Archroma Textiles S.a.r.l. (Archroma) is a multinational company providing colour and specialty chemicals. Globally, the company has 3000 employees, 25 production sites and is present in 35 countries. It is incorporated in Luxemburg and headquartered in Reinach, Switzerland. Archroma was formed in October 2013 from the textile, paper and emulsions business of Clariant. Clariant itself was formed in 1995 as a spin-off from Sandoz, a chemical company that was established in Basel in 1886. In 1997, Clariant acquired the chemicals business of Hoechst, a German Chemical company.
In May 2014, Archroma acquired 49 percent of M. Dohmen SA an international group specializing in the production of textile dyes and chemicals for the automotive, carpet and apparel sectors. It acquired the global textile business of BASF SE in 2015.
Archroma Pakistan Limited (APL) acquired BASF Pakistan (Pvt) Ltd on 31 July, 2015. Archroma Textiles Chemicals Pakistan Pvt Ltd (ATCPPL) amalgamated into APL with effect from 1 January, 2016. APL is a subsidiary of Archroma which holds 75 percent of the share capital of the company. APL is primarily engaged in the manufacture and sale of chemicals, dyestuffs and emulsions. It also acts as an indenting agent. It has a production site at Jamshoro which produces liquid indigo for the denim industry.
Business segments:
Textiles Textile industry in the major consumption segment of APL with bulk of its sales accounted by textile specialties which include chemicals and dyes. APL plays a key role throughout the entire textile supply chain, with special chemicals for pretreatment, dyeing, printing, and finishing of fabrics that range from high fashion to home and technical textiles.
Paper solutions Archroma's paper solution business provides expertise in the management of whiteness, coloration, special coatings and strength for all kinds of papers. Their key markets are printing and writing copy papers, coated paper and board, recycled papers, newsprint, packaging, and specialized applications.
Emulsions Offering a wide range of applications, Archroma's polymer emulsions are used in paints, adhesives, construction, as well as textile, leather and paper industries. They also deliver synthetic latexes/polymer dispersion for paints, coatings, adhesives, and sealants.
Global textile chemicals market There has been a movement away from synthetic dyes and chemicals to the usage of natural dyes globally. In addition, the usage of renewable sources of energy in textile and apparel industry has increased due to many ecological advantages. Archroma is following these trends with its eco-conscious Jamshoro plant and its EarthColours range.
The global textile chemicals market was estimated to be worth $ 19.63 billion in 2013 and is further expected to reach $23.42 billion in 2018, growing at a CAGR of 3.6 percent from 2013 to 2018. Globally, the textile chemicals market is driven by the growth of the global apparels market and technical textiles market.
EarthColours APL identifies itself as environmental friendly. One of its USP is their EarthColours (EC) range which uses biosynthetic dyes for cotton and cellulose based fabrics. The red, brown, and green colours for denim and casual wear are derived from agricultural waste products like almond shells, saw palmetto, rosemary leaves and other natural products that would otherwise been sent to landfills.
These biosynthetic dyes equal the fixation rate, fastness and overall performance of existing range of sulphur dyes made from conventional petroleum based raw materials. As the origin of these dyes is classes as a natural polymer, earth colour products are compliant with European Reach requirements.
Furthermore, EC dyes are fully traceable, from natural waste material to store due to smart Near Fields Communications technology (NFC). Every garment coloured with EC has a hang tag incorporated with a chip that stores information drawn from Archroma's database. This information can be accessed by the prospective buyer using NFC technology through their Smart Phone.
These features, along with the "zero liquid discharge" facility at Jamshoro, increase its market competitiveness for exports. Though its exports account for less than 10 percent of total sales, it plans to increase them in the future and hence is working towards global competitiveness.
Financial outlook APL crossed the milestone of Rs 10 billion in sales during the year ending September 2016. The growth in sales was 6 percent as compared to the period last year when taking into consideration sales made by subsidiary ATCPPL. The financials reported include only two months of sales of ATCPPL due to technical reasons. Overall the growth was of 21 percent in the top line. Profit for the year increased by 28 percent. The company announced 600 percent, ie Rs 60 per share as final cash dividend for the year ended 30 September, 2016. Sales for the nine months ending 30 June, 2017 increased by 8 percent compared to the period before. Profit after tax and EPS increased by 10 percent.
Share price
Company's share price during 2016 was quoted at its highest of Rs 610 and lowest at Rs 390 on the PSX. Though it dipped below KSE-100 at some points in 2016, APL has generally performed better than KSE-100.
Future outlook Since the textile industry is a major consumer of APL's brands, Pakistan's chronic energy crises presents a challenge to the company's output.
Currently, the company is focusing on domestic consumption. However, in the long term APL plans to increase exports. Though the economic slowdown in European markets may make it challenging, APL also plans to explore Asia, Africa and the Middle East.
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Shareholders Pattern
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No. of No. of
Shareholders Category shareholders shares %
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Directors, Chief Executive Officer,
and their spouse and minor children. 0 0 0
Associated Companies, undertakings
and related parties. 1 25,588,533 75
NIT and ICP 1 700 0
Banks Development Financial Institutions,
Non-Banking Financial Institutions. 4 291,175 0.85
Insurance Companies 6 1,247,707 3.66
Modarabas and Mutual Funds 12 2,132,726 6.25
Shareholders holding 10% 1 25,588,533 75
General Public :
a. Local 1725 4,212,236 12.35
b. Foreign
Others 57 644,804 1.89
Total (excluding: shareholders
holding 10%) 1,806 34,117,881 100
Shareholders holding
10% or more voting interest
Archroma Textiles S.a.r.l., Luxemburg 1 25,588,533 75
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Profit and Loss Account for the year ended September 30, 2016
Rs. in million 2016 2015
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Sales 12,474 9,806
Net Sales 11,350 8,829
Cost of goods sold 7,680 6,295
Gross Profit 3,670 2,533
Distribution and marketing expenses 763 642
Administrative expenses 353 238
Other expenses 186 110
Other income 54 171
Finance Costs 128 134
Profit before tax 128 134
Profit for the year 1,720 1,242
EPS per share 50.41 36.40
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Profit and loss account for the nine months period ended
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Rs. in million 30-Jun-17 30-Jun-16
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Net Sales 9,036 8,287
Cost of goods sold 6,158 5,550
Gross Profit 2,878 2,737
Distribution and Marketing Expenses 630 585
Administrative expenses 343 313
Other Expenses 146 135
Other Operating Income 15 42
Operating Profit 1,773 1,747
Finance Cost 80 102
Profit before Tax 1,693 1,645
Profit after Tax 1,268 1,146
Total comprehensive income 1,268 1,146
EPS (Rs. Per share) 37.17 33.59
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Key Ratios
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2016 2015
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Current Ratio 2.33 1.73
Assets Turnover 1.31 0.98
Return on Assets % 26.72 17.47
Return on Equity % 43.07 34.11
Payout Ratio after tax 119.02 68.68
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