A short 🧵on Alufluoride Ltd.
Alufluoride Limited (AL) is a leading manufacturer of Aluminium Fluoride (AlF3). Lets first understand the chemistry to get down to the business.
AlF3 is an inorganic compound used primarily in the production of aluminium. Adding AlF3 to the production process of aluminium lowers the consumption of electricity required in smelting process and thereby it contributes to the reduction of production costs of aluminium.
AlF3 is produced by reacting dry Alumina Hydrate with Hydrofluosilicic acid, manufactured as a coproduct in the production of phosphate fertilizers. Fluorine gases, otherwise effluents are scrubbed with water to produce Hydrofluosilicic acid - thus converting "Waste into Wealth"
Aluminium fluoride from Hydrofluorosilicic acid -->
H2SiF6 + Al2O3 → 2 AlF3 + SiO2 + H2O
H2SiF6 – Hydrofluorosilicic acid
Al2O3 - Aluminium oxide
AlF3 - Aluminium fluoride
SiO2 - Silicon dioxide
H2O - Hydrogen oxide
Around 25kg of Aluminum Fluoride is needed per ton of aluminum production. Increased demand, coupled with rising freight costs, has boosted the aluminium price outlook. Demand for Aluminum Fluoride should increase proportionally.
Based on an agreement between AL and Coromandel International Ltd, CIL was to supply 4,000 TPA of Hydrofluosilicic Acid exclusively to AL. Now CIL has expanded its Phosphoric Acid production capacity and signed a long-term acid supply contract with Alufluoride Ltd.
In view of increased demand, AL has also expanded its AlF3 production facilities. Commercial production of the new plant was declared with effect from 1st May 2021. JV with JPMC for 20000 TPA capacity is also in place.
AL has installed a 3 MW Solar plant in Visakhapatnam which is expected to reduce power cost.
With massive capex, gross block has more than doubled from Mar 21 to Sept 21. While doing so, AL has availed a term loan of 25 Cr and 5Cr towards working capital limits.
Due to Covid-19, Vizag expansion plans were delayed for about 6 months. Then, all plants were shut down to synchronize old plant equipment to new ones. This resulted in a ZERO sale quarter in Q4FY21. Now, profits are slowly picking up.
Except FY21, ROCE has been solid in past few years, thanks to increasing demand for aluminum fluoride driven by high growth in several end user industries.
Risk:
1) Highly dependent on prospects of aluminium industry.
2) Although, Hydro-fluosilicic acid does not require any materials to be procured from abroad but procurement has been erratic in the past.
3) Customer concentration is a risk
End of the thread. if you find the information useful, please retweet for maximum reach. Thanks for reading. 🙏
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