Wrong Chemistry

Opens on : December 5, 1996

Listing at : Hyderabad, Ahmedabad and Mumbai

Lead managers : Aryaman Financial Services and Rajashree Fiscal

Services

Its capacity is no match for gaints like GNFC and Deepak Fertilisers.

Rishab Alchem India (RAIL) is setting up a Rs 11.70 crore plant to make methanol using naptha as a feedstock with an installed capacity of 12,000 tonnes However, its capacity is no match for companies like GNFC with a capacity of 120,000 tonnes and Deepak Fertilisers with a capacity of 100,000 tonnes. Strangely, the company cites the small capacity itself as a reason not to fear competition.

 

The project, located in Andhra Pradesh is financed through equity capital of Rs 11.70 crore and lease finance of Rs 1.60 crore. The company providing the lease finance is also one of the largest shareholders of RAIL holding 100,000 shares. RAIL is yet to approach a bank to tie up the working capital finance of Rs 2.79 crore.

The experience of the promoters in this field is very limited. While one of them is an arts graduate with experience in the marketing of chemicals, another is a mechanical engineer and the third a practising physician. RAIL was originally incorporated as WIL Alchem in February 1994.

The company has not received permission for using the land for non-agricultural purpose. It is in the process of applying for a power connection does not have a NOC from the pollution control board either.

The prospectus cites rising international prices of methanol as a salient feature. But these price trends date back to 1994 and latest prices are not mentioned in the prsopectus The prices were $180/mt in January 1994 and $447/mt in November 1994. Currently, the prices are around $180/mt. which is the same as the January 1994 level. The project is to commence production in March 1997. With such a small capacity in and with the project at a very early stage of implementation, there is no reason to invest in this issue.