PBCL expecting improved profitability in next three years

Phillips Carbon Black Ltd (PCBL) is a part of the USD 2500 million RP-Sanjiv Goenka Group, with a sales turnover of USD 500 million and four strategically located state-of-the-art plants at Durgapur, Palej, Cochin and Mundra. PCBL is India’s largest and seventh largest carbon black producer in the world. It was set up in collaboration with Phillips Petroleum USA and started production in the country in 1962, with 14,000 metric tonnes (MT) of carbon black at Durgapur. Currently, it has a production capacity of 472,000 MT per annum in India and involves a dedicated capacity of speciality blacks of 40,000 MT per annum at Palej. Carbon black is a material produced by the combustion of heavy petroleum products and is widely used as a compound for diesel oxidation. It is used as reinforcing filler in tires and other rubber products, while it is used as a colour pigment in plastics, paints and inks. PCBL provides a complete portfolio of products to meet the specific end requirements across rubber, plastics, coatings, inks and other niche industries globally. The company has been continuously reinventing itself in order to make the best in class products. Additionally, its after-sales service and strong technical support ensure a fiercely loyal base of tyre, non-tyre and non-rubber customers from around the world. PCBL has etched global footprints and has a market presence in more than 30 countries, with decanting stations and warehouses near customer locations. The company has redefined its business by establishing captive power plants at each factory from the off-gas or waste product from the carbon black manufacturing process, thus creating a sustainable green movement. The gas, which is a byproduct of carbon black production, is harnessed for generating electricity at the company’s captive power plants at Baroda, Durgapur, Mundra and Kochi. That is why PCBL is the first carbon black company in the world to receive carbon credits. The company has heavily cut down on carbon and gas emission, and serves green power to large private industrial units and state electricity utilities. From the pioneer plant at Durgapur in the east to the Kochi plant in the south and Palej and Mundra plants in the west, PCBL’s footprint is spread across India. The company posted a robust Q3FY17 performance, with net sales of Rs 484 crore, EBIDA at Rs 64.9 crore and PAT at Rs 17.50 crore. The decline in crude oil prices and anti dumping duty on Chinese imports have aided the company to benefit Indian players like PCBL. The company is currently operating at over 90% capacity utilisation levels and is therefore undertaking new expansion plans. PCBL is expecting improved profitability in the next three years, backed by strong volume growth and reduction in debt levels. This will propel earnings at the PAT level and translate the stock to climb from Rs 260 at present to Rs 350 in six months.

Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.