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 sequential rise in performance but in Q3, QoQ numbers were down but YoY, they were much better. Net profit for the quarter came in at Rs.4.25 crore, which more than doubled up from Rs.2 crore in Q3Fy13. Net sales rose 31% (YoY) at Rs.80 crore. The rise in net profit was despite the 26% rise in operating costs. Raw material costs remain high, up 23%. 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 30^th Sept 2013, promoters hold 61.48% and they have marginally hiked it up to 61.69% as at 31^st Dec’13. 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.