By: ICN Bureau
Last updated : December 28, 2021 3:44 pm
The plant's existing manufacturing capacity is pegged at 16,500 MTPA
Meghmani Organics Limited (MOL), a leading diversified chemicals company with a presence in pigments and agrochemicals business, has completed an acquisition of Kilburn Chemicals Limited (KCL).
MOL paid Rs. 132 crore (including Rs. 12.15 crore towards equity subscription) as per the National Company Law Tribunal (NCLT) approved resolution plan. With this, the company has diversified its pigment division’s product offering and fast-tracking its foray into Titanium Dioxide (TiO2).
The acquisition has been funded from MOL’s internal accruals. As a result, MOL’s Titanium Dioxide (TiO2) project will be EPS accretive. The plant is located at Dahej, Gujarat and its existing Titanium Dioxide (TiO) manufacturing capacity is pegged at 16,500 metric tons per annum (MTPA).
MOL expects to commence the commercial production of TiO2 from Q2 FY23, thereby adding Rs. 300-350 crore to the revenues on a full financial year basis.
The company anticipates doubling up its TiO2 capacity to 33,000 MTPA by Q1 FY24 by incurring an additional Capex of Rs. 270 crore funded by an appropriate mix of internal accruals and debt. At normal capacity utilization, the aforesaid plant is expected to contribute Rs. 650-700 crore to MOL’s topline on a full financial year basis.
Capacity utilization will be ramped up gradually. MOL’s TiO2 plant is expected to garner an EBITDA margin of around 23-25%, along with robust return ratios.
TiO2, a bright white pigment, has multiple industrial applications, including paints, plastics, inks, dyes, paper, and cosmetics, etc.
The annual demand for TiO2 in India stands at 250,000 MTPA and is growing at 4.2% CAGR. Imports meet nearly 80% of India’s Titanium Dioxide (TiO) demand. The Titanium Dioxide (TiO2) production capacity in India is pegged at 81,000 MTPA. Titanium Dioxide, an import substitution product, accelerates MOL’s growth plans mirroring the Government’s ‘Make in India’ & ‘Atmanirbhar Bharat’ vision.
The company remains committed to execute its overall capex guidance of Rs. 620 crore by Q2 FY23 and achieve Rs. 3,000 crore topline by FY24.