Shree Pushkar Chemicals & Fertilisers Limited (SPCFL) was incorporated as chemical trading company in 1993. Over the years, the company has diversified into wide range of products in 5 major segment viz. Reactive Dyes, Dye Intermediates, Acid Complex (comprising sulphuric and its derivative acids), Cattle Feed Supplement and Fertilizers (Single Super Phosphate & Soil Conditioner).
SPCFL has created a niche field in the dyestuff business through strong backward and forward integration in its operations which helped the company to manufacture other value added products leading to efficiencies in the cost of production and low dependence on raw materials from external sources. Company is one of the few diversified chemical manufacturers in India with 'zero waste' integrated facilities. SPCFL is an ISO 9001:2008 company and largest manufacturer of K Acid in India with currently two manufacturing facilities located at Lotte Parshuram, Maharashtra. The company is also a recognized Government Export House.
Product Range
Dyes Intermediate
SPCFL is manufacturing dye intermediates like vinyl sulphone, gamma acid, K-Acid, H-acid and Meta Ureido Aniline. This segment has contributed 71% of total revenue of the company for FY 16. Further H-Acid and Vinyl Sulphone are the major contributors to the revenue in the dye intermediate segment of business. The company is the largest manufacturer of K-Acid, a dye intermediate used to manufacture Reactive Dyes for dyeing of textiles. The company has an aggregate installed capacity of 8,000 MTPA of various Dyes Intermediates. The company exports its products to the world’s leading dye manufacturers like Huntsman Corporation USA and Archroma Switzerland. In addition to this, the company also exports to several countries like Brazil, Thailand, Mexico etc.
Dyes
SPCFL has started commercial production of different type of reactive dyes from May 2016. Reactive dye is the only class of dyes amongst all the classes of dyes which makes covalent bond with the fiber and becomes a part of it. Dyestuffs are critical inputs to several industries such as textiles, paper & packaging, leather, foodstuffs, polymers, coating etc. Reactive dyes are the absolute best type of dyes made for fabrics or fibers like Cotton, Linen, Rayon, Hemp, Bamboo, Paper, Jute, etc.
Acid Complex
SPCFL is producing various acids and its derivatives like Sulphuric 98%, Oleum 23%, Oleum 65%, Chloro Sulphonic Acid etc. Most of the acid production is used for captive consumption and excess quantity is sold in the local market.
FERTILIZERS
SPCFL has commissioned the plant to manufacture NPK and SOP with total capacity 30,000 mt in February and August 2016 respectively. In the fertiliser segment, SPCL has marketing tie up with the DCM Shriram group. SPCL also has its own brand “Dharti Ratna” in the soil conditioner space. SSP is primarily used as a crop nutrient and also find some application in construction, food and pharmaceuticals sector. Soil conditioner is added to soil to improve the soil’s physical qualities such as structure and aeration, water-holding capacity, tile drainage effectiveness, alkali soil reclamation, chemical incorporation, root development, yields and quality.
ANIMAL FEED
Di-Calcium Phosphate is widely used as an additive of feed for livestock and domestic fowls and as supplementary of phosphorus and calcium. SPCFL is marketing cattle feed with brand name 'Pushp Ahaar'
Key Investment Rationale
SPCFL has recently expanded its capacity both horizontally and vertically. Strong backward and forward integration will help to reduce the cost and increase the operational efficiency. The forward integration is to manufacture dye stuffs (black, red, yellow) and colorants from current dye intermediates. It will help to meet 1,000TPA long‐term manufacturing and supplying arrangement with Huntsman. Its backward integration at the acid division followed by SSP (sulphuric acid with rock phosphate), soil conditioner, and DCP (acid waste with rock phosphate) production. Gypsum (calcium sulphate), which is a waste product, has a realisation of Rs 300‐400/tonne. However its conversion into soil conditioner (in combination with magnesium) as a secondary nutrient gives a realisation of Rs 8,000/tonne. Company has set up 500kw power plant to meet 40% of power requirements.
SPCFL has over a period of time treated its main effluents waste prudently thereby inventing new avenues for sales including fertilisers, soil conditioner and cattle feed. The dye business results in acid production along with significant waste but the company created demand for its by‐products and converted its wastes into commercially viable products, which made it a 'zero‐waste' player thereby improving its operating efficiency.
There is no listed company which is exactly comparable having a similar business model as that of SPCFL. There are companies like Bhageria Dye Chem, Kiri Industries, Bodal Chemicals are dealing in dye Intermediates. Atul, Aarti Industries, Vinati Organics are dealing in Speciality Chemicals and Khaitan Chemicals & Fertilizers, Coromandel International, Rama Phosphates are in SSP and soil conditioners business but none of these companies are having similar presence in all 5 verticals and under integrated facility with 'zero waste'.
Company offers "one stop" source of all their chemical requirements, it has created large diversified customer base in domestic like Vinati Organics, Atul, DCM Shriram, Meghmani, Amul and Huntsman, Archroma among international clients. It has an exclusive marketing arrangement with Shriram Chemical & Fertilizers for SSP in Maharashtra and Karnataka and has tied up with Shivam Chemicals for marketing of DCP in Karnataka. It has also launched its own soil conditioner brand named Dharti Ratna. with network of 125 dealers.
Location of integrated manufacturing is close proximity to consumption area of product or raw material and to the ports like Dharamtar, Jaigad and JNPT besides connectivity to road and rail. This saves time and costs towards transportation, loading and unloading charges and other ancillary charges. Further, it markets cattle feed supplement mainly in the states of Maharashtra and Karnataka while fertilizers are marketed within Maharashtra only. The Company has its own fleet of trucks / tankers for transportation of goods/ acids and thus reducing the dependence on transporters. Dye intermediates are mainly marketed in Maharashtra and Gujarat as both the states are considered to be the major hubs for Dyes manufacturing. This has helped the Company save time and cost towards transportation of raw materials and final products to / from domestic and international customers.
Conclusion
SPCFL has a stable and strong business model with healthy earnings growth visibility after recent commissioning of new production capacities. Strict environmental laws in the several countries have resulted in discontinued production of certain dyes for textiles and leather. SPCFL has established itself as 'zero waste' chemical and dye manufacturer and it is providing long term sustainable growth opportunity for the company. The organised dyes and dye intermediate industry is expected to grow @ 15 - 20% in coming future.
Management is well determined to capitalize the opportunities and given update during recent investors conference call.
http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/AAA868BC_C019_4B68_94B9_9891EC0503E0_144915.pdf
At cmp 118 SPCFL is very good investment option in chemical and dye sector for long term as well as for short term.
