CHENNAI, Feb 5: The expected merger of Clariant India and Colour Chem may be ruled out till the year 2002, according to Vanavil Dyes and Chemicals managing director PV Subramanian. Vanavil is a subsidiary of Colour Chem, and Clariant AG has a stake in Vanavil through Colour Chem.Clariant AG has got textile dyestuff business worldwide and Clariant India can still manufacture it in the country. However Colour Chem had sold its dyestuff business to Dyestar (Bayer's subsidiary) in order to bring about more synergy of product lines.
Colour Chem also allowed Dyestar to use its existing manufacturing capacities in the dyestuff business and is collecting a toll fee in return.There is an agreement between Dyestar and Colour Chem that prevents the latter from competing with the former till the year 2002 in the dyestuff business.
Unless Clariant AG gives up its dyestuff business globally there is no possibility of the Colour Chem-Clariant India merger because of the agreement with Dyestar, said Subramaniam.
Asfar as Vanavil's future was concerned, the Clariant AG takeover had given it a fillip in operations. For the parent company is responsible for sales of Vanavil's products, ensuring regular growth and returns. Vanavil as a result is expanding production capacity of Chloranil which will go up to 800 tonnes by June 1998.
With this, it will rank among the top three global suppliers, perhaps having an edge over the others even. With Clariant AG buying out a US company called Cookson, Vanavil will be asked to produce some Phthalo blue pigments for Cookson's customers in the US which would be supplied directly to the end user. The capacity of Phthalo blue is also being expanded from 450 tpa to 600 tpa.
On the napthols front, Vanavil is bidding for a portion of Hoechst's business worldwide which is being divested now. Hoechst was having 8000 tpa capacity. So an upsurge of activity can be expected in the napthols front too, Subramaniam said.
After the current expansions are underway by June 1998, there is to beyet again a doubling of capacity. The current expansion is being done with $ 2 million ECB with which domestic loans were retired.The company's equity base would increase to Rs 5.2 crore from the current Rs 3.8 crore in June.
It had come out with a rights issue in 1995 when it issued a detachable warrant to every share which could be converted to equity in June 1998.
Before the rights issue, the company had an equity base of Rs 2.4 crore.The company has recorded a steady growth in turnover in the last five years. The earnings per share has also increased from Rs 2.95 to Rs 7.21 during this period.
The dividend was also increased from 15 per cent in 1992-93 to 25 per cent in 1996-97. For this year the company hopes to achieve a turnover of Rs 70 crore.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
