Asahi Songwon
Asahi Songwon Colors Limited (ASCL) is a Gujarat based manufacturer of pigments and dyes. ASCL manufactures CPC Green, CPC Blue, Beta blue (derivative product of CPC Blue) pigments. The company has its manufacturing plants based at Mehsana and Vadodara. The company, for Q2FY14, showed a a much better performance than Q1, where its net profit had dropped 43% on YoY. In current Q2, the company posted a 20% rise in net sales at Rs.72 crore. Operating costs were down, it came in at 87% of the total sales compared to 92% in Q2Fy13. It ended the quarter with a whopping 150% jump in net profit at Rs.5 crore. Blame it mainly on the lower base effect too. The spoke in the wheel has been its raw material cost, which has risen 23% (YoY) though sequentially, it has remained status quo. Its key raw materials are Phthalic Anhydride, and Cuprous Chloride. Pthalic Anhydride is a petroleum-based product and hence its prices behave in line with the crude prices. The other raw material, cuprous chloride is imported thus there it suffers from two uncertainties – rising crude and falling rupee.
This company manufactures pigments for the chemical industry and it supplies to leading companies like BASF, Clariant. It has two plants, one at Baroda and one near Ahmedabad. As at 30th Sept 2013, promoters hold 61.48% and interestingly, Clariant Chemicals holds 5.86% in the company. Another Japanese company, Dainippon Ink & Chemicals Corporation is its client and it also holds 7.05% stake in the company. Asahi derives more that 90% of its total revenue from overseas market and thus fluctuation in foreign exchange, increasing raw material prices, rising price of crude remain major threats to the company.