Shares of Kiri Industries, which manufactures dyes, intermediaries and basic chemicals, have shot into limelight recently. Its shares have doubled in six trading sessions, compared to a flat movement in the broader Sensex during the period.  Manish Kiri, managing director Kiri Industries, said, “There are multiple things which are coincidentally happening at the same time in favour of the company.”

Indian dye manufacturers used to face strong competition from Chinese dye companies. However, in a recent move to control pollution, the Chinese government has cracked down on some companies, which has led to the shutdown of a major dye manufacturer in China, which was contributing nearly 30 per cent of global dye production.

“Closedown of the Chinese unit has led to shortage of products in the markets and prices of some of our products have increased sharply,” said Mr Kiri.

There has been a dramatic change in market situation of some dyes intermediates due to closure of a leading manufacturing plant in China, the company said in a recent filing to BSE.

The average price of H.Acid, which has been ranging from Rs 300 to Rs 360 per kg during the previous financial year, has now shot up to about Rs 900 to Rs 1,000 per kg, Kiri Industries said. And the average price of Vinyl Sulphone, which stood at Rs 160 to Rs 180 per kg during the previous financial year, has risen to about Rs 240 to Rs 275 per kg globally, the company added.

H.Acid and Vinyl Sulphone are intermediates (raw materials) to manufacture dyes which are used in different industries such as textiles. Kiri Industries has installed capacity to manufacture 7,200 million tonnes per annum (MTPA) of H. Acid and 18,000 MTPA of Vinyl Sulphone.

Mr Kiri said it would take some time for the Chinese players to reach the compliance level and reopen their plants. “We are looking at a topline of Rs 1,300 crore with 20 per cent EBITDA margin in FY2017, if this situation continues for the first quarter at least,” he added.

For FY2016, Kiri Industries is expecting to report revenue of Rs 1,000 crore and EBITDA (operating profit) of Rs 160 crore.

Mr Kiri also said that the company has brought down its debt by more than 50 per cent in FY16, which will result in significant reduction in interest of the company for FY16. Kiri Industries’ debt now stands at Rs 411 crore, down from Rs 853 crore earlier.

The Ahmedabad-based company had acquired 37.55 per cent stake in a Singapore-based Dye Star in 2010. Kiri Industries supplies raw materials to Dye Star and is benefiting from the price surge in intermediate products, said Mr Kiri.

As of 2.01 p.m., Kiri Industries shares were locked at upper circuit of 10 per cent at Rs 167.30. In comparison, the Sensex was trading flat.