Kiri In­dus­tries: Com­mit­ted To Grow Sans Eq­uity Di­lu­tion Or Debt

Man­ish Kiri Man­ag­ing Di­rec­tor, Kiri In­dus­tries Ltd.

Dalal Street Investment Journal - - COMMUNICATION FEATURE -

Kiri In­dus­tries Lim­ited (KIL) is one of the largest man­u­fac­tur­ers and ex­porters of wide range of dyes, in­ter­me­di­ates and chem­i­cals from In­dia. KIL is a pre­ferred re­source cen­tre for many of the most ex­ten­sive prod­uct lines in tex­tile dyes. So­phis­ti­cated qual­ity con­trol prac­tices and pro­ce­dures, mod­ern man­u­fac­tur­ing fa­cil­i­ties and Erp-driven en­ter­prise man­age­ment has en­abled KIL to of­fer in­ter­na­tion­ally recog­nised qual­ity prod­ucts and ser­vices.

The com­pany came into be­ing in 1998 with the set­ting up of dyes man­u­fac­tur­ing unit at Vatva, Ahmed­abad. KIL is an ISO 9001:2008-cer­ti­fied com­pany listed on Bom­bay Stock Ex­change and Na­tional Stock Ex­change of In­dia.

On Fe­bru­ary 4, 2010, Kiri In­dus­tries Lim­ited (KIL) ac­quired Dys­tar Group, through SPV Kiri Hold­ing Sin­ga­pore Pvt Ltd. The ac­qui­si­tion of Dys­tar, a multi­na­tional Ger­man com­pany hav­ing world­wide mar­ket share of around 21%, has changed the dy­nam­ics, mak­ing KIL now a global con­glom­er­ate adding to the prof­itabil­ity of KIL sig­nif­i­cantly.

KIL is ac­cred­ited with many rev­o­lu­tion­ary in­no­va­tions in the process and chem­istry of pro­duc­ing dyes and dye in­ter­me­di­ates. Th­ese have en­abled it to con­trib­ute to­wards cost ra­tio­nal­i­sa­tions for cus­tomers, im­proved com­pli­ance with sus­tain­abil­ity norms. KIL has set its foot­print in over 50 coun­tries across 7 con­ti­nents.

IN­DUS­TRY OUT­LOOK

We be­lieve the chem­i­cal in­dus­try in In­dia will show rapid growth in the com­ing years. There is good amount of pol­icy sup­port from the gov­ern­ment to fa­cil­i­tate in­dus­try growth. 100 per cent FDI is per­mis­si­ble in the In­dian chem­i­cals sec­tor, which will at­tract for­eign in­vest­ment in chem­i­cal sec­tor. Also, the Gov­ern­ment of In­dia has launched the Draft Na­tional Chem­i­cal Pol­icy, which aims to in­crease share of In­dia’s chem­i­cal sec­tor in the GDP.

The chem­i­cal in­dus­try is an in­dis­pens­able and in­te­gral con­stituent of the grow­ing In­dian in­dus­try and re­mains one of the old­est in­dus­tries of the nation. The sec­tor has grown from a small-scale sec­tor to multi-di­men­sional sec­tor, which is tak­ing on the chal­lenges of glob­al­i­sa­tion. The In­dian chem­i­cal in­dus­try has cer­tainly come a long way to hold a recog­nised po­si­tion on the global map.

In­dian chem­i­cal in­dus­try is the third largest in Asia after China and Ja­pan and sixth largest in the world. In­dia ac­counts for ap­prox­i­mately 16% of the world pro­duc­tion of dyestuffs and dye in­ter­me­di­ates, par­tic­u­larly for re­ac­tive, acid and di­rect dyes. In­dia spe­cialty chem­i­cal mar­ket is ex­pected to reach USD 70 bil­lion by 2020. How­ever, sig­nif­i­cant in­vest­ments in ca­pac­ity cre­ation, tech­nol­ogy de­vel­op­ment, ex­ten­sive R&D, ac­cess to feed­stock and cre­ation of a larger pool of skilled hu­man re­sources, re­main some of the ma­jor ar­eas of con­cern.

FI­NAN­CIALS

The com­pany has de­liv­ered strong op­er­at­ing re­sults on both stand­alone and con­sol­i­dated ba­sis. This per­for­mance was de­spite a tem­po­rary Gst-re­lated over­all slow­down. The com­pany has elim­i­nated sev­eral low mar­gin lines and is con­cen­trat­ing on higher mar­gin prod­ucts. The re­sults of this ra­tio­nal­i­sa­tion are clear on the EBITDA mar­gin, ab­so­lute EBITDA, PBT and PAT lev­els.

The com­pany's ex­pan­sion into higher value-added chem­i­cals is on track and will start to reflect in oper­a­tions from the se­cond half of the cur­rent fi­nan­cial year.

The com­pany's com­mit­ment is to grow with­out any eq­uity di­lu­tion or debt. The com­pany's in­ter­nal free cash gen­er­a­tion is suf­fi­cient to meet all its capex needs. The com­pany's per­for­mance met­rics are cen­tred around de­liv­er­ing high ROE, ROCE and free cash flow.

HIGH­LIGHTS OF Q1 of 2018 RE­SULTS :-

The stand­alone EBITDA mar­gin ex­panded by 3.8 per cent points YOY and 2.6 per cent points se­quen­tially, to 17 per cent on a stand-alone ba­sis. Stand­alone EBITDA for the quar­ter stood at ₹37.8 crore, grow­ing by 12.6 per cent YOY and 8.8 per cent se­quen­tially.

Profit be­fore tax has come in at ₹31.75 crore, where growth was 22.8 per cent YOY and 14.1 per cent se­quen­tial on a stand­alone ba­sis. Stand­alone profit after tax (PAT) for the quar­ter is ₹30.3 crore, a growth of 16 per cent YOY and 19 per cent se­quen­tial.

Over­all, Kiri's con­sol­i­dated PAT has come in at ₹103.7 crore and ₹81.7 crore in the cor­re­spond­ing quar­ter last year and

₹54.8 crore in the quar­ter end­ing March 2017, a growth of 26.9 per cent YOY and 89.2 per cent se­quen­tially. Dys­tar, in which KIL holds 37.5 per cent stake, has de­liv­ered a strong PAT of USD 28.47 mil­lion, a growth of 47.5 per cent YOY. The half-year (Jan 2017 -June 2017) PAT for Dys­tar stands at USD 55.1 mil­lion, a growth of 23 per cent YOY.

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