Philips Carbon to Set up New Plant in TN; Plans Expansion at Mundra and Palej

The RP-Sanjiv Goenka Groupowned Philips Carbon Black Ltd. (PCBL) – the sixth largest global producer of carbon black – has unveiled a Rs. 900-crore capital expenditure plan till 2020. According to Mr. Sanjiv Goenka, Group Chairman, around Rs. 600-crore will go towards a greenfield plant in Tamil Nadu that is expected to be operational around September 2020. The Tamil Nadu plant will have a capacity of 150,000-tpa and will focus on rubber black used in tyres and on speciality blacks that have better margins.

Another Rs. 300-crore will be for brownfield expansion at its Mundra and Palej plants. The Mundra plant expansion, likely to be operational by December-end, will see capacity addition of 50,000-tpa, while 30,000-tpa of capacity will be added at Palej by March 2019. “There will be a 50% capacity addition post the investments,” Mr. Goenka informed. PCBL currently has an annual capacity of 470,000-tpa across its four plants – Durgapur (West Bengal), Mundra (Gujarat), Palej (Gujarat) and Kochi (Kerala) – which is expected to go up to 700,000-tpa by December 2020.

The expansion plans will be funded through a mix of internal accruals, equity issue and debt. The company is likely to go for an equity issue by the end of this year. “We are generating cash flows to the tune of Rs. 450-crore a year. So, we do not expect much of an issue in funding the expansion plans,” Mr. Goenka said.

Financial results

The company, meanwhile, reported a near 165% jump in standalone net profit for the January to March quarter of the current fiscal to Rs. 74-crore. Profit in the corresponding quarter in the last fiscal (FY17) stood at Rs. 28-crore. Sales (revenue for operations) stood at Rs. 753-crore. PCBL said the revenues are not comparable to previous quarters since there has been a change in accounting treatment of indirect taxes post the roll-out of GST. “Increase in sales, focus on high margin speciality black, an increase in efficiency such as usage of fuel, and a reduction in debt, has led to improved results and rise in net profit,” Mr. Goenka said.

According to him, in FY18, PCBL reduced its debt to Rs. 770-crore from Rs. 1,200-crore in the year-ago period. In fact, the plan is to bring down long-term debt to zero. Long-term debt currently stands at Rs. 460-crore in FY18. “We expect debt to be around Rs. 700-crore for the next few years, especially since we will be investing towards capex. However, going forward, we hope to bring down the long-term debt to zero and focus only on working capital requirements,” he said. For the full fiscal, standalone net profit saw a 228% jump year-on-year to Rs. 230-crore, while revenue (from operations) stood at Rs. 2,600-crore.