The Hindu Business Line : Balaji Amines rises on higher sales, growth prospects

BALAJI Amines Ltd is moving up on higher sales and profit growth prospects following stabilising production of Solanesol and long-term supply arrangement for N-Methyl-2-Pyrrolidone (NMP).

Balaji Amines has set up a dedicated facility for NMP. In a bid to secure its overseas market for NMP, commercial production for which has begun roughly six months ago, Balaji has entered into a strategic arrangement with BASF, biggest global manufacturer of NMP, for next two years.

Mr Ram Reddy, Managing Director of Balaji Amines, told Business Line that initially the company was looking at NMP supply to BASF of 1,500 to 2,000 tonnes per annum. However, the company would review the situation after three to four months and see whether supplies to could be increased. "Our current capacity for NMP is 3,600 tpa. BASF wants a steady supply of 3,000 tpa. We can increase our capacity to 5,000 tpa after some de-bottlenecking at our plant," Mr Reddy added.

The current envisaged supply level between 1,500 and 2,000 tpa to BASF, is expected to bring in about Rs 30-40 crore revenues in a year. Also, at the current global and domestic prices, the margins on NMP would be a decent one, he confirmed. In the domestic market, Balaji is in the process of supplying a 200- tonne order from HPCL by December. The domestic price of NMP, which is normally imported, is slightly higher than the global benchmark.

The company, under the arrangement, would supply to BASF and its associates at a price mutually agreed from time to time for the next two years from now. According to the agreement, BASF would supply Gama Butyrolactone, one of the key raw materials for NMP production, for next two years at a mutually agreed price from time to time.

The net profit for Balaji in 2004-05 had declined mainly due to increase in raw material cost for its amines products and delay in the production of Solanesol.

Mr Reddy also informed that the commercial production of Morpholine, another new product for the company, would begin from April 2006.

The stock today closed 5 per cent higher at 241.25 on the BSE. According to an analyst with Motilal Oswal, the net expected sales growth for this fiscal is around 53 per cent and 48 per cent in 2006-07.

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