PSUs Approved for Disinvestment

Punjab Alkalies and Chemicals Ltd.

• Background

  Punjab Alkalies and Chemicals Ltd. (PACL), was promoted by Punjab State Industrial Development Corporation Limited (PSIDC) in the year1981. It is engaged in the manufacture of caustic soda, liquid chlorine and hydrochloric acid with an installed capacity of 300 tpd of caustic soda. Sodium hypochlorite, barium sulphate and hydrogen gas are by-products. The plant is located at Naya Nangal, District Ropar, Punjab.




• Share holding Pattern

  The authorised share capital of the company is Rs. 40 crores comprising 400,00,000 equity shares of Rs. 10 each and the issued share capital is Rs. 20.54 crores comprising 205,37,900 equity shares of Rs. 10 each. The shareholding pattern of the company as on 31^st March , 2002 is as under:-

  	PARTICULARS	NO.OF SHARES	%AGE
  1	PSIDC	9090000	44.26
  2	Unit Trust of India	1252582	6.10
  3	Mutual Funds	23100	0.11
  4	General Insurance Corporation of India & its Subsidiaries	207100	1.01
  5	Non-Resident Indians Foreign Institutional Investors & Overseas Corporate Body	949390	4.63
  6	Nationalised Bank	300	0.00
  7	Resident Bodies Corporates & Co-Operative Societies	1449660	7.06
  8	Resident Individuals	7563418	36.83
  		20535550	100.00




• Management Structure

  The Board of PACL is broad-based and has 12 Directors, 4 of whom are from the Promoter Group, 6 are independents whereas two are institutional nominees. The list of Directors of PACL is given in the Annexure-1.

  List of Directors PUNJAB ALKALIES & CHEMICALS LIMITED (PACL)

  1	Sh. Mukul Joshi, Principal Secretary Industries & Commerce, Udyog Bhavan, 18, Himalaya Marg, Chandigarh	Chairman
  2	Sh. Viswajeet Khanna Punjab State Indl.Dev.Corpn.Ltd. Udyog Bhawan,18 Himalaya Marg, Sector 17 Chandigarh.	Director
  3	Sh. S.K. Shama, Executive Director (Proj.) Punjab State Indl.Dev.Corpn.Ltd. Udyog Bhawan,18 Himalaya Marg, Sector 17 Chandigarh.	Director
  4	Sh. J.S. Saraon 562, Sector 33-B, Chandigarh	Director
  5	Sh.Ajmer Singh Makkar, D/o Sh. Asa Singh Cotton Factory, Water Works Road, Kotkapura Distt.Faridkot (Pb.)	Director
  6	Sh. T.Chakravorty, General Manager, Industrial Development Bank of India, New Delhi Branch Office, IRCS Building, 1, Red Cross Road, New Delhi - 110 001.	Director
  7	Sh. S.P. Gupta, Asstt. General Manager (L), IFCI Limited Regency Plaza, 5, Park Road, Hazrat Ganj, Lucknow.	Director
  8	Sh. Jagpal Singh, IAS, Managing Director, Punjab Alkalies & Chemicals Ltd SCO: 125-127, Sector 17-B, Chandigarh.	Director




• Financial Highlights

  The financial highlights of PACL over the last 4 years are as under:-

  (Rs. In Crore)

  For the period ended	March,99	March,2000	March,2001	March,2002
  Capacity, tpa	99000	99000	99000	99000
  Production, tpa	62094	82647	76882	77569
  Capacity Utilisation (%)	85*	84	78	78.35
  Sales	97.76	127.98	148.07	139.97
  PBDIT	(2.55)	6.62	28.43	16.88
  Interest	13.33	22.36	22.76	22.63
  Depreciation	8.40	10.96	11.18	11.47
  Operating Profit	(24.28)	(26.70)	(5.51)	(17.22)
  Profit Before Tax ( Loss)	(24.75)	(25.98)	(5.51)	(17.22)
  Tax	0.00	0.00	0.00	0.00
  Net Profit/(Loss)	(24.75)	(25.98)	(5.51)	(17.22)
  Share Capital	20.47	20.47	20.47	20.47
  Reserves & Surplus	43.23	35.89	36.36	36.33
  Less: Misc.Expenditure Not W/off Accumulated losses	00.68 -	0.44 18.64	1.17 24.16
  Net Worth	63.02	37.28	31.50

  The capacity utilisation in the year 1998-99 has been calculated taking only nine months of operation for unit II since it was not available for the production for a period of three months due to undergoing expansion and conversion programme.




• Sales/Profitability

  As can be seen from the above graph, sales that were declining during the last 2 years a decline of 17% in 1997-98 and 10% in 1998-99, have picked up in 1999-2000, registering a growth of 31%. The company which was earning profits till the year 1996-97 started incurring losses from 1997-98 onwards. These losses can be attributed to declining selling prices and increasing interest burden.




• Analysis of the performance of the industry

  If we compare the performance of PACL with the market leader GACL, it can be observed the company is incurring heavy expenditure on power and fuel (57% of turnover) as compared to 34% by GACL. This is due to the fact that GACL has its own captive power unit and its entire/capacity is based on membrane cell technology resulting in lower power consumption and hence lower power costs. PACL has also switched over to membrane cell technology and its power costs are expected to reduce from 3600 kwh/ tonne to 2600 kwh/tonne which would mean saving of Rs. 3200 per tonne in power costs. The manpower cost for PACL has been consistently growing @ , around 20% every year despite the fact that the company is incurring losses. Also, this cost is on higher side (5% of sales) as compared to, GACL (4% of sales). No. of employees per tpd is 1.80 for PACL as compared to 1.65 of GACL. It may also be observed that selling and distribution costs are 6.85% of sales for PACL as compared to 1.13% for GACL. This difference appears to be due to inclusion of 'discount on sales' under the selling and distribution head by PACL.




• TECHNOLOGY ADOPTED BY PACL
  nufactured using four different processes -viz., the chemical process, diaphragm process, mercury cell process and the membrane cell process. These processes primarily involve the electrolysis of common salt, which is the key raw material. In addition to common salt, power is the other key input.

  Amongst all these processes, the membrane cell. process is more popular because of its energy efficiency and low operating costs.

  PACL commenced its production in 1984 based on the mercury cell chnology with an installed capacity 0: 135 tpd. Over the years, it Installed a flaker unit, replaced graphIte anodes by tItanium metal . anodes and installed .an automatic voltage controller, rectifier and balancing equipment to increase its capacity to 154 tpd.

  In 1.994, RACL set up another unit at the same location with an installed capacity of 100 tpd based on the membrane cell technology at a cost of Rs.1 05 crore. In December 1998, it converted its existing caustic .soda plant (capacity 154 tpd) based on mercury cell technology to a 200 tpd plant based on membrane cell technology. This conversion involved the replacement of 20 mercury cells of the old plant with 6 triple electrolysers and also led to savings in power costs to the tune of about .1000 units per tonne and eliminated mercury pollution. The cost of the .above conversion and expansion was estimated at Rs. 86.16 crore but was actually completed at Rs. 80 crore.




• Applications

  Caustic soda and chlorine, are basic chemicals used in a variety of industries. Caustic soda is used in the manufacture of paper and pulp, man made fibres, soap & detergents, aluminium, synthetic fibre, etc., Chlorine is used in the manufacture of chemicals like ethylene oxide,solvents like trichloro ethylene, pesticides like DDT, plastics like vinyl chloride etc.

  PACL supplies its products within an 800 km radius and the farthest point of supply has been in Kanpur, UP. The major customers ofPACL are the manufacturers of paper and soap. These units are primarily located in regions ofPunjab, Haryana, Himachal Pradesh, Jammu & Kashmir and Delhi.




• Substitutes, if any

  Soda-ash is. the only substitute for caustic soda which can be used in paper and soap and detergents industry. However, in addition to handling, disposal and environment problems, the consumption ofsoda-ash is around 1.5 times that of caustic soda. In the event the prices of soda-ash fall drastically, threat of substitution may arise.