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.

Its numbers for Q3FY16 were affected due to its Vadodara plant shut down from 3rd Dec to 15th Dec – the plant was shut for annual maintenance. Its topline contracted over 3% (YoY) to Rs.45 crore while EBITDA fell 42% to Rs.5 crore. Margin tumbled down from 13.3% to 11.6%.. It ended the quarter with a net profit of Rs.4 crore, a drop of 20%.

Though raw material costs fell 37%, it has apparently not helped. 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 raw material is always ruled by two facts – crude price and falling rupee.

This company manufactures pigments for the chemical industry and it supplies to leading companies like BASF, Clariant. As at 31st Dec 2015, promoters hold 62.28%. 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.