Meghmani Finechem announces expansion plans into Chlorotoluene and its value chain

Expanding into Chlorotoluene and its value chain; high ROCE product.

November 11, 2021 4:43 IST | India Infoline News Service
Meghmani Finechem Limited, a leading manufacturer of Chlor-Alkali products and its value-added Derivatives, on Thursday has announced its expansion plans into Chlorotoluene and its value chain.

The upcoming facility in its existing Chlor-Alkali Complex of Dahej will produce intermediates for manufacturing pharmaceutical and agro-chemical active ingredients, which are amongst the fastest growing segments.

The Chlorotoluene project is expected to be commissioned by Q4FY24 and would require a capex of Rs180cr which will be fully funded through internal accruals. Meghmani Finechem Ltd expects annual revenue of Rs300cr from this project.

The EBITDA margin is expected to be in range of 28% - 32% which is in line with company’s overall margin guidance. Given the high asset turnover ratio of 1.6x, absolute EBIDTA will be high leading to ROCE of nearly 30%. This will boost up the 24% ROCE target by FY2024.

This is a first of its kind intermediate facility which will be backward integrated with Toluene Chlorination (Ring Chlorination) plant in India. This entails a new set of opportunities for value addition of chlorine for an entirely new vertical. Indian Chlorotoluenes and its value chain demand are fulfilled through imports and hence, this facility will cater to the requirement for domestic and export market. This will also contribute in “MAKE IN INDIA” initiative to become Atmanirbhar Bharat, launched by our visionary Honourable Prime Minister.

Along with this Project, MFL is also announcing an investment in setting up a world-class Research and Development centre which will help the company identify new molecules in Chlorotoluene eco-system and further strengthen the fully integrated facility. This investment in R&D centre will be the foundation for the next phase of growth of speciality chemical market. The facility will be set up at Changodar, Ahmedabad.

Speaking on the development, Maulik Patel, Chairman & Managing Director said: “We are extremely excited about the new project, which further strengthens our product portfolio and makes us a diversified and fully integrated Specialty chemical player. Our focus at MFL is to create superior shareholder value and this new high ROCE product is a step in that direction.

We are also very thrilled about setting up an advanced and world-class R&D facility, which will definitely catapult our company to a higher growth trajectory.”

Meghmani Finechem ended at Rs797.30 apiece higher by 5% on the BSE.

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