This is not a buy or sell recommendation.

We are in the process of compiling data sheets of companies that we track so that in future we may use these for buying / selling stocks of such companies. Reason for sharing is hopefully somebody who has more information may get in touch with us or for a healthy debate.

Adi Finechem Date Traded In Face Value CMP EPS (TTM) P/E Market Cap Enterprise Value 52 Week H/L Website Timeline 1985 Incorporated as H.K. Agro Oil. 1994 Name changed to H.K. Agrochem 1995 IPO 2000 Name changed to H.K.Finechem 2010 Open offer by group of investors who take management control of the company. 2010 Name changed to Adi Fincechem Profile Adi Finechem Limited is involved in the business of manufacturing and distribution of speciality chemicals like oleo chemicals, intermediate nutraceutical and health products and cardanol. Its manufacturing facility is located near Ahmedabad in the state of Gujarat. : 24-Nov-11 : BSE B (530117) : 10 : 54 : 7.73 : 6.98 : 51 Cr : 62.31 Cr : 72.25 / 30.65 : http://www.adifinechem.com/

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Oleochemicals are chemicals derived from plant and animal fats. The raw materials for the company are the by-product streams of vegetable oil refineries and cashew nut shell liquid for cardanol.

Products The products of the company can be classified based on the raw materials used to manufacture the products Products

By products of oil refining process

Cashew nut shell liquid

Mixed Tocopherols

Oleic Acid

Cardanol

Linoleic Acid

Dimer and Trimer Acids

Mixed Tocopherol: Natural Vitamin E, known as mixed tocopherol, is currently produced from a by-product of the soybean / sunflower oil industry. Crude vegetable oil contains many impurities, which must be removed to produce the edible oil we use in cooking. As part of the oil refining procedure the oil is deodorized, a process by which the volatile impurities are distilled from the oil and removed as a vapor. This deodorizer distillate is rich in mixed tocopherols, and is condensed and processed into natural Vitamin E. Oleic acid is a monounsaturated fatty acid found naturally in many plant sources and in animal products. It is an omega-nine fatty acid, and considered one of the healthier sources of fat in the diet. Its commonly used as a replacement for animal fat sources that are high in saturated fat. The dominant use of oleic acid is as its sodium salt, which a major component of many kinds of soap. Small amounts of oleic acid are used as an excipient (inactive substance used as a carrier for the active ingredients of a medication) in pharmaceuticals, oleic acid is used as an emulsifying (suspension of small globules of one liquid in a second liquid with which the first will not mix)or solubilizing agent in aerosol (gaseous suspension of fine solid or liquid particles) products.

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Linoleic acid is an unsaturated n-6 fatty acid. Linoleic acid is used in making quickdrying oils, which are useful in oil paints and varnishes. These applications exploit the easy reaction of the linoleic acid with oxygen in air, which leads to crosslinking and formation of a stable film. Dimer and Trimer Acids are polymers manufactured from various fatty acid feedstocks such as Rapeseed, Tallow, Tall Oil and Cottonseed. They serve as building blocks for a variety of end-products due to their di-carboxylic acid reactivity. Dimer acids are used primarily for synthesis of polyamide resins and polyamide hot melt adhesives. They are also used in alkyd resins, adhesives, surfactants, as fuel oil additives, lubricants, etc. Cardanol is a phenol obtained from anacardic acid, the main component of cashew nutshell liquid (CNSL), a byproduct of cashew nut processing. Cardanol finds use in the chemical industry in resins, coatings, frictional materials, and surfactants used as pigment dispersants for water-based inks. It is used to make phenalkamines, which are used as curing agents for the durable epoxy coatings used on concrete floors. Promoters In 2010 the company changed due to an open offer. The details of the new promoters are as below The Acquirers broadly can be classified into three groups. Group 1 Mr. Utkarsh B. Shah (Age: 49), after his graduation (B.Sc.) in 1980, joined the family business coal/lignite transportation. He is currently engaged in the business of coal/ lignite transportation, coal trading and real estate development. He served as the President of the Gujarat Chamber of Commerce in 1998-99 and currently serves on the advisory committee of various State Government Corporations and Boards. Mr. Raj B. Shah (Age: 53) is the brother of Mr. Utkarsh B. Shah. After his graduation (B. Com) in 1977, he joined the family business coal/lignite transportation. Currently, he is involved in the business of coal/ lignite transportation, coal trading, and real estate development. Mr. Sukoon V. Shah (Age: 27) is a nephew of Mr. Utkarsh B. Shah. After his graduation (B. Com) in 2003, he joined the family business of coal/ lignite transportation, coal trading, and real estate development. The companies promoted by group 1 are Adicorp Enterprise Private Limited, Adiraaj Tradelinks Private Limited. Intrestingly Adiraaj Tradelinks Private Limited has stake of 68,285,000 (3.13%) shares of Adani Power. At CMP of ` 71.25, this stake is worth ` 486.53 Cr. This stake was acquired in 2009 during the pre IPO of Adani power.

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Group 2 Mr. Bimal D. Parikh (Age: 49), after completing his graduation (B.E. in Chemical Engineering) in 1982, he started the business of manufacture of dyes and chemicals. In 1998-99, he was the President of Gujarat Dyestuff Manufacturing Association. He has been an Executive Committee member of the Gujarat Chamber of Commerce since the last 10 years. Mrs. Mamta B. Parikh (Age: 46) is wife of Mr. Bimal D. Parikh. She looks after the day to day affairs of the family companies engaged in the business of manufacture of dye and chemicals and investments. She completed her graduation (B.A.) in 1984. The companies promoted by group 2 are Dashrath Jagmohandas Investments Private Limited, Ashmak Investments Private Limited, Dashmal Investments Private Limited, Dashbina Investments Private Limited, Dashparikh Investments Private Limited, Dashjag Investments Private Limited, Dashmohan Investments Private Limited, Dashbim Investments Private Limited, Emparco Chemicals Private Limited, Deejay Chemical Industries Private Limited. Group 3 Mr. Hemant N. Shah (Age: 48) is a B. Com graduate and is engaged in the business of logistics, garments trading, trading of minerals and retailing since the last 25 years. He is a member of numerous trade organizations like Gujarat Chamber of Commerce, Confederation of India Institute, Ahmedabad Management Association etc. In addition, he is a trustee in Lalji Meharotra Lions School and a member of the Advisory Comittee of H.L. Center for Professional Education. Mr. Rohan Shah (Age: 23) is son of Mr. Hemant Shah. He completed his graduation (B.E. in Electronics & Electrical Engineering) from Luaghbour University, U.K in 2009. He is currently involved in hosiery business for the last 1 year. The companies promoted by group 3 are Super Handlers Private Limited, Newzen Computer Private Limited, Tulsishyam Investments Private Limited, Munindra Investments Private Limited, Navin Syntex Private Limited, Paramshakti Investments Private Limited, Goldmedal Holdings Private Limited, Goodyear Holdings Private Limited. They belong to the Navin group. They manufacture hosiery undergarments under the brand name "NITLON" and "NITEX". Independent directors The following were appointed as directors in the board after the management change. Mr. Jayesh K Shah (Age: 51) B.Com & C.A. He is a whole time director with the designation of Director and Chief Financial Officer of Arvind Limited (Formerly Known as Arvind Mills Limited) and he has been associated with Arvind Limited since 1st July, 1993. He has extensive financial, regulatory and managerial expertise with his vast experience in the field. He also holds directorship in other companies

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Mr. Kalpesh A Patel. (Age: 44) B.E(Chemical Engineering) and M.B.A (Marketing) from U.S.A. At present he is an Executive director of Nirma Limited. He has wide experience in the production and operation related to soaps, detergent and allied chemicals. At present he is looking after healthcare division and lab facilities of Nirma Limited. Mr. Sharvil P. Patel (Age: 33). Specialisation in chemical and pharmaceutical sciences from the University of Sunderland,U.K. Doctarate in breast cancer research from John Hopkins Bayview Medical Centre and the National Institute for aeging. He is director of Zydus Pharmaceuticals Ltd since 1997 and Deputy Managing Director since April, 2007. He is on board of various Limited and Private limited companies of Zydus group engaged in business manufacturing of pharmaceutical products. Competitors Other companies which have a similar product range Tocopherols Chemical & Fragrance Corpn (India) Bio Pharma Laboratories Private Limited (India) Linoleic acid Penn Bio - Chemicals (India) Pvt Ltd Acme Synthetic Chemicals Dimer Acid Jayanth Agro Organics Ltd Cardanol CardoChem Industries Golden Cashew Products Pvt.Ltd Kumarswamy Chemicals Oleic Acid Godrej Industries

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Financials Yearly Results Profit and Loss

Profit & Loss account Income
Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure Raw Materials Power & Fuel Cost Employee Cost Other Manuf Exp S & Admin Exp Miscellaneous Exp Total Expenses Operating Profit

2012
6 mths

2011

2010

2009

` in Cr 2008 2007

2006

2005

2004

2003

2002

12 mths for year ending march of above year

41.12 -0.5 40.62 26.55 3.22 1.81

61.37 4.01 57.36 0.64 1.02 59.02 37.51 5.56 2.81 0.16 0 2 48.04 10.34 10.98 1.35 9.63 1.73 0 7.9 0 7.9 2.84 5.07 10.53 0 0.95 0.15 95 5.33 10 18.4

40.71 37.6 35.24 30.94 26.25 24.75 21.51 19.61 12.13 2.32 3.57 4.07 3.73 2.55 2.21 2 1.92 1.19 38.39 34.03 31.17 27.21 23.7 22.54 19.51 17.69 10.94 0.11 -0.19 0.17 0 0.09 0.2 0.25 -0.54 0.9 -1.58 -1.04 2.76 -0.34 -0.1 0.48 -0.08 0.37 0.17 36.92 32.8 34.1 26.87 23.69 23.22 19.68 17.52 12.01 23.89 20.64 21.1 15.84 12.04 10.61 9.64 9.14 4.93 5.9 6.84 5.71 4.88 3.69 3.38 2.86 2.83 2.41 2.66 2.08 1.91 1.69 1.52 1.12 1.07 1.06 1.06 0.21 0.23 0.24 0.25 0.11 1.13 0.9 0.75 0.76 0.93 0.82 1.06 0.93 0.94 0 0 0 0 0.63 0.71 0.7 0.52 0.35 1.9 1.4 1.36 1.35 34.22 31.32 30.72 24.11 18.65 18.14 15.87 15.14 10.51 2.59 1.67 2.7 1.48 1.66 1.85 1.04 -0.37 1.69 1.65 0 0 -0.65 -2.02 -0.06 -0.03 -0.71 -2.05 -0.16 -0.62 -0.56 -1.45 10.33 10.68 0 0 0 0 0 0 3.21 3.38 1.51 1.87 1.62 0 0.25 0.43 0.68 -0.13 0.82 9.62 0 0 0 2.76 2.76 1.16 1.6 1.51 0 0.09 0 0.09 0.08 0.02 8.27 0 0 0 4.95 5.04 0.75 4.29 1.29 0.03 2.97 -0.01 2.96 1.71 1.26 6.61 0 0 0 4.88 5.08 0.8 4.28 1.16 0 3.12 0 3.12 1.84 1.13 7.53 0.06 0.76 0.11 3.56 3.81 0.84 2.97 1.12 0 1.85 0 1.85 0.8 1.05 6.23 0.07 0 0.01 2.92 2.38 0.97 1.41 1.09 0 0.32 0 0.32 0.43 0.55 6 0.14 0 0.02 0.6 1.5 1.09 0.41 1.05 0 -0.64 0 -0.64 0 -0.56 5.58 0 0 0

33.87

6.71 PBDIT 6.71 Interest 0.88 PBDT 5.83 Depreciation 0.91 Other Written Off 0 Profit Before Tax 4.92 Extra-ordinary items 0 PBT 4.92 Tax 1.51 3.41 Reported Net Profit Total Value Addition 0 Preference Div 0 Equity Dividend 0 Corporate Div Tax 0 Per share data (annualised) No of Shares (L) 95 EPS (`) 3.58 0 Equity Dividend (%)
Book Value (`)

95 95 95 95 95 95 95 95 95 -0.59 -1.53 0.87 0.02 1.33 1.13 1.03 0.43 -0.59 0 0 0 0 0 8 0 0 0 14.23 14.82 16.34 15.48 15.46 14.15 14.09 13.07 11.97

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Balance Sheet
` in Cr 2008 2007

Balance Sheet

2012 6 mths 9.5 9.5 11.39 0 20.89

2011

2010

2009

2006

2005

2004

2003

2002

12 mths for year ending march of above year 9.5 9.5 7.98 0 17.48 10.12 4.03 14.15 31.63 36.46 17.52 18.94 3.53 0 8.33 6.75 0.34 15.42 1.4 0 16.82 0 6.14 1.5 7.64 9.18 0 31.65 0.88 18.4 9.5 9.5 4.02 0 13.52 8.34 4.66 13 26.52 34.87 15.86 19.01 0.28 0 6.68 2.9 0.08 9.66 1.18 0.14 10.98 0 3.33 0.42 3.75 7.23 0 26.52 0.73 14.23 9.5 9.5 4.58 0 14.08 9.87 4.7 14.57 28.65 34.73 14.33 20.4 0.35 0 5.69 4.64 0.1 10.43 3.08 0.12 13.63 0 4.45 1.29 5.74 7.89 0 28.64 0.73 14.82 9.5 9.5 6.02 0 15.52 9.14 3.27 12.41 27.93 33.52 12.69 20.83 0.36 0 6.53 3.24 0.06 9.83 2.59 0.14 12.56 0 4.71 1.11 5.82 6.74 0 27.93 0.85 16.34 9.5 9.5 5.2 0 14.7 9.49 2.93 12.42 27.12 33.3 11.1 22.2 0.57 0 3.75 3.68 0.06 7.49 2.65 0.11 10.25 0 4.44 1.45 5.89 4.36 0 27.13 0.07 15.48 9.5 9.5 5.19 0 14.69 7.19 1.72 8.91 23.6 28.67 9.76 18.91 2.33 0 3.59 2.09 0.08 5.76 1.98 0.14 7.88 0 4.1 1.41 5.51 2.37 0 23.61 1.22 15.46 9.5 9.5 3.94 0 13.44 6.79 1.49 8.28 21.72 25.67 8.6 17.07 0.31 0 4.18 3.27 0.15 7.6 0.89 0 8.49 0 2.65 1.53 4.18 4.31 0.03 21.72 0.19 14.15 10 9.5 3.89 0 13.89 3.21 3.78 6.99 20.88 23.12 7.45 15.67 0.33 0 2.91 2.56 0.18 5.65 3.18 0 8.83 0 3.54 0.46 4 4.83 0.05 20.88 0.36 14.09 10 9.5 2.92 0 12.92 4.04 4.29 8.33 21.25 22.51 6.35 16.16 0.26 0 2.81 2.06 0.12 4.99 3.4 0 8.39 0 3.23 0.42 3.65 4.74 0.09 21.25 0.17 13.07 10 9.5 1.87 0 11.87 5.45 3.52 8.97 20.84 21.63 5.29 16.34 0.36 0 2.39 1.74 0.14 4.27 0.55 0 4.82 0 0.72 0.1 0.82 4 0.14 20.84 0.08 11.97

Sources Of Funds
Total Share Capital Equity Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities

15.6 36.49

Application Of Funds
Gross Block Less: Accum. Deprec Net Block Capital WIP Investments Inventories Sundry Debtors Cash and Bank Bal Total Current Assets Loans and Advances Fixed Deposits CA, Loans & Advan Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Exp Total Assets

0 6.74 10.07 0.11 16.92 2.06 0 18.98 0 4.13 0.6 4.73 14.25 0

Contingent Liabilities Book Value (`)

21.98

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Cash Flow
` in Cr Cash Flow Net Profit Before Tax Net Cash From Operating Activities Net Cash (used in)/from Invst Activities Net Cash (used in)/from Fin Activities Net (decrease)/inc In C and C Equiv Opening Cash & Cash Equivalents Closing Cash & Cash Equivalents 2011 2010 2009 2008 2007 2006 2005 2004 12 mths for year ending march of above year 7.91 4.96 -0.19 0.13 0.22 0.34 -0.66 -2.03 3.52 -3.2 -0.01 0.22 0.22 0.94 0.31 0.02 0.2 0.22 0.26 1.36 0.05 -1.38 0.03 0.17 0.2 0.1 0.56 2.47 -0.05 0.22 0.17 2.97 6.12 -0.88 0.07 0.15 0.22 2.97 2.51 0.04 -0.04 0.18 0.15 1.84 2.61 -1.83 0.06 0.12 0.18

-4.64 -0.33 -1.23

-3.09 -5.16 -2.59 -0.72

Quarterly Results
Quarterly Results
Sales Other Inc Total Inc Total Exp Op Profit Gr Profit Interest PBDT Depr PBT Tax Net Profit EPS Equity FV

` in Cr Sep Jun 2011 -19.2 4.85 4.85 0.44 4.42 0.44 3.98 1.09 2.89 3.04 9.5 10 Mar Dec Sep Jun Mar 7.51 0.01 7.52 6.8 0.71 0.72 0.37 0.33 0.42 0.08 -9.5 10 Dec 9.49 -9.49 9.25 0.24 0.24 0.39 -0.14 0.43 -0.01 -9.5 10 Sep Jun Mar 8.89 0.01 8.9 8.57 0.32 0.33 0.44 0.42 Dec 2008 6.92 -6.92 7.92 -1 -1 0.51 0.42 2010 0.5 15.4 3.88 4.38 0.38 4 0.44 3.56 1.02 2.54 2.67 9.5 10 -13.15 2.87 2.87 0.32 2.54 0.44 2.1 0.71 1.39 1.46 9.5 10 -9.52 1.6 1.6 0.33 1.27 0.43 0.84 0.5 0.34 0.36 9.5 10 -8.93 2.14 2.14 0.31 1.82 0.42 1.4 0.61 0.79 0.83 9.5 10 -10.4 0.61 0.61 0.44 0.18 0.43 -0.25 -0.23 -0.02 -9.5 10 2009 11.01 10.56 0.02 9.51 1.05 1.07 0.42 0.65 0.42 0.23 0.04 0.19 0.2 9.5 10 11.01 10.58

17.05 24.05 19.28 16.02 11.12 11.07 -15.2 1.87 1.87 0.44 1.43 0.47 0.96 0.43 0.53 0.56 9.5 10 17.05 24.05 19.79 16.02 11.13 11.07

-0.11 -1.52 -0.53 -1.94 -0.57 -0.16 0.04 0.05 9.5 10 -1.78 -9.5 10

-0.09 -0.57 -0.17 -0.56

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2011 2010 2009 2008 2007 2006 2005 2004 12 mths for year ending march of above year Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (`) Net Operating Profit Per Share (`) Free Reserves Per Share (`) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Inter & Tax Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) ROA Excluding Revaluations ROA Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Fin Charges Cov Ratio Post Tax Fin Charges Cov Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio 10 10 10 10 10 10 10 10 1 -----0.8 -10.9 2.73 1.75 3.38 2.9 5.21 5.14 3.75 60.4 40.4 35.82 32.8 28.6 25 23.7 20.5 -3.7 4.29 5.82 4.95 4.94 -0.03 -0.05 0.33 0.33 0.33 0.33 0.33 0.33 0.31 0.31 18 14.9 15 11.7 11.7 8.73 8.73 29.3 29 29 18.4 18.4 29.3 6.74 2.33 2.34 3.19 3.19 -1.44 -1.44 3.9 -4.11 -3.41 14.2 14.2 6.36 4.89 0.03 0.03 1.43 1.43 -4.25 -4.25 0.25 -10.3 -8.28 14.82 14.82 0.39 0.6 1.22 1.04 0.3 0.04 1.04 0.93 1.11 8.86 8.65 8.86 0.98 1.19 0.98 10.3 5.1 5.11 6 6 2.63 2.63 5.84 5.29 1.67 16.3 16.3 8.49 0.61 0.99 0.8 0.24 1.13 0.8 2.16 2.62 6.9 9.02 6.9 0.93 1.12 0.93 10.1 4.57 6.48 5.57 5.82 0.05 0.3 4.86 0.1 0.56 15.5 15.5 6.31 0.63 1.04 0.84 0.42 1.25 0.84 2.45 2.32 7.28 9.44 12.3 1.24 1 0.82 20.9 15.4 18.5 10.7 10.8 5.3 5.24 15.7 8.6 8.49 4.34 4.34 17.9 0.77 0.76 0.61 0.41 5.92 0.61 6.69 4.43 6.63 8.85 11 1.23 1 0.83 21.7 16.5 16.5 10.1 10.1 5 5 17.4 7.97 7.97 14.1 14.1 17.4 2.03 1.03 0.62 0.62 18.2 12.3 12.5 11 11 5.31 5.31 12.9 7.34 7.34 14 14 12.9 2.21 1.48 0.56 0.56

2.2 0.53 1.11 1.14 0.81 0.96 0.81 0.2 6.87 0.81 8.15 6.04 7.37 11.9 7.37 1.57 1.81 1.57 0.64 0.96 1.64 1.68 8.12 10.2 8.12 1.1 1.45 1.1

4.71 3.2 0.62 0.56 6.16 4.54 3.86 3.58 5.92 7.73 5.92 0.88 1.04 0.88 7.39 8.45 7.39 0.84 0.93 0.84

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Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Compt of RM Consumed Selling Distribution Cost Composition Exp as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times Earnings Per Share Book Value

2011 2010 2009 2008 2007 2006 2005 2004 12 mths for year ending march of above year -57.6 21.83 17.5 28.2 21.1 ---1.94 ------57.5 67.7 83.52 77.9 57.6 36 68.8 89.1 65.4 62.2 60.66 67.7 58.2 50.8 47.1 49.4 1.39 2.4 0.04 8.66 0.2 3.32 ---1.51 1.17 1.6 1.64 1.63 --30.1 26 17.76 18.1 14.9 32.9 --21.8 -----81.3 1.02 16.2 -----39 0.47 78.2 --100 100 100 18.7 99 83.8 100 100 100 100 100 61 99.5 2.08 10.6 29.85 6.62 7.81 3.47 3.62 3.22 5.33 -0.59 -1.53 0.87 0.02 1.33 1.13 1.03 18.4 14.2 14.82 16.3 15.5 15.5 14.2 14.1

Export vs Domestic Sales (` Cr)

50 40 30 20 10 0 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05

Exports

Domestic

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Sales volume data

Sales in MT Deodoriser Distillate (Mixed Tocopherols) Linoleic Acid / Oleic Acid Dimer Acid Other fatty acids Cardonol / Cardol
Red denotes drop in sales

2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04

1322 1026 859 3120 305

704 821 1040 2462 142

460 786 1064 2202

387 1827 614 2426

280 1494 959 2514

400 874 735 2478

420 902 633 1825

300 1158 543 1081

Sales pricing data

`/ MT
2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 93,321 107,537 95,780 49,487 69,260 27,962 44,658 67,532 23,654 47,162 69,734 23,800 87,124 50,556 72,428 23,710

Deodoriser Distillate 133,465 147,404 118,579 89,289 (Mixed Tocopherols) Linoleic Acid / Oleic Acid Dimer Acid Other fatty acids Cardonol / Cardol 55,262 94,483 42,714 35,709 63,741 82,897 33,838 30,377 66,851 96,229 39,370 55,521 82,065 33,455

Raw material pricing data

` / MT
Veg oil based fatty acid distillate Acid oil C.N.S.L oil Others Chemical 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 36,144 30,058 22,835 27,993 26,117 22,835 31,251 40,354 29,390 31,384 36,263 29,543 21,094 29,021 17,770 28,674 24,840 28,041 26,785 26,849 24,582 24,111 20,103 19,413 18,700 15,040 19,816 16,419 19,901 19,008

139,290 46,274 46,567 40,638

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Shareholding Pattern Sep 2011

30%

7%

63%

Promoters

Public holding more than 1 %

Public holding less than 1 %

Trigger Though Adi Finechem had consistent top line growth its bottom line was not spectacular or consistent. With the new management its growth has been good for the past year. The introduction of cardanol in its product line will not only help the company financially but also de-risk its product portfolio. Its product portfolio was dependent on the byproduct of oil refining for its raw material. Cardanol needs cashew nut shell oil as its raw material. The new management has also given a dividend. New management + Good results would be the trigger. SWOT Analysis Strengths The new management seems to have deep pockets and good contacts within the business community. Though the board of directors do not seem to have a major say in the corporate governance of small companies and that even boards with eminent personalities falter, the board of Adi Finechem seems to be a worth a look. The CFO of Arvind Ltd, the second in command of Cadilla and Nirma will not want to get their names

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associated with scandals. Having said that post satyam anything can seem to happen but the board with such famous young men need to be watched. Though the Sept quarter result is ok and not spectacular, we need to consider that the entire month of July there was a planned shutdown for capex. If they had worked for the entire 3 months results may have been spectacular.

Weakness Past performance has not been very stellar

Opportunities Product portfolio.

Threats Very less trading volume It is a micro cap company

Valuation Will try to value Adi Finechem based on various methods. 1. Current year valuation Current Valuation: Adi Finechem has an EPS of 3.04 for the 1st quarter and .56 for the 2nd quarter of the current financial year. The trailing twelve months EPS is 7.73. A very crude estimation would be an EPS of 10 for the year. 2. Earning Power Valuation Formula used by Geoff Gannon for appraising the value of business (Reference 8) is as below. This is compared with the enterprise value of the company. Value of Business = (Cash - Debt) + (8 * EBIT) or (Cash - Debt) + (10 * Free Cash Flow) Current Valuation: As per the 2010-11 results, Cash = ` 0.34 Cr Debt = ` 14.15 Cr. EBIT = ` 11.04 Cr Thus Value = 0.34 14.15 + (8 * 11.04) = ` 74.51 Cr Free Cash Flow (FCF) = ` 4 Cr The operating cash flow is ` 4.95 Cr, since we are not able to calculate the FCF we are assuming it to be ` 4 Cr

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Thus Value = = 0.34 14.15 + (10 * 4) = ` 25.84 Cr Earning power value of CCIL is ` 25.84 Cr & ` 74.51 Cr whereas the enterprise value is ` 63.41 Cr

Synopsis Company seems to be doing well. Seems to be fairly priced at the current market price. Adi Finechem will be a value buy below ` 40 / share Risk mapping vs Share price in `
< 40 41 - 60 61 - 70 71 >

References 1. 2. 3. 4. 5. 6. 7. 8. www.bseindia.com www.adifinechem.com HK finechem open offer doc Adani Power red herring document www.indiainfoline.com http://www.navingroup.in http://www.edelweiss.in http://www.gannononinvesting.com/blog/how-to-value-a-business.html

Disclaimer General: This report is not a buy / sell recommendation. Buying stocks must be done after careful analysis and the above report can be used as a base for the analysis and should not be used as sole basis. Vested Interest: The author does have a position in the above mentioned stock at an average price of ` 57.51. He may purchase / sell the same in the future in the short or long term based on his conviction and his financial situation. Data Validity: The data is collated from various sites in the internet. Even though we have tried our best, there may be discrepancy due to human error while collating the data. The author should not be held responsible for such mistakes. The data can be looked up at various websites given in the reference section. Valuation: The author is not an expert and his valuation may be off the mark.

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