By: ICN Bureau
Last updated : December 28, 2020 10:32 am
Navin Fluorine has outlined capital expenditure for setting up a multi-purpose plant (MPP) with an outlay of Rs 195 crore.
Navin Fluorine has outlined capital expenditure for setting up a multi-purpose plant (MPP) with an outlay of Rs 195 crore. The capex will be undertaken by its wholly owned subsidiary, Navin Fluorine Advanced Sciences Ltd at Dahej, Gujarat.
According to ICICI Direct Research, the new capacity is expected to come on stream during H1FY23 and will create opportunities for new products in life science and crop science sectors in the specialty chemicals business. The company has already identified potential 12 new products of which five are going to be commercialised initially, which find application in crop protection. This new capacity would retain a mix of 50:50 among life science and crop protection in the long run.
The management expects better margins for this new venture with an asset turn of 1.35-1. 45x. New capex likely to aid specialty chemical revenue growth, going ahead. The management highlighted that given that the company was doing R&D on a few niche fluorine molecules for both crop protection & life science, it has been able to develop 12 intermediates. Of this, five intermediates will be launched initially having application in crop protection.
The management believes that of these five molecules, four intermediates have the potential to reach 300-400 tonnes of volumes in the next three to four years. This would lead the company to look after dedicated MPP in the years to come, the report says.
ICICI Direct believes since 40% of the plant is currently vacant, which can be expanded by putting in more machineries going ahead, expected asset turn could be at2-2.25x. This should support specialty chemical segment revenue growth in the high teens.
The new capacity is expected to generate revenues to the tune of Rs 260-280 crore at peak utilisation levels. Payback period is estimated to be four years and the capacity is expected to reach peak levels in two to three years post its commissioning.
The company may enter forward integration of products and develop active ingredients based on requests received from its strategic customers in the next three to four years.