Acquisition to fast-track MOL’s foray into Titanium Dioxide
Meghmani Organics Limited (MOL) recently announced that it has completed an acquisition of Kilburn Chemicals Limited (KCL). MOL paid Rs 132 Crores (including Rs 12.15 Crores towards equity subscription) as per the National Company Law Tribunal (NCLT) approved resolution plan dated December 16, 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 (TiO2) manufacturing capacity is pegged at 16,500 metric tons per annum (MTPA). MOL expects to commence the commercial production of Titanium Dioxide (TiO2) from Q2 FY23, thereby adding Rs 300-350 Crores 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 Rs 270 Crores funded by an appropriate mix of internal accruals and debt. At normal capacity utilisation, the aforesaid plant is expected to contribute Rs 650-700 Crores to MOL’s topline on a full financial year basis. Capacity utilisation will be ramped up gradually. MOL’s Titanium Dioxide (TiO2) plant is expected to garner an EBITDA margin of ~23-25 per cent, along with robust return ratios i.e., ROCE and ROE ranging ~19-20 per cent each.
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 Rs 620 Crores by Q2 FY23 and achieve Rs 3,000 Crores topline by FY24.
