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Alufluoride


Alufluoride is in the business of supplying aluminium fluoride to practically all aluminium smelters in India to reduce the temperature for aluminium smelting.

The company has not reported any significant growth in revenues or operating profits over the last five years.  It reported net operating losses of about 2cr on below-par revenues of 17cr in the last financial year and operated with a net cash position of about 6cr.


The business is plagued by inconsistent raw material supplies (hydrofluosilicic acid from Coromandel International Ltd.), inability to price raw material increases to customers, fluctuating end product prices etc.

The company is currently procuring supplies from alternative but more expensive sources.  It is apparently evaluating several offers to procure reliable and consistent supplies on a long-term basis.  Therefore, it is likely to generate lower operating profit margins in the future.  Moreover, it may incur significant capital expenditure to shift its plant closer to new supply sources.

Management initiated dividends in 08/09 but stopped it during the last two years presumably as a result of deteriorating operating results.  Nevertheless, they could’ve maintained a reasonable rate considering the abundance of liquid resources at their disposal.  The recent turnaround in operating performance (in the June quarter) should provide a catalyst to observe whether management will reinstate a respectable dividend payout or not.
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