Alkali Metals Limited CMP - 47
Company Profile
Alkali Metals Limited was set up in 1968 for manufacturing of Sodium Metal, the company subsequently diversified into manufacturing of Sodium derivatives, Amino pyridine derivatives, Picoline, Potassium derivatives, Fine Chemicals, Speciality Chemicals, Active Pharmaceutical Ingredients (APIs) and other Cyclic compounds. These products find wide application and use in various industries like the pharma, agro based products, pesticides, explosives, bio technology products, electroplating chemicals, nuclear plants etc. Its products are sold primarily to pharmaceutical and chemical companies for further processing and conversion into bulk drugs or any other form of end use.
Alkali Metals Limited has entered in the capital market with an initial public offering ( IPO) of price range Rs. 86 -103 for 2.55 million equity shares in 2008 with intention to enter the active pharmaceutical ingredient segment by setting up of an Active Pharmaceutical Ingredients (API) plant at Jawaharlal Nehru Pharma City Visakhapatnam. Company caught on wrong foot due to severe recession from 2008 to 2011 years. Most of the pharma and chemical companies are performing exceptionally well from last three years but due to delayed regulatory approvals Alkali Metal enable to start the production of Metformin (API) only from last year (2015) . Company has shown turnaround performance in FY 15 -16 results after posting poor results for several years. All ratios and parameters started improving quickly like debt reduction, sales growth, improved operating and net margins. Company has declared 8% interim and 4% final dividend for FY 15 -16.
The company has three manufacturing units, at Uppal, Dommara Pochampally and JNPC Visakhapatnam. Last year company has completed metformin API manufacturing facility for APIs at Jawaharlal Nehru Pharma City, Vizag. Company has already completed the implementation of the expansion plan of its second unit. Manufacturing facilities are ISO 14001 and ISO 9001 certified.
Products and Application
The major strength of the company is its ability to handle hazardous chemicals like alkali metals, alkali metal amides, alkoxides and organometallic products, sodium hydride, amino pyridines, pyridine derivatives and tetrazoles. Sodium metal, which is the key raw material for sodium derivatives and is a highly explosive material. The company is one of the few manufacturers who use the sodium metal route to manufacture sodium azide, which provides higher purity levels as compared to the alternative manufacturing process that uses hydrogen hydride. AML facilities are well equipped to carrying-out specialized reactions like nitration, diazotization, chlorination, bromination, n-oxidation, reduction, chichibabin, organometallics, cyclisation.
Research & Development Centre
The Company has converted unit-1 into R&D facility and it is approved as an "In house R & D Facility" by the Ministry of Science & Technology, Government of India. The company has spent 4.9 million towards Research and Development during the previous financial year and is putting continuous efforts in R&D to increase the cost efficiency through optimum material consumptions by improving the processes. Company has developed more than 300 products in the categories include amides, hydrides, alkoxides, azides, tetrazoles, pyridine compounds, cyclic compounds, drug and pharma intermediates, specialty and fine chemicals etc. It manufactures products on bulk and regular basis, campaign basis and on contract manufacturing basis for international customers. The technology for these products was developed in–house which is an achievement considering hazardous process chemistry involved in the development and manufacture of the same.
Future Growth Drivers
Metformin (API) facility began its operation last year and the capacity utilization is lower in the initial operation stabilising phase. However the capacity utilisation is expected to improve with stabilisation of operations and also with the receipt of international regulatory approvals from US FDA, WHO & EU in the medium term. Company has marketing arrangement with Thinq Pharma for metformin. Metformin is primarily used for type 2 diabetes, it is an orally administered biguanide derivative used to lower blood glucose concentrations in patients with non-insulin-dependent diabetes mellitus by improving insulin sensitivity.
Fine chemicals sales gradually increasing from last two years. The company has commercialized 3 new products which have good potential in the coming years. AML is sole supplier of Pyridine Aldoxime Methochloride (PPAM) to Archimica S.R.L. Italy. This product finds application in anti-histamine, anti poisoning, blood pressure control drugs. The raw materials for PPAM are sodium hydride and chloropyridines, which are manufactured captively.
Well Established Customer Base
AML caters to the product requirements of both the domestic and overseas markets. Its major domestic customers are Rallis India, Granules India, Porus Drugs & Intermediates, Dr. Reddy’s Lab, Punjab Chemicals, TEVA API India, and Allied Chemicals. International clients: Allwin Asia Limited, Nihon Siberhegner K.K, Novasep Syntheasis, Euticals S.P.A, Teva Pantex Chemicals Limited. Its major export customers include Chemsource SA (Switzerland), and DKSH Japan KK. Company able to get repeated orders due to superior quality of the products.
Conclusion
Future demand for specialty and fine chemicals is expected to grow at good pace.
AML is well known brand name in sodium derivatives, well established infrastructure, in -house R&D capabilities and reputed customer base. Sales growth from Metformin (API) and fine chemical segment is expected to increase in coming quarters. Commercialization of new value added products will further increase its top and bottom line. With all these capabilities company is well set to make major turnaround.
Stock is providing very good investment opportunity for long term investment.
