464% Rally YTD: Himachal Fibres To Acquire Shiva Cottex, Forays Into New Business Segment

Himachal Fibres shares opened on Thursday at Rs 30.40 apiece and rallied to hit 2% upper circuit at Rs 30.91 after the company announced to foray into new business segment, acquistion plan and formation of strong management team.

Himachal Fibres Ltd. has been given permission to enter a new business segment: the production of innovative and sustainable products made entirely of recycled waste plastic packaging. This is a big step towards the company's eventual full business transformation and exponential growth. The forthcoming new business line will encompass a wide range of integrated operations, from the collecting of waste plastic packaging material to the full fabrication of a variety of sustainable products made from that waste material.

In order to establish the new business line that will generate profits for the company and result in the development of significant employment opportunities, the company will investigate and assess a range of potential possibilities, both organic and inorganic (such as acquisitions, mergers, etc.). The company's dedication to sustainable business methods is further demonstrated by its choice to introduce a new range of items made from waste plastic packaging. By repurposing current resources, this would not only lessen dependency on virgin materials but also advance the circular economy.

Mr. Akhil Malhotra, Chairman of Himachal Fibres Limited said, "There is a growing demand and trend for sustainable products both in India and globally as it reduces carbon footprint, minimizes plastic waste, decreases reliance on virgin materials, conserves valuable resources, and actively supports a circular economy by recycling and reusing waste plastic materials.

Also, the quality of products made from waste plastic material are at par with quality of products made from virgin materials. The regulatory reforms and Governmental focus & initiatives also support and promote the adoption of waste plastic material as against use of virgin materials. We believe that the aforesaid decision will help the Company in completely transforming itself and in creating the long term value for its stakeholders."

The firm's board of directors has made the decision to look into the potential for acquiring Shiva Cottex Private Limited's 51% stake, making it a subsidiary of the company. The planned target firm is now developing a 7,000-ton yearly capacity rPET bottle-to-bottle chips production line and a 7,50,000-square-meter rPET-based acoustic panel manufacturing plant. The acoustic panel manufacturing plant and the rPET bottle-to-bottle production line mentioned above will begin commercial production in the 2024-2025 fiscal year.

Mr. Akhil Malhotra, Chairman of Himachal Fibres Limited said, "Regarding rPET bottle to bottle, he said that there is growing consumption of PET bottles in India and globally. At present, there is an annual consumption of 1.1 million tonnes (approx.) of PET bottles in India, and with Extended Producers' Responsibility ('EPR') Regulations requiring minimum usage of 30% from recycled PET from FY 25 onwards, the demand for rPET bottle chips is going to spurt substantially specially from the brands like Cola Cola, Pepsi, Hindustan Unilever, etc. Further, the production capacity for rPET bottle to bottle chips is very less in India as compared to future demand post implementation of EPR regulations.

Regarding acoustic panels, he said that these panels are used to reduce noise and sound, and can be used on walls, ceilings, etc. in theatres, offices and other places.These panels are innovative products made from 100% rPET with growing demand from consumers. Therefore, these businesses of rPET bottle to bottle chips and acoustic panels will be very lucrative and game changer for the Company."

Mr. Akhil Malhotra, who possesses extensive business expertise in recycling waste plastic packaging material, was recently named Chairman of the firm. Apart from the aforementioned, the company plans to appoint additional professionals to its board to bolster the management team and help it accomplish its business transformation objectives.

Himachal Fibres shares have given a multibagger return of 462% in 1 year and on YTD basis the scrip has gained 463% so far in 2023.