Dhanuka Agritech commences trial production at Dahej unit, expects lower input costs from plant

Leading agrochemicals company Dhanuka Agritech Ltd. on Wednesday announced the commencement of trial production at its new plant in Dahej, Gujarat, from August 8, 2023.

Dhanuka Agritech’s Dahej plant is a technical manufacturing plant that will provide raw material security and the benefit of backward integration in the form of lower raw material costs. The company has spent more than Rs 300 crore over a period of two years to set up the unit, Dhanuka Agritech said in filing to the stock exchanges.

In its research report dated August 2, brokerage firm Prabhudas Lilladher said that it expected nearly Rs 50 crore of revenue contribution from the technical plant at Dahej in 2023-24, with an initial operating loss due to lower utilisation.

The brokerage said that it hasn’t factored in the commencement of the trial production at the Dahej plant in its estimates, as the impact would be ‘insignificant’ during financial year 2024.

Dhanuka Agritech in June had decided to hold on to its guidance for the fiscal year 2024 on the back of delayed monsoons. Instead of making premature adjustments, the company said it would closely monitor the progress of the monsoon before revising its projections.

Dhanuka Agritech had also said that declining prices of agrochemicals would have an impact on the company’s margins as the delayed onset of monsoons led to delayed sowing and increased agrochemical inventories.