>DIC India(Formerly known as Coates of India) BSE Code 500089

This company is a wholly owned subsidiary of DIC - Japan (Dainippon Inks and Chemicals).

About DIC – Japan.
The parent company is the world’s largest supplier of inks, organic pigments, varnishes,
coatings, resins, and toners and ink jet inks. DIC India enjoys 40% market share in printing inks,
organic pigments and resins.

About DIC (India):
It has pan India seven production facilities at Kolkata, Delhi, Mumbai, Chennai, Noida and
Ahmedabad. It recently sold its industrial coatings manufacturing facility of its wholly owned
subsidiary DIC Coatings India Limited is located at Bangalore. DIC India’s major revenues are
generated from printing inks.

It caters to the requirements of these three segments in printing ink, viz., Publishing inks
(covers newspapers, magazines & books), Packaging inks (as covers FMCG sector, has
tremendous potential to grow) and high quality emerging segment - Commercial printing inks
(covers sales literature, leaflets, brochures, tourist literature, catalogues, etc).

It manufacture inks covering all printing processes used in India - black inks, offset inks, liquid
inks, screen inks and print finish inks.

Investment rationale:
1. Active support from DIC – japan: In order to sync its product line with the objectives of parent
It has decided alter the scope of biz segments into the following.
a) Graphic Art materials
b) Industrial Materials
c) High Performance& Applied products
d) Electronics and Information material
Access to Technology know how from parent will enable the company to have an edge over its peers.

2. With the fortunes of printing ink industry directly related to the GDP growth, the company’s revenues are expected to turnaround with the improvement in industrial activity and the trend in IIP nos. are a suggestive evidence. Many print media companies have witnessed winds of change in the advertisement revenues. Majors of Printing ink industry are likely to be single largest beneficiaries. DIC India enjoys 33 % market share.

3. With special focus on education spending in the recent budget, effective implemetation of Sarva Siksha Abiyan Yojna there will be more demand for text books mainly in rural area. This will generate indirect demand for printing inks.

4. Improvement in general economic activities to generate more demand to emerge in commercial printing inks segment viz: sales literature, brochures, tourist literature, catalogues. DIC being a market leader will be a direct beneficiary of increase demand of packaging inks.

5. Chemical Divn. To generate income from trading/agency business in pigment segment in years ahead.

6. DIC – India has entered into a Share Purchase Agreement with The Valspar (Singapore) Corporation Pte Ltd, for sale of entire stake in its 100% subsidiary DIC Coatings India Ltd. It is learnt from reliable source that the sale is likely to fetch > Rs.300 mn in Cy10.

7. Reduction in interest cost in CY 10 to expand EPS by Rs.3/-: Company is focused on reducing its borrowing cost . in Cy 09 it has reduced its interest cost from Rs.62.5 mn ( Cy08) to Rs.48 mn

With no major capex cost in offing the sale proceeds are likely to be deployed in reduction of debt and meeting working capital requirement.

8. Miniscule Royalty Cost: DIC India pays a nominal fee of ~1.26% of its net sales to DIC Japan. (CY08 royalty fee Rs.57.87 mn on net sales Rs.4592 mn).

Promoter Shareholding : 72%

To read the full report: DIC INDIA