Capacity expansion is a strategic decision that involves increasing the production capability of a business to meet growing demand or capture new opportunities. It can involve investing in new facilities, equipment, technology, or human resources, or optimising existing ones.
Businesses pursue capacity expansion to achieve various goals, including increasing sales and market share, enhancing customer satisfaction and loyalty, lowering unit costs and improving profitability, strengthening reputation and competitive edge, and fostering innovation and growth.
Cosmic CRF Ltd.
Cosmic CRF is engaged in manufacturing of Railway Components, Sheet Piles and Structures. The products delivered by the company are cold rolled forming and manufacturing of other engineering items for electrical transmission and defence sector as well as real estate.
Capacity Enhancement
Cosmic CRF has started the year with exceptional growth, reporting a 100 percent year-over-year increase in volume and achieving its highest-ever quarterly sales.
Management anticipates that the company will be able to garner 15-16 percent of market share of expected cold roll formed products 22,45,000 MT over a period of 3 years.
The company’s order book, including its subsidiary N.S. Engineering Projects Pvt Ltd, has reached a record Rs.550 crores, and the sales funnel remains robust. N.S. Engineering is on track to commission its plant by August 2024, six months ahead of schedule, with an installed capacity of 35,000 tons per annum, with plans to reach 70,000 tons per annum by March 2025.
Additionally, Cosmic CRF is in advanced discussions with a major Russian railway company for a potential tech partnership to enhance its future in the wagon industry.
Cosmic CRF’s capacity stands at 36,000 tons per annum. The management confirms that the total installed capacity has been achieved as planned.
Management anticipates that sales volumes will reach higher levels by the end of the financial year 2024-25, supported by a pipeline of orders worth approximately Rs.119 crores.
Financials
The company reports financial statements on a half-yearly basis. The revenue from operations of Cosmic CRF Ltd. soared by 19.4 percent year-on-year, reaching Rs.130 crore in H2FY24, up from Rs.108.9 crore in H2FY23. Moreover, the Profit After Tax (PAT) of the company surged 6.4 percent to Rs.5.96 crore in H2FY24, compared to Rs.5.6 crore in the of H2FY23.
In Wednesday’s trading session, the share price of Cosmic CRF Ltd. hit an upper circuit limit of 5 percent reaching Rs.2,089 per share.
Phillips Carbon Black Limited (PCBL)
Phillips Carbon Black Limited (PCBL), a part of RP-Sanjiv Goenka Group, is India’s largest carbon black producer and exporter in India. The company is in the business of production of Carbon Black, speciality chemical and generation of electricity for the purpose of captive consumption and sale of surplus to outsiders.
Capacity Expansion
The Chairman of the RP-Sanjiv Goenka Group anticipates that PCBL’s profit to reach Rs.2,400-2,500 crore within the next five years and expects profit to grow 2.5 times over the next three years.
Over the next 12 to 18 months, PCBL to allocate approximately Rs.35,000 crore in capital expenditure, and over the next three years, about Rs.50,000 crore.
PCBL currently operates five plants with a combined capacity of 770 KTPA (Kiloton per Annum), alongside a green power generation plant producing 122 MW (Mega Watt).
The company is undertaking several significant expansions and projects. It is implementing a 20,000 MTPA (Million Ton per Annum) specialty black expansion at its Mundra plant, expected to be commissioned within the current year, which will raise its specialty black capacity to 1,12,000 MTPA by FY25.
Additionally, PCBL has initiated a brownfield expansion of 90,000 MTPA carbon black at its Tamil Nadu facility, set to be completed in FY25 in two phases—30,000 MTPA and 60,000 MTPA—boosting total capacity to 880,000 MTPA next year.
The company is also evaluating a new greenfield expansion to increase its total capacity beyond 1 million MTPA.
Furthermore, PCBL’s new joint venture with Kinaltek Pty Ltd and Nanovace Technologies Ltd plans to design and set up a pilot plant.
The company has also secured a patent (IN544320) for a hybrid carbon black grade incorporating graphene, which improves rubber compounds’ fuel efficiency, durability, and load-bearing capacity while reducing tire weight.
Financials
The consolidated revenue from operations of PCBL reported an increase of 40.4 percent to Rs.1,929 crores in Q4FY24, from Rs.1,374 crores in Q4FY23. Similarly the Profit-after-tax (PAT) also experienced a rise of 9 percent to Rs.111 crores from Rs.102 crores in the same time period.
In Wednesday’s trading session, the share price of PCBL was trading at Rs.325.5 per share, 1.94 percent down from its previous close.
Written by – Siddesh S Raskar
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