI is a leading player in the Chloro Chemicals segment with market leadership
in the Eastern regionof the country. With recent expansion in capacity and
further addition being implemented in 2007-08, the Company is expected to be
within the top manufacturers in the country.
Currently, Caustic Soda contributes about 23% to the total turnover of the
Company, and Chlorine derivative products another 24%.
Opportunities:
* Higher derived demand from higher growth in user industries,
particularly alumina and paper industries.
* Company positioned well to meet the higher demand through expanded
production capacity.
* Strong forward of the Company to commercially utilise Chlorine for
production of downstream derivatives like Stable Bleaching Powder and Aluminium
Chloride and considerable value to the revenue stream.
* Focus on environment friendly technologies and sustainable development
initiatives, enables the Company to conform to best standards.
Threats:
* Cheaper imports could distort markets and margins.
* Environmental activism that could impact the usage of Chlorine in
downstream products.
Performance:
The
Chloro Chemicals Division of the Company reported production of 76,894 MT of
Caustic Soda in 2006-07 as against 48,051 MT in the previous year. This was
enabled by the addition of a 110 TPD Membrane Cell based plant during the
year.
The production of Poly Aluminium Chloride was 14,118 MT compared to 8,942 MT in
2005-06. The production of Chlorinated Paraffins improved to 9,470 MT in
2006-07 up from 4,978 MT in the previous year.
The two captive 25 MW thermal power plants, which are part of the Chloro Chemicals
complex of the Company, reported stable generation of electricity. The twin
plants provided flexibility in operations and net power generation during the
year under review increased by over 75% from 197.95 MW/MU to 347.62 MW/MU.
Outlook:
Higher
economic activity with a resurgence of the manufacturing sector augurs well for
the Chlor Alkali industry. Backed by higher demand from user industries such as
paper and alumina, the expanded Caustic Soda capacity at 90,000 TPA positions
the Company to cater to this increased demand. With this capacity going up
further to 130,000 TRA by the year 2008 its position would get further
strengthened.
Increased investment activity in the metals and mining sector as well as in
paper and textiles is expected to further augment Caustic Soda demand. The
other products of the Company also expect robust demand over the medium
term.
Alco Chemicals Segment:
Industry structure and development:
The Alco Chemicals industry essentially comprises the production of ethanol
from molasses and further synthesising into several products for industrial
applications.
KCI's Alco Chemicals Division is both backward and forward integrated. A
distillery based on sugar molasses produces industrial alcohol. The other
starting raw material is Methanol. Based on Methanol and Ethanol, the Company
produces a number of products. The Company is the largest producer of
Pentaerythritol, Formaldehyde and Hexamine in India.
Opportunities:
* Close proximity if both sources of raw materials as well as markets for
finished products, the Alco Chemicals Division is strongly positioned to cater
to steady demand from its user industries such as paints, resins and
laminates.
* The highly nature of the Division and the pioneering work it has done
in treatment and recycling of distillery effluent and other waste enables it to
sustain a low cost structure and thus makes the products of the Division
competitive in both domestic and international markets.
Threats:
* Cheaper imports and dumping of Pentaerythritol and Hexamine.
* Erratic price and supply of molasses and its diversion to distilleries
catering to the Ethanol for fuel programme and expanding potable market can
lead to difficulties of molasses, the main raw material for the Division.
Performance:
The operations of the Alco Chemicals Division remained stable during the
year.
Production of Pentaerythritol during 2006-07 was 6,311 MT compared to 6,025 MT
in the previous year. Production of Formaldehyde increased from 71,261 MT to
72,752 MT in 2006-07.
Outlook:
* Stable growth of user industries such as the paints industry indicates
a sustainable growth for the Division.
* Technological expertise and market leadership position in several
products provides the Division a competitive edge in the market.
* Low cost structure as a result of
backward and forward integration of products and processes, and the
minimisation of waste by finding commercial utility.
CAPACITY EXPANSION DURING THE YEAR:
During the early part of the year under review, the Company, at its Chloro
Chemicals Division at Renukoot, successfully completed and commercially
commissioned the first phase of its expansion in Caustic Soda production
capacity from 50,000 TPA to 90,000 TPA. Based on environment friendly Membrane
Cell technology, this was part of the Rs.2 billion twin-complimentary project
that also witnessed doubling of the Company's power generation capacity from 25
MW to 50 MW.
The increased Caustic Soda capacity resulted in commensurate expansion in the
capacity of Liquid Chlorine, from 40,560 TPA to 72,060 TPA, and Hydrochloric
Acid, from 11,284 TPA to 18,284 TPA.
INITIATIVES
DURING THE YEAR:
KOI completed the construction of a Flyash Housing Complex project at Renukoot.
In an initiative to benefit the society, the Company dedicated the housing
complex to its employees. In a first of its kind project, flyash has been used
to build a housing complex that would exclusively cater to contract workers.
This housing complex not only provides sanitised housing for the employees and
a clean environment, but also demonstrates gainful utilisation of flyash. The
128 units housing complex will benefit an equal number of nucleus families.
The housing complex has been constructed using flyash bricks & blocks, and
Ferro cement doors, window frames & roofing. The approach roads to the
housing complex are made with flyash based concrete. While constructing these
houses, natural contours of the topography have been maintained.
The project was another initiative by the Company towards its overall focus on
sustainable development.
EXPANSIONS
Power Plant
The Company has successfully commenced commercial production
at its second 25 MW Power Plant at Renukoot from 15 December 2005. With this,
the Company's power generating capacity has increased to 50 MW. Surplus power
is being sold to Uttar Pradesh Power Corporation Limited (UPPCL) under an
agreement to this effect entered into with them.
Chlor Alkali Plant
Another hallmark achieved during the year was successful mechanical completion
of the Company's environment friendly Membrane Cell technology based Chlor-
Alkali plant with an installed capacity of 110 TPD at Renukoot. This has
commenced commercial production at the time of writing this report, that is 24
April 2006. With this, the total capacity has increased from 145 TPD to 255 TPD
and the Company has become the leading Chlor-Alkali chemical manufacturer in
Eastern India.
AS PER WEBSITE DETAILS:
Over the years, Kanoria Chemicals & Industries (KCI) has
emerged as a leading manufacturer of Chlor-alkali and Alco-chemical based
intermediates catering to the needs of a cross section of Indian industry.
Their tenet of sustainability and transparency is reflected in the
latest ISO certifications for quality, environment and organizational health
and safety. KCI has received the CRISIL GVC Level 3 rating for its 'strong'
capability of wealth creation for all stakeholders through sound corporate
governance practices.
They have consciously built their product portfolio through global
best-in-class technological adaptations combined with a steady focus on
backward and forward integration to emerge as a low cost manufacturer. They
also have long term supply commitments with their customers both in India and
abroad.
As a responsible corporate citizen, they
have gone much beyond what is required by us by statutes. Their
state-of-the-art effluent treatment and its commercial utilization provides us
with one of the greenest environs around a chemical plant. Their community
development initiative in partnership with Business &
The Golden Peacock Eco-Innovation
Award for Environment Management 2005, instituted by the World Environment
Foundation
v
ISO 9001:2000
v
ISO 14001:1996
v
ISO 14001:1996
v ICMA-Award
v ICMA-Award
v TERI Award
Major milestones in the history of
KCIL in terms of expansions and diversifications
Year
Milestone
2005
Commissioning of a new 110 TPD plant for manufacture
of Caustic Soda through the environment-friendly Membrane Cell technology, thus
almost doubling the company's Caustic Soda manufacturing capacity
Commissioning of the second 25 MW coal based
power plant at Renukoot, taking the total power generation capacity of the
company to 50 MW.
Signed a power purchase agreement with Power
Trading Corporation of India to gainfully utilise surplus power
2004
Further
expansion of Formaldehyde plant to 75,000 TPA
Further
expansion of Aluminium Chloride plant.
2002
Further
expansion of Penta plant to 6,000 TPA
Further
expansion of Formaldehyde plant to 50,000 TPA
Further
expansion of Acetaldehyde plant to 10,000 TPA
2000
Started
producing Hydrogen for commercial purposes
1999
Expansion
in capacity of Distillery to 225 million litres per annum
Commissioned
a 2 MW Bio-gas plant at Ankleshwar
1998
Commissioned
a 25 MW coal based power plant at Renukoot
Further
expansion in capacity of Acetaldehyde plant to 9,000 TPA
Commissioned
Acetic Acid plant with a capacity of 6,000 TPA
Commissioned
Ethyl Acetate plant with a capacity of 3,300 TPA
1997
Further
expansion in capacity of Lindane plant to 875 TPA
Commissioned
Aluminium Chloride plant with a capacity of 6,875 TPA
Further
expansion of Penta plant to 5,000 TPA
Further
expansion of Hexamine plant to 4,000 TPA
1995
Expansion
in capacity of Lindane plant to 660 TPA
1994
Started
producing Industrial Alcohol (15 million litres per annum)
1993
Expansion
in capacity of Formaldehyde plant to 33,000 TPA
1992
Commissioned
Hexamine plant with a capacity of 1,500 TPA
1991
Commissioned
a plant to manufacture Lindane with a capacity of 33 TPA
Expansion
in capacity of Acetaldehyde plant to 2,500 TPA
1988
Commissioned Formaldehyde plant with a capacity
of 16,500 TPA
Expansion in capacity of Penta to 3,000 TPA and
consequently Sodium Formate plant to 1,650 TPA.
Commenced
production of Acetaldehyde with a capacity of 6,000 TPA
1983
Commissioned another chemical complex in Ankleshwar
in the state of Gujarat, with initial capacity of 1,200 TPA of Pentaerythritol
(Penta) and 660 TPA of Sodium Formate
1980
Further
expansion of SBP plant to 15,000 TPA
1977
Expansion
in capacity of SBP to 10,000 TPA
1973
Further
expansion in capacity of Caustic Chlorine plant to 33,000 TPA
1973
Expansion
in capacity of Caustic Chlorine plant to 21,000 TPA
Added
Stable Bleaching Powder (SBP) plant with a capacity of 5,000 TPA
Started
producing own Salt.
1965
Caustic Chlorine plant commissioned at Renukoot
in the state of Uttar Pradesh with a capacity of 16,500 TPA of Caustic Soda
Products
Subject is a leading player in the Indian
chemicals and intermediates market.
Subject has two manufacturing facilities, one at
Renukoot in Uttar Pradesh, which manufactures Chlor-Alkalis, Chlorine
derivatives and water treatment chemicals; and the second at Ankleshwar in
Gujarat, which manufactures Alcohol based intermediates. The company's
portfolio comprises of over 15 products, with a market leadership in three and
substantial shares in all others.
The categories
of products manufactured by KCI are:
Chloro Chemicals
Alco Chemicals
Agro Chemicals
Water Treatment Chemicals
Industrial Gases
Ethos
Subject guided by its core ethos of sustainable development. The
company's vision "To be India's leading manufacturer of chemical
intermediates with a focus on sustainability and transparency" summarises
its guiding philosophy and business objectives.
Consistently driven by its ethos, KCI has invested carefully in
augmenting its business in areas of strength and streamlining focus in areas
that have future potential. At KCI, sustainability encompasses the product mix,
technology and processes that the company has adopted, financial working,
marketability, human resources and above all the environment in which the
company operates.
Subject has evolved and honed its strategy to excel in its
business segments. This strategy engages all stakeholders in a manner that
promotes efficiency and collaborative partnerships.
In its quest for becoming the leader in the country, the company
is steadfastly pursuing newer technologies and expanding its backward and
forward linkages in manufacturing processes. This approach has enabled the
company in becoming the lowest cost manufacturer in several product categories
that the company manufactures.
The company focuses on transparency in its relationships with its
stakeholders. These relationships have been built over years and have evolved
on the dictates of the heart rather than the mind and look beyond just
conforming to statutory compliance.
KCI believes in ethical
business practices and maintains high levels of corporate governance standards.
More than three-fourths of the Board of Directors consists of Independent
Members comprising of experts with multi-disciplinary background. Recognising
such governance practices at KCI, CRISIL has rated the company at 'GVC Level
3', indicating KCI's strong capability to create wealth for its stakeholders
while adopting sound corporate governance practices.
As a responsible corporate citizen, KCI has
developed a scientific basis for providing sustainable livelihoods to people in
and around its manufacturing locations. Both KCI units at Renukoot and
Ankleshwar are ISO 14001 certified and undertake extensive greening projects.
KCI's ethos also guides the company to continuously empower its
employees for germination and cross-pollination of ideas, creation of a pool of
talent to eventually provide leadership and continuity in the ideology and
culture of the company.
Innovation in approach is critical to the success of the company,
be it technological innovations to enhance the manufacturing process,
innovations in environment sustainability; innovation in the company's
community outreach programme; or innovation in managing their human resources.
Press Releases
Kanoria
Chemicals raises US$20 million through FCCBs
New Delhi, May 31, 2006: Kanoria
Chemicals & Industries Limited announces the successful raising of US$20 million through
Zero coupon Foreign Currency Convertible Bonds. The Bonds will be convertible
into equity shares at a conversion price of INR 160.00 which represents a
51.73% premium to the NSE closing price of INR 105.45 as on 30th May, 2006. The
bonds have tenure of 5 year 1 week and bear a yield-to-maturity of 7.5%.
Silverdale Services Limited, London was the Sole Lead Manager for the offering.
The money raised will be utilised to fund inter alia expansion of Chlor
Alkali capacity with simultaneous expansion in capacities of various
chlorinated derivatives.
R. V. Kanoria, Chairman and Managing Director of Kanoria Chemicals &
Industries Limited said: “We are
pleased that global investors have recognized the potential of their Company
and its excellent growth prospects. This has enabled us to raise monies at
significant premium over their current share price. The commissioning of
additional 25MW power project in December 2005 and 40,000 TPA Caustic Soda
plant in April 2006 has boosted the fundamentals of the Company. With this
funding, KCI is fully equipped to implement its next phase of expansion.”
Sanjay Guglani, Managing Director of Silverdale Services said: “We are delighted
at the confidence of quality global investors in Kanoria Chemicals convertible
bond issuance. Despite tremulous market conditions, the Company has been able
to attract savvy global investors. We, at Silverdale, are proud to be
associated with the issuance as sole Lead Manager.”
Kanoria Chemicals & Industries (KCI) is a leading manufacturer of Chlor-alkali and
Alco-chemical based intermediates with a portfolio comprises of over 15
products. Emerging as a market leader in three and with substantial market
share in all others, it is ISO 9001, ISO 14001 and OHSAS 18001 certified
besides being rated a 'CRISIL GVC Level 3' for its strong capability with
respect to wealth creation for all its stakeholders while adopting sound
corporate governance practices.
Press Releases
Kanoria Chemicals declares EBIDTA of Rs. 268.31 million and
Net Profit of Rs. 102.69 million in Q1 FY 2007-08; Net Sales grows by 13.5%
Highlights:
First quarter Operating Profit at Rs. 268.31 million, up 68.1% from the corresponding
quarter last fiscal
First quarter Net Profit at Rs. 102.69 million, up 461.8% from the
corresponding quarter last fiscal
Net sales increased by 13.5% to Rs. 1,056.85 million from Rs. 931.43 million
New Delhi, 26 July 2006: Kanoria Chemicals
& Industries Limited (KCI), India’s leading manufacturer of chemical
intermediates, announced its Q1 results today. During the first quarter of
current fiscal KCI’s Operating Profit increased by 68.1% at Rs. 268.31 million
as against Rs. 159.61 million last year. The Net Profit during the same period
increased by 461.8% from Rs. 18.28 million to Rs. 102.69 million.
The improved Q1 results can be attributed to the
stabilisation of the expanded Caustic Soda capacity. The Chlor Alkali
realisations witnessed growth compared to the same quarter last year.
According to Mr. R V Kanoria, Chairman & Managing
Director, KCI, “We are pleased that our expansion programme is
progressing well and the enhanced production of Caustic Soda and Chlorine
derivative products have started contributing to revenues. I am confident that
we would further improve profitability in the coming quarters”.
The next phase of the company’s expansion is on way and
further increase in production capacity from existing 90,000 TPA to 130,000 TPA
is expected to be completed by the end of this fiscal.
The profit for the quarter includes net exchange rate
fluctuation difference of Rs. 67.41 million on transactions related to FCCB
pursuant to clarification given by the Companies (Accounting Standards) Rules,
2006 applicable to the Company from current financial year.
CMT REPORT [Corruption, Money laundering & Terrorism]
The Public Notice information has been collected from
various sources including but not limited to: The Courts, India Prisons
Service, Interpol, etc.
1] INFORMATION ON DESIGNATED PARTY
No
records exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom notice
had been received that all financial transactions involving their assets have
been blocked or convicted, found guilty or against whom a judgement or order
had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that
subject is or was the subject of any formal or informal allegations,
prosecutions or other official proceeding for making any prohibited payments or
other improper payments to government officials for engaging in prohibited
transactions or with designated parties.
3] Asset Declaration :
No
records exist to suggest that the property or assets of the subject are derived
from criminal conduct or a prohibited transaction.
4] Record on Financial Crime :
Charges or
conviction registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l Anti-Money
Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No available
information exist that suggest that subject or any of its principals have been
formally charged or convicted by a competent governmental authority for any
financial crime or under any formal investigation by a competent government
authority for any violation of anti-corruption laws or international anti-money
laundering laws or standard.
8] Affiliation with Government :
No record exists to
suggest that any director or indirect owners, controlling shareholders, director,
officer or employee of the company is a government official or a family member
or close business associate of a Government official.
9] Compensation Package :
Their market survey
revealed that the amount of compensation sought by the subject is fair and
reasonable and comparable to compensation paid to others for similar services.
10] Press Report
:
No press reports / filings exists on the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments
on Corporate Governance to identify management and governance. These factors
often have been predictive and in some cases have created vulnerabilities to
credit deterioration.
Our Governance Assessment focuses principally on the
interactions between a company’s management, its Board of Directors,
Shareholders and other financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local
laws, regulations or policies that prohibit, restrict or otherwise affect the
terms and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs. 40.45 |
|
UK Pound |
1 |
Rs. 82.25 |
|
Euro |
1 |
Rs. 63.20 |
SCORE & RATING
EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
7 |
|
PAID-UP
CAPITAL |
1~10 |
7 |
|
OPERATING
SCALE |
1~10 |
7 |
|
FINANCIAL
CONDITION |
|
|
|
--BUSINESS
SCALE |
1~10 |
7 |
|
--PROFITABILIRY |
1~10 |
7 |
|
--LIQUIDITY |
1~10 |
7 |
|
--LEVERAGE |
1~10 |
7 |
|
--RESERVES |
1~10 |
7 |
|
--CREDIT
LINES |
1~10 |
7 |
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT
POINTS |
|
|
|
--BANK
CHARGES |
YES/NO |
YES |
|
--LITIGATION |
YES/NO |
NO |
|
--OTHER
ADVERSE INFORMATION |
YES/NO |
NO |
|
MERIT
POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
NO |
|
--EXPORT
ACTIVITIES |
YES/NO |
YES |
|
--AFFILIATION |
YES/NO |
NO |
|
--LISTED |
YES/NO |
NO |
|
--OTHER
MERIT FACTORS |
YES/NO |
YES |
|
TOTAL |
|
46 |
This
score serves as a reference to assess SC’s credit risk and to set the amount of
credit to be extended. It is calculated from a composite of weighted scores
obtained from each of the major sections of this report. The assessed factors
and their relative weights (as indicated through %) are as follows:
Financial condition (40%) Ownership background
(20%) Payment record (10%)
Credit history (10%) Market trend
(10%) Operational
size (10%)
RATING EXPLANATIONS
RATING
|
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the
strongest capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy.
General unfavourable factors will not cause fatal effect. Satisfactory
capability for payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet
normal commitments. |
Satisfactory |
|
26-40 |
B |
Unfavourable & favourable factors carry similar weight
in credit consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and
principal sums in default or expected to be in default upon maturity |
Limited with full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be
exercised |
Credit not recommended |