Fluoride Action Network

Interview with Shekhar Khanolkar, Managing Director, Navin Fluorine International

Source: www.IndiaInfoLine.com (IIFL) | May 31st, 2016 | By Yash Ved
Location: India
Industry type: Chemical Industry

Shekhar Khanolkar is a Chemical Engineer with Masters in Management studies and an alumni of Harvard Business School. He has spent more than 24 years in the chemical industry with both Indian & Multinational Chemical majors. He has been on the Board of the company since 2008  and Managing Director since 2011.

Navin Fluorine International Ltd (NFIL), established in 1967, belongs to the Arvind Mafatlal Group – one of India’s oldest industrial houses. It is one of the largest and most respected Indian manufacturers of fluorochemicals with experience, capability and expertise in scale up from research to pilot and manufacturing. It is one of the few chemical companies in India to be “Responsible Care” certified.

Replying to Yash Ved of IIFL, Shekhar Khanolkar says, “With an objective to create a long-term sustainable organization equipped with a strong but resilient business model, we initiated our journey to leverage on our capabilities and Fluorination Chemistry.”

Brief us about the stake acquisition in Manchester Organics?
Our association with MOL began in 2011 when we acquired 51% equity shares. Even then the business models of both the companies were in perfect synergy. On one side, Manchester Organics was  working directly with innovative pharma companies on milligram to multi kilo research phase. On the other side, Navin Fluorine was developing its contract research and manufacturing services division with experience in multi hundred kilos to multi ton production activities, leveraging its Fluorination expertise gained over four decades.

When we started working with the company in May 2011, it had a catalogue of around 8,000 compounds. Today, the number stands at more than 40,000 compounds, which includes many innovative molecules helping innovator companies in their research efforts. In Oct 2015, we acquired the balance equity stake of 49% MOL through our 100% subsidiary NFIL UK Limited . Over the years, we have further enhanced the scientific capabilities at MOL site at Runcorn.

Today, MOL continues to bring access to not only global innovative pharmaceutical companies but also cutting-edge fluorination chemistries, which supports the company’s overall production capabilities in creating value added product portfolio of CRAMS.

Tell us about your plans to set up greenfield plant at Dahej, Gujarat under JV with Piramal Enterprise.
We are setting-up a Greenfield plant at Dahej, Gujarat for exclusive supply of products to Piramal Enterprises.  A JVC is formed between Piramal enterprise and Navin, wherein the former will hold 51% of the equity share and Navin will hold 49%. This JV company will develop, manufacture, sell Specialty Fluorine Chemicals, with specific focus on applications in healthcare segment.

JV has invested roughly about Rs.140 crores into this project. This will enhance our portfolio with value added fluoro-intermediates. The project is moving smoothly and the product is already under validation at customer end. This project reinforces our vision of leveraging Navin Fluorine’s Fluorination capabilities, to tap the latent potential of Fluorine as a chemical into pharma intermediates, in the area of healthcare which is a forte of Piramal Enterprises.

Comment on your manufacturing facilities?
Apart from Dahej, we have two more manufacturing facilities. One at Surat – in the state of Gujarat and the other at Dewas – in the state of Madhya Pradesh.

At Surat chemical complex, we manufacture various products starting with Hydrofluoric acid and then build Fluorine chemistry from it. Our R&D centre – Navin Research Innovation Centre is also housed at Surat.

Dewas Site is developed as a cGMP compliant site for CRAMS from the very inception. Earlier, we had a cGMP complaint Pilot plant for CRAMS business. During last year, we have invested Rs. 65 crores in building a cGMP compliant manufacturing unit, to create ton-level capabilities for augmenting our CRAMS offering. This is India’s only cGMP compliant high pressure fluorination facility. The plant is now fully operational.

Brief us about your different segments such as Specialty Chemicals & Inorganic Fluorides?
The company’s chemical business can be further segregated as – Refrigerants, Inorganic Fluorides, Specialty Chemicals and CRAMS.

In Refrigerants business, we manufacture R22 (HCFC- 22), catering to demand from AC manufacturers and replacement demand from AC users.

In Organics Fluorides BU, our product portfolio consists of 8-10 products which are mainly used in Stainless Steel and Glass Industry. These two business together are part of our traditional business.

Over the last 15 years, we have created our presence across the higher value fluorine application industries, through our Specialty Chemicals BU and CRAMS BU.

In Specialty Chemicals BU, we cater to demand for value-added fluorine based molecules for niche applications in petrochemicals, pharmaceutical and agrochemicals, in India and across the Globe.

In CRAMS BU, we have created our presence and acceptance among the research fraternity with global innovator pharma companies. In this business, we capitalized on our knowledge & technical know-how of fluorine chemistry, to offer basic research, library syntheses, process development, scale up and small and large batch manufacturing and thus differentiate ourselves from other CRAMS players in India & China.

What are your investment plans going ahead?
We are just closing two of investments at Dahej and at Dewas, which would start contributing to the growth of the company form FY17. We are working on a couple of projects at this point in time, hence, we still do not have specific numbers to present to you today. We are also investing into our manufacturing site at Surat, to make this facility a zero liquid discharge facility as a part of our sustainability efforts.

Apart from that we are also looking at some expansion activities or de-bottlenecking activities for our Specialty business. Those activities are also under finalization right now. So, it will be a little too early for me to give exact number. But there are couples of infrastructure CAPEXs, couple of growth CAPEXs, and couple of maintenance CAPEX s, that are under review at this point of time.

Your target for EBITDA margins and revenue?
We have been able to improve of EBITA margins this year. We will continue to work towards improving the same, while we drive our top line. However, we refrain from sharing a formal guidance.

What is your revenue mix?
Our traditional business units of Refrigerants (34%) and Inorganic Fluorides (14%) have contributed 48% of the standalone sales in current year vis-à-vis 73% FY11.

Today, our Specialty (38%) and CRAMS (14%) business units put together have contributed 52% of our standalone sales in current year vis-à-vis 27% in FY11, while all these businesses individually are showing growth over the years.

What is your current debt on books?
The cash and cash equivalents including non-current investments of the company stands at Rs. 199 crores as on 31st of March, 2016. The long-term debt as on 31st of March, 2016 is at 48 crores. Thus, making us a net debt free status company.

What is your message to the shareholders?
With an objective to create a long-term sustainable organization equipped with a strong but resilient business model, we initiated our journey to leverage on our capabilities and Fluorination Chemistry. For past few years, we have continuously invested financial and managerial resources to achieve this goal and we will continue to do so. All our strategic initiatives towards moving up the value chain have now begun to culminate into reality. We believe that the journey towards growth has just gained momentum.

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