Alkyl Amines Chemicals, a market leader, in amines and amine derivatives has posted excellent results for the year ended March 31, 1999. Its sales grew 38 per cent to Rs 86.12 crore and net profit was up a phenomenal 200 per cent to Rs 12.85 crore from 4.29 crore in 1997-98. Though the topline growth in fourth quarter was not very impressive, net profit rose from Rs 1.24 crore to Rs 3.34 crore. The increase in profit was mainly due to better capacity utilisation, decrease in operating costs and a reduction in raw material prices.
Raw material constitutes about 55 per cent of the cost of production and hence the profitability is highly dependent on the price movement of its major raw materials, alcohol and ammonia. The operating margins have improved from 18 per cent in the previous year to 28 per cent in the current year.
Alkyl Amines Chemicals (AACL) is the market leader in almost all the amine products in India except in methyl amines. Amines are basically semi-commodity chemicals and have wide applications in a number of areas like pharmaceuticals, agrochemicals, rubber and foundry. The company is also a market leader in a number of amine derivatives. Amine derivatives are used in pharmaceuticals, water treatment, insect repellents, fuel additives etc. Its client list includes Novartis, Bayer, ICI, Ranbaxy and Glaxo.
AACL has a capacity to make 13,500 tonnes of amines at its Patalganga plant. It has set up another 10,000 tonne ethyl amine capacity at its Kurkumbh plant in Maharashtra. This expansion will be funded through internal accruals and a preferential equity issue. The benefit to this expansion are likely to occur from next year. Kirat Patel, executive director, AACL, says, "The demand for amines is likely to grow by at least 25 per cent for the next two years." AACL will be able to meet the increase in demand after its capacity expansion.
AACL has also set up a joint venture company in collaboration with Th. Goldschmidt AG of Germany. The joint venture company will be known as Goldschmidt Alkyl Speciality Chemicals. Both Alkyl Amines and Th. Goldschmidt will have 50:50 equity participation in the joint venture. The joint venture will manufacture betanes and other speciality cosmetic additives. These products will mainly be used in the cosmetic industry. The 5000 tonne manufacturing facility for the same is being set up at AACL's Kurkumbh plant and production will commence shortly. Th. Goldschmidt AG belongs to the VIAG group. VIAG group is one of the largest industrial conglomerates in Germany with a total turnover of over 40 billion marks annually.
AACL has also entered into marketing alliances with Rohm & Haas of US to market primene amines in India and another alliance with SKW Trostberg of Germany to market cynamide chemicals. Last year,
AACL had issued 15,60,000 warrants which will be converted into as many shares at a price of Rs 20 to promoters and employees. This price may look cheap compared to the current market price but this issue was open when the stock price was Rs 18.
This issue will raise the share capital from Rs 7.3 crore to Rs 8.86 crore in the current year. The promoters' stake will be increased to 51.02 per cent from the current 41.24 per cent.
AACL has also started making hydrogen which is a key ingredient to the manufacturing of amines and amine derivatives. This backward integration is expected to improve the margin in th
