ANUPAM RASAYAN INDIA

Ticks all boxes in speciality chem

Gujarat-based Anupam Rasayan India is a leading company engaged in customised synthesis and manufacturing of speciality chemicals, particularly 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 consumers. The company’s focus is to manufacture products with sustainability using its continuous process technology through flow chemistry and photo chemistry, greater R&D and engineering capabilities to deliver value to its customers for their complex and multi-step synthesis projects.

The company has as many as six manufacturing facilities – four in Sachin near Surat and two in Zagadia – all in Gujarat. 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 development, and total commitment to excellence in quality and sustainability. Anupam Rasayan is doing very well on the financial front, with sales growth during the last five years being 30 per cent CAGR and the profit growth being 34 per cent CAGR. What is more, future prospects are all the more promising. Consider:

• The company is going from strength to strength on the financial front. During the last 12 years, its sales turnover has spurted almost 10 times — from Rs 107 crore in fiscal 2011 to Rs 1,066 crore in fiscal 2022, with the profit at net level spurting by more than nine times – from Rs 17 crore to Rs 150.78 crore. 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. Anupam Rasayan went public in fiscal 2021 and has started paying dividends at the 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 contracts and LoIs signed this fiscal year to Rs 2,620 crore. These trades demonstrate firm revenue visibility for growth in the coming years.

KEY TAKEOVER

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.

During the current bearish environment, the share price of Anupam Rasayan has tumbled from a 52-week high of around Rs 936 to around Rs 637. 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.

PERFORMANCE INDICATORS (Rs. in crore)

KSHITIJ POLYLINE

Rebranding to boost sales

Mumbai-headquartered Kshitij Polyline is engaged in the manufacture, supply and export of a wide variety of smart ID card products, binding and lamination equipmentrelated materials, and accessories and stationary products. The management claims the company’s entire product range exhibits high tenacity, robust construction, long service life and low maintenance. Its products can easily be customized as per the requirements and specifications of clients as a special team interacts constantly with them to incorporate their suggestions and demands. The company also exports its products to countries like Uganda, Lebanon, Sri Lanka, South Africa, Bhutan, Nepal and Dubai.

Be that as it may, the company’s performance is not up to the mark. During the last five years, its sales turnover has improved modestly from Rs 27.08 crore in fiscal 2018 to Rs 39.04 crore in fiscal 2022 but operational profit has remained stagnant at Rs 3.76 crore as against Rs 3.57 crore, while at the net level, the profit has declined from Rs 1.06 crore to Rs 0.42 crore. However, Kshitij is undergoing a process of transformation which is expected to improve its prospects going ahead. Consider:

• The management has decided to enter the e-commerce space and develop a brand for stationery and ancillary products. The company intends to develop its own website selling on other e-commerce platforms, open stores for speedy delivery, tie up with other vendors and undertake offline as well as online marketing to increase revenues. This exercise will cost around Rs 10 crore, which will be raised through internal reserves or institutional borrowings.
• The management has also decided to increase its product image, which it hopes will boost the company’s revenues as well as profits.
• In view of the improved outlook for the company on account of its transformation plan, Mauritius-based Visaka India EIF Fund-Incube Global Opportunities has picked up 6 lakh shares of Kshitij Polyline at a price of Rs 41.43 per share. With these funds, the company is looking to increase its revenues by entering new product ranges and taking advantage of technological advancements.

GOOD CASH FLOW

• The company has certain points in its favour. First of all, it has good cash flow management as CFO/PAT stands at 2.01. Again, the company has a high promoter holding of 56.61 per cent, which shows the management’s confidence in the company’s future.
• The company’s board is full of members of the promoter Gala family. Chairman and Managing Director Bharat Gala, a diploma holder in plastic engineering, has more than 15 years of experience in the plastics and stationery industry. He started the business of manufacturing plastic stationery and laminated and PP sheets. During his career, he has developed a wide range of products with versatile applications like laminated sheets, PP sheets, office stationery, accessories, wire products, files and folders.
• However, Kshitij has not progressed as expected. The company had come out with an IPO in 2018 at a price of Rs 35 per share. Going ahead, much depends on its transformation strategy. If it succeeds, shareholders could see better days ahead. No doubt, there is scope for a better financial performance going ahead, but viewed in the context of the past performance, there is also an element of risk.

PERFORMANCE INDICATORS (Rs. in crore)