The Ahmedabad-based Kiri Dyes and Chemicals (KDCL), manufacturer and exporters of dyes and dyes intermediates, is open for subscription with its initial public offering (IPO) of 37.5 lakh equity shares of face value of Rs 10 each, to raise funds for executing its backward integration project for manufacturing three key raw materials for dye intermediates. The price-band has been fixed at Rs 125 to Rs 150 per equity share.

Moneycontrol conducted a poll on market experts to check whether to apply for the public issue or not. Experts said don't apply.

Experts/Company	Poll Result	Experts view
R S Iyer (KR Choksey)	Don’t Apply	Investors should ignore primary market for the time being as the market sentiments are weak. All stocks are available at cheap price range in the secondary market. Even recently listed IPOs are also trading below their issue price.
SP Tulsian (Investment Advisor)	Don’t Apply	Kiri Dyes and Chemicals is into manufacturing of Dyestuff with an installed capacity of 10,800 TPA, Dye-intermediates being Vinyl Sulphone of 3,600 TPA and H Acid of 3,600 TPA.    The total borrowing of the company as at 30-09-07 was at Rs 58 crore, against the net worth of Rs 44.50 crore. Also, due to benefit under section 10B available till March 2010, the company is having MAT liability only, which is keeping its bottomline healthy. However, post March 10th, it will attract the usual 34% tax liability, which will reduce its bottomline to that extent.   Presently due to better realizations of Vinyl Sulphone and H Acid, the profitability of all such manufacturers are quite strong. However, this industry is quite cyclical and passes through a phase where it becomes difficult for the manufacturers to make profits. Working capital burden is also quite high for the industry.   Apart from this, the industry is commanding very low PE multiple of just 5 – 7 times. Atul Ltd, having turnover of Rs 1,000 crore and an EPS of close to Rs 10 is ruling at Rs 55, having a PE multiple of 5.50 times. This is despite book value per share of Rs 105 as at 31-12-07. Metrochem Industries with topline of Rs 300 crore and book value per share of Rs 80 is ruling at Rs 43, which is again despite an expected EPS of Rs 7 for FY 08, which translates into a PE of 6 times. Asahi Songwon having topline of close to Rs 80 crore and EPS of Rs 10 for FY 08, is ruling at Rs 30, translating into a PE of 3 times. This company issued shares at Rs 90 per share in May 07, which was at its lower band at that time. There are many companies like Bhageria Dye Chem, Shri Hari Chemicals ruling at a PE of close to 5 times.   In this scenario, the share price of this company is not worth beyond Rs 60, considering an EPS of Rs 12, on post issue equity of Rs 15 crore for FY 08 and multiplying it by 5 times. Hence, a clear advise to remain away from the issue even at the lower end of the price band.

The company has made pre-IPO placement of 12.50 lakh equity shares to an investor, the amount aggregating to Rs 14.44 crore, which the company proposes to utilise towards the objects of the issue.

The backward integration project is proposed to be located in Vadodara district and will have combined production capacity of 1.80 lakh mtpa. The company is setting up the plant with latest double-absorption technology and a power plant of 2.9 MW capacity, which can run from the steam generated by the sulphuric acid plant. With the implementation of backward integration project for manufacturing of intermediates, the company aims to enhance market share and capitalise on the opportunity for high growth in chemicals and dyes industry with reduction in operating costs, research and development, quality controls, and offer competitive price to domestic and international players.

The shares will be listed on Bombay Stock Exchange and National Stock Exchange of India. The book running lead manager to the issue is Centrum Capital.