High pressure cylinders manufacturer Everest Kanto Cylinder Limited (EKC) is targeting significant capacity expansion in India and Europe. With a highly positive outlook, the Mumbai based company is looking at scaling up production by increasing utilization of facilities.

EKC plans to invest around Rs. 215 crore in various projects during FY23-24 and expects combined revenue potential of about Rs. 712 crore from expansion.

The company will invest Rs. 35 crore into brownfield expansion with addition of 400,000 cylinders annually at Tarapur in Maharashtra and Kandla in Gujarat. The project also includes de-bottlenecking and expansion of existing lines. De-bottlenecking and expansion initiatives have already improved output in existing production lines. While the Phase I of the project has already been completed, the Phase II is targeted for completion by the second quarter of FY23. The revenue potential of the project has been put at Rs. 300 crore.

There is also a further revenue expansion potential of approximately Rs. 100 crore annually from Phase II expansion.

EKC’s greenfield expansion at Mundra in Gujarat is aimed at initial increase in production by 200,000 cylinders annually. The initial phase of the project will have a Capex of Rs. 45 crore with revenue potential of Rs. 200 crore, and completion is expected in the second quarter of FY24. The company has also acquired contiguous land parcels aggregating 54 acres that will allow modular expansion in multiple phases. The available equipment will enable reduced capital intensity of the expansion. Since the place is located 30 km from the existing manufacturing facility at Kandla SEZ, it would result in operating and cost efficiencies.

The company’s greenfield expansion in Hungary via 80:20 joint venture aims at manufacturing 240,000 cylinders annually. The Capex of Rs. 135 crore (€16 million), out of which 20% is equity, 50% is debt and 30% is government cash subsidy. The revenue potential of the project expected to be completed by FY24 is Rs. 212 crore (€25 million). The company aims to set up local, EU-focused manufacturing with advantages of better market acceptability and exemption from EU import duties. Advantages include low-cost land, tax exemptions, and other fiscal benefits from the Hungarian government.

Established in 1978, EKC is a clean energy solutions company and a leading global manufacturer of seamless steel gas cylinders with over 20 million industrial gas and CNG cylinders currently in service.

In the US market, EKC has emerged as a leader in innovation, producing large, seamless pressure vessels. The company’s product portfolio includes ground storage and mobile transportation for industrial gases and alternative fuels, on-board cylinders for passenger and commercial vehicles, flasks for the U.S. Government Shipboard Systems, specialty vessels for foreign military, vessels for oil and gas exploration and cylinders for other specialty applications. The company also markets the DOT-approved industrial cylinders sourced from India and Dubai.

In Europe, EKC signed a JV with Rev Gas Industries Limited, Hungary to set up a state-of-the-art manufacturing plant in Hungary for seamless high pressure CNG/industrial gas cylinders and cascades for bulk storage for the European markets such as Italy, Germany, France, and Hungary.

In UAE, the company has made deals in CNG cylinders, industrial cylinders, cascades, multiple element gas containers, specialized fire suppression systems and fire detection/alarm systems. The target markets include the Middle East, South America, Eastern, and Western Europe. It has also received approvals enabling supply of cylinders worldwide, including exports to India.

Given its strong position in the Indian domestic market and wide acceptance across several key international markets built over the last four decades, EKC is poised to benefit from the increasing usage of gases in industrial production and automobile sectors based on both economic and environmental considerations.

Going forward, the company will focus on increasing volumes, higher margin products. The factors such as Capex with high return on investment (RoI), financed by internal accruals and robust framework would enable its participation in multi-year growth opportunities.