Financials - expansion - 6 February 2006

Kanoria Chemicals announces Rs 150 cr expansion

To partly fund the expansion through $20 million FCCBs
New Delhi, 6 February 2006: Kanoria Chemicals & Industries Limited, a leading manufacturer of Chlor-alkali and Alco-chemical based intermediates has outlined a Rs 150 crore expansion for its Caustic Soda manufacturing unit in Renukoot. The Company is considering issue of Foreign Currency Convertible Bonds (FCCBs) worth $20 million to partly fund the expansion, along with other options like debt and internal accruals. With this, the company plans to add an additional 40,000 tonnes per annum (TPA) capacity.

According to Mr. R.V. Kanoria, Chairman and Managing Director Kanoria Chemicals and Industries Ltd., "This expansion initiative will further de-risk our existing business and enable us to cater to the increased demand for value added Chlorinated Derivatives. Improved chlorine utilization and enhanced energy efficient Caustic Soda capacity is likely to result in improved profitability."

The expansion slated to begin in June 2006 will see the installation of the plant's second environment friendly Membrane Cell Technology based unit. By 2007, when this expansion is complete, KCIs total caustic soda capacity will go goes up to 130,000 tonnes per annum, from the current 50,000 TPA. Simultaneous expansion in various other chlorinated derivatives at the company's integrated intermediate chemical manufacturing complex is also envisaged.

With this KCI will firmly establish its leadership in its Chlor-Alkali segment of business, strengthen its position in Chlorine derivatives and result in a quantum leap in profitability of the company.

The Rs 150 crore announcement follows close on the heels of the now nearly complete first phase of expansion. This involved a twin complimentary Rs.180 crore project at Renukoot, to enhance the capacity of the Chlor Alkali plant by 40,000 TPA to 90,000 TPA by installing a membrane cell technology based unit and to double the power generation from 25 MW to 50MW. The Chlor Alkali plant is expected to commence production by mid February 2006.

Kanoria Chemicals & Industries (KCI) is a leading manufacturer of Chlor-alkali and Alco-chemical based intermediates with a portfolio comprises of over 15 products. Emerging as a market leader in three and with substantial market share in all others, it is ISO 9001, ISO 14001 and OHSAS 18001 certified besides being rated a 'CRISIL GVC Level 3' for its strong capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices
The company also announced that the first phase of expansion involving membrane cell technology is now complete and has commenced commercial production. With this the company's Caustic Soda production capacity almost doubles from 50,000 tonnes per annum (TPA) to 90,000 TPA. This twin 180 cr expansion project also doubled the power generation capacity from 25 MW to 50 MW.

Earlier this year – the company had already announced a Rs 150 cr second phase of expansion that is expected to take its Caustic Soda capacity up to 130,000 TPA.

About Kanoria Chemicals

Kanoria Chemicals & Industries (KCI) is a leading manufacturer of Chlor-alkali and Alco-chemical based intermediates with a portfolio comprises of over 15 products. Emerging as a market leader in three and with substantial market share in all others, it is ISO 9001, ISO 14001 and OHSAS 18001 certified besides being rated a 'CRISIL GVC Level 3' for its strong capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices.