Bilt Chemicals, a Gautam Thapar company, has bought out the citric acid plant of Bharat Starch for Rs 22 crore.
Confirming the acquisition, Thapar said: "We have taken over the plant located at Baroda in Gujarat." Bharat Starch is a company run by Gautam Thapar's brother, Karan.
According to Thapar, the existing capacity of the plant is 18,000 tonne per annum, which the Thapars plan to raise to 26,000 tonne. "One of the attractions of the acquisition was the land and infrastructure available at the site," Thapar said. He plans to use the land and infrastructure to up the fine chemicals capacity of Bilt Chemicals.
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Bilt Chemicals is a closely-held company with 100 per cent stake held by Bilt Investments, a Brij Mohan Thapar family company. Earlier, it was a division of Ballarpur Industries Ltd, now the Lalit Mohan Thapar group flagship.
However, Thapar clarified that citric acid has no synergies with the existing product line of Bilt Chemicals - chlor-alkali and bromine. Its production facility is located at Kutch, also in Gujarat. The company had engaged consultancy firm Mckinsey to streamline its product portfolio. "It was decided to restrict ourselves to chlor-alkali, a stable business, and bromine, a performance chemical," Thapar said.
Bilt Chemicals has also started making fine chemicals used in pharmaceuticals and engineering plastics industries. "These products have been developed by our in-house research and development wing. We are asking the pharmaceutical companies to focus on research and development and we will make these chemicals for you," Thapar added. However, he clarified that there are no plans to enter these sectors. "It requires a different set of skills which we do not possess," Thapar said.
The company will invest Rs 120 crore spread over two years in a brownfield project in Gujarat adjacent to the existing facility in Kutch. The investment will enhance the bromine and bromine derivatives capacity of Bilt Chemicals by 10,000 tonne per annum. The existing capacity at the site is 3,200 tonne per annum.
The investment will be funded out of internal accruals as well as debt. Interestingly, this is the first investment in the sector after a long gap. Most chemical companies have either delayed or shelved their proposed investments because of the depressed market conditions.
According to Thapar, Bilt Chemicals is expected to close the current financial year with a turnover of Rs 230 crore and a gross profit of Rs 22-23 crore. He expects the investment to raise the company's turnover to Rs 500 crore and boost the bottomline by almost Rs 60 crore.