This Microcap stock which deals in manufacturing caustic soda is up by 16.5 percent after the company announced the capacity expansion of an additional 90 tonnes per annum.
Price Action
With a market capitalization of Rs. 436.80 Crores, the shares of Lords Chloro Alkali Limited were up by 16.5 percent in the day’s trade touching a day’s high of Rs. 184.95 per share. The stock reiterated from the day’s high and was trading at Rs. 183 per share which is up 15.35 percent higher from the previous closing price of Rs. 197.80 apiece.
What Happened
The company has announced the capacity expansion of caustic soda which would increase from the current 210 tonnes per annum to 300 tonnes per annum by adding 90 tonnes per annum to improve their production and to maintain rising market demand. The company has an existing capacity operating around 80 to 85 percent. The technology will be procured from Asahi Kasei and production growth to be over 40 percent in output.
Management Commentary
Ajay Virmani, the Managing Director said on the expansion “We are happy to announce the operationalization of our expanded capacity, increasing our installed capacity of Caustic Soda Lye from 210 TPD to 300 TPD. This milestone represents a key step in our longterm growth strategy, enabling us to meet rising market demand while strengthening our competitive edge.
As part of strategy to use superior technology, we have adopted Zero Gap Technology from Asahi Kasei marking a transformative achievement for our operations. With our existing capacity operating at a utilization rate of 80-85%, this strategic expansion was both timely and essential. It not only reinforces our ability to maintain market share but also strengthens our position as a reliable and forward-thinking industry partner. Looking ahead, this upgrade is expected to yield significant operational and financial benefits. Improved economies of scale will lower production costs and support a healthier margin portfolio, driving longterm profitability.
Commenting on the expansion, Madhav Dhir, the Executive Director said “”This expansion is a testament to our unwavering focus on creating a more efficient, resilient, and scalable operation. The increase in capacity and adoption of advanced electrolyser technology come at a time when demand for our products is surging. This upgrade allows
us to enhance operational efficiency, optimize production processes, and deliver higher volumes with improved productivity, ensuring we remain agile and competitive in a dynamic market.”
About the Company
Lords Chloro Alkali Ltd, established in 1979, specializes in the production of caustic soda and other chemicals. The company operates primarily in North India and has transitioned from mercury cell to membrane cell technology for manufacturing, improving efficiency. Its
product range includes liquid chlorine, hydrochloric acid, and stable bleaching powder, serving industries such as textiles, pharmaceuticals, and PVC. Despite historical financial struggles and a recent decline in sales growth, Lords Chloro Alkali is focusing on capacity expansion to boost profitability and market presence.
Products and Services
The company offers a diverse range of chemical products which includes Caustic Soda, Chlorine, Hydrochloric Acid, and Stable Bleaching Powder. These products cater primarily to industries such as paper, soap, dyes, chemicals, and plastics. The company also provides ancillary services related to chemical manufacturing and distribution across North India
Financials & Ratios
Its Revenue from operations grew by 26 percent year on year from Rs. 48.12 Crores in Q2FY24 to Rs. 60.62 Crores in Q2FY25, accompanied by losses of Rs. 1.22 Crores to a profit of Rs. 0.36 Crores.
In terms of Return ratios, it has reported a return on equity (ROE) of -2.88 percent and a return on assets (ROA) of -1.83 percent. It has reported a debt-to-equity ratio of 0.2.
Shareholding Pattern
As of September 2024, the shareholding pattern with the promoter’s stake holding a share of 74.66 percent in Lords Chloro Alkali, Foreign Institutional Investors (FII) holding 0.03 percent, Domestic Institutional Investors holding 0.04 percent, and the public holding around 25.27 percent.
Written by Santhosh S
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