Vinyl Chemicals India Ltd is a Pidilite group company incorporated on 15th May, 1986 with the object of manufacturing Vinyl Acetate Monomer (VAM). It's a chemical company which make chemicals for textile, paints, alcohol, adhesive industries since 1991.
Why to invest?
1. Strong promoter group -
pidilite group is well known and market leader in their segment. They have very clean record on their balancesheets with no corporate goverance issue which can always give soothing to investors holding the group company.
2. Worst history behind -
The Company commissioned a 10,000 TPA, Vinyl Acetate Monomer(VAM) manufacturing plant in the Raigad district of Maharashtra, in technical collaboration with Uhde GmbH,Germany, on 25th October, 1990.
Due to some reason, the VAM plant made continuous losses and was demerged into Pidilite Industries Ltd. (PIL) in FY08. Due to the demerger, the Share Capital of the co. reduced from Rs. 18.34Cr. in FY07 to Rs.1.84Cr. in FY08. Networth reduced from Rs.30.8Cr. to Rs.2.7Cr., Debt reduced from Rs.32.4Cr. to Nil and Total Assets reduced from Rs.63Cr. to Rs.2.7Cr.
The Net Fixed Assets were reduced from Rs.39Cr. to Rs.25 lakhs and the company ceased to be a manufacturing concern.
This demerger was a boon for VCIL shareholders since the VAM plant was a liability. Today, the VAM plant which is now a part of PIL, is inoperative. The VAM plant generated revenues of Rs.93Cr, Rs.15.7Cr. & Rs.2.1Cr. in FY09, FY10 & FY11 for PIL. Clearly, the demerger was a bail out of VCIL by PIL.
3. Excellent growth and dividend -
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| Revenue | 292.78 | 243.56 | 211.48 | 157.27 | 125.67 |
| Other Income | 1.04 | 0.84 | 0.21 | 0.15 | 0.19 |
| Total Income | 293.82 | 244.40 | 211.69 | 157.42 | 125.86 |
| Expenditure | -282.45 | -235.37 | -204.26 | -151.59 | -117.13 |
| Interest | -0.04 | -0.22 | -- | -- | -0.09 |
| PBDT | 11.33 | 8.81 | 7.43 | 5.83 | 8.64 |
| Depreciation | -- | -- | -- | -- | -- |
| PBT | 11.33 | 8.81 | 7.43 | 5.83 | 8.64 |
| Tax | -3.85 | -2.87 | -2.42 | -1.89 | -2.92 |
| Net Profit | 7.48 | 5.94 | 5.01 | 4.30 | 5.72 |
| Equity | 1.83 | 1.83 | 1.83 | 1.83 | 1.83 |
| EPS | 4.09 | 3.24 | 2.74 | 2.35 | 3.12 |
| CEPS | 4.09 | 3.25 | 2.74 | 2.35 | 3.13 |
| OPM % | 3.88 | 3.71 | 3.51 | 3.71 | 6.95 |
| NPM % | 2.55 | 2.44 | 2.37 | 2.73 | 4.55 |
In the current bull run, it's very difficult to get such good dividend paying and trustworthy management backed company to get at less than 10 PE. We expect company to do well in mid to long term. Hence, we ask our readers to take a positional call with growing company and be a part of their growth.
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