Meghmani Organics ends 5% higher on acquisition of Kilburn Chemicals

The Company has diversified its Pigment Division’s product offering with Kilburn Chemicals acquisition.

December 27, 2021 4:18 IST | India Infoline News Service
Meghmani Organics Limited (MOL) has announced that it has completed an acquisition of Kilburn Chemicals Limited (KCL). MOL paid Rs132cr (including Rs12.15cr towards equity subscription) as per the National Company Law Tribunal (NCLT) approved resolution plan dated 16" December 2021.

Thus, the Company has diversified its Pigment Division’s product offering with Kilburn Chemicals acquisition, fast-tracking its foray into Titanium Dioxide (TiO2). The aforesaid 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 Titanium Dioxide (TiO.) from Q2 FY23, thereby adding ~Rs300-350cr to the revenues on a full financial year basis.

The Company anticipates doubling up its Titanium Dioxide (TiO2) capacity to 33,000 MTPA by Q1 FY24 by incurring an additional capex of Rs270cr funded by an appropriate mix of internal accruals and debt. At normal capacity utilisation, the aforesaid plant is expected to contribute ~Rs650-700cr to MOL’s topline on a full financial year basis. Capacity utilisation will be ramped up gradually. MOL’s Titanium Dioxide (TiO,) plant is expected to garner an EBITDA margin of ~23-25%, along with robust return ratios i.e., ROCE and ROE ranging ~19-20% each.

Titanium Dioxide (TiO2), a bright white pigment, has multiple industrial applications, including Paints, Plastics, Inks, Dyes, Paper and Cosmetics, etc.

The annual demand for Titanium Dioxide (TiO,) in India stands at 2,50,000 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 (TiO2), 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 Rs620cr (Rs270cr— Pigment Division and Rs350cr— Agrochemicals Division) by Q2 FY23 and achieve Rs3,000cr topline by FY24.”

Meghmani Organics ended at Rs112.50 per piece higher by 4.80% on the BSE.

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