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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.