Financials - expansion - second phase - 27Sep05

New Delhi, September 27, 2005
KCI Board of Directors approves Rs. 150 crore expansion plan to further enhance Chlor Alkali and chlorinated derivatives production facilities approves issue of securities including Foreign Currency Convertible Bonds (FCCB), to fund expansion proposal to be placed for shareholder approval at an Extraordinary General Meeting on October 28, 2005
The Board of Directors of Kanoria Chemicals & Industries Limited (KCI) [BSE:506525; NSE:KANORICHEM], one of India's leading chemical intermediate manufacturer's, today approved further capacity enhancement of the Chlor Alkali manufacturing capacity by 110 TPD to 360 TPD with simultaneous expansion in various other chlorinated derivatives at the company's integrated intermediate chemical manufacturing complex at Renukoot in Uttar Pradesh.

The additional Chlor Alkali and chlorinated derivatives manufacturing capacity involves an estimated capital outlay of Rs. 150 crores.

This is in addition to KCI's current twin complimentary Rs. 180 crore expansion at Renukoot to enhance the existing capacity of the Chlor Alkali plant by 110 TPD to 250 TPD and double the power generation to 50MW, scheduled for completion by end December 2005.

Once this phase of expansion is complete, KCI will emerge with a dominant market share in the fast growing economy of Eastern India given the company's own power generating capability, captive salt production and proximity to markets.

Commenting on the Board's decision, Mr. R.V. Kanoria, Chairman & Managing Director, KCI said, "The Company intends to further enhance the Chlor Alkali capacity to meet the increased demand for Chlor Alkali products. This additional capacity, based on environment friendly membrane cell technology, will enable us to 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 topline and bottomline for the company."

The Board of Directors at its meeting today considered various fund raising options in order to part finance the Company's proposed next phase of expansion plan. The KCI Board gave its consent to raise funds through issue of securities including Foreign Currency Convertible Bonds (FCCB), up to a maximum of Rs. 120 crores. The decision of the Board will be put up for shareholder approval at an Extraordinary General Meeting (EGM) to be convened on October 28, 2005 in Kolkata.
About Kanoria Chemicals & Industries Limited
Kanoria Chemicals & Industries Limited (KCI) is a leading manufacturer of chemical intermediates catering to industries such as Aluminium, Paints, Paper, Pharmaceuticals, PVC and Water treatment. KCI has two manufacturing facilities, one at Renukoot in Uttar Pradesh, which manufactures Chlor-Alkalis and Chlorine derivatives, and the second at Ankleshwar in Gujarat, which manufactures Alcohol based intermediates. Both the units are ISO 9001, ISO 14001 and OHSAS 18001 certified. The company's portfolio comprises of over 15 products, with a market leadership in three and substantial shares in all others. KCI also operates a 25MW thermal power plant in Renukoot, and enjoys cost advantage as a result of backward and forward integration.

KCI has been rated 'CRISIL GVC Level 3' for its strong capability with respect to wealth creation for all its stakeholders while adopting sound corporate governance practices. During the year, KCI was awarded the prestigious ICMA Award for Water Resource Management in Chemical Industry for the year 2003-04 and a Certificate of Merit under the ICMA D.M. Trivedi Award for Introducing Advancement in Technology having a Widespread Impact on Chemical Industry for the year 2003-04. Both the awards pertain to the pioneering use of Reverse Osmosis technology for treatment of distillery effluent and recycling water in India. KCI is the recipient of the TERI (The Energy & Resources Institute) Corporate Excellence Award for Environment Management in May 2005. The award was given on the case study of the 'Waste to Energy' programme run at the company's chemical works located at Ankleshwar. KCI was also conferred the Golden Peacock Eco-Innovation Award by the World Environment Foundation.