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Thursday, December 31, 2009

Gulshan Polyols Ltd:Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Gulshan Polyols Ltd

Story:Promoted by Dr. C.K. Jain of Gulshan Group of Industries, GPL is engaged in manufacturing of 'Sorbitol-70%'. Sorbitol, a starch derivative, sweet in taste with wide range of application, the major uses in dentrifice, cosmetic, Pharma, Vitamin-C, food products etc. The Plant was set up in the State of Gujarat in the parent company i.e. Gulshan Sugars & Chemicals Ltd. GPL was incorporated in 2000, to take over the Sorbitol project from GSCL in terms of scheme of Arrangement/demerger.Company is having the largest capacity in India capable to produce Crystaline and Non-crystaline grade of Sorbitol which is a unique feature.Sorbitol, a water soluble polyhydric alcohol, having sweet taste and properties of humectancy and plasticizing is used in manufacture of Toothpaste, Tonics/liquid Formulations, Cosmetic products like Face Creams and Lotions, etc.Sorbitol, besides being immune to bacteriological degradation, is also less vulnerable to mould grade other humectant plasticizing materials. Sorbitol is produced by Hydrogenation of Dextrose. The Dextrose is produced in house from Starch by enzymetic process to achieve highest standard of product.. The clear dextrose solution is reacted with hydrogen gas in catalyst in the reactors at specified pressure and temperature which is subsequently subjected to catalyst ION Exchange etc. The solution thereafter is subjected to chemical adjustments, testing for chemical required concentration or Sorbitol (70%) is achieved in Evaporators before final testing etc.So, Apart from having wide range application, the major uses are in dentrifice, cosmetics creams, lotions which have become daily consumer product of the society. In pharmaceutical sector it finds applications in Syrups, Cough Syrups, tablet compounding and many others. Sorbitol is also a R/M for Vitamin C. It also has application in Food products and Tobacco conditioning high quality papers etc.

Competitive Advantage:-

1)Proximity to raw material (Maize) availability area.
2)Manufacturing facilities and equipments are best comparable with any of the world class facilities.
3)Favourable Plant Location for logistic purpose both for Raw Material as well as Finished Product.
4)Nearer to the user Industry such as Tooth paste, Pharma, Paint in the nearby region providing low transportation cost.
5)In-house research & development facilities and micro-bio lab with high tech infrastructure.
6)Consistent growth since inception.
7)Usage in industries such as Plastic, PVC, Paper, Dentifrice, Paint, Pharma, Cosmetic, etc. providing future growth avenues.

Conclusion:Current Demand for Sorbitol in India is around 80,000 tonnes. Demand-Supply is almost evenly balanced. However, demand is growing @ 8-12% p.a.Company is planning further capacity addition in Sorbitol. Most likely, it may set up a new plant in Uttarakhand.Considering that demand for Sorbitol is buoyant and GPL is the leading producer of same, stock is undervalued.The scrip should provide investors with sweet returns over the coming 18-24 months period.

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