Tanfac Signs Agreement With Japanese Specialty Co

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00:00Good morning and welcome to NDTV Profit.

00:11We are now discussing TANFAC as they have signed a new agreement with a Japanese speciality

00:17company to talk more about this particular order as well as the year gone by and what

00:22does the next year look like.

00:23We are now joined by Mr. Senthil Nathan, who is the Managing Director of TANFAC Industries.

00:29Good morning sir and thank you so much for joining us today.

00:33Good morning to you.

00:34Now before I get into the specific contract that you have won, I just wanted to talk about

00:40the business first.

00:42You know you are going to be supplying refrigerant gases in this particular order to the Japanese

00:47speciality chemical company.

00:49If you could just tell us about this particular product for the company itself amongst the

00:54other products and segments such as hydrochloric acids that you also are a part of.

00:59What is the current other products that you are and what is the current kind of contribution

01:03into and then we will get into the specific product or order that you have got.

01:08See right now we are manufacturing a main product called hydrochloric acid, out of that

01:14we manufacture a host of fluorinated products like aluminum fluoride, potassium fluoride

01:20and other specialty fluorides and the contributions are very reasonable and moving forward we

01:29will be able to increase our cost portion and I mean cost portion means we will be able

01:37to be more efficient and going forward we will have more products and one such product

01:45is the one which we are talking about now and this product will be made in TANFAC and

01:53offered to the market.

01:56Just if I could just get some numbers from you, the current contribution of refrigerant

02:01gases to the total revenue of FI24 specifically, what would be the percentage and if you could

02:07also tell us about what is the current contribution for hydrofluoric acids, aluminum fluoride

02:12as you spoke about, just some range also would be good sir.

02:17As far as this refrigerant gases are concerned, our supply will start as we mentioned, it

02:25will be in next year only, I mean later part of next year.

02:30As far as the HF, they are available in the public domain, it is not something secret,

02:37so I will say that is healthy as we move forward, our situation becomes healthy, we are reducing

02:45cutting costs in terms by way of increasing our efficiency through various innovations,

02:53so we are pretty strong in that.

02:56Understood sir, now coming to this specific order, now we know that the potential of this

03:02particular order is over the next 5 years roughly around 675 crores, what else can you

03:09tell us about this particular order when also how are you seeing the potential of further

03:14order wins in refrigerant gases as well?

03:19As far as this contract is concerned, it is a prestigious contract, first of all, TENFECT

03:26will be entering into the domain of refrigerant gases for the first time and we will have

03:33like, I mean the raw materials will be available with us captively, so that is not an issue

03:43as far as the raw materials are concerned and there has been like, we have already started

03:50the initial spread work for this project and we at TENFECT have highly talented human resources

03:58to effectively execute this project both in terms of time as well as money.

04:05Currently, the market report says that the demand for this product looks very good, keeping

04:14this in mind, I am pretty confident that the execution of the project will be pretty smooth.

04:21Just want to talk about the space of refrigerant gases for a bit, you know, how relevant is it

04:26in India, how big is the market size, you did speak about the market currently that

04:31it looks really good, the outlook and who do you compete with in this particular market currently,

04:37both on the unlisted as well as the listed space?

04:41See, like just to give a note about refrigerant gases in India, see, I should talk first about the,

04:51I mean, first to talk about the air conditioners and out of the 1.4 billion population in India,

05:00it has got around 304 households, out of these 304 households, only 9% of the households

05:11have air conditioners, due to this, the market in India has a good potential to grow.

05:20As of now, due to the combination of factors like the rising quality of lifestyle in India,

05:28rising temperatures in a hot and humid condition in India and increasing affordability by the

05:36people, the air conditioner market in India is growing faster than almost anywhere else in the

05:45world. Furthermore, the propulsion of this growth from the 9% as given above is expected to

05:59double or triple shortly. More air conditioners coming into the market means more refrigerant

06:09gases are used in the air conditioners and thereby we are to make more refrigerant gases

06:15and in those refrigerant gases, they will be filled by the various producers in India.

06:24There are almost all sets of producers have this, I mean, production facility for

06:31the various refrigerant gases and TANFAC is entering into this space and because of this

06:41growth in the, or very high growth in the demand for this product, we expect that we will be able

06:51to do, have a reasonable share in the market. Now, just to take a step back and look at the

06:58financial year gone by for 24, we saw that revenues were roughly around the 378 crore,

07:03mark was roughly flat compared to the previous year, so were the margins and profitability.

07:09What led to this particular flat nature of the business, if you could just talk us through that?

07:16That if you see, many people could not remain flat, but remaining flat itself is a great thing

07:22and we did that, so you can definitely understand, we have done well in the past.

07:31And currently, what is the current capacity utilization of the company, because we have

07:37seen that across the 3 to 4 products, you have built up capacity over the past few years

07:43and any kind of capex that you will need, if any capacity additions over the next 2 to 3 years,

07:47so just on current utilization and what's the, any kind of capex plans if you have any?

07:53Yeah, the current capacity utilization last year was fantastic, it is the highest

07:59compared to anywhere in the past and we expect it to continue and there are many products in

08:05pipeline and there are many process improvement in pipeline, so accordingly capex will be decided.

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