Bhansali Engineers Plans For Expansion
Bhansali Engineering Polymers Limited has informed that the board of directors of the company at its meeting has approved the revised Capital Expenditure (CAPEX) at Rs 70.00 Crores in modification of the previous Capex Approval of Rs 300 crores. Resolution to the effect thereof was passed in the Board Meeting held on 14th July 2017 pertaining to Capacity Expansion Project of the company Nfiz. ABS compounding expansion from SO KTPA to 137 KTPA. The Modified Capex reflects the expansion of ABS Compounding capacity at 137 KTPA at Abu Road and also includes setting up of R & D Centre there. In respect of the above, following facts were discussed in threadbare detail:
a) Company's initial effort to tie-up technology and selecting the location for the port based greenfield project is shaping fast.
(b) Captive manufacturing programme for H'RG and Bulk SAN at the port based greenfield project will be based on state of the art technology, Moreover, there will be substantial saving in logistic cost and benefit out of economics of scale_ These will result in cost and quality competitiveness against international giants in ABS manufacturing field.
(C) Incurring Capex for manufacturing additional captive HRG at Satnoor and additional captive Bulk SAN at Aburoad would not be as cost competitive as that of the greenfield plant, owing to the reasons mentioned hereinabove.
(d) In view of development happening towards establishing the green field port based ABS project. it is quite likely that the proposed project will be commissioned by 31st March 2021 in lieu of 31st March 1022 envisaged earlier.
(e)In fact, the captive manufacturing of 1-11iG at Satnoor and Bulk SAN at Aburoad beyond the present capacity would have become fully operational only by 31st March 2019. Hence the benefit of the enlarged capacity from 80 KTPA to 137 KTPA with full backward integration would have been effectively available only for 2 years.
(f)Therefore, augmenting the production capacity to 137 KTPA through expansion of Compounding facility to be commissioned by 31st December, 2018 is a cost-effective expansion strategy, More-over, the entire compounding Plant & Machinery will be shifted at an appropriate time in future to the proposed port based Want location; hence there will be hardly any wastage of resource.
(g)In the light of aforesaid facts, it is deemed prudent to augment AB5 manufacturing capacity at Aburoad to 137 KT ESA by ma December 2018. This is being implemented in two phases, the first phase with 100 IOTA ABS capacity through compounding expansion to be completed by 31st March. 2018 incurring Capex of Rs. 20 crores_ And the second phase with aggregate 137 KTPA capacity through compounding expansion to be completed by 31st December 2018 incurring additional Capex crores, thus aggregates to Rs. 50 crore
(h) In order to maintain growth momentum minimally at 15% CAGR beyond fiscal 2019, the deficit quantum of HF1.5 and SAN as may be, will be imported and such imports though will cost higher than the variable cost of SAN and HRG captively manufactured with a limitation of overall ABS capacity at 80 KTPA, such. dip in contribution for the quantum beyond 80 KTPA will be far less than the loss the company would otherwise have to suffer if for meeting such requirement expansion of captive HRG and 5AN is implemented owing to the reasons cited in the foregoing.
(i) R&D Centre at Aburoad, which is an ongoing project, is likely to be completed by 31st December 2018 with a Capex of Rs. 20 crores, All R&D equipment from Aburoad R&D Centre will be shifted to new R&D Centre at the port based plant location as and when it is established.