Navin Fluorine sees weakness in contract unit to continue in Jul-Sep

25 Jul 2022

The top management of Gujarat-based Navin Fluorine International Ltd expects the weakness in revenue in its contract development and manufacturing unit in Apr-Jun to extend to the current quarter but is confident of a rebounce in the second half of the current financial year.

The Padmanabh Mafatlal Group company was addressing analyst queries during a post-earnings conference call today on the reason behind a 12% on-the-year fall in revenue in the company’s contract development and manufacturing unit to 590 mln rupees in the June quarter.

As a result the unit’s share in the company’s revenue from operations slid to 15.3% from 21.4%. The unit caters to pharmaceutical industry customers and nearly all sales are to international markets, European and North American ones being the main ones.

In its special chemicals unit, which recorded a 32% jump in revenue to 1.76 bln rupees, Navin Fluorine’s management expects a “strong pipeline of growth opportunities, especially in agrochemicals” to drive the unit’s performance going forward.

But the company admitted to the challenge of demand weakness in the specialty chemicals segment on account of slack in demand for its anti-retro viral products.

“Demand in ARVs (anti retro viral) has not yet come back but our specialty chemicals unit will continue to grow despite it,” its senior management official told analysts and investors in the call.

In the June quarter, the company derived 52% of its specialty chemicals revenue from international sales and 48% from domestic sales.

The third major unit of high performance product in fluorochemical space saw revenue rising 33% on the year to 1.52 bln rupees on the back of higher volume and price increases.

The company management that a capital expenditure of 800 mln rupees will be used for debottlenecking operations “for a new molecule in HPP (high performance product) unit in Surat.”

The company said the new plant set up for Honeywell International for manufacturing and supplying a high performance product will generate revenue from the current quarter.

In Apr-Jun, Navin Fluorine’s revenue from operations rose 23% on the year to 3.87 bln rupees while its net profit jumped 40% to 790 mln rupees. The company declared its results on Saturday.