Gwalior Chemical Industries IPO opens on Sept 11

Mumbai, September 5, 2006: Gwalior Chemical Industries Limited (GCIL), a producer of niche chemical products for agro-chemicals, pharmaceuticals, dye, flavor and fragrance industries, is entering the capital market with an initial public offering of equity shares aggregating to Rs.80 crores through a 100% book build process. Price band for the offer has been fixed between Rs 71 and Rs 85 per share. The issue opens for subscription/ bids on September 11, 2006 and closes on September 14, 2006.

Of the total offer, upto 50 % will be allotted on a proportionate basis to Qualified Institutional Buyers (QIBs), of which 5% is reserved for allocation to mutual funds. Another 15% would be available for allocation on a proportionate basis to non-institutional bidders and the balance 35 % will be reserved for allotment on a proportionate basis for retail individual bidders.

The Company

GCIL is an integrated facility at Nagda, Madhya Pradesh and Ankleshwar, Gujarat to manufacture chlorinated compounds and their derivatives. The range of chlorinated compounds includes chlorotoluene range and sulphur chlorides range. In the chlorotoluene range the three primary products are benzyl chloride, benzal chloride and benzo trichloride. Moreover, the company also manufactured black viscose dye.

Mr. Ashwin Kothari, Chairman of the company, speaking at a news conference here to announce the company's IPO said "At present, the company has facilities to manufacture the first stage downstream products and we intend to further expand into the second stage of value added downstream products like esters which are used in the flavor and fragrance industry."

In the sulphur chloride range, the main products manufactured by the company include thionyl chloride and sulphuryl chloride having varied applications. The company has drawn up plans to further expand into acid chlorides which are value added downstream products of thionyl chloride.


Mr. Kothari pointed out that "at GCIL, we have taken initiatives in the past to value add most of our by-products into sellable products such as sodium bi-sulphite, sodium benzoate and hydrochloric acid, which presently contribute 3.5% of our net sales for fiscal 2006."

He also said that demand for speciality chemicals has been on the rise due to an increasing trend towards outsourcing as clients seek high quality molecules at a competitive cost and demand timely delivery.

GCIL has been a beneficiary of this growing trend towards outsourcing as is evident from the increase in exports revenue from Rs 4.90 crore for fiscal 2003 to Rs 21.18 crore for fiscal 2005. For fiscal 2006, the exports were Rs 52.65 crore.

To strengthen the company's exports drive, the company has incorporated a subsidiary in Belgium. The Belgium subsidiary besides providing marketing support also has storage facilities to cater to the needs of the company customers in Europe.

The net sales and adjusted profit after tax for fiscal 2006 was Rs 170.63 crore and Rs 15.59 crore respectively as compared to a net sales and adjusted profit after tax of Rs 136 crore and Rs 13.02 crore for fiscal 2005.

To cater to growing demand from export markets and the domestic market, the company has plans to expand its capacities both at Nagda. Moreover, the company is also setting up new plant at Nagda and Ankleshwar for producing second stage downstream products including benzyl esters and acid chlorides and a new plant for viscose dye pigments from the proceeds of the present issue.

JM Morgan Stanley Private Limited is the sole Book Running Lead Manager to the Issue.