Sunshield Chemicals Ltd

Stock Opportunities Untested - but worth a good look
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Overview
Sunshield Chemicals was established in 1986.
The company manufactures a wide range of specially formulated & customized products for various industrial applications. Company’s product profile is a part of essential chemicals

Segment
Company has application in a wide range of industries like - agrochemicals, polymers, plastics, rubber, latex, tyre & tubes, conveyor belts, lubricants, additives, homecare, cosmetics, soaps, detergents, fertilizers, PVC stabilizers, inks, colours, coatings, textiles, metal treatment, wire insulation enamel and many more.

Exports
It started as a domestic player and today serves customers spread over North-America, South-America, Europe, South - East Asia, Far east and the Middle East
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Clients
Company’s customers are well recognized and located in India and all over the world especially in America, Europe, and Far- East.
Its key customers include Asian Paints, Pidilite, Lubrizol, Atlanta, Lanxess, Oronite, Solvay, Kansai Nerolac, MRF, Reliance, BASF.

Products

Company’s main products are -
i) Specialty surfactant products - (made from Ethylene oxide)
It is used to make surfactants which have uses in detergents, paints & coatings, textiles, personal care, etc

ii) Specialty Anti-Oxidants - It has applications in plastic additives, fuels, lubricants, adhesives, etc

iii) THIEC
It is available as a powder as well as in noodles form.
Its end-use include applications as heat stabilizers and PVC stabilizers

iv) HQEE
It is used for finishing and improving properties of materials.
It has applications in hydraulic cylinders, conveyor belts, seat foam, shoe sole, colour stabilizers.

Sunshield is one of the only few manufacturers of HQEE in the world

Co. mentions that it is among the few global manufacturers of THIEC and only manufacturer in India due to its requirement of complex technologies

Strategy forward
Company’s current capacity is 2000MTPA
Company announced capex of 25cr to add capacity of around 2000-2400MTPA which will be completed by March 2023
Doing capex to meet additional demand from its existing customers

Risks
a) Availability of EO(ethylene oxide) - it is currently available only from one manufacturer in the country, if there’s an issue with the supply, production of some products out of it would be affected
b) Risk of fire as some raw materials are hazardous and inflammable.
c) High debt - though the debt is reducing, it is considerably high.

Triggers
i) Capex - increasing capacity which would increase the revenues of the company to meet future demands
ii) Improving Margins - Co.s margins rose to mid double digit from FY21 compared to single digit in past few years.
iii) Co. Is taking steps to shift the thrust of business from commodity Specialty to Niche Specialty chemicals which has higher margins.

Sources of the data

  1. Annual report
  2. Company website
  3. Article by Business standard - Sunshield Chemicals Company History - Business Standard News | Page 1
  4. Capex details - https://www.bseindia.com/xml-data/corpfiling/AttachHis/260f0128-d09d-4dea-97c2-3aacda19ee77.pdf

Discl. - Invested
(All information presented is for education purpose only)

Request fellow members of the Forum to provide their thoughts on this.

This is my first attempt to present a stock story here on VP. Please excuse me for any mistakes or errors.

10 Likes
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Great start!

2000 mtpa is the total capacity of the company or only of Antioxidants segment?

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Sunshield_chemicals_28_08_21.pdf (1.4 MB)

The ownership of the company has changed from Solvay to INDUS PETROCHEM.

also an open offer of 26% was brought at price of 352 but hardly 20000 shares were tendered past change in ownership from SOLVAY to INDUS group.

1 Like
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Not sure about the capacity.
In the capex circular it mentions, "we wish to inform you that the Company has approved project to
enhance existing antioxidant plant capacity, debottlenecking of EO / Theic unit and automation.
Link - https://www.bseindia.com/xml-data/corpfiling/AttachHis/260f0128-d09d-4dea-97c2-3aacda19ee77.pdf

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Got this!
Anti-oxidants contribute 26% to their total revenue ( Annual report 2020). They are doubling this capacity

1 Like
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Are you aware of the entry barriers for this product segment?

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There are not any entry barriers however there are only 2 others producers for these products in India. Other than China most other countries are no longer producing much volumes of these grades and these products are being used in the lube and rubber industry for donkeys years.

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who are these other two producers?

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yasho industries and there is another one that is unlisted and smaller in size/capacity

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Interesting promoters and Insider Trades

Company directors and promoters heavily involved with Aegis Logistics Ltd
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Recent insider trade,
1.swarna Malhotra Possibly wife of Sudhir omprakash malhotra ( CEO OF Aegis )
2.`Coppersmit energies and project private limited
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How Sunshield linked with AEGIS Logistics

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Recent Developments ( Rights Issue )

They submitted a draft on a rights issue. Not sure what happened there. Rights issue has’t materialized as of now.
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But that gave some insights.
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Current capacity as per rights issue draft document
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Product FY 2022 Installed FY 2022 Utilized (%) FY 2023 Installed FY 2023 Utilized (%) FY 2024 Installed FY 2024 Utilized (%)
Ethoxylates & Propoxylates 7,740 75% 7,740 66% 7,740 100%
Anti-Oxidants 2,200 69% 2,200 86% 2,200 98%
THEIC 4,000 100% 4,305 75% 5,640 83%
Urea Formaldehyde Resin 336 70% 336 71% 336 35%
HQEE 300 40% 345 41% 480 0%
Miscellaneous 1,680 18% 1,680 15% 1,680 9%
Total 16,256 75% 16,606 65% 18,076 83%

The rights was due to 2 reasons

  1. To clear of debt around 100 Crores
  2. To construct a new plant ( For the cost of 25 Crores ) in a land which needs to be acquired ( 7.5 Acres ) from Jeet Malhotra ( MD of sunshield )

Summary of capex plan

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The plant was planned to complete by Mar 2025. Not sure what happened to these priorities.
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Strategic Location advantage of company to Aegis logistics Ltd JNPT PORT

Also Aegis logistics is building a new capex in JNPT port, which is just 80 km from the sunshine petro chem

Conclusion

Company does not provide proper explicit details or proper communication to the investors in recent times about recent development.

Bonus ( Not sure what to take away from this )

Recently there was a case against Aegis, Indus and one more company called Sea Lord Containers

In 2025, the CCI investigated Aegis Logistics, Indus Petrochem, and Sea Lord Containers for alleged bid rigging at New Mangalore Port.
The companies were noted to have common ownership and management.
However, the CCI found no evidence of collusion, and the case was dismissed

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Disclosure : Invested

1 Like