ANUPAM RASAYAN INDIA

Banking on R&D for growth

Gujarat-based Anupam Rasyan India Ltd is engaged in the manufacture of multi-synthesis molecules such as: (a) Life science-related speciality chemicals comprising products related to agrochemicals, personal care and pharmaceuticals; and (b) Other speciality chemicals comprising speciality pigments and dyes as well as polymer additives on an exclusive basis for its customers. The company has six manufacturing facilities — four in Sachin near Surat and two in Zagadia. Some of these facilities are ISO 9001:2015 and ISO 14000:2015 certified. The company is known for its sound technology, environmental consciousness, rich history of innovation through research, and total commitment to excellence in quality and sustainability. The company is doing well, but its prospects going ahead are all the more exciting.

Consider:

• The company is going from strength to strength on the financial front. During the last five years, its sales turnover has more than trebled – from Rs 342.77 crore in fiscal 2018 to Rs 1,066 crore in fiscal 2022, with the profit at net level spurting by almost four times – from Rs 38.65 crore to Rs 150.78 crore during this period. The company’s financial position is getting stronger by the day, with reserves at the end of March 2022 standing at Rs 1,624.41 crore — 16 times its equity capital of Rs 100.25 crore. The company went public last year (fiscal 2021) and has started paying dividends at a rate of 10 per cent per year.
• Going ahead, the company’s growth prospects are all the more promising. Recently, it signed a letter of intent worth $ 95 million (around Rs 700 crore) with a major multinational crop protection company to supply a new life science-related active ingredient. The company has entered into a long- term contract to supply this speciality chemical product for the next five years. According to Anand Desai, Managing Director of Anupam, the company has to date signed LoIs worth Rs 1,800 crore and contracts worth Rs 820 crore, taking the total contract LoIs signed in this fiscal year to Rs 2,620 crore. These trades demonstrate firm revenue visibility for growth in the coming years.
• With a view to expanding its fluorination chemistry business, Anupam has acquired a 24.96 per cent equity stake and joint control of Tanfac Industries Ltd (TIL) and has become a promoter jointly with the Tamil Nadu Industrial Development Corporation. TIL is a speciality fluorides chemical manufacturer while Anupam is a leading producer of hydrofluoric acid and is also engaged in the manufacture of other organic and inorganic fluorine-based products. This acquisition and joint management control will create significant value for Anupam through synergies and expand its fluorination chemistry business.
• A plus point for Anupam Rasayan is the importance it gives to research and development. The company has developed a strong R&D structure to drive its growth. Thanks to its fully equipped R&D team, the company has secured a strong market position at home as well as abroad. The management strongly believes that continued investment in R&D activities is imperative for continued success and growth.

During the current bearish environment, the share price of Anupam Rasayan has tumbled from a 52- week high of around Rs 1,107 to Rs around Rs 631. The current price level is highly attractive for discerning investors to invest in such a growth-oriented company. Once the current phase of market depression is over, the Anupam stock price is most likely to cross the Rs 1,000-mark once again.

CONSOLIDATED PERFORMANCE INDICATORS (Rs. in crore)

SHANKARLAL RAMPAL DYE-CHEM

Dominant player in dyes, chems

Shankarlal Rampal Dye-Chem, based in Bhilwara (Rajasthan), is a leading trader in dyes and chemicals engaged in the trading of hydrogen peroxide, sodium carbonate (99.5 per cent), sodium meta bi-sulphite acid (90 per cent), linear alkyl benzene sulphonic acid (90 per cent) and many other chemicals.

The company caters to several industries, including textiles and garments, manufacturing, food and beverages, leather, candle-making, plastics, agricultural, water treatment, personal care and cosmetics, and plywood. It also trades in speciality performance chemicals used in the textile dyeing and printing industry. The company is doing very well on the financial front and its prospects going ahead are all the promising.

Consider:

• Shankarlal is a leading Indian trading company in dyes and chemicals. It deals in a large number of products, including the entire range of speciality chemicals used in textiles and garments processing — viz., pre-treatment, printing, dyeing and the finishing process. The company also offers speciality performance chemicals to the leather and chemicals sectors. It also trades in other products for its buyers, including food colours, pigment powder and direct dyes.
• With the implementation of GST, organised players like Shankarlal have emerged in a better position by maintaining a cost structure move efficient than that of any unorganised local manufacturer. The Indian dyes and chemicals market is highly fragmented, with almost half the market being unorganised. The implementation of GST, stricter environmental norms, and rising compliance requirements from global clients have led to a need to consolidate. Hence, large and efficient players are growing more and smaller units are being ousted from the market, or are consolidating with the large players. Shankarlal has, as a result, emerged as one of the dominant players.
• With rising business, the company has been steadily growing on the financial front. During the last 11 years, the sales turnover has grown from a paltry Rs 12 crore in fiscal 2010 to Rs 303 crore in fiscal 2022, with the profit at net level growing from nil to Rs 27 crore during this period. Its financial position has been steadily improving, with reserves at the end of March 2022 standing at Rs 55.46 crore as against an equity capital of Rs 21.32 crore, that too after bonus issues during the last three years at the rate of 1:3 in 2020, 1:1 in 2021 and 2:1 in 2022. The company has started paying dividends from fiscal 2019, though the rate is nominal – 1 per cent for the previous two years 2020 and 2021.
• The company’s future prospects are highly encouraging. As a leading supplier of sulphur dyes, it is expected to grow at a rate of around 5 per cent for the forecast period of the next seven years upto 2028, according to Data Bridge Market Research.

PERFORMANCE INDICATORS (Rs. in crore)