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National Peroxide


National Peroxide is in the business of manufacturing hydrogen peroxide – which is used primarily in the paper industry.

The company is the leader in the industry, which exhibits growth of 7% p.a.  It plans heavy capital expenditure in the next few years to ramp up capacity and remain competitive.

The company has reported good growth in revenues and operating profits over the last five years – reporting 90cr of operating profits on revenues of 180cr in the last financial year. It employed no net debt and held about 21cr of liquid investments largely in an equity mutual fund.

The fortunes of this business is tied to the paper industry, which faces its own problems such as moves to a ‘paperless’ world, consolidation of capacities etc. It is also dependent on natural gas prices, which is expected to rise substantially from 2014 (based on current spot prices) when the company’s current fixed price contract with Petronet LNG expires.

The industry is also blighted by surplus capacity in other major producing countries such as Thailand, Korea, China etc. that could dampen pricing power in the medium term.  It is also under scrutiny for pollution concerns, which may result in more stringent (and costly) regulations in the future.
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