Sadhana nitro :a Dog or a Horse?

(Amey A Kulkarni) #43

I fully agree with you.
The fortunes of the company have really turned around in the last 18 months and even if we ignore the red flags (cash profits take care of everything else), we need to be sure about the trajectory of product prices.

Ayush, help us track prices of the other 2 products that Prasad Kumaresan mentioned.
I was not able to find the HSN codes for those products - ODB2 and ANDSA and hence could not extract the product prices from

(Amey A Kulkarni) #44

Do you know the HSN codes?
We can then track the prices on

(Amey A Kulkarni) #45

Hi Amit

I have only anecdotal evidence and not specific information.
Check this out
(It may not be the best example, but China is capable of scaling up manufacturing very fast)

Given that the company for loss making for so many years in the past, to my non-chemical industry expert mind it suggests that either the technology for the manufacturing the end-products is not very complex/difficult or at least the existing players can easily expand capacity.

But, any specific information is always welcome on this topic.

(Prasadkumaresan) #46

I don’t have the HSN codes sir. I was trying to get that but am unable to do that. I found Belgium China and Japan are the major importers of MAP. and SNCL capacity after expansion is almost 40 pc more than the next placed 2 Chinese companies added together. In China the biggest player is hianjin xenjin.
ODB2 or colour former demand is also very high since they are needed for thermal papers everywhere now. The overall demand for odb2 is 10000 mtpa out of which Sadhna after expansion will have only 500 mtpa.

(Prasadkumaresan) #47

(Prasadkumaresan) #48

Sir is it possible to get prices of COLOUR FORMER ODB2 At least

(kalidasa) #49

About ODB-2 prices, check this:

October 18, 2018: The receipt paper industry continues to face cost pressures due to the ongoing market challenges (a critical shortage of leuco dye, reduced production, the rising cost of wood pulp, and transportation and labor, etc.). As a result, POS Supply Solutions will be forced to implement a 4-6% price increase on the following paper and label products, effective with all shipments as of November 12, 2018

November 17, 2017: As many of you have heard by now, the world’s primary supplier of leuco dye (a dye required in the production of thermal paper) was shut down.

Which is this primary supplier? Google search reveals it is Connect Chemicals. From this page):

As Connect Chemicals is the world’s primary supplier of leuco dye, a vital ingredient to producing direct thermal paper, its decision to (indefinitely) close the production plant in China starting September 2017 has caused a short supply in the marketplace.

Connect Chemical owns an estimated 30 to 40% of the global dye demand for thermal coaters (and approximately 70% of demand in Europe and Asia, according to market estimates); therefore, a manufacturing shut down has significant direct implications for end users who rely on direct thermal paper.

On Connect Chemical’s website, we can confirm that it supplies (or supplied) ODB2.

WinCon-2 (CAS 89331-94-2) can be used as a color former for both thermal and carbonless paper.

If we search for “leuco dyes” on Connect Chemical’s website, we get a list of 7 chemicals, out of which only 2 are useful for both thermal and carbonless papers–ODB2 (WinCon-2) and WinCon-205.

In summary, the shortage of leuco dyes (including ODB-2) seems to have persisted as of Oct 2018. Thermal paper prices are increasing as a result.

(Prasadkumaresan) #50

If my understanding is correct connect chemicals account for 40 pc of colour former requirements. They produce more than 4000 mtpa of CF.
Then comes chameleon speciality chemicals in China and UK
Then is shuoguang fukang which is basically a API producer which also produces MAP and odb 2
Then is Sadhna with only 500 mtpa capacity after expansion.

(Amey A Kulkarni) #51

This is an interesting article.

It talks about the supply disruption of leuco dyes caused by the shutdown of Connect Chemicals plants. In Mar-18, this article estimated that the supply constraints will probably persist for another 6-9 months.

It should be interesting to check out the price trend for ODB2 and MAP for the next 3 months

(Amey A Kulkarni) #52

I spoke to a chemical industry consultant who had some insight into part of the products manufactured by Sadhana Nitro Chem.

  1. Meta Amino Phenol (MAP) and Aniline 2.5 Disulphonic Acid are bulk chemicals and are not very difficult to manufacture or are not exactly speciality checmicals where only a few companies are able to manufacture.
    The spurt in the prices could be because of temporary supply-demand dynamics.

  2. The consultant’s opinion on the pollution related shutdown in China is that all the pollution/effluent treatment systems are add-on systems. They can be fitted to existing plants though.
    The pollution control / effluent treatment methods have a direct impact on the cost of production.
    This means after supply comes back in China, its cost may be higher than before and thus Sadhana Nitro Chem will be a profitable company but may not be able to make super-normal profits

(kalidasa) #53

Your article has a link about leuco dyes shortage likely to continue into 2019 also.

Many factories are closed in China for the winters between Oct until March—MAP and ODB2 price levels will significantly reduce only after that if they will.

(Billu) #54

This is in regards to shutdown of all types of plants in China.

Many plants - especially state owned ones were cheap producers due to hidden subsides. Plants may have been closed due to stoppage of those subsidies due to the credit problems China is having now.

Pollution may very well be a bogey man. That angle should also be looked whilst thinking about honest competition.

(Lokesh) #55

The company issued around 1 lakh shares @ 44/- to promoters while the stock price is trading around 800. Even if we consider the least price in the last 6 months, it is still around 700.

How is this possible?

(Prasadkumaresan) #56

Can you get the updated chart of Meta amino phenol for this month sr

(shahharshb) #57

ODB 2 realisations have risen to as high as Rs. 6000 per Kg in November, 2018. However, MAP realisations for Sadhana have fallen in recent months due to their long term contractual obligations. Still expect company to report growing pat in the coming quarters.

I have been tracking this company for a while now.

Open to discussions to understand people’s point of view.

You can contact me at [email protected]

(Prasadkumaresan) #58

This company products

  1. MAP average price is 20 dollars per kg in October which is higher than September spot prices(72pc sales)
  2. ODB2 which is now at 6000 per kg according to your info. It was at 3600 per kg in q2.(how reliable is your source sir)
  3. ANDSA.


  1. when is the expansion getting completed. The company’s statement is by q4 of FY19. WHATS the current status.
  2. MAP capacity utilisation is only 70 pc of installed 2400 mtpa while the company is debottlenecking to improve it to 90pc by November 2018. Is it done?.
  3. According to their investor presentation MAP is the precursor of ODB2. if so out of the 2400 mtpa of MAP how much is sold outside and how much is used for ODB2 production.
  4. The major competitor s are they also expanding?
  5. How much of MAP is sold on long term contracts and how much by spot prices

(shahharshb) #59
  1. Expansion of MAP from 2000 mt to 2400 mt will be done by end of Q4 FY19 and to 3000 mt will be done sometime in H2 FY20 (expansion has taken longer time due to time needed to build vessels)
    Expansion of ODB2 from 250 mt to 500 mt … has been done in november
    Expansion of aniline from 720 mt to 1440 mt has been done in november

  2. MAP utilisation was lower in Q2 at around 70% due to transport issues during the time of festival, couldn’t procure raw materials on time.

  3. There is no number given as to how much MAP is captively used to produce ODB2 … but you can take around 10% of MAP is used to make ODB 2 (this is a very rough estimate)

  4. there are 4 major players
    • 1 chinese player with capacity of 2000 mt has been shut due to environmental issues
    • 1 chinese player with capacity of 2000 mt as well has been operating at 50 - 60 % utilisations
    • 1 japanese player only caters to domestic market to a large extent

  5. Sadhana has not shared what is the share of long term to spot contracts … on their agm … they have said its a healthy blend … and its really hard to define
    as there are contracts which have
    • fixed yearly quantity but prices differs quarterly
    • 3 year contracts where prices get negotiated every year end
    • fixed pricing at the start of the year with quantity negotiable

( basically they have too many contracts where sometimes the order is given on spot basis as well )

However, i believe 70 - 75% of MAP is generally contracted …

Other info : MAP prices for sadhana in Q3 have fallen due to large quantity of MAP being supplied to hundsman at old prices. Hence i do not expect Sadhana to report PAT growth in Q3 (expect it to be flattish) … however, i believe the story is still intact as the new contracts being negotiated (generally they start in January) would be at much better prices than the previous contracts)

(kalidasa) #60

Flattish PAT… does that include higher capacity utilization as outlined by the management earlier, and the latest dollar exchange rate?

(rupaniamit) #61

@shahharshb - above information that you have shared is not available in public domain. Can you please tell the source of your information? Would be good to know if it is as a result of your own hard work/scuttlebut or any other source.

Large qty of MAP being supplied to Huntsman at old prices - this is very sensitive information which only insiders/management would have. It’s difficult for me to believe your info unless you point me to where it is available on public domain or tell us how you got the info.

(Prasadkumaresan) #63

Can you please post the updated chart of Meta amino phenol export and import data with prices