💰 Financial Performance

Revenue Growth by Segment

The Chemicals segment grew 17% YoY in H1 FY26, reaching INR 377.42 Cr compared to INR 322.62 Cr in H1 FY25. Conversely, the Textile segment revenue declined by 9.7% YoY to INR 33.80 Cr from INR 37.46 Cr due to currency devaluation in Ethiopia. Consolidated revenue for FY25 grew 4.17% to INR 1,536.7 Cr.

Geographic Revenue Split

Revenue is split across India (Chemicals), Ethiopia (Textiles contributing INR 76 Cr or ~5% of FY25 revenue), and Switzerland/Europe (Electronics via APAG). The Ethiopian operations saw a 30% revenue drop in FY25 due to a 130% devaluation of the Birr.

Profitability Margins

Consolidated EBIDTA margin improved to 4.65% in FY25 from 2.75% in FY24. However, the company reported a consolidated net loss of INR 55.3 Cr in FY25, though this was an improvement from the INR 108.1 Cr loss in FY24. Standalone PAT margins were historically thin at 0.87% in FY23.

EBITDA Margin

Consolidated EBITDA stood at INR 71.5 Cr in FY25, a 76% increase from INR 40.6 Cr in FY24. This improvement was driven by robust chemical operations and better margins in the Alco Chemical division.

Capital Expenditure

The company recently completed and commissioned a new Formaldehyde and Hexamine plant at Ankleshwar, Gujarat. Total gross block increased slightly to INR 1,348.6 Cr in FY25 from INR 1,348.4 Cr in FY24.

Credit Rating & Borrowing

CARE Ratings maintains a 'Stable' outlook. Borrowing costs are significant, with consolidated finance costs rising 39% to INR 16.07 Cr in FY25. Standalone total debt includes INR 142.97 Cr in short-term borrowings as of September 2025.

⚙️ Operational Drivers

Raw Materials

Methanol is the primary raw material, with prices highly sensitive to global crude oil volatility. Raw material costs represent approximately 70% of standalone revenue (INR 265.29 Cr out of INR 377.41 Cr in H1 FY26).

Import Sources

Not explicitly disclosed, though Methanol is typically sourced globally based on crude oil and supply-demand metrics.

Capacity Expansion

Current manufacturing facilities are located in Ankleshwar (Gujarat), Visakhapatnam, and Naidupeta (Andhra Pradesh). Recent expansion includes a new Formaldehyde and Hexamine plant at the Ankleshwar site to boost chemical volumes.

Raw Material Costs

Raw material costs for the standalone entity rose 20% YoY in H1 FY26 to INR 265.29 Cr. Procurement is challenged by high volatility in input prices, which directly fluctuates profit margins.

Manufacturing Efficiency

Chemical operations are described as robust and efficient, resulting in higher production volumes in FY25. The Ethiopian textile plant is targeting maximum capacity utilization following currency liberalization.

📈 Strategic Growth

Expected Growth Rate

12-15%

Growth Strategy

Growth will be driven by the ramp-up of the new Ankleshwar Formaldehyde and Hexamine plant, leveraging anti-dumping duties on Pentaerythritol to improve realizations, and the strategic turnaround of APAG through a new strategic investor. The company is also divesting non-core assets like the Solar Power division to strengthen the balance sheet.

Products & Services

Pentaerythritol (Penta), Formaldehyde, Hexamine, Denim fabrics, Electronic Control Units (ECUs), and LED-based lighting modules for the automotive industry.

Brand Portfolio

SS Kanoria Group, Alco Chemical Division.

New Products/Services

New capacity in Formaldehyde and Hexamine is expected to contribute to a 15-20% volume growth in the chemical segment.

Market Expansion

Focusing on the automotive electronics market in Europe via APAG and the denim export market from Ethiopia, which has become more viable due to lower USD-denominated production costs.

Strategic Alliances

APAG Holding AG has secured a strategic investor to build trust among customers and suppliers. The company is part of the SS Kanoria Group.

🌍 External Factors

Industry Trends

The chemical industry is seeing a shift toward specialized alco-chemicals. Anti-dumping protections in India are helping domestic manufacturers compete against imports. The automotive electronics sector is facing a trend of OEMs insourcing R&D and production.

Competitive Landscape

Competes in the commodity and specialty chemical space; APAG competes with global automotive component manufacturers.

Competitive Moat

Moat is based on a five-decade track record in chemicals and established relationships with a concentrated but reputed customer base. Sustainability depends on maintaining cost leadership in Pentaerythritol.

Macro Economic Sensitivity

Highly sensitive to global crude oil prices (affecting Methanol) and foreign exchange stability in emerging markets like Ethiopia.

Consumer Behavior

Automotive OEMs are increasingly looking for integrated ECU and LED lighting solutions, but also exerting pricing pressure on tier-1 and tier-2 suppliers.

Geopolitical Risks

Operations in Ethiopia are subject to local economic liberalization policies and foreign currency availability risks.

⚖️ Regulatory & Governance

Industry Regulations

Operations are influenced by anti-dumping duties on Pentaerythritol and environmental norms for chemical manufacturing. Liberalization of the foreign currency market in Ethiopia significantly impacted subsidiary operations.

Environmental Compliance

Alco Chemical Division facilities in Ankleshwar, Vizag, and Naidupeta adhere to Environment, Health, and Safety (EHS) standards.

Taxation Policy Impact

Consolidated tax expense was INR 11.43 Cr in FY25. The company adheres to Ind AS 34 for interim financial reporting.

Legal Contingencies

The company recognized impairment losses of INR 44.99 Cr in FY25, comprising INR 20.25 Cr for Kanoria Africa Textiles PLC and INR 24.74 Cr for APAG Holding AG.

⚠️ Risk Analysis

Key Uncertainties

Volatility in Methanol prices (impacts margins by 5-10%), sustainability of the Ethiopian Birr, and the successful integration of the strategic investor in APAG.

Geographic Concentration Risk

Heavy reliance on the Indian market for chemicals and the European market for automotive electronics.

Third Party Dependencies

High dependency on top 10 customers (44% of revenue) and global methanol suppliers.

Technology Obsolescence Risk

APAG faces risks if it cannot keep pace with OEM R&D requirements or if insourcing trends accelerate.

Credit & Counterparty Risk

Exposure to group companies is high, accounting for 70% of KCIL’s standalone net worth (INR 330 Cr in investments/loans plus INR 116 Cr in guarantees).