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Polychem


Polychem engages in the manufacture of specialty polymers and property development.

The specialty polymers find application in 1) investment castings used in the automotive industry (expected to grow strongly over next five years) including exports to Japan, and 2) as filler in cement for structural repair of columns/beams in old buildings (dependent on repair work on ageing buildings). 

The company also has about 1.4cr of assets deployed in property development.

The company reported continuous operating losses in the last four years on a revenue base of about 5cr in the last financial year.  It owed no debt and operated with over 6cr of liquid investments and cash at the end of the last financial year.

The business is subject to cost increases of its primary raw material – styrene monomer, which is a crude oil derivative and hence, exposed to crude oil price increases.

Moreover, the business has limited pricing power with customers and consequently, profit margin pressure looms as the main risk factor impacting the business.

Since it is a net importer, a weakening INR would adversely impact profits.

The trend of redeveloping buildings instead of repairing them reduces demand for polymers used as filler in cement and poses a threat to a portion of the company’s revenue stream.

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