Chemplast Sanmar Ltd. said it is expediting the expansion of a custom manufacturing chemical division near Hosur in Tamilnadu to cater to additional volumes.
“With greater visibility on new products, especially with the order win in this half year, we plan to increase the capacity in Phase-1 itself to provide for incremental volumes,“ Ramkumar Shankar, MD, said in an earnings call.
“Therefore, we plan to advance some of the capacity planned in Phase-2 in Phase-1 itself, which will lead to the project cost from Phase-1 moving up from ₹260 crore to ₹310 crore,” he added.
Chemplast Sanmar, is a leading supplier of intermediates for global Agrochemical, Pharmaceutical and Fine Chemical innovators and has a 1,068 mtpa installed capacity at Berigai, near Hosur.
According to Mr. Shankar, Phase-1 of the multi-purpose custom manufacturing block is slated to be completed by Q2 of FY24. The company intends to complete the civil work for the entire project in this phase.
Effectively, phase-2 would take a much shorter time to commission after completion of Phase-1, as it would not require any additional civil work. Besides, the company is also in the process of tying the debt for the project, which is expected in the ensuing quarter.
“Based on current trends, the custom manufacturing business is expected to grow at about 30% on the top line in FY23,” he said.
Mr. Shankar said the company recently signed a Letter of Intent with a global innovator to supply an advanced intermediate for a recently launched active ingredient and added that they expected to achieve significant growth in this segment in the coming years.
Stating that they were incurring a significant amount of capex in phase-1, CFO N. Muralidharan said that it would not be restricted to the balance sum of ₹30-40 crore for phase-2.
“It would be definitely larger than that as the company is evaluating the pipeline and the options and looking at fast-tracking Phase-2 as well,” he added.