SITARA CHEMICAL INDUSTRIES LTD
Research Analyst, PAGE
July 19 - 25, 2010
SCIL was incorporated in 1981 and began producing caustic soda in 1985, initially at a rate of 30 million tones caustic a day. The plant's capacity gradually increased over years to the current level of 545 million tones a day. In addition, various byproduct facilities have been added and expanded from time to time to cope with growing demand. The company entered into textile spinning business in 1995. Its specialty chemicals and export division was established in 2001 and agri chemicals division in 2003.
Sitara Peroxide Limited is another landmark achievement of Sitara Group; never before has hydrogen peroxide been produced on such a large scale in Pakistan.
The main products of SCIL are basic chemicals which include ammonium chloride, bleaching powder, caustic soda flakes, caustic soda liquid 33 per cent, caustic soda liquid 50 per cent, hydrated lime, hydrochloric acid, liquid chlorine and sodium hypochloride. Specialty Chemical includes calcium chloride, calcium chloride (flakes), chlorinated paraffin oil (CPW), ferric chloride, magnesium carbonate, magnesium chloride, nickel chloride, poly aluminum chloride and sulphonated chlorinated paraffin wax. Gases include carbon dioxide gas, nitrous dioxide gas and oxygen gas. Agricultural products include chelated iron, chelated zinc, NPK-c, nutri calcium, phosphorus plus, phosphorus plus and potash plus.
Ammonium Chloride - DCS controlled plant has capacity of 10 million tonne per day. Most of the equipment is from Europe (Netherland, Germany, and France). M-II replacement is fully automated DCS controlled plant having capacity of 135 million tonnes per day of 32 per cent caustic soda. Electrolyzer technology is supplied by Uhdenora Italy.
New HCL furnace erection is in progress. Its capacity is 50 tonne per day chlorine consumption. This furnace is fully automatic. Most parts are imported from China, Germany, and Italy.
CSP - IV is also a DCS controlled plant having capacity of 100 million tonne per day of caustic soda flakes. Most of the equipments are designed and fabricated in-house. Salt heating system is imported from Switzerland.
It includes membrane-I (M-I) is DCS (Yokogawa - Centum CS 3000) based plant having capacity of 67 MTon/Day using membrane technology.
Membrane-II (M-II) replacement is fully automated DCS (Supcon- AdvanTrol) controlled plant having capacity of 135 MTon/Day of 32 per cent caustic soda. Electrolyzer technology (Gen. IV) is supplied by Uhdenora Italy. The plant startup is scheduled on March 31, 2010.
BMR - M II is also DCS (Supcon - AdvanTrol) based plant having capacity of 208 MTon/Day with membrane technology.
Membrane-III (M-III) has capacity of 200 MTon/Day. It is also DCS (Honeywell) controlled plant. Electrolyzer technology is supplied by Asahi Kasei, Japan.
Needless to mention that energy crisis and escalation in power and fuel cost has affected overall business environment in the country. During this quarter, electricity rates escalated by 12.5 per cent additionally on account of fuel adjustment charges. An increase of Rs1.02 per KWH was also enforced. Further Sui Gas rates also escalated by 18 per cent during the quarter under review. The company tried its best to sustain the profitability and considering the above factor, the company was able to manage its performance. Sale for the quarter is Rs1,498 million as compared to Rs1,493 million in corresponding period. Net profit for the quarter before tax is Rs90 million as compared to Rs171 million in the corresponding period. Net profit after tax for three month is Rs43 million as compared to Rs94.8 million for corresponding period.
FINANCIAL PERFORMANCE (RS '000)
JAN-MAR 2010 JAN-MAR 2009 Sales 1,497,594 1,492,858 Cost of Sales 1,191,477 1,084,256 Gross Profit 306,117 408,602 Admin Exp (49,692) (54,640) Financial Costs 148,764 166,574 Profit before tax 89,967 171,090 Profit after taxation 43,076 94,806 Profit in EPS 2.11 4.65
Pakistan is in the grip of a serious electricity and gas crisis that has affected all sectors of the economy and the various segments of the society as well. Pakistan's economy did not perform as expected owing to various factors including insufficient electricity and gas, law and order situation and surge in price of oil, electricity, and gas. The availability of energy and gas is inevitable for any industry and same is the major component of any industrial production. Owing to this fact, the production and sales of large scale manufacturing industry (LSM) remained under pressure.
SCIL has continued the expansion, revamping and diversification strategy and undertaken different projects including caustic soda liquid plant which is cost efficient plant, new caustic solidification plant, and single super phosphate (SSP). Textile division showed improvements due to better performances.
Despite high inflation, crippling electricity shortages and challenging security conditions, domestic economic activity has picked up in recent months which are a positive sign of economical revival in the near future. As a result, overall business environment is likely to improve in future and will have positive effect on the company's performance.