Insight into Vishnu Chemicals

Vishnu Chemicals Limited is a market leader in manufacturing and sales of Chromium chemicals and Barium compounds across the world

Serving 12+ industries across 50+ countries (83 countries as per publicly available information)

Chromium Chemicals –>

~85% revenues (FY21) , Leading manufacturer in India as well as South Asia,

FY21 Domestic: Export Sales Mix: 51:49 , 3 manufacturing units

Over the last few fears, the company has diversified its Chromium revenue profile with presence in both domestic and export markets. Earlier the portfolio was concentrated in chromium, domestic oriented and now diversified and balanced geographically in domestic and export markets

Applications –> Pharmaceuticals, Leather tanning, Pigments and Dyes, Plastic masterbatches, Ceramic glazes, tiles, Electroplating, Automotives, Refractories, Wood Preservative, Paper pulping and others.

Barium Chemicals –>

~15% revenues (FY21), Leading manufacturer in India, FY21 Domestic: Export Sales Mix: 45:55 ,1 manufacturing unit.

Applications –> Ceramics, tiles, glazes, bricks, refractories and water purification chemical in caustic soda industry, speciality glass, Luminescent Compounds, etc.

Strengths

Long standing relationships with domestic and overseas marquee customers.

Well diversified board with specialists in field

Certifications — ISO 9001:2015 , ISO 14001:2008, REACH Quality Certification

Income, EBITDA, PAT, PAT Margin improving

D/E is high but decreasing as desired

Ability to pass the rise in input prices and freight costs.

Triggers for company in coming quarters

Operating leverage: Most of the overheads or manpower addition are largely done considering FY21 as a base.
Higher utilizations from existing capacity: Major debottlenecking completed in Vizag unit in FY21 will lead to better throughput & efficiency

Majority of the capital expenditure towards sodium carbonate in Chromium chemicals is completed, Majority of company’s sodium carbonate’s current requirement will be met through the process. Significant cost reduction expected from upon being operational by Q4FY22E.

Focus is to increase market share with higher volumes in Barium chemicals

Leading manufacturer in India for Barium Chemical : Other players have less than 1/10th of Vishnu’s current capacity.

Incremental capacity of 20,000 TPA of Barium Carbonate expected to be operational by Q4FY22E

China plus 1 strategy has made them a preferred vendor instead of being a second option for their customers.

16-may-22 update by management

Exit Triggers

Crash in finished products prices or inability to pass on raw material in coming quarters

Any change in China +1 strategy for customers

Less than expected utilization of incremental capacity

Risks

Debt profile is still out of comfort zone

ROCE and PAT Margin still not as much as desired

Any Exports oriented issues including currency risk, freights costs

Significant promoter pledge of 40%

Any delay in operations of underway capacity expansion

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