Kanoria Chemicals & Industries Ltd ... Probable Money multiplier

Today I am expressing my view on one of the multi sector player .... Kanoria Chemicals & Industries Ltd (KCIL)

Company Profile

Kanoria Chemicals & Industries Limited (KCI) is a leading manufacturer of chemical intermediates in India. Apart from chemicals, it has diversified business interests including automotive and industrial electronics, renewable energy and textiles.

KCI has two chemicals manufacturing facilities, one at Ankleshwar in the state of Gujarat, which manufactures Alcohol based intermediates; and the second at Visakhapatnam in the state of Andhra Pradesh, which manufactures Formaldehyde, Hexamine and resins. Both facilities have ISO 9001, ISO 14001 and OHSAS 18001 certifications. With a product portfolio of over ten products, the company has a market leadership in three and substantial shares in the others.

With over five decades of experience in manufacturing chemicals, KCI has diversified into renewable energy and knowledge based sectors. It has set up a 5 MW grid interactive solar power plant using Photovoltaic (PV) technology near Jodhpur in the state of Rajasthan.

In the year 2012, KCI acquired APAG Holding AG, the Switzerland based holding company and its wholly owned subsidiary APAG Elektronik AG, Switzerland. APAG is engaged in development and sale of electronic and mechatronic modules and control devices for the automotive, consumer goods, power tool electronics and building automation industries. The designing and engineering facility of the company is located in Switzerland, whereas the manufacturing facility is located in the Czech Republic.

In another diversification initiative, KCI has incorporated a subsidiary company, Kanoria Africa Textiles Plc in Ethiopia, Africa and is setting up a Greenfield manufacturing plant to initially produce 12 million metres of Denim per annum.

KCI has strong capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices. The Company steadfastly believes in the core values of sustainability, transparency, ethical business practices, and maintaining high standards of corporate governance.

KCI is well recognised in the areas of environment management, resource use efficiency and social responsibility. It has been the recipient of several awards, including:

• Indian Chemicals Manufacturers Association (ICMA) Award for Water Resource Management in Chemical Industry
• ICMA D.M. Trivedi Award for Introducing Advancement in Technology having a Widespread Impact on Chemical Industry
• TERI award for Corporate Excellence in Environment Management
• Golden Peacock Eco-Innovation Award from the World Environment Foundation
• National Award for Fly Ash Utilization jointly awarded by the Department of Science & Technology, the Ministry of Power and the Ministry of Environment & Forests, Government of India
• The Indian Chemical Council (ICC) Award for Social Responsibility

KCI has a synergistic relationship with its group company KPL International Limited which is a 20 year old professionally managed international business company, specialising in global marketing and distribution of chemicals, plastics, paper and allied products.

Financia Structure

1. The financial structure of KCL is quite strong in all aspects. Its reserves are 22 times its equity capital.
2. The Company is cash-rich as its debt to equity ratio is just 0.2, which is close to being debt-free. Cash and bank balance of Rs.42.31 crore is 15% of fixed assets, which shows that the Company has sufficient funds for expansion or modernization.
3. Long-term and short-term investments of Rs.82.8 crore (57.4+25.4) is also four times its equity capital.
4. KCL issued bonus of 1:2 in 2007. There is possibility of Bonus due to its sound financial condition 

Outlook

Promoter hold 74.43% stake of the company. Company posted 320.21 cr top line and 21.3 cr bottom line in FY 15-16 and 241 cr top line 13.28 cr bottom line in latest 9 month ended 2016-17. The upcoming qtr seems to be promising. The stock is trading at 72.7 which is at PE of 14.9 of FY 15-16. As per my expectations KCL is potential Blue Chip Candidate.

Disc: I am holding few quantity of stock.

NOTE : THE ABOVE IS NOT A RESEARCH REPORT NOR A RECOMMENDATION  BUT INFORMATION AS AVAILABLE ON PUBLIC DOMAIN.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”