DCW Ltd plans to double CPVC capacity and raise synthetic pigments output with Rs 125-cr capex

Mumbai-headquartered DCW Ltd has chalked out a Rs 125 crore capital expenditure plan which entails doubling of its chlorinated polyvinyl chloride (CPVC) resin capacity and debottlenecking of synthetic pigments output at its existing location at Sahapuram Complex in Tamil Nadu. The company has a total present CPVC production capacity of 10,000 tonnes per annum (TPA) which under the present plan would go up to 20,000 TPA. In addition to resin, the company also has a 12,000 TPA of CPVC compounding capacity at the same location.

DCW Ltd also plans to augment the capacity utilization of its SIOP (synthetic iron oxide pigments) plant to 100 percent with some line balancing capex to generate an additional 10,000 TPA of production per annum. It is one of the world’s largest commercial sale plants to produce 27,000 TPA SIOP along with 50,000 TPA calcium chloride with technology from Rockwood Pigments and patented technology for Yellow Pigments.

The present capacity utilization of DCW’s SIOP plant stands at around 75 percent which works out to a total production of 20,000 TPA. On completion of the proposed debottlenecking, the SIOP production will go up to 30,000 TPA. While the CPVC project is expected to be commissioned in the second half of the financial year 2023-24, the SIOP de-bottlenecking is projected to be completed by the first quarter of the same year. DCW, however, is making concerted efforts to try and fast-track the projects.

“This capital expenditure aligns with our overall strategy of making further inroads into and expanding our specialty chemicals business. The capacity expansion of CPVC and taking our SIOP capacity to nearly 100 percent, will further strengthen our position in the marketplace considering the demand curve for both these products. The proposed capex initiatives also further strengthen our country’s ‘Make in India’ initiatives,” said Vivek Jain, Managing Director, DCW Ltd.

The total combined expenditure on both these projects is estimated at Rs 125 crore which is proposed fully through internal accruals. DCW is investing in both these projects and anticipates a substantial boost to profitability, given the high margin profile of these products.

“We are committed to growing our specialty portfolio going forward as well and our strategy and research and development (R&D) teams are already focused on the next growth drivers and in identifying products relating to chlorine and other related chemistry to add/expand to our portfolio. We wish to continue our historic pioneering legacy in the commodity segment while considering new niche products. Our solid cash flow generation and de-leveraged balance sheet give us ample headroom to pursue the said growth strategies,” Jain added.

DCW, a leading manufacturer of CPVC, a versatile thermoplastic used mainly for manufacturing hot and cold-water pipes, industrial liquid handling, and a wide range of products serving a variety of applications. Its caustic soda, SIOP, and PVC units are in close proximity to the Tuticorin port in Tamil Nadu, giving a competitive edge over its peers in exporting its products to global markets.

Triggered by a bumper one-time income of Rs 29.51 crore from exceptional items, DCW reported two-and-a-half times to increase in its net profit at Rs 49.64 crore for the quarter that ended September 30, 2022, compared to Rs 19.67 crore in the corresponding last year. The total income of the company stood at Rs 70.26 crore for the July-September quarter versus Rs 57.31 crore in the same quarter the previous year.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com