RP-Sanjiv Goenka Group owned Phillips Carbon Black (PCBL) will be investing Rs 300 crore in the current financial year to increase its installed capacity by 80,000 tonnes in its plants in Mundra and Palej. The move will result in upping its annual production capacity to 5,60,000 tonnes by March 2019.
This quarter, the company had utilised 98 per cent of its 4,80,000 installed capacity which called for increasing the same.
Besides, it is also planning another 1,20,000 tonnes greenfield project and is currently shortlisting locations in Tamil Nadu and Andhra Pradesh.
Sanjiv Goenka, the company's chairman said that it has 60 acres of land in Tamil Nadu which is the most likely location for the new project, but Andhra Pradesh is also a possible location for the upcoming plant.
"We are keen for a south based location for the new unit although we are considering Gujarat. Most of the new projects and expansions of the tyre companies are taking place in south India and so we are keen on that part of the country. The new plant has to be in close proximity to these plants," he said adding that PCBL is in talks with tyre companies for offtake commitment.
Madras Rubber Factory Ltd, makers of the MRF brand of tyres is its largest client.
However, PCBL, which is the largest carbon black company in India and the sixth largest globally, is yet to narrow down on the possible investment in this project as the cost will depend on the location as well as the product mix. Ideally, the plant will require 70-80 acres of land.
These decisions come in wake of the carbon black sector growing at a 4-5 per cent rate per annum in the country.
Goenka said besides the manufacturing regular carbon black, which is a reinforcing filler used in rubber compounds, the company is focussing on increasing the share of specialty carbon black, used in printing, paints, fibre, films and others, from the current 20,000 tonne capacity to 50,000 tonne per annum.
Globally, the share of specialty blacks to a company's overall portfolio is between 15-20 per cent, however, in case of PCBL, it is just above four per cent.
"The share of specialty blacks to our manufacturing portfolio is miniscule but its share to our net profit is significant. We are going to focus on expanding this business which will further our bottomline," he said.
Led by lowering of expenses and higher capacity utilisation to cater to its consumers, PCBL reported a 407 per cent increase in its net profit at Rs. 48.16 crore for the quarter ended June 30, 2017, while its net sales grew by 33 per cent at Rs. 637.32 crore.
"This is probably the best first quarter we ever had. Normally, it's the third and fourth quarter which outpaces the rest of the fiscal periods but this time, its been exceptional," Goenka said.
PCBL's net profit in the corresponding quarter of the last financial year stood at Rs 9.50 crore with net sales of Rs 453.18 crore.
In recent times, the company had tried to acquire other carbon black manufacturers globally but the price offered and asked for by the sellers didn't materialise into a takeover.