Laxmi Organic Industries Share price and Fundamental Analysis

Company History

Laxmi Organic Industries Limited (LOIL) is the Goenka Group's flagship company, established in 1989 and is in the business of acetyl intermediates and specialty chemicals. The Company primarily manufactures Ethyl Acetate, Acetic Acid and Diketene Derivative Products (DDP). DDP is a specialty chemical group, the technology and business of which has been acquired by LOIL from Clariant Chemicals India Limited.

Laxmi Organic Industries Limited was incorporated on May 15, 1989. The Company is a leading manufacturer of Acetyl Intermediates and Specialty Intermediates with almost three decades of experience in large scale manufacturing of chemicals. Since its inception in 1989, the company has been on a journey of transformation. The Company initially started manufacturing acetaldehyde and acetic acid in 1992, and soon thereafter moved on to manufacturing of ethyl acetate in 1996. The Company is currently among the largest manufacturers of ethyl acetate in India with a market share of approximately 30% of the Indian ethyl acetate market. Further, post completion of the YCPL Acquisition, the market share in the ethyl acetate market will be further enhanced. In 2010, the company commenced manufacturing the Specialty Intermediates by acquiring Clariant's diketene business. The Company believes that the diversification of its product portfolio into varied chemistries in Specialty Intermediates has enabled it to create a niche for itself. The Company is the only manufacturer of diketene derivatives in India with a market share of approximately 55 % of the Indian diketene derivatives market in terms of revenue in Fiscal 2020 and one of the largest portfolios of diketene products.

The Company's products are currently divided into two broad categories, namely the Acetyl Intermediates and the Specialty Intermediates. The Acetyl Intermediates include ethyl acetate, acetaldehyde, fuel-grade ethanol and other proprietary solvents, while the Specialty Intermediates comprises of ketene, diketene derivatives namely esters, acetic anhydride, amides, arylides and other chemicals. These products find application in various high-growth industries, including pharmaceuticals, agrochemicals, dyes & pigments, inks & coatings, paints, printing & packaging, flavours & fragrances, adhesives and other industrial applications. The Company also proposes to diversify into manufacturing of specialty fluorochemicals to which end, the company has recently acquired assets including plant & machinery, design and operating paperwork, REACH registrations and patents of Miteni, a manufacturer of organic fluorospecialties and electrochemical fluorination. The Company believes it is well placed to enter into the high margin specialty fluorochemicals space through this acquisition. According to the Frost & Sullivan Report, given its expertise in the Acetyl Intermediates and the Specialty Intermediates segments, its entry into the fluorochemicals space will put the company at a differentiated position from other chemicals manufacturers.

Over the years, the company has significantly expanded its scale of operations and global footprint with customers in over 30 countries including China, Netherlands, Russia, Singapore, United Arab Emirates, United Kingdom and United States of America. The Company has established long-standing relationships with marquee players including Syngenta Asia Pacific Pte. Ltd., Alembic Pharmaceuticals Limited, Covestro (India) Private Limited, Dr. Reddy's Laboratories Limited, Flint Group India Private Limited, Granules India Limited, Hetero Labs Limited, Heubach Colour Private Limited, Hubergroup India Private Limited, Huhtamaki India Limited, Laurus Labs Limited, Macleods Pharmaceuticals Private Limited, Mylan Laboratories Limited, Neuland Laboratories Limited, Parikh Packaging Private Limited, Suven Pharmaceuticals Limited, Colourtex Industries Private Limited, and UPL Limited. The Company has offices in Leiden (Netherlands), Shanghai (China) and Sharjah (United Arab Emirates) which enables it to assess international demand and increase its customer outreach thereby bolstering its product development initiatives. The Company also has arrangements with third parties for usage of storage tanks in inter alia Mumbai for storage of raw materials and finished goods and Rotterdam (Netherlands), Antwerp (Belgium) and Genoa (Italy) for storage of finished products which enables the company to deliver its products on short notice. The Company has been the largest exporter of ethyl acetate from India in the six months ended September 30, 2020 and Fiscals 2020, 2019 and 2018 and one of the largest exporters of ethyl acetate to Europe from India since 2012. The Company currently has two manufacturing facilities in Mahad, Maharashtra with one facility dedicated to Acetyl Intermediates and another dedicated to Specialty Intermediates, which are strategically located in proximity to several ports and each other. As at September 30, 2020, the aggregate installed production capacity at the AI Manufacturing Facility was 161,320 MTPA, while the aggregate installed production capacity at the SI Manufacturing Facility was 78,045 MTPA. The Company is also in the process of acquiring YCPL, having an aggregate installed production capacity of 10,500 MTPA of acetaldehyde and 29,200 MTPA of ethyl acetate as on September 30, 2020. The Company also has two distilleries located in Satara district (the Jarandeshwar Distillery) and Kolhapur district in Maharashtra (the Panchganga Distillery and together with the Jarandeshwar Distillery) for the manufacturing of ethanol or specially denatured spirit. As at September 30, 2020, the Jarandeshwar Distillery had an installed production capacity of 8,100 KLPA while the Panchganga Distillery had an installed production capacity of 9,112 KLPA. The ethanol manufactured at the Distilleries is primarily consumed at the AI Manufacturing Facility and the SI Manufacturing Facility for the manufacturing of fuel-grade ethanol, ethyl acetate and certain Specialty Intermediates including several downstream products. Further, the company is in the process of setting up a manufacturing facility at Lote Parshuram, Maharashtra for manufacturing fluorospecialty chemicals.

The Company has 2 Department of Scientific and Industrial Research, Government of India (DSIR) recognized research and development facilities, with infrastructure to synthesize specialty molecules and advanced intermediates.

During the year 2018-19, the Hydro Power Project at Yedgaon got commissioned and the power generation for captive consumption was also started. During the year 2018-19, the Company sold 49% of the total equity shares which it held in Suvas Holdings Limited to Mr. Ravi Goenka and Mr. Rajeev Goenka. Hence, Suvas Holdings Limited is no longer an associate / joint-venture of the Company.

During year 2019-20, the Company incorporated its wholly owned subsidiary (WOS), Laxmi Speciality Chemicals (Shanghai) Co. Limited in China on September 5, 2019. It also incorporated 2 new WOS in India, namely Yellowstone Fine Chemicals Private Limited and Yellowstone Speciality Chemicals Private Limited.

During the year 2020-21, Company came out with and Initial Public Offering (IPO) aggregating to Rs. 8,000 million out of which Rs. 2,000 million was issued as Pre-IPO placements to marquee investors such as IIFL, GMO, WhiteOak, Malabar and Kuber India. The offer was subscribed and eventually, the Company was listed on The National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on March 25, 2021.

During the year 2021-22, Company acquired 100% equity share capital of Acetyls Holding Private Limited (AHPL) through Share Purchase Agreement dated December 09, 2020 and Prospectus dated March 18, 2021 and accordingly, with this acquisition, AHPL and its wholly owned subsidiary Company, Yellowstone Chemicals Private Limited (YCPL) became subsidiaries of Company w.e.f. October 01, 2021.

During the year 2022-23, the wholly owned subsidiary namely, Acetyls Holding Private Limited (AHPL) and its step-down subsidiary namely, Yellowstone Chemicals Private Limited (YCPL), merged with the Company and accordingly, the Assets and Liabilities of the amalgamating entities got incorporated to and vested in the Laxmi Organic Industries Ltd. (LOIL / the Parent Company) effective from September 30, 2022.