Meghmani Finechem stock surges ~3% on commissioning CPVC resin plant at Dahej

18 Jul 2022 , 02:31 PM

Meghmani Finechem Limited on Monday announced the successful commissioning of Chlorinated Polyvinyl Chloride Resin (CPVC Resin) Plant at Dahej in Gujarat.

The newly-commissioned facility with a production capacity of 30,000 tonnes per annum (TPA) is the largest of its kind in India. Despite a challenging external environment, the plant has been commissioned on time and without any cost overrun, which is a testimony of the company’s strong project execution skills.

In India, CPVC resin demand is around 140 kilo tonnes per annum (KTPA) and it is expected to grow by around 13% CAGR over the next five years. Approximately 95% of the CPVC resin demand of India is met through imports. MFL’s entry into this product is in line with the Central Government’s initiative of Aatmanirbhar Bharat and Make in India. This will reduce the dependence of CPVC resin consumer on imports thereby helping the country save its foreign exchange reserves.

CPVC resin is used in manufacturing CPVC pipes and fittings. CPVC pipe has high heat resistance and chemical resistance properties. Considering its features, CPVC is widely used for domestic (households) and industrial purposes.

CPVC resin is a high value product. Considering the current prices of CPVC resin, MFL expects asset turnover ratio to be above 2.0x, which will improve the company’s absolute EBITDA and will end up providing higher ROCE (Return on Capital Employed), ultimately creating value for the shareholders.

Commenting on the commissioning of CPVC Resin plant, Maulik Patel, Chairman and Managing Director, MFL said, “I am very happy to announce that we have commissioned India’s largest CPVC resin plant of 30,000 TPA. I would like to congratulate our project team for commissioning the plant on committed timelines and within the estimated capex limit.

Production of CPVC resin has started and it is under approval process with various customers. We estimate that it will take around 3 months’ time for approval and stabilisation process. We expect that volume of CPVC resin should pick from Q3FY22 onwards and should reach optimum capacity utilisation by Q1FY24.

On commissioning of CPVC resin plant, we are moving in the direction of being a multi-product company and this will increase revenue contribution from the Derivative and Specialty Chemical segment. Also, this will further strengthen our fully integrated complex, as part of the raw material for CPVC resin will be available within the plant itself.”

At around 2:32 PM, Meghmani Finechem was trading at Rs1477.40 per share higher by 2.89% on the BSE.