Fineotex Chemical Limited (FCL)

Stock Opportunities
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Fineotex Chemical Limited:

About Fineotex Chemical Limited:

Fineotex Group was founded in 1979 and is engaged in manufacturing of Specialty Chemicals and Enzymes. Fineotex is one of India’s largest and most progressive speciality textile chemical manufacturers. Company manufactures chemicals for the entire value chain for the textile industry including pretreatment, dyeing, printing and finishing process. It also manufactures other chemicals for various industries like agro, adhesives, construction, water treatment etc. With more than 400 products catering to various industries. FCL’s key strength lies in a strong balance sheet with Zero Debt; High ROE and ROCE, Consistently Dividend paying. Strong Industry knowledge - over three decades of operations, extremely strong brand loyalty and strong R&D capabilities help them increase customization levels of their products. Fineotex group is one of the leading manufacturers of chemicals for textiles, construction, water-treatment, fertilizer, leather and paint industry. Its products have an established international market in countries like Bangladesh, Indonesia, Bulgaria, Pakistan, Colombia, Singapore, etc. Also, the company’s products are sold in Indian cities like Mumbai, Balotra Bhilwara, Delhi, Ludhiana, Tirupur, Karur, Erode, etc.

List three key products/services that the Company manufacturers/ provides (as in the balance sheet):

1. Finishing Textiles Processing Chemicals
2. Printing Textiles Processing Chemicals
3. Dyeing Textiles Processing Chemicals

Products:

1. Textile Chemicals: Fineotex manufactures speciality textile chemicals for the entire value chain for the textile industry including Pre-Treatment, Dyeing, Printing and Finishing Process. All these textile chemicals have been produced as per the European technology since 1979. Fineotex is a Public Listed Multinational company and recognized as a world-class specialty textile chemicals and sustainable solutions producer. The plants of Fineotex are located in Navi Mumbai and Selangor in Malaysia producing 43,000 ton of textile chemicals and speciality chemicals and supplying to over 60 countries and recognised as the Fastest growing textile chemicals companies over the period of years. Fineotex manufactures and provides an entire range of products for Pretreatment Process, Dyeing Process, Printing Process and Finishing Process for the textile processing to customers across the globe.

  • Pretreatment Process consists of:
  1. Desizing Agent
  2. Wetting & Penetrating Agents
  3. Sequestering Agents
  4. Demineralising Agents
  5. Wetting Agents cum Detergents
  6. Bisourcing
  7. Silicone Defoamers
  8. Non-Silicate Peroxide Stabilisers
  9. Neutralizer
  10. Polyester Weight Reducing Catalyst
  11. Anti-Back Staining Agent
  12. Core Alkali Neutraliser
  13. Other Pretreatment Auxiliary
  • Dyeing Process consists of:
  1. Sequestering Agents
  2. Defoamers
  3. Acid Buffers
  4. Polyester Dyeing Carrier
  5. Dispersing & Oligomer Removing Agent
  6. Levelling Agents
  7. Anticrease Lubricants
  8. Washing Off Agents
  9. Dye-Fixing Agents
  10. Soda Ash Substitute
  11. Catonising Agent
  12. Reduction Clearing Agents
  13. Other Dyeing Auxiliary
  • ** Printing Process consists of:**
  1. Dispersing Agents
  2. Fixation Accelerators in Polyester
  3. Binders
  4. Fixers in Pigment Printing
  5. Thickeners
  6. White Inks
  7. Washing Off Agents
  8. Softener for Pigment Printing
  9. Oxidising Agent
  • Finishing Process consists of:

  1. Stiffeners

  2. Softeners - Cationic

  3. Silicone Softeners

  4. Wax Finishing Agents

  5. Antistatic Agents

  6. Water Repellent & Soil Resisting Agents

  7. Polyurethane Finishing Agent

  8. Anitcrease Resins

  9. Anti - Pilling Cum Antislip Agent

  10. Enzymatic Bio-Polishing Agents

  11. Yarn Lubricants

  12. Other Finishing Auxiliary

  13. Speciality Chemicals: These are used in the following industries/treatment:

  • Oil & Gas Industries

  • Benzalkonium Chloride (BKC)

  • Hematite

  • Barite

  • Magnesium Chloride

  • Calcium Chloride

  • Water Treatment

  • Antiscalant Agent for Sea Water Distillation

  • THIPS 75%

  • Paper Adhesives

  • Gum

  • Defoamer

  • DOSS (Dioctyl Sodium Sulfosuccinate

2017-2018:

Board of Directors:

  • Mr. Surendrakumar Tibrewala - Chairman & Managing Director
  • Mr. Sanjay Tibrewala (Son of Mr. Surendrakumar Tibrewala) - Executive Director & CFO
  • Mrs. Aarti Jhunjhunwala (Daughter of Mr. Surendrakumar Tibrewala) - Executive Direction (Appointed w.e.f 14-08-2018)
  • Navin Mittal - Independent Director
  • Manmohan Mehta - Independent Director
  • Alok Dhanuka - Independent Director
  • Mrs. Ritu Aditya Gupta (Daughter of Mr. Surendrakumar Tibrewala) - Non-Executive Direction (Resigned w.e.f 14-08-2018)

Manufacturing Facilities:

  • Indian facilities located at Mahape, Navi Mumbai - Trans Thane Creek Industrial Area. The current production capacity is 22,800 MT p.a.

  • Malaysia facility at Bander Baru Bangi - Plot 71, Jalan P10/21, Selaman Industrial Park, 43650 Bander Baru Bangi, Selangor, Malaysia. The current production capacity is 6,500 MT p.a.

  • Exporting to 33 countries around the world.

  • Market Capital of Fineotex crossed 1100 crores in January 2018.

PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:-

Sr. No Name And Address Of The Company CIN/GLN Holding/ Subsidiary/ Associate % of shares held Applicable Section
1 Fineotex Malaysia Limited Subsidiary 100 2(87)
2 Rovatex Shd Bhd Subsidiary 70 2(87)
3 BT Biotex Sdn Bhd Subsidiary 67.63 2(87)
4 BT Chemicals Sdn Bhd Subsidiary 67.16 2(87)
5 Fineotex Specialities FZE Subsidiary 100 2(87)
6 Manya Steels Private Limited U24200MH2009PTC195660 Subsidiary 100 2(87)

2018-2019:

Board of Directors:

  • Mr. Surendrakumar Tibrewala - Chairman & Managing Director
  • Mr. Sanjay Tibrewala (Son of Mr. Surendrakumar Tibrewala) - Executive Director & CFO
  • Mrs. Aarti Jhunjhunwala (Daughter of Mr. Surendrakumar Tibrewala) - Executive Direction (Appointed w.e.f 14-08-2018)
  • Navin Mittal - Independent Director
  • Manmohan Mehta - Independent Director
  • Alok Dhanuka - Independent Director
  • Mrs. Ritu Aditya Gupta (Daughter of Mr. Surendrakumar Tibrewala) - Non-Executive Direction (Resigned w.e.f 14-08-2018)

Manufacturing Facilities:

  • Indian facilities located at Mahape, Navi Mumbai - Trans Thane Creek Industrial Area. The production capacity increased to 36,500 MT p.a.

  • Malaysia facility at Bander Baru Bangi - Plot 71, Jalan P10/21, Selaman Industrial Park, 43650 Bander Baru Bangi, Selangor, Malaysia. The current production capacity is 6,500 MT p.a.

  • Exporting to 60 countries around the world.

  • Amongst NSE’s top 1000 companies.

PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:-

Sr. No Name And Address Of The Company CIN/GLN Holding/ Subsidiary/ Associate % of shares held Applicable Section
1 Fineotex Malaysia Limited Subsidiary 100 2(87)
2 Rovatex Shd Bhd Subsidiary 74.76 2(87)
3 BT Biotex Sdn Bhd Subsidiary 72.38 2(87)
4 BT Chemicals Sdn Bhd Subsidiary 71.92 2(87)
5 Fineotex Specialities FZE Subsidiary 100 2(87)
6 Manya Steels Private Limited U24200MH2009PTC195660 Subsidiary 100 2(87)

2019-2020:

Board of Directors:

  • Mr. Surendrakumar Tibrewala - Chairman & Managing Director
  • Mr. Sanjay Tibrewala (Son of Mr. Surendrakumar Tibrewala) - Executive Director & CFO
  • Mrs. Aarti Jhunjhunwala (Daughter of Mr. Surendrakumar Tibrewala) - Executive Direction (Appointed w.e.f 14-08-2018)
  • Navin Mittal - Independent Director
  • Manmohan Mehta - Independent Director
  • Alok Dhanuka - Independent Director
  • Mrs. Bindu Shah - Independent Director

Manufacturing Facilities:

  • Indian facilities located at Mahape, Navi Mumbai - Trans Thane Creek Industrial Area. The production capacity increased to 36,500 MT p.a.

  • Malaysia facility at Bander Baru Bangi - Plot 71, Jalan P10/21, Selaman Industrial Park, 43650 Bander Baru Bangi, Selangor, Malaysia. The current production capacity is 6,500 MT p.a.

  • Exporting to 60 countries around the world.

PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:-

Sr. No Name And Address Of The Company CIN/GLN Holding/ Subsidiary/ Associate % of shares held Applicable Section
1 Fineotex Malaysia Limited Subsidiary 100 2(87)
2 Rovatex Shd Bhd Subsidiary 74.76 2(87)
3 BT Biotex Sdn Bhd Subsidiary 72.38 2(87)
4 BT Chemicals Sdn Bhd Subsidiary 71.92 2(87)
5 Fineotex Specialities FZE Subsidiary 100 2(87)
6 Manya Steels Private Limited U24200MH2009PTC195660 Subsidiary 100 2(87)

Key Financial ratios as on June 04, 2021:

Market Cap: 1,000 Cr

Current Price: 90.50

52 weeks High / Low : 24.70 / 93.40

Book Value: 18.90

Stock P/E: 23.5

Sales Growth (3Yrs): 16%

PAT Growth (3Yrs) : 20%

TTM EPS: 3.88

Listed on : NSE

Face Value: 2.00

Debt to equity: 0.02

Equity capital: 22.26 Cr

EPS: 3.85

NPM : 15.93%

Shareholding Pattern

The Shareholding Pattern of the Company as on 31st March, 2020 is as follows:

Category No. of shareholders No. of Equity Shares held % of Shareholding
Promoters (Non Corporate) 10 7,55,10,070 67.84
Promoters (Corporate) 2 39,83,000 3.58
Domestic Bodies Corporate 117 17,05,814 1.53
Clearing Members 167 14,20,208 1.28
Non Resident Indians 635 14,08,809 1.27
Non Nationalised Banks 2 39,566 0.04
Directors 1 1,91,494 0.17
Financial Institutions 1 79,998 0.07
Government Companies 1 659 0.00
Public 34,821 2,69,60,382 24.22
Total 35,759 11,13,00,000 100.00

On June 7,2021 Fineotex Chemical appointed Arindam Choudhuri as Chief Executive Officer (CEO).

Financial Data:

Profit and Loss:

Balance Sheet:

Cash Flow:

My Thoughts:

Fineotex looks like a multibagger company and good from an investing point of view. The company’s CEO Surendrakumar Tibrewala is the largest shareholder. According to me, I think this is a good sign when insiders own a significant number of shares in the company. But I have very little knowledge regarding this.

One of my doubts is- Debtors’ days are going up. I believe this might be because its major clients are textile manufacturers, which are larger players than the company is. As a result, the company is usually in a weaker negotiating position over its customers. Therefore, the company seems to be facing challenges in collecting the money from its customers in time.

It is a request to you all to put all your thoughts and knowledge about this company.

This is my very first post here, I hope all mistakes can be ignored.

And, I would also like to know any of your suggestions.

Sources of contents mentioned above :

  1. Company website : Fineotex Chemical Limited (Fineotex : Investor Relations)
  2. Annual Report 2017-18 : Fineotex Chemical Limited (Fineotex : Investor Relations)
  3. Annual Report 2018-19 : Fineotex Chemical Limited (Fineotex : Investor Relations)
  4. Annual Report 2019-20 : Fineotex Chemical Limited (Fineotex : Investor Relations)
  5. Fineotex Chemical Ltd financial results and price chart - Screener
  6. Fineotex Chem Share Price, Fineotex Chem Stock Price, Fineotex Chemical Ltd. Stock Price, Share Price, Live BSE/NSE, Fineotex Chemical Ltd. Bids Offers. Buy/Sell Fineotex Chemical Ltd. news & tips, & F&O Quotes, NSE/BSE Forecast News and Live Quotes
  7. Fineotex Chemical Share Price, Financials and Stock Analysis
  8. https://www.tickertape.in/stocks/fineotex-chemical-FINE?checklist=basic
  9. Economic Times
  10. Fineotex Chemical Ltd: Fundamental Analysis - Dr Vijay Malik
22 Likes
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Disclosure: Invested.

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Like the prospects ? But one point which worries me - why are promoters reducing stake ?

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5dec4ffd-c612-4499-8def-2b0ba4e8f5ca.pdf (1.1 MB)

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Recievables is also a red flag . Even they have a strange cost structures .

Disc : No Interest

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Sometimes, the investments made by these “ace investors” are beyond my understanding. Why would someone make an investment with a small cap chemical company at PE of 42 and PB of 10?! That too with average ROE, and erratic net annual cashflows.

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Adding my research here:
Fineotex Chemical (FCL) is a specialty chemicals producer with a focus on textiles chemicals. FCL manufactures over 400 specialty chemicals and enzymes to textile, garment, construction, leather, water treatment, agrochemicals, adhesives and other industries. Over the last 4 years, it has also entered into oil drilling chemicals and home care and hygiene segments. However, 94% of revenue is still textile chemicals.

The finishing segment is a large growth driver

FCL’s chemicals form a very small part of the cost for textile companies

However, it is a critical application product

This makes it very sticky as textile companies rarely switch the supplier

FCL’s established position also allows them to attract new clients, by using existing clients as ‘reference customers’

They also enable conversion of utility cost into chemical cost for the customer

Most major textile companies are customers of FCL

FCL had acquired Biotex in 2011

They recently did greenfield capex to take total installed capacity to 79000 MTPA from the earlier 43000 MTPA, at a cost of Rs 27 Cr

The plants (even Ambernath one) are fungible

Production in Ambernath facility began in Nov 2021 and its contribution to Q3FY22 sales was low; contribution is expected to be higher in Q4FY22.

Peak utilisation in Ambernath facility is around 85%

Utilisation is expected to reach optimum level around Mar-Apr 2022

Asset turnover on this is expected to be >8x

Ambernath plant itself could earn revenue of Rs 350 Cr

They are looking to increase higher-margin products

Any new expansion will be funded internally

They are looking to increase penetration and wallet share with the customers

Growth rates are expected to be strong, driven majorly by volume growth but also pricing, because of a trend of increasing realisations

OPM is expected to be >23% on a sustainable basis

Disc- no holdings as of now
Edit- added a tracking position
Edit on 8 May- sold the tracking position, no holdings now

16 Likes
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The management has back tracked on their 23% sustainable margins and has said 19% is normal.

Disc - sold at 213.

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Promoter purchasing shares from open market

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Some more buying here.

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Disc - used to own but sold off at highs for technicals, looking to re-enter. Biased

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I want to mention that the buying of shares in open market might not be with the best of intentions.
Management is not of the highest quality(not fraudulent but not very honest IMO).

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  1. Completely backtracked on 23% margin guidance and back to 19%. One can read the concalls to get an understanding.

  2. The company talks about the demand for textile chemicals, which might be true but if there is as much demand as they talk about in their Q3 & Q2 calls then I don’t understand the doubling of inventory with the same rise in sales or PAT, earnings are not high quality in my opinion. Of course B2B has its quirks along with exports but increasing NWC as against lower growth in sales is a thing to keep in mind IMO.

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Just negatives to keep in mind as I think like many mgmts they also have an interest in keeping the stock price up.

Disc; sold off the highs previously for technicals, looking to re-enter

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Ashish Kacholia’s team is visiting the company’s plant.

Disc: Invested

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Huge capacity headroom available . If the company is able to increase their sales to maximise the entire capacity in a year or so . The profits should more than double in the coming year .

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Plant visit by Ashish Kacholia sir’s firm.

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Approved fund raising up to Z200 Crore (Rupees Two Hundred Crore), in one or more
tranches, on such terms and conditions as it may deem fit, by way of issuance of Securities,
through one or more permissible mode(s) including but not limited to a private placement,
preferential issue, qualified institutions placement, follow-on public offering or a combination
thereof, subject to shareholders’ approval and regulatory and other approvals, as may be
required under applicable law.

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Great set of numbers both QoQ and YoY by FCL. They’re surely on track to achieve 800 Crores of Revenue as guided by the management.

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