Ami Organics board approves capex plan of Rs 190 cr

Ami Organics on Friday announced that its board approved Capex plan of Rs 190 crore to build a brownfield plant in Ankleshwar, Gujarat.

The plant will support future business growth in the company's advanced pharmaceutical intermediates segment. The Capex will be funded through a mix of General Corporate funds of IPO proceeds, internal accruals, and debt. Currently, the company does not have long-term debt on the books other than a short-term working capital loan.

Ami Organics acquired two facilities at Ankleshwar and Jhagadia from the Gujarat Organics on 31 March 2021. The production at the Ankleshwar unit was successfully transferred to the Jhagadia unit during the last quarter for optimum utilisation of resources without losing any revenue. Currently, the old plant at Ankleshwar is being demolished and the new plant will be built on the site.

The Ankleshwar site received necessary environmental clearance and the new facility will have 90 reactors taking the total reactor capacity to 436KL. The plant is expected to start commercial operations from Q4 FY24.

The current capacity utilisation at the Sachin unit in Surat, Gujarat which manufactures the majority of the pharmaceutical intermediates is at 65%.

Commenting on the Capex plan, Nareshkumar Patel, executive chairman & managing director of Ami Organics said, We envisage an increase in demand for our existing products as well as for our products in the pipeline. The CAPEX that we have planned will help us cater to this growing demand till 2027-28. Our plant at Sachin is running at a capacity of around 65%. To ensure that we have enough capacity to cater to the growing demand until the new project at Ankleshwar is complete. We are in the process of shifting some of our existing as well as new products to continuous flow reactors. This will help free up a considerable capacity at the Sachin unit. It gives me immense pleasure to share that we have successfully shifted the manufacturing of two products from the traditional method to continuous flow reactors. We will continue to invest in improving our processes and strategically shift high volume products to advanced technology that will allow our business to stay sustainable and maintain our margins given the uncertain external global environment and supply-chain challenges.

Ami Organics is a research and development driven specialty chemicals manufacturer with varied end usage, focused on the development and manufacturing of advanced pharmaceutical intermediates.

On a consolidated basis, the company reported a 34.6% rise in net profit to Rs 19.47 crore on a 53.5% jump in net sales to Rs 141.15 crore in Q3 FY22 over Q3 FY21.

Shares of Ami Organics were trading 0.48% higher at Rs 1131.45 in early afternoon trade.

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