Kiri Industries: Committed To Grow Sans Equity Dilution Or Debt
Manish Kiri Managing Director, Kiri Industries Ltd.
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.
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.
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.