Chemicals player Meghmani Finechem Ltd (MFL) said it will touch ₹5,000 crore in topline in the next five years as the company eyes stronger revenues from newer segments of CPVC resins, epichlorohydrin (ECH) and chlorotoluene.

After commissioning an ECH plant in June, MFL on Monday announced commissioning of a chlorinated polyvinyl chloride resin (CPVC Resin) plant at Dahej in Gujarat.

Demand for resin

Set up with an investment of about ₹190 crore, the plant, at its optimal operations of about 85 per cent on annualised basis, is expected to contribute about ₹400-500 crore revenues. Demand for CPVC resins - a key input for production of CPVC pipes, is expected to be strong following increased usage in construction and housing sector. The annual CPVC resins demand in the country is estimated at around 1,40,000 TPA, which is primarily met through imports. The demand is expected to grow at about 13 per cent CAGR over the next few years.

MFL has set up the plant with an installed capacity of 30,000 tonnes per annum (TPA), the largest in India.

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 provide higher ROCE (Return on Capital Employed), ultimately creating value for the shareholders, MFL said.

Commenting on the commissioning of CPVC resin plant, Maulik Patel, Chairman and Managing Director, MFL, said, "Going forward our strategy will be to move from a chloralkali player to a multi-product specialty chemical company. 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."

In the Epichlorohydrin (ECH) category, which is 100 per cent imported, MFL is the sole producer in India. Considering the prospects, it pumped in ₹275 crore for the ECH facility.

"We are expanding our product portfolio keeping in view a wider sectoral coverage. Currently, we are making products that cater to about 15 sectors. This is part of our derisking strategy. Also, our focus is now on adding new products that are import-substitutes," said Patel in an interaction with media.

The company is also setting up facility for chlorotoluene, which will be commissioned by fourth quarter of fiscal 2024. The chlorotoluene facility is being set up at the cost of ₹180 crore.

Besides the fresh investments, the company has also spent about ₹250 crore to augment caustic soda capacities from currently 2,94,000 tonnes per annum to 4,00,000 tonnes.

"In past two years we have spent about Rs 700 crore for these new capacities. We are now positioned to built on these capacities which will contribute to the company's revenues in coming years. Our target is to reach ₹5,000 crore revenues by 2027 from about Rs 1,500 crore in fiscal 2022," said Patel.

MFL shares ended at ₹1476.80 on BSE, up 2.85 per cent from the previous close.

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