Kanoria Chemicals & Industries (KCI) announces excellent First Quarter FY 2005-06 results
Twin complimentary Rs. 180 crores Chlor-Alkali and Power expansion projects in advanced stage of completion

Company to add Rs. 44 crores to its operating profit post expansion by 2007
Kanoria Chemicals & Industries Limited (KCI), one of the leading Indian manufacturers of chemical intermediates, announced the financial results for the first quarter of the current financial year.

Net profit for Q1, FY '06 has risen by 230 % to Rs. 10.05 crores from Rs. 3.05 crores in the corresponding quarter of the previous year on the back of an 18 % increase in turnover to Rs. 74.42 crores from Rs. 63.06 crores in the previous year. Cash Profit for the quarter under review stood at Rs. 15.48 crores against Rs. 8.11 crores in the previous year, while EPS is at Rs. 5.93 versus Rs. 1.67.

Commenting on the first quarter results, Mr. R.V. Kanoria, Chairman & Managing Director, Kanoria Chemicals and Industries Limited (KCI), said,

"The company has posted excellent results on the basis of improved realizations from the Chlor-Alkali segment.

Our Rs. 180 crore twin complimentary expansion projects at Renukoot for a greenfield 110 tons per day state-of-the-art environment-friendly Membrane Cell Technology based Chlor-Alkali plant and doubling of the existing power generating capacity to 50 MW are at an advanced stage of implementation. These projects are part of our de-risking strategy and also fulfil the objective of expanding capacity to meet the anticipated market requirement for Chlor Alkali products.

Additional power generation will enable us to meet power requirement for the new Chlor-Alkali capacity and do away with the need for external power even in case of planned shutdown or outages in the existing power plant. The surplus will be sold, ensuring additional revenue stream for the company. Similarly, the new Chlor-Alkali plant, based on environment friendly Membrane Cell Technology, will almost double the existing caustic soda manufacturing capacity and facilitate a smooth transition from the existing Mercury Cell technology without impacting the bottom line.

On completion, these projects will enable KCI to firmly establish its regional leadership in its Chlor-Alkali segment of business and strengthen its position in Chlorine derivatives besides ensuring a quantum leap in profitability of the company. KCI expects to add Rs. 72 crores to its turnover and Rs. 44 crores to its operating profit at the end of fiscal 2006-07, the first full year of operation after the commissioning of these new plants.

"KCI had embarked on a twin-complimentary expansion projects at its integrated chemical manufacturing complex in Renukoot, Uttar Pradesh in 2004. The two projects will enhance the company's power generating capacity to 50 MW, from existing 25 MW, with a capital outlay of Rs. 87 crores. M/s. Thermax Limited is implementing the project on a turnkey basis for setting up of the additional state-of-the-art 25 MW Power plant with the compact, efficient and environment friendly Circulating Fluidised Bed Combustion (CFBC) technology.

The 110 tons per day state-of-the-art environment-friendly Membrane Cell Technology based Chlor-Alkali plant is being implemented by M/s. Uhde India Limited with a capital outlay of Rs. 93 crores.

This additional Caustic Soda production facility will consume about half the power generated by the new power plant and the surplus power will be sold to PTC India Limited under a MoU that has already been signed.

The company had earlier tied up Rs. 150 crores debt component of the project with State Bank of India, UTI Bank and UCO Bank. The balance Rs. 30 crores is being funded through internal accruals.

The power plant will be eligible for a tax holiday of 10 consecutive years under Section 80-IA of the Income Tax Act. The company's estimated future financials reflect a healthy operating growth with sufficient margins for meeting its debt obligations and creating wealth for its stakeholders.