INITIATING COVERAGE Navin FluorineInternational
© B&K Securities 2014
All Rights Reserved
Attention is drawn to the disclaimer andother information on the last page
Batlivala & Karani
MID CAP
Exciting times ahead!!!
Navin Fluorine International Ltd. (NFIL), an Arvind Mafatlal Group companywas established in 1967 to manufacture Fluorochemicals. It has now diversifiedinto Refrigerants, Inorganic Fluorides, Speciality Fluorochemicals and CRAMS.NFIL is gearing up to monetise huge opportunities arising out of recovery indeveloped countries and virtual capitulation in China. Further, CRAMS businessis at the inflection point and is expected to double profits over the next threeyears. Total investments (real estate+non-trade) value at current prices is ~Rs178/share and cash per share is expected to rise to Rs 229 by FY15E. Combinedvalue is ~67% of current m.cap. NFIL’s dividend payout ratio has beenconsistently above 30%. We like the stock and expect re rating as CRAMS gainstraction. We initiate coverage with a Buy and assign a target price of Rs 850.
Year to March FY13 FY14 FY15E FY16E CAGR (%)
P&L Data (Rs mn) FY14-16E
Revenues 5,482 4,843 5,499 6,312 14.2
EBITDA 827 660 785 959 20.6
Adjusted net profit 434 524 624 755 20.0
Margins (%)
EBITDA 15.0 13.6 14.2 15.1 –
Adjusted net profit 7.9 10.8 11.3 12.0 –
Balance Sheet (Rs mn)
Total assets 7,256 7,794 8,359 8,910 6.9
Shareholders’ funds 5,042 5,553 5,983 6,533 8.5
Per Share Data (Rs)
Adjusted EPS 44.4 53.7 63.9 77.4 20.0
CEPS 65.8 76.0 87.2 101.9 15.8
Returns (%)
RoCE 11.9 11.2 12.4 13.9 –
RoE 8.8 9.9 10.8 12.1 –
Ranjit [email protected]+91-22-4031 7127
Presence in Fluorine Chemistry: Indian chemical companies (Fluorinebased) are witnessing good times as global MNCs are now recognising theirability to manufacture newer molecules and execute complex processes. NFILwith over 40 years of experience is well placed to capture this growth.
Rebooting to pursue higher growth: End of easy money regime (incomefrom carbon credits) in 2013 compelled management to get its focus back togrowing business verticals. NFIL has rebooted itself and started improvinginternal efficiencies and diversifying into new geographies and products.
CRAMS – next growth driver: Encouraged by strong response fromMNCs, NFIL is investing Rs 650 mn at its Dewas site. The capacity is expectedto come in FY15 and would drive EBITDA margins and profitability considerably.
Key risks: Volatile currency and aggressive pricing by Chinese players.
Relative Performance
26 June 2014
BUY
Share Data
Market Cap. Rs 5.9 bn (US$ 98 mn)
Price Rs 619
Target Price Rs 850
BSE Sensex 25,314
Reuters NAFL.BO
Bloomberg NFIL IN
6M avg. daily turnover (US$ mn) 0.3
52-week High/Low (Rs) 660/148
Issued Shares 9.76 mn
Valuation Ratios (Consolidated)
Yr to 31 Mar FY14 FY15E FY16E
EPS (Rs) 53.7 63.9 77.4
+/- (%) 20.8 19.0 21.1
PER (x) 6.5 9.7 8.0
PBV (x) 0.6 1.0 0.9
Dividend/Yield (%) 4.6 2.7 2.9
EV/Sales (x) 0.5 0.9 0.7
EV/EBITDA (x) 3.5 6.0 4.4
Shareholding Pattern (%)
Promoters 39
FIIs 8
MFs 3
Public & Others 50
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2NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Index ...................................................................... Page No.
Investment arguments .................................................................................. 3
Investment concerns .................................................................................... 8
Outlook and valuation .................................................................................. 9
Company background ................................................................................ 11
Business segments ....................................................................................... 15
Industry ...................................................................................................... 20
Financial analysis ........................................................................................ 22
Annexure I ................................................................................................. 25
Detailed financials ....................................................................................... 28
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3NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Investment arguments
Presence in Fluorine Chemistry
Indian chemical companies are witnessing good times as global MNCs have started to recognise
their ability to manufacture newer molecules and execute complex processes. Companies are
witnessing higher enquires from global MNCs to aid their innovation and research. CRAMS
business in chemicals seems to be at inflection point and would likely take off in the near future.
Further, recovery in the developed countries augurs well for global chemical companies as
their performance is directly linked to GDP growth. Also, slowdown in China due to clampdown
by the governmental officials for implementing stringent effluent treatment norms to bring
down the pollution levels is expected to benefit Indian players with proven technical capabilities.
Global fluorochemicals market is expected to reach US$ 25 bn by 2020. Positive demand outlook
from key application markets such as refrigeration, pharmaceuticals, aluminium, steel and
electronic consumables is expected to drive fluorochemicals sales over the next six years. Fluorine
chemistry is very complex and it needs high technical expertise to manage and manufacture
different compounds with high purity. Some of the compound takes 7-8 weeks involving 15-18
different processes, while some are manufactured within a day. Managing such complexity and
getting high purity remains key to success in fluorochemcials industry. NFIL with rich experience
of over 40 years in manufacturing of Fluorine based derivatives would be a key beneficiary. The
company is well placed to capture growth emanating from Fluorine based derivatives.
Some of the key takeaways from earnings call of MNCs having significant exposure in China.
BASF: BASF 2014 outlook flags China slowdown risk to chemicals. Asia accounted for the
largest regional reduction in chemicals growth in BASF’s 2014 outlook. Given China GPD’s
chemicals-intense nature, this contributed to a global forecast for slowing chemical growth
(4.4%).
Eastman: Eastman added to Dow’s cautious comments on chemicals demand growth in
China in its discussion of 1Q results. Growth of just 1% in sales in the Asia-Pacific region
was the slowest since 1Q12 and demand for solvents, tyres and plasticiser in China was
weak. Management reiterated confidence that China’s demographic and consumer trends
will drive long-term demand. Yet, it noted slowing China demand is affecting chemical plant
construction and reducing speciality fluids sales.
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China Wes tern Europe Others Mexico Japan USA
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World Fluorspar production
Source: Industry, B&K Research
World Fluorspar consumption
With virtual capitulation inChina, Indian players areexpected to benefit
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4NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Rebooting to pursue higher growth targets
End of easy money regime (income from carbon credits) in 2013 compelled management to get
its focus back to growing business verticals. NFIL has rebooted itself and started diversifying
into newer geographies, introducing new products and improving internal efficiencies. Further,
it has embarked on an aggressive plan to strengthen its business verticals and reviewing its
work practices and standard operating procedures and modifying them to bring in overall
permanent cost efficiencies in input-output norms, energy usages, import-export points, parcel
sizes, etc. The results were partly visible in FY14 as the company was able to hold its
EBITDA margins at 13.6% despite zero carbon credits income. Logistics costs were
also well managed as Hazira port became operational for containerised cargos during the year.
NFIL would continue to enjoy this permanent advantage due to the proximity of Bhestan
plant to Hazira.
Segmental revenues
(Rs mn) Refrigerants Speciality Chemicals Inorganic Fluorides CRO/CRAMS
Applications Air conditioning and Pharma, Agrochemicals Metals industries (mostly Research for a broad range
household refrigerators and Petrochemical industries steel, abrasive and glass) of pharma and agro companies
Geographical presence India, South East Asia, India, Europe, US and Asia India and Asia India, Europe and US
Middle East and South Africa
Domestic (%) 68.0 64.0 96.0
Exports (%) 32.0 36.0 4.0 >90.0
Revenues in FY14 1,540 1,560 1,130 630
Contribution (%) 32.0 32.0 23.0 13.0
Key competitors – SRF, Gujarat SRF, Tanfac Inds Tanfac Inds SRF
Domestic Fluorochemicals
Key competitors – Chinese refrigerant Honeywell, BASF, Chinese players Chinese players
International players Arkema, Rhodia,
Saltigo, Chinese players
Growth drivers Internal efficiencies, niche New product launches Export to newer Synergies from MOL,
pharma applications geographies higher share of CRAMS
Source: Company, B&K Research
EBITDA margins steady inFY14 despite no carboncredit income
Carbon credit income
(Rs mn) FY10 FY11 FY12 FY13 FY14
Revenues 4,292 4,297 7,219 5,482 4,843
EBITDA 1,433 1,125 2,505 827 660
EBITDA margin (%) 33.4 26.2 34.7 15.1 13.6
Carbon credits (CC) 1,500 783 2,519 571 –
Revenues (excl. CC) 2,792 3,514 4,700 4,911 4,843
EBITDA (excl. CC) 83 420 238 313 660
EBITDA margin (%, excl. CC) 3.0 12.0 5.1 6.4 13.6
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5NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
CRAMS – next growth driver
NFIL’s offerings in the dedicated fluorine space are now well accepted by global pharma
researchers and formulators (MNCs). In FY14, the company has developed, worked and
delivered more than 40 molecules to more than 15 global pharma and agro majors.
The division has registered revenues of Rs 260 mn. The management expects strong growth
in FY15 and beyond.
Encouraged by strong responses from large global players, NFIL is investing Rs 650 mn at its
Dewas site to deliver tonne level quantities in large batch sizes. The cGMP compliant capacity
is expected to come on-stream during FY15.
The company also intends to leverage its acquisition of Manchester Organics Ltd. (MOL). The
acquisition of MOL provides NFIL access to some of the advanced molecules as well as
established relationships with global pharma and agrochemical companies. Though MOL had
R&D capabilities it was unable to service clients with tonne level production requirements due to
lack of scale. With the synergies flowing in, the management expects NFIL-MOL combine to
garner higher share in the contract research and manufacturing space of fluorinated molecules.
NFIL is offering Contract Research and Manufacturing Services (CRAMS) for custom
chemical syntheses of fluorinated compounds for the pharmaceuticals, agro chemicals and
speciality chemicals industries. Offerings and capabilities include basic research, library
syntheses, process development, scale-up and small and large batch manufacturing.
CRO/CRAMS
(Rs mn) FY13 FY14 FY15E FY16E
Revenues 140 630 860 1,200
% of total revenues 3.0 13.0 15.6 19.0
Domestic (%) 10.0 10.0 – –
Exports (%) 90.0 90.0 – –
Growth (%) – 350.0 36.5 39.5
Source: Company, B&K Research
Speciality chemicals business to grow at rapid pace
Key segment for NFIL, is witnessing higher sales of Fluorine based molecules with niche
applications in Pharma, Agro and Petrochemicals. NFIL has 40 products (indigenously built) in
this segment and has introduced six new fluorinated compounds in FY13 and two products in
FY14. During FY14, the segment’s performance was under pressure as one of its key selling
product (Boron Trifluroide – BF3) witnessed weak demand. It is used as catalyst in making
Polymer, Pharma and adducts. NFIL has one of the largest BF3 facilities in the world.
The company intends to expand manufacturing and research capacity to speed up new product
development and commercialisation. It has also augmented its Multi Purpose Plant (MPP)
capacity to increase its product basket and intends to generate sales of Rs 700 mn from it in
near future. If the demand exceeds it would further take steps to implement MPP 2 plant. It
also intends to grow the business by diversifying into newer geographies.
In order to meet the growing demand of novel fluoro compounds and new chemical entities
(NCE), NFIL expanded its Navin Research Innovation Center (NRIC) infrastructure to provide
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6NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
strong R&D support to global clientele. R&D is well supported by a pilot plant enabling faster
development of fluoro compounds. It currently has 6 Phds, 31 Post Graduates, 1 M.Phils, 4
Chemical Engineers and 3 Graduates working in its R&D.
Speciality chemicals
(Rs mn) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
Revenues 794 853 1,075 908 1,175 1,590 1,780 1,560 1,794 2,063
% of total revenues 31.0 29.6 25.9 21.2 27.3 22.0 32.5 32.2 32.6 32.7
Domestic (%) – – – – 65.0 50.0 54.0 64.0 – –
Exports (%) – – – – 35.0 50.0 46.0 36.0 – –
Growth (%) – 7.4 26.0 (15.6) 29.4 35.3 11.9 (12.4) 15.0 15.0
Source: Company, B&K Research
Refrigerant business to remain steady
NFIL manufactures R22 class of refrigerant which is used in residential and commercial air
conditioning. The gas is not used in automobile air conditioning; however, it is also used in
Household Refrigerators. It exports 32% of its products to countries like South East Asia,
Middle East, Saudi Arabia, Turkey, Egypt and South Africa through distribution network of
120 distributors. R22 class of refrigerant is under phase out due to its Global Warming Potential
(GWP). Production is now restricted at average of 2009-10 levels with 10% cut in 2015 and
complete phase out by 2030. With the country’s air conditioner market expected to rise owing
to rapid increase in middle class households and supply been constrained, the company expects
this segment to deliver healthy performance. The company does not manufacture R 134a
grade of refrigerant (automobile air conditioning), however, it does trading of this gas in India.
Factors that are expected to sustain R22 consumption
• No proven substitute is available yet. R140a is being looked at as an alternative; however,
owing to its high GWP the usage is been limited in developed countries.
• High growth in ACs, Refrigerators from Asia is expected to drive demand for R22.
• R22 is increasingly finding applications in pharma, however, it is still in the nascent stage.
Refrigerants
(Rs mn) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
Revenues 1,268 1,386 2,296 2,480 2,387 4,469 2,331 1,540 1,602 1,682
% of total revenues 49.4 48.1 55.2 57.8 55.6 61.9 42.5 31.8 29.1 26.6
Domestic (%) – – – – 32.0 60.0 68.0 68.0 – –
Exports (%) – – – – 68.0 40.0 32.0 32.0 – –
Dealers (Nos.) – – – 125 120 120 120 120 – –
Growth (%) – 9.3 65.6 8.0 (3.8) (18.3) (9.7) (12.5) 4.0 5.0
Source: Company, B&K Research
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7NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Inorganic fluorides – Exports to drive growth
This segment includes product such as ammonium bifluoride, potassium fluorides, sodium
fluorides and other inorganic fluorides that find application in industries like Glass, Metals,
Agro, Pharma and FMCG. This has been a stable business for NFIL and has been generating
revenues of Rs 1 bn for it. The company plans to introduce new inorganic fluorine compounds
and also intends to increase its international presence. It has initiated exports in a good way
and intends to improve its capacity utilisation.
The division has introduced a compound for the glass industry in FY14 and expects high
growth potential for it in both domestic and international markets in the coming years.
Inorganic fluorides
(Rs mn) FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
Revenues 543 671 808 596 770 980 990 1,130 1,243 1,367
% of sales 21.2 23.3 19.4 13.9 17.9 13.6 18.1 23.3 22.6 21.7
Domestic (%) – – – – 98.0 95.0 97.0 96.0 – –
Exports (%) – – – – 2.0 5.0 3.0 4.0 – –
Growth (%) – 23.5 20.5 (26.2) 29.2 27.2 1.0 14.1 10.0 10.0
Source: Company, B&K Research
Net cash company trading at attractive valuations
NFIL is a net cash company with cash equivalents of ~Rs 1.6 bn (27% of m.cap) and has
dividend payout ratio of ~30% in the last three years. Further, it also has real estate property
worth Rs 475 mn (BV) from which it derives lease rentals of Rs 110 mn p.a.
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8NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Investment concerns
Raw materials availability and price
Fluorspar, Chloroform, Sulphur and Boric acid are the key raw materials for NFIL. Currently
it requires ~40,000 MT of fluorspar annually and the supply is been met by imports. In order
to secure supply, the company has formed JV with GMDC and Gujarat Fluorochemicals for
beneficiation of fluorspar ore from reserves located in Gujarat. Supply is expected to commence
post FY16.
Aggressive pricing by Chinese competitors
China is a big player in Refrigerant gases and enjoys dominant market share. Therefore any
aggressive pricing from Chinese players would impact NFIL.
Stringent effluent treatment norms
Chemical manufacturing inherently produces wastes/effluents that need to be treated before
dumping into atmosphere/environment. Failing to do so could harm the ecological balance in
the long-term. World over, the governments are taking cognizance of this fact and are coming
out with stringent norms.
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9NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Outlook and valuationPresence in Fluorine Chemistry for the last 40 years has given the company an edge in catering
to growing demand of Fluorine based molecules. Global fluorochemicals market is expected
to reach US$ 25 bn by 2020. Positive demand outlook from key application markets such as
refrigeration, HVAC, pharmaceuticals, aluminium, steel and electronic consumables is expected
to drive fluorochemicals sales over the next six years. With the group company now coming
out of woods and aiming to grow its chemical business, NFIL seems to be set on a high growth
path. Though there would be headwinds in the near term w.r.t. introduction of new products
and phasing out of R22, however, FY16 could be a watershed year for the company as it would
witness the increased contribution from CRAMS. Ability to introduce new fluorine based
molecules and ramp-up of its CRAMS remains a key trigger for the company.
Though the stock price has more than doubled in the last one year owing to superior margins
despite zero CERs, we believe the company is still worth looking at from two-three years
perspective as it has just embarked on a growth journey.
We expect NFIL to post revenue CAGR of 14% and PAT CAGR of 20% over 2015-16. We
expect valuation multiple to re-rate and therefore feel comfortable in assigning 11x multiple to
FY16E EPS of Rs 77.4.
We have also worked out SOTP based valuation by assigning 11x multiple to core earnings
and adding cash per share+investments. The target price thus achieved is Rs 975 per share.
Price movement Relative performance
Source: B&K Research
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10NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Valuation comparison with peers
CY13/FY14
Bloomberg No. of CMP M Cap Revenues EBITDA PAT EPS RoE RoCE EV/ TPE
ticker shares (mn) (Rs) (Rs mn) (Rs mn) (Rs mn) (Rs mn) (Rs) (%) (%) EBITDA (x) (x)
Navin Fluorine NFIL IN 9.8 619 6,041 4,843 660 524 53.7 9.9 11.2 3.5 11.5
International
SRF SRF IN 51.4 509 29,252 40,181 5,225 1,658 28.9 8.2 7.4 8.2 17.6
BASF BASF IN 43.3 876 37,922 44,299 2,520 1,205 27.8 11.6 13.5 16.8 31.5
Clariant* CLRC IN 26.7 870 23,194 12,132 1,209 839 31.5 31.0 20.1 11.3 27.7
Pidilite Inds PIDI IN 512.6 320 164,045 38,561 6,780 4,802 9.4 25.5 32.4 22.8 34.2
Atul Ltd. ATLP IN 29.7 893 26,486 23,983 3,637 2,192 73.9 29.6 27.6 4.3 12.1
Castrol* CSTRL IN 494.5 316 156,262 31,796 6,815 5,086 10.3 75.2 108.7 20.5 30.7
Source: Company, B&K Research. *CY ending.
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11NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Company backgroundNavin Fluorine International Ltd. (NFIL), an Arvind Mafatlal Group company was established
in 1967 to manufacture Fluorochemicals. It was a part of Mafatlal Industries till 2003 and was
divested as a part of Financial Restructuring. NFIL has now diversified its business into
Refrigerants (R22), Inorganic Fluoride, Speciality Fluorochemicals and CRAMS and derived
34%, 25%, 35% and 6% of its revenues from these segments, respectively, in FY14. The
mother plant is located at Surat (Gujarat) and another one at Dewas (Madhya Pradesh). The
company derived ~25% of its revenues from exports.
Subsidiaries and Joint Venture
Subsidiary companies % holding of NFIL
Sulakshana Securities Ltd. 100
Manchester Organics Ltd. 51
Urvija Associates 80
Joint Venture
Swarnim Gujarat Fluorspar Pvt. Ltd. 25
Journey
1967 : Establishment of the first integrated Fluorochemicals Complex in South East Asia
(excluding Japan) to produce HF, refrigerant gases and a range of inorganic fluorides at
Surat, Western India.
1969 : Commencement of commercial production of refrigerant gases.
1978 : Facility was set up at Dewas to produce Alkylated Anilines and Toluidine.
1982 : Capacity expansion at Surat for Smelter Fluorides and AIF3.
1990 : CFC 113 plant commissioned at Surat.
1999 : Commencement of organic and inorganic speciality fluoride production at Surat.
2000 : Commencement of Fluorobenzene and Benzotrifluoride series production at Surat.
2001 : Set up first large scale plant in South East Asia for production of Boron Trifluoride
Gas at Surat.
2003 : Capacity expansion of speciality organic fluorides at Surat.
2004 : Commissioned Trifluoroacetic acid plant at Surat.
2005 : Commissioned Trifluoroethanol plant at Surat.
2006 : Capacity expansion of Boron Trifluoride Gas.
2007 : Commissioned CDM plant at Surat.
2008 : Inauguration of new R&D centre – Navin Research Innovation Centre (NRIC) at Surat.
2009 : Start-up of pilot plant for scale-up of research and development molecules.
2010 : Established multi-purpose plant and CRO at Surat.
2011 : Capacity expansion of BF3 at Surat, acquisition of land at Dahej for further expansion,
acquisition of Manchester Organics Ltd., commissioning of cGMP pilot plant at Dewas.
2013 : Expansion of multi-purpose plant at Surat.
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12NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Vision
We at Navin Fluorine are committed to be a world-class, customer focused, innovative
organisation in the field of Fine and Speciality Chemicals and partner of choice to global
Refrigerant, Chemicals, Crop Sciences and Life Science companies.
Mission
• To provide customers the best “Value for Money” by producing world-class speciality
fluorochemicals at most competitive prices.
• To continue and grow R&D as the sustenance engine of the organisation.
• To innovate, build and operate chemical plants in the most safe and environment friendly
manner.
• To continuously enhance stakeholder value by optimum utilisation of resources.
Board of Directors
Mr H.A. Mafatlal, Chariman
Mr H.A. Mafatlal is the chairman and a promoter director of Navin Fluorine International
Limited. He heads the Arvind Mafatlal group of companies, a conglomerate having major
interests in Textiles, Denim, Rubber Chemicals and Fluorochemicals. He was vice-chairman
of the Cotton Textiles Export Promotion Council. Mr Mafatlal holds a Bachelor’s Degree in
Commerce (Hons.) and has attended Advanced Management Programme at the Harvard
Business School, USA.
Mr Shekhar Khanolkar, Managing Director
Mr Khanolkar is the Managing Director and has over 22 years of experience in various
reputed Indian and multinational organisations. He has been on the board of the company
since 2008. He holds a Bachelor of Engineering (Chemical) degree from Pune University and
holds a degree in Masters of Management Studies (MMS) from University of Mumbai. He has
completed Advanced Management Programme at the Harvard Business School, USA.
Senior management
Dr Ashis Mukherjee, President – CRAMS & Chief Technology Officer
Mr. Mukherjee is a post graduate in Science, Ph.D. and a postdoctoral fellowship from The
Rockefeller University, NY, USA. He has work experience of 21 years in Pharma, R&D and
CRO/CRAMS. He has been with the company since 2009.
Mr Partha Roychowdhury, Vice President – Finance & Accounts
Mr Roychowdhury is a C A with 29 years of post-qualification experience. He has been with
the company since 1995.
Mr Radhesh Welling, President – Marketing & Corporate Strategy
Mr Welling is a mechanical engineer from NIT, Surat and followed with MBA from IIFT, Delhi
& IMD, Switzerland with a total work experience of more than 17 years.
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
13NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Equity capital Promoter’s stake
Source: Company, B&K Research
36.0
36.5
37.0
37.5
38.0
38.5
39.0
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
%
Technical capabilities
Capability and experience to develop innovative and cost effective processes
Fluorination capabilities include catalytic, non-catalytic, gas phase, and liquid phase fluorination
using HF. Other specialised fluorination reactions include Balz- Schiemann, Schiemann and
Swarts. Safe handlings of HF and Halogen exchange are niche capabilities. It also practice
vapour phase chemistries namely alkylation, halogenations including bromination,
ammoxidation, etc.
Expertise includes
High Pressure Chemistry
• Ammonolysis
• Chlorination
• Fluorination
• Hydroxylation
• Hydrogenation
• Halogen exchange
Diazotization
• Sandmeyer’s (Halogenations, etc.)
• Schiemann
• Balz-Schiemann
• Deamination
• Hydroxylation
• Meerwein arylation
Vapor Phase Chemistry
• Alkylation
• Ammoxidation
• Chlorination
• Fluorination
• Oxidation
• Hydrolysis
Others
• Acylation
• Friedel-Crafts
• Bromination
• Chlorination
• Nitration
• Sulfonation
• Desulphonamidation
• Halogen exchange (Halex)
• Organometallics
0
50
100
150FY
06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
Rs
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
14NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Process scale-up and technology transfer
NFIL has developed capability and expertise to scale up from research to pilot and
manufacturing. Dedicated teams manage projects from development trials to final delivery of
the desired compound. The pilot facility at Surat can simulate full scale production conditions
and provide transition from laboratory to production plants.
Technological expertise spans
Fluorinations: With metal fluorides (Halex), anhydrous HF, HF amine complexes, SF4 (under
high pressure) and F2 gas.
High pressure synthesis: Using catalytic hydrogenation and hydro-dechlorinations,
ammonolysis, hydroxylation, halogen exchange using HF, Kolbe reaction.
Vapour phase synthesis: Using alkylation, fluorination, ammoxidation, chlorination,
hydrolysis, oxidation.
Diazotizations: Fluorination (Schiemann reaction and Balz-Schiemann reaction), bromination
and chlorinations (Sandmeyer Reactions), hydrolysis to phenols, deamination and Meerwein
arylation.
Other capabilities: Nitration, bromination, chlorination, acylation, chlorosulfonation,
condensation, methoxylation, organometallic chemistry, Grignard reaction and n-BuLi
applications. Reductive deamination with sodium borohydride, hydrogen peroxide oxidation,
Friedel – Crafts acylation, Fries Rearrangement, Kolbe’s synthesis and hydrolysis.
Surat: New Fluorination Technologies
NFIL has been using AHF and KF as fluorinating agents for several years now. Recently they
have developed capabilities to handle fluorinating reagents like SF4 and fluorine gas. These
reagents are highly hazardous and require special precautions to handle. They are also working
on newer fluorinating agents like XtalFluor in collaboration with Manchester Organics.
Dewas: State-of-the-art technology capabilities
NFIL’s team is capable of undertaking any organic synthesis challenge and assignment involving
chiral chemistry, moisture sensitive reactions, and other speciality requirements. Their focus
though is centered on fluorination based expertise and technologies.
These include:
• Fluorination by anhydrous hydrogen fluoride (AHF) fluorinating reagents.
• Fluorination using Halex Reactions (KF, CsF, Py-HF).
• Reactions using BF3, BF3 adducts, DAST, Selectfluor and other similar reagents.
• Chemistry involving Trifluoromethylation using CF3TMS and other reagent.
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
15NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Business segments
Refrigeration
NFIL introduced refrigerants into India in 1967 by commissioning its manufacturing plant at
Surat, Gujarat. It is backward integrated into manufacturing of critical intermediates namely
Sulphuric and hydrofluoric acid (HF) which are precursors to refrigerants. NFIL offers
refrigerants under its brand name Mafron and offers refrigerants for various refrigeration and
air conditioning applications.
Key strengths are:
• High performance and high quality refrigerants.
• Suitable for various refrigeration and air conditioning applications.
• Supplied in returnable cylinders, disposable cylinders and ISO tanks.
Industries and application segments
• Window and split room air conditioners.
• Chillers, packaged air conditioners and commercial and industrial refrigeration.
• Intermediate for API’s.
HCFC 22 Process Flow
Salt
Power
Caustic soda
Chlorine
Hydrogen
MethyleneDichloride
Chloroform
CTC
Chlorine
Methanol
Flourspar
Sulphuric Acid
AHF
Gypsum
AHF Plant
ChloromethanePlant
AHF
Chloroform
HCFC-22
Hydrochloric Acid
Refrigerant GasPlant
Caustic Soda Plant
Source: Industry, B&K Research
+
+
+
+
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
16NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Brief on Refrigerant gases
Refrigerant gases are used for cooling purpose and therefore find application in Air conditioners
and Refrigeration. These gases have evolved over the years and also faced phased outs due to
their ozone depleting potential and now owing to their global warming potential. Earlier, gases
like methyl chloride, sulphur dioxide were used as refrigerants. In 1930s chlorofluorocarbons
(CFCs) dominated the market, however, due to their ozone depleting potential; they were
phased out and replaced by HCFCs in 1950s. Over the years, HCFCs were also discovered as
been harmful to environment and currently are been replaced by HFCs. HCFCs are already
phased out in developed countries and are been phased out in developing countries (by 2030).
HFCs, the next generation gases are been seen as viable substitutes. However, owing to their
global warming potential, developed countries are currently contemplating to replace it by
HFOs. Duponts’ HFO-1234YF is been encouraged as viable alternative.
Details of Refrigerant gases
Type Name Energy Ozone Depletion Global Warming
efficiency (COP) Potential (ODP) Potential (GWP)
CFCCFC - 11 6.6 1.00 5.0
CFC - 12 6.3 1.00 11.0
HCFCHCFC - 22 6.1 0.050 1.7
HCFC - 123 6.5 0.025 0.5
HFC - 134A 6.2 – 1.3
HFC - 410A 5.8 – 2.1
HFC HFC - 32 5.9 – 0.8
HFC - 152A 6.3 – 0.1
HFO - 1234YF 6.0 – –
Propane 6.1 – –
Others Carbon dioxide 6.3 – –
Ammonia 6.3 – –
Phase out of R22 gas
Source: Industry, B&K Research
0
10
20
30
40
50
60
7080
90
100
2005 2010 2015 2020 2025 2030 2035
Bas
elin
e Pe
rcen
tage
Source: Industry, B&K Research
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
17NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Inorganic fluorides
NFIL has one of the largest Anhydrous Hydrofluoric (AHF) and Aqueous Hydrofluoric acid
manufacturing capacities in India. AHF is used for captive manufacture of various inorganic
fluorides. NFIL enjoys a good market share with large consumers of inorganic fluorides.
Additional investments are planned to enhance capacities and widen the product range.
Products
• Ammonium bifluoride.
• Potassium fluoride.
• Sodium fluoride.
• Potassium fluorotitanate.
• Potassium fluoroborate.
• Hexafluorophosphoric acid.
• HF adducts as HF Pyridine complex and HF urea complex.
Industries and application segments
• Oil & Gas.
• Stainless Steel.
• Pharmaceutical & Agrochemicals.
• Abrasives.
• Electronics.
• Solar energy.
Speciality fluorochemicals
NFIL’s expertise, built through decades of experience in fluorine chemistry, coupled with state
of art manufacturing infrastructure enables it to produce a wide range of value added speciality
fluoro intermediates in large quantities. NFIL has dedicated multipurpose plants (MPP) to
process multi step products and intermediates which are high in the value chain. It has
capabilities to handle complex chemistries and deliver high quality products in all forms. NFIL
is one of the leading high quality producers of Boron Trifluroide gas and its adducts.
NFIL’s strength in speciality fluoro intermediates
• Strong R&D interface with customers for development of new products and technologies.
• Flexible manufacturing capabilities.
• Ability to execute a variety of complex multi-step reactions.
• Ability to supply and service small and bulk quantities at a short notice.
Industries and application segments
• Pharmaceuticals.
• Crop protection.
• Hydrocarbon.
• Fragrances.
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
18NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
CRAMS – Leveraging proven skills in Fluorination Chemistry
NFIL has recently started offering Contract Research and Manufacturing Services (CRAMS)
for custom chemical syntheses of fluorinated compounds for the pharmaceuticals, agro
chemicals and speciality chemicals industries. Offerings and capabilities include basic research,
library syntheses, process development, scale-up and small and large batch manufacturing.
NFIL has made investments in cGMP pilot and multi-purpose plant at Dewas, Madhya Pradesh
to service its clients from milligram to kilogram to multi tonne scale. It offers custom synthesis,
and contract research services through both Full Time Equivalent (FTE) and Fee for Service
(FFS) arrangements.
Contract Research Services (CRO)
Contract research services at NFIL include fluorination and introduction of fluorine at the
position of choice in molecule. The increasing needs for extending pipelines and new chemical
entities (NCE) with fluorine in the molecule both for pharmaceutical and agro chemical
application are well understood by the scientific and discovery chemists worldwide.
Contract Manufacturing (CMO)
NFIL’s contract manufacturing is focused to help clients in designing, developing and
commercialising various chemical compounds as per needs of product development life cycles.
Its cGMP pilot plants at Dewas is fully geared to deliver milligrams to kilograms quantities
required by life sciences, agro chemical and other speciality chemical industries. NFIL is further
expanding its manufacturing capabilities by investing in cGMP multi-purpose plant, offering
clients a single source for bulk quantities on a consistent basis.
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
19NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Details of subsidiaries
Sulakshana Securities Limited (SSL): SSL was created through Sanctioned Scheme of
Rehabilitation (SS) of Mafatlal Industries Limited (MIL) to settle dues of term lenders of MIL.
All debts of SSL stands settled/funded. NFIL received Rs 39.5 mn during FY14 from SSL,
towards partial repayment of interest free advances provided in earlier years. Consequently,
provision for doubtful advances made in this context in earlier years of Rs 38 mn was written-
back. The market value of assets of SSL far exceeds the outstanding advance to SSL of Rs
242 mn. SSL has properties in Lower Parel, Nariman Point and Churchgate. It has rented its
properties on lease and received annual rental income.
Manchester Organics: NFIL holds 51% of Manchester Organics Limited, an operating
specialised chemicals research company in Runcorn, UK.
Mafatlal Industries Ltd.
NFIL held 43% of Mafatlal Denim Limited (MDL) which was its only associate company. With
effect from 01 April 2012, MDL was amalgamated with Mafatlal Industries Limited (MIL)
under the composite scheme of arrangement and amalgamation of MDL and Mishapar
Investments Ltd. with MIL. Consents of the Hon’ble High Courts of Bombay and Gujarat for
the scheme were received and filed with the Registrar of Companies. NFIL received shares of
MIL in lieu of the MDL shares of the same value. The company currently has no associate
company. With the redemption of preference shares of Rs 300 mn by Mafatlal Industries
Limited (MIL) during the year, all financial assistances provided to MIL for their expeditious
rehabilitation stands repaid as on 31 March 2014.
Details of non-trade investments
Book value (Rs mn) FY13 FY14 Market value
Investment in properties 453.7 474.8 ~1,300
150,000 equity shares of Sulakshana Securities Ltd. 1.5 1.5 NA
5,100 equity shares of Manchester Organics Ltd. 326.5 326.5 NA
Stake in Mafatlal Denim Ltd. 155.3 – –
Stake in Mafatlal Industries Ltd. – 155.3 273.0
Stake in NOCIL Ltd. 113.8 113.8 168.0
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
20NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Industry
Fluorine
Fluorine atom is an extremely reactive and poisonous elemental gas. However, its compounds
are known to be best inert and stable as well. It is this characteristic of fluorine which helps it
to find more and more applications. Fluorine is the 24th most abundant element in the known
universe and the 13th most abundant within the earth’s crust. Primary mineral source of
fluorine is fluorite. About half of mined fluorite is used directly in steel-making while
other half is converted to hydrogen fluoride (HF) which is the precursor to many
fluorochemcials.
Fluorine finds its usage right from Toothpaste to Teflon (cookware coating), rocket fuel,
refrigeration, pharma and agrochemicals. The most important end-use segments of the fluorine
economy are steel pickling, aluminum smelting, fluoropolymers and fluorochemicals.
The steel industry is a sizeable user of HF in so-called “pickling” lines, where steel is stripped
of any surface corrosion or contamination by an acid bath. Metspar is often added to furnaces
making steel to help lower the melting point and save money otherwise spent on energy.
Cryolite and Aluminum fluoride are used during the production of aluminum, as they melt at
much lower temperatures than aluminum oxide (Al2O3) and also dissolve aluminum oxide
and make it possible to electrolytically extract aluminum metal, consuming much less energy
than would be required otherwise.
Well-known fluoropolymer is Dupont’s Teflon, a compound properly known as poly-
tetrafluoroethylene, or PTFE. The use of Teflon is gaining traction with consumers in India
and China increasingly using Teflon-coated cookware and kitchen utensils. Flouropolymer like
poly-vinylidenefluoride (PVDF) is also used in lithium batteries. Along with PVDF, a polymer
known as fluorinated ethylene propylene (FEP) is used in the jackets of fibre optic cables.
Refrigerants like chlorofluorocarbons (CFCs), hydrochlorofluorocarbons (HCFCs),
hydrofluorocarbons (HFCs) and hydrofluoroolefins (HFOs) are termed as Fluorochemicals.
Fluorspar
Fluorspar is the commercial name for the mineral fluorite (calcium fluoride:CaF2), which when
pure, consists of 51.1% calcium and 48.9% fluorine. Fluorine represents around 0.06 to 0.09
%of the earth’s crust and predominantly occurs in the mineral fluorspar. Commercial fluorspar
is graded according to quality and specification into acid-grade, metallurgical grade and ceramic
grade. Acidspar is the highest-grade form of fluorspar and has the highest indirect use in
downstream industry. Fluorspar is the dominant source for chemical element Fluorine (F), and
due to Fluorine’s extreme chemical properties, it is largely irreplaceable in its use.
Metallurgical grade (metspar) = 60-85% CaF2 with a limit on silica content, and is used as a
fluxing agent in the making of steels. In essence, the addition of metspar lowers the melting
point of steel by an appreciable amount, making steel far less expensive to manufacture.
Ceramic grade = 85-96% CaF2 is used to make certain glasses and ceramics. Given the chemical
stability of compounds containing F, these materials are able to withstand high temperatures
without issue, and include cookware, labware.
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
21NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Acid grade (acidspar) = 97%+ CaF2, Acidspar is so called because it is converted to hydrofluoric
acid (HF), the basic starting point for almost all fluoro chemistry. Acidspar is also the starting
point for the creation of one of the key compounds used in the smelting of aluminum, aluminum
fluoride (AlF3). Aluminum refining is a major consumer of acidspar.
The global supply and demand for fluorspar has seen steady growth over the decade 1998 to
2008. 2009 witnessed contraction in acidspar supply and demand followed by a recovery in
2011. During 2012 and through 2013 demand for acidspar has softened which has been
reflected in the price. The China export price for acid-spar is a traditional benchmark price
and is currently published as US$ 310–330/tonne (Industrial Minerals Magazine).
The largest acidspar consuming regions outside of China are Western Europe, Canada and the
USA, collectively importing more than 900,000 tonnes of acidspar per year. The uncertainty
of Chinese acidspar supply has resulted in increasing pressure on these regions to secure long-
term sources and recent upstream merger and acquisition integration in the industry reflects
this position.
Fluorite HF (acidspar) x HFC
Metal smelting(metspar)
Cryolite
HCFC
CFC
Teflon, otherfluoropolymers
Water fluoridation
Uraniumenrichment
Sulfur hexafluoride
WF6, ReF6, NF3,halogen fluorides,
niche organo-fluorines
Direct use: glass,ceramics, welding
Fluorapatite
Steel pickling, metalfluorides
Fluorosilicic acid
Petrochemicalcatalyst
x
Fluorine chain
Source: Industry, B&K Research
Fluorine gas
Fluorocarbons49%
Waste (phosphogypsum, byproduct offertilizer manufacture)
Legend
Uses of inoraganic fluorides
Uses of fluorocarbons
Uses of fluorine gas
47%
4%
1%
99%
42%
33%
16%
5%
2%
2%
95%
55%
42%
3%
5%
47%
40%
13%
40%
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
22NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Financial analysis
946838
918925
526
114 101
426526576
0
200
400
600
800
1,000
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
E
FY16
E
Rs
mn
0.0
0.1
0.2
0.3
0.4
0.5
0.6
x
Debt Debt to Equity
0
500
1,000
1,500
2,000
2,500
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
E
FY16
E
Rs
mn
0
50
100
150
200
250
Rs
APAT AEPS
Revenue and revenue growth EBITDA and EBITDA growth
Source: Company, B&K Research
7,21
9
4,84
3
5,48
2
5,49
9
6,31
2
4,29
7
4,29
2
4,15
6
2,88
1
2,56
4
01,0002,0003,0004,0005,0006,0007,0008,000
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
E
FY16
E
Rs
mn
(40)
(20)
0
20
40
60
80
%
Net Sales Growth (%)
322
359
953
1,43
3
1,12
5
2,50
5
827
660
785
960
0
500
1,000
1,500
2,000
2,500
3,000
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
E
FY16
E
Rs
mn
0510152025303540
%
EBITDA EBITDA (%)
PAT and PAT growth Capex
Source: Company, B&K Research
509
313
78 14 238
616
164
164
464
174
0
100
200
300
400
500
600
700
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
E
FY16
E
Rs
mn
0.0
0.2
0.4
0.6
0.8
1.0
1.2
x
Capex As set turn (X)
Debt to decline in future Return ratios to improve
Source: Company, B&K Research
12.110.89.98.8
53.3
22.4
31.4
24.2
8.6 2.90
10
20
30
40
50
60
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
E
FY16
E
%
0
10
20
30
40
50
60
70
%
RoE RoCE
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
23NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Quarterly results (Standalone)
(Rs mn) Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14
Net Sales 1,949 1,920 1,595 1,546 1,565 1,373 1,245 1,045 1,144 992 1,097 1,238
YoY (%) 125.9 145.0 69.6 (9.4) (19.7) (28.5) (21.9) (32.4) (26.9) (27.7) (11.9) 18.4
Gross Profit 1,394 1,381 960 809 815 739 641 494 580 553 590 626
Gross Margins (%) 71.5 71.9 60.1 52.3 52.1 53.8 51.5 47.3 50.7 55.7 53.8 50.5
Staff Cost 90 79 89 138 102 95 98 147 132 116 120 116
Other Expenditure 405 393 296 508 351 329 327 367 273 280 342 378
As % of Net Sales 20.8 20.5 18.5 32.9 22.4 24.0 26.3 35.1 23.9 28.2 31.2 30.5
Total Expenditure 1,053 1,040 1,088 1,360 1,262 1,069 1,034 1,080 970 834 970 1,110
Operating Profit 896 880 507 187 303 304 212 (35) 175 158 127 127
Margins (%) 46.0 45.8 31.8 12.1 19.4 22.1 17.0 (3.4) 15.3 15.9 11.6 10.3
Other operating income 6 10 9 20 4 5 4 5 4 6 4 6
EBITDA 902 890 516 207 307 310 216 (30) 179 164 131 133
EBITDA Margin (%) 46.1 46.1 32.1 13.2 19.6 22.5 17.3 (2.9) 15.6 16.5 11.9 10.7
YoY (%) – – – (66.7) (66.0) (65.2) (58.2) (114.7) (41.8) (46.9) (39.4) (538.9)
Other Income 33 33 42 784 36 34 27 45 63 67 30 133
EBIT 895 881 511 942 295 294 193 (35) 191 179 110 215
EBIT margins 45.9 45.9 32.0 60.9 18.8 21.4 15.5 (3.3) 16.7 18.1 10.0 17.3
Interest 6 9 13 7 11 16 13 20 12 11 14 17
Depreciation 40 42 47 48 48 49 50 49 51 52 51 52
PBT 889 872 498 935 283 278 180 (55) 179 168 96 198
Tax 287 284 160 151 90 88 55 21 45 45 27 16
Tax/PBT 32.3 32.5 32.2 16.2 31.8 31.7 30.8 (37.5) 25.3 26.9 28.7 8.3
Income 602 588 338 784 193 190 124 (76) 134 123 68 181
Adjusted PAT 602 588 338 784 193 190 124 (76) 134 123 68 181
YoY (%) 295.3 962.9 237.7 91.8 (67.9) (67.7) (63.2) (109.7) (30.7) (35.3) (45.0) (338.4)
PAT Margin(%) 30.9 30.6 21.2 50.7 12.4 13.8 10.0 (7.3) 11.7 12.4 6.2 14.6
No. of shares in mn 9.76 9.76 9.76 9.76 9.76 9.76 9.76 9.76 9.76 9.76 9.76 9.76
Adjusted EPS 61.7 60.3 34.6 80.4 19.8 19.5 12.8 (7.8) 13.7 12.6 7.0 18.6
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
24NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Annual Segmental Revenues (Consolidated)
Rs mn FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E
Refrigerants 1,268 1,386 2,296 2,480 2,387 4,469 2,331 1,540 1,602 1,682
% of Sales 49.4 48.1 55.2 57.8 55.6 61.9 42.5 31.8 29.1 26.6
Growth (%) – 9.3 65.6 8.0 (3.8) (18.3) (9.7) (12.5) 4.0 5.0
Specialty Chemicals 794 853 1,075 908 1,175 1,590 1,780 1,560 1,794 2,063
% of Sales 31.0 29.6 25.9 21.2 27.3 22.0 32.5 32.2 32.6 32.7
Growth (%) – 7.4 26.0 (15.6) 29.4 35.3 11.9 (12.4) 15.0 15.0
Bulk Fluorides 543 671 808 596 770 980 990 1,130 1,243 1,367
% of Sales 21.2 23.3 19.4 13.9 17.9 13.6 18.1 23.3 22.6 21.7
Growth (%) – 23.5 20.5 (26.2) 29.2 27.2 1.0 14.1 10.0 10.0
CRO/CRAMS – – – – – – 140 630 860 1,200
% of Sales – – – – – – 2.6 13.0 15.6 19.0
Growth (%) – – – – – – – 350.0 36.5 39.5
Quarterly revenue growth Quarterly gross margin
Source: Company, B&K Research
1,54
6
1,56
5
1,37
3
1,24
5
1,04
5
1,14
4
992
1,09
7
1,23
8
1,94
9
1,92
0
1,59
5
0
500
1,000
1,500
2,000
2,500
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Mar
-14
Rs
mn
(50)
0
50
100
150
200
%
Net Sales YoY%
1,39
4
1,38
1
960
809
815
739
641
494
580
553
590
626
0200400600800
1,0001,2001,4001,600
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Mar
-14
Rs
mn
01020304050607080
%
Gros s Profit (%)
Quarterly EBITDA and margin Quarterly PAT
Source: Company, B&K Research
902
890
516
207
307
310
216
179
164
131
133
(30)(200)
0
200
400
600
800
1,000
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Mar
-14
Rs
mn
(10)
0
10
20
30
40
50
%
EBITDA EBITDA margin (%)
602
338
193
190
124
134
123
68
181
(76)
784
588
(200)
0
200
400
600
800
1,000
Jun-
11
Sep-
11
Dec
-11
Mar
-12
Jun-
12
Sep-
12
Dec
-12
Mar
-13
Jun-
13
Sep-
13
Dec
-13
Mar
-14
Rs
mn
(200)
0
200
400
600
800
1,000
1,200%
PAT Growth (%)
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
25NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Annexure I
Product list for Refrigerants
Product Applications Packaging
HCFC 22 Window and split Room Air conditioners, Chillers, Commercial and Industrial Returnable cylinders, non returnable disposableRefrigeration Units and intermediates for Life science. cylinders and ISO tank.
HCFC 22 Intermediate for fluoropolymer resins Returnable Iso TankPTFE Grade
HFC 134a Domestic and industrial Refrigerators, Deep Freezers, Water Coolers, Foam Returnable cylinders, non returnable disposable
Blowing and Mobile Airconditioning (MAC) cylinders ,non returnable cans and ISO tank.
HFC 404a Refrigerated vans and cold rooms Returnable cylinders
HFC 410a Residential and Commerical Airconditiong, Window and Split air conditioners, Returnable cylindersChillers
Product list for Inorganic division
Product Packaging Industry
Aluminium Fluoride 25/50 kg HDPE bags Frosting of Bottles, Oil Well, Sugar
Ammonium Bifluoride 25/35 kg HDPE bags Electroplating , Sugar Industry,Oil Well
Drilling
Anhydrous Hydrofluoric Acid 600 kg tonners/ 17mt ISO tanks Refrigrant Gases, Oil Refinery
Anhydrous Hydrofluoric Acid ISO tanks Refrigrant Gases, Oil Refinery
Dilute Hydrofluoric Acid - 20% 30/35 kg HDPE carboys / 220 kg drums Steel Industry
Dilute Hydrofluoric Acid - 30% 30/35 kg HDPE carboys / 220 kg drums Steel Industry
Dilute Hydrofluoric Acid - 40% 38 kg HDPE carboys / 220 kg drums Steel Industry
Dilute Hydrofluoric Acid - 49% 38 kg HDPE carboys / 220 kg drums Steel Industry
Dilute Hydrofluoric Acid - 50% 38 kg HDPE carboys / 220 kg drums Steel Industry / Glass Industry
Dilute Hydrofluoric Acid - 55% 38 kg HDPE carboys / 220 kg drums Steel Industry
Dilute Hydrofluoric Acid - 60% 38 kg HDPE carboys / 220 kg drums Steel Industry / Glass Industry
Dilute Hydrofluoric Acid - 70% 38 kg HDPE carboys / 220 kg drums Steel Industry
Fluboric Acid 50% 25/30/40 kg HDPE carboys / 220 kg drums Electroplating Industry
Hexafluoro Phosphoric Acid 40 kg carboys Pharmaecuticals Inetremediates
HF Pyridine 55% 25 kg HDPE carboys/ 150 kg MS HDPE composite drums Pharmaecuticals Inetremediates
HF Pyridine 70% 25 kg HDPE carboys/ 150 kg MS HDPE composite drums Pharmaecuticals Inetremediates
HF Urea 70& 25 kg HDPE carboys/ 150 kg MS HDPE composite drums Pharmaecuticals Inetremediates
Mafrolite 40 kg HDPE bags Abrasive/ Automobiles
(Synthetic Cryolite - Crushed)
Potassium Bi Fluoride 25/500/600 kg HDPE bags Pharmaceuticals / Atomic
Potassium Fluoride 25/7 kg fibreboard / 300 kg jumbo bags Pharmaecuticals Inetremediates / Agro
Chemicals
Potassium Fluoro Borate 25 kg HDPE bags Foundry Flux
Potassium Fluoro Titanate 25 kg HDEP bags Foundry Flux/ Titanium
Sodium Bi Fluoride 25/500/600 kg HDPE bags Tin Plates
Sodium Fluoride 25/500/600 kg HDPE bags Toothpaste/ Pharmaceuticals Intermediates
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
26NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Product List for Speciality Fluorochemicals
Product Industry
2 ,4 -Difluorobenzyl Amine Pharmaceuticals
2 -Amino-Benzotrifluoride Crop protection/Pharmaceuticals/Splty Pigment/Dyes
2 -Fluoro Nitrobenzene Pharmaceuticals
2,3,5,6 -Tetra Fluorobenzyl Alcohol Crop Protection/Personal Care
2,4- Difluorobenzoicacid Pharmaceuticals
2- Bromo Fluoro Benzene Pharmaceuticals
2- Fluoro Aniline Pharmaceuticals
2- Fluoro Phenol Crop protection/Pharmaceuticals
2- Fluoro Propionic acid Pharmaceuticals
2- Fluoro- 4- Bromo Aniline Crop protection/Pharmaceuticals
2-Amino -5-Chloro Benzotrifluoride Crop protection/Splty Pigment/Dyes
2-Bromo- 4- Fluoro Aniline Crop protection/Pharmaceuticals
2-Chloro-4-Fluoro Toluene Crop protection
2-Fluoro-5-Hydroxy Benzotrifluoride Crop protection
2-Methyl-3(Trifluoromethyl) Aniline Pharmaceuticals
3 - Fluoro Toluene Crop protection/Pharmaceuticals
3 -Amino-Benzotrifluoride Crop protection/Pharmaceuticals
3 -Bromo- 1,1,1-Trifluoroacetone Pharmaceuticals
3 -Chloro Benzotrifluoride Crop protection/Pharmaceuticals
3 -Chloro- 4- FluoroBenzotrifluoride Crop protection
3- Amino- 4- Chloro Benzotrifluoride Pharmaceuticals/Splty Pigment/Dyes
3- Bromo-Benzotrifluoride Pharmaceuticals
3- Hydroxy Benzotrifluoride Crop protection/Pharmaceuticals
3-(Trifluoromethyl) Cinnamicacid Pharmaceuticals
3-Chloro-2-Fluoro Benzoicacid Pharmaceuticals
4 -Bromo-Benzotrifluoride Pharmaceuticals
4 -Fluoro Aniline Crop protection
4 -Fluoro Anisole Pharmaceuticals
4 -Fluoro Benzaldehyde Pharmaceuticals
4 -Fluoro Benzyl Chloride Crop protection/Pharmaceuticals
4 -Fluoro Nitrobenzene Pharmaceuticals/Personal Care
4,4 -Difluro cyclohexane Carboxylic Acid Pharmaceuticals
4,4’ – Difluoro Benzophenone Pharmaceuticals/Hydrocarbon/Polymers/Personal Care
4- Bromo Fluoro Benzene Crop protection/Pharmaceuticals
4- Fluoro Benzonitrile Crop protection/Pharmaceuticals
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
27NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Product Industry
4- Fluoro Benzyl Amine Pharmaceuticals
4- Fluoro Phenol Crop protection/Pharmaceuticals
4- Fluoro Toluene Crop protection/Pharmaceuticals
4-Trifluoromethyl Salicylic acid Pharmaceuticals
Benzotrifluoride Crop protection/Pharmaceuticals/Splty Pigment/Dyes
BF3 Acetic Acid Pharmaceuticals/Flavours and Fragrences/Hydrocarbon/
Polymers
BF3 Etherate Crop Protection/Pharmaceuticals/Flavours and Fragrences/
Hydrocarbon/Polymers
BF3 Phenol Crop Protection/Pharmaceuticals/Hydrocarbon/Polymers
BF3 THF Crop protection/Pharmaceuticals
BF3. Acetonitrile Crop protection/Pharmaceuticals
Boron Trifluoride(gas) Pharmaceuticals/Hydrocarbon/Polymers
Fluoro Benzene Crop protection/Pharmaceuticals
Methyl -2- Fluoropropionate Pharmaceuticals
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
28NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Detailed financials
Income Statement
Yr end 31 Mar (Rs mn) FY11 FY12 FY13 FY14 FY15E FY16E
Net Sales 4,297 7,219 5,482 4,843 5,499 6,312
Raw Material Cost 1,716 2,553 2,631 2,283 2,579 2,938
RMC (%) 39.9 35.4 48.0 47.2 46.9 46.6
Personnel Cost 298 490 535 591 650 721
Other exp 1,168 1,698 1,506 1,329 1,507 1,717
Other Operating income 11 27 18 20 22 24
EBITDA 1,125 2,505 827 660 785 959
EBITDA margin (%) 26.1 34.6 15.0 13.6 14.2 15.1
Depreciation 138 188 208 218 228 240
Other Income 106 758 141 308 314 319
EBIT 1,093 3,075 761 750 871 1,039
Interest paid 36 36 61 55 52 48
Pre-tax profit 1,057 3,039 700 827 819 991
Tax (current + deferred) 344 886 258 148 188 228
Net profit 713 2,153 441 680 631 763
Asso Profit & Minority Int (0) 21 (7) (23) (7) (8)
Adjusted net profit 713 2,174 434 524 624 755
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
29NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Balance Sheet
Yr end 31 Mar (Rs mn) FY11 FY12 FY13 FY14 FY15E FY16E
Current assets 1,583 2,981 2,792 3,516 3,842 4,409
Cash & bank 177 1,258 1,132 1,663 1,844 2,237
Debtors 578 665 744 905 997 1,110
Inventory 551 886 774 656 669 682
Loans and advances 261 111 124 260 295 339
Non-current assets 3,620 4,661 4,464 4,278 4,517 4,500
Fixed assets (Net block) 1,879 2,577 2,498 2,475 2,711 2,646
Add: Capital WIP 322 52 87 57 57 57
Investments 478 1,400 1,192 1,018 978 973
Total assets 5,203 7,641 7,256 7,794 8,359 8,910
Current liabilities 1,329 2,275 1,579 1,530 1,657 1,649
Creditors 553 464 506 609 688 784
Other current liabilities 130 105 131 216 226 236
Non-current liabilities 491 527 566 618 625 632
Total debt 491 946 838 576 526 426
Total Liabilities 1,819 2,802 2,145 2,148 2,282 2,281
Total shareholder's fund 3,384 4,777 5,042 5,553 5,983 6,533
Paid up capital 98 98 98 98 98 98
Reserves and surplus 3,287 4,679 4,944 5,456 5,886 6,435
Total equity and liab. 5,203 7,641 7,256 7,794 8,359 8,910
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
30NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Cash Flow
Yr end 31 Mar (Rs mn) FY11 FY12 FY13 FY14 FY15E FY16E
Pre-tax profit 1,057 3,039 700 827 819 991
Depreciation 54 188 208 218 228 240
Chg in working capital (245) 103 85 (28) (107) (146)
Total tax paid (362) (791) (219) (139) (188) (228)
Cash flow from oper. (a) 395 2,481 788 904 775 876
Capital expenditure (238) (616) (164) (164) (464) (174)
chg in investments (469) (1,112) (417) (296) 40 5
Cash flow from inv. (b) (708) (1,635) (534) (431) (395) (140)
Free cash flow (a+b) (312) 847 253 474 380 736
Equity raised / (repaid) (136) 0 0 0 0 0
Debt raised / (repaid) (13) 455 (108) (261) (50) (100)
Dividend (incl. tax) (89) (193) (840) (171) (97) (194)
Other financing activities (76) (218) (56) 20 (52) (49)
Cash flow from fin. © (313) 44 (1,004) (413) (199) (343)
Net chg in cash (a+b+c) (625) 891 (750) 61 181 393
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
31NAVIN FLUORINE INTERNATIONAL
B&K RESEARCH JUNE 2014
Balance Sheet (Consolidated)
Period end (Rs mn) Mar 13 Mar 14 Mar 15E Mar 16E
Share Capital 98 98 98 98
Reserves & surplus 4,944 5,456 5,886 6,435
Shareholders' funds 5,042 5,553 5,983 6,533
Minority Int, Share Appl, 70 92 94 96Pref Capital
Non-Current Liabilities 566 618 625 632
Long-term borrowings 1 2 2 2
Other Long term liab, Prov, DTL 565 615 622 629
Current liabilities 1,579 1,530 1,657 1,649
Short-term borrowings, 836 574 524 424Curr Maturity
Other Current Liab + Provi 742 956 1,133 1,225
Total (Equity and Liab.) 7,256 7,794 8,359 8,910
Non-current assets 4,464 4,278 4,517 4,500
Fixed assets (Net block) 2,585 2,532 2,768 2,703
Non-current Investments 1,192 1,018 978 973
Long-term loans and advances 277 318 362 415
Other non-current assets, 410 410 410 410DTA, Goodwill
Current assets 2,792 3,516 3,842 4,409
Cash & Current Investment 1,132 1,663 1,844 2,237
Other current assets 1,659 1,853 1,998 2,173
Total (Assets) 7,256 7,794 8,359 8,910
Total Debt 838 576 526 426
Capital Employed 6,514 6,838 7,226 7,685
Income Statement (Consolidated)
Period end (Rs mn) Mar 13 Mar 14 Mar 15E Mar 16E
Net Sales 5,482 4,843 5,499 6,312
Growth (%) (24.1) (11.7) 13.5 14.8
Operating expenses (4,673) (4,203) (4,736) (5,377)
Operating profit 809 640 763 935
Other operating income 18 20 22 24
EBITDA 827 660 785 959
Growth (%) (67.0) (20.2) 19.0 22.2
Depreciation (208) (218) (228) (240)
Other income 141 308 314 319
EBIT 761 750 871 1,039
Finance Cost (61) (55) (52) (48)
Profit before tax 700 827 819 991
Tax (current + deferred) (258) (148) (188) (228)
P/(L) for the period 441 680 631 763
P/L of Associates, (7) (23) (7) (8)Min Int, Pref Div
Reported Profit/(Loss) 434 657 624 755
Adjusted Net profit 434 524 624 755
Growth (%) (80.0) 20.8 19.0 21.1
Cash Flow Statement (Consolidated)
Period end (Rs mn) Mar 13 Mar 14 Mar 15E Mar 16E
Profit before Tax 700 827 819 991
Depreciation 208 218 228 240
Change in working capital 85 (28) (107) (146)
Total tax paid (219) (139) (188) (228)
Others 88 77 (44) (115)
Cash flow from oper. (a) 788 904 775 876
Capital expenditure (164) (164) (464) (174)
Change in investments (417) (296) 40 5
Others 47 29 29 29
Cash flow from inv. (b) (534) (431) (395) (140)
Free cash flow (a+b) 253 474 380 736
Debt raised/(repaid) (108) (261) (50) (100)
Dividend (incl. tax) (840) (171) (97) (194)
Others (56) 20 (52) (49)
Cash flow from fin. (c) (1,004) (413) (199) (343)
Net chg in cash (a+b+c) (750) 61 181 393
Key Ratios (Consolidated)
Period end (%) Mar 13 Mar 14 Mar 15E Mar 16E
Adjusted EPS (Rs) 44.4 53.7 63.9 77.4
Growth (80.1) 20.8 19.0 21.1
CEPS (Rs) 65.8 76.0 87.2 101.9
Book NAV/share (Rs) 516.5 568.9 613.0 669.3
Dividend/share (Rs) 15.0 16.0 17.0 18.0
Dividend payout ratio 39.4 27.8 31.1 27.2
EBITDA margin 15.0 13.6 14.2 15.1
EBIT margin 13.8 15.4 15.8 16.4
Tax Rate 37.0 33.9 23.0 23.0
RoCE 11.9 11.2 12.4 13.9
Total debt/Equity (x) 0.2 0.1 0.1 0.1
Net debt/Equity (x) (0.1) (0.2) (0.2) (0.3)
Du Pont Analysis - ROE
Net margin 7.9 10.8 11.3 12.0
Asset turnover (x) 0.7 0.6 0.7 0.7
Leverage factor (x) 1.5 1.4 1.4 1.4
Return on equity 8.8 9.9 10.8 12.1
Valuations (Consolidated)
Period end (x) Mar 13 Mar 14 Mar 15E Mar 16E
PER 4.8 6.5 9.7 8.0
PCE 3.2 4.6 7.1 6.1
Price/Book 0.4 0.6 1.0 0.9
Yield (%) 7.1 4.6 2.7 2.9
EV/EBITDA 2.1 3.5 6.0 4.4
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
B&K RESEARCH JUNE 2014
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B&K Investment Ratings1. BUY: Potential upside of > +25% (absolute returns) 3. UNDERPERFORMER: 0 to -25%
2. OUTPERFORMER: 0 to +25% 4. SELL: Potential downside of < -25% (absolute returns)
B&K Universe Profile
By Market Cap (US$ mn) By Recommendation
62 64
8 3 1
152
0
20
4060
80
100
120140
160
180
Buy OP UP Sell NR URno
. of c
ompa
nies
23
105
162
020
4060
80
100120
140160
180
> $1bn $200mn - $1bn <$200mn
no. o
f com
pani
es
Prepared for [email protected] - Sent on Thursday, June 26, 2014 8:10:45 AM
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