Inox GFL targets zero debt by fiscal end

Mumbai: The chemicals-to-renewables Inox GFL group, with listed companies such as Gujarat Fluorochemicals (GFL) and Inox Wind, aims to become a net debt-free group at the company level by the end of this financial year, said Devansh Jain, executive director, Inox GFL Group.

Internal accruals will be used for growth in the future, and the combined revenue of Inox GFL Group is expected to double in the next three years, Jain told ET.

Inox Wind has recently announced an initial public offering for Inox Green Energy Services (IGESL), which is expected to hit the primary market next month. The IGESL IPO comprises fresh issuance of equity shares worth ₹370 crore and an offer for sale of ₹370 crore by promoter Inox Wind. IGESL is expected to receive Sebi approval soon for its public issues, and fundraising is likely to play an important role in the debt reduction of the Inox GFL group.
Inox Wind has a net borrowing of ₹1,492 crore as on March 31, 2022. While the company will receive ₹370 crore from the offer for sale, the promoters will pump in ₹800 crore through non-convertible redeemable preference shares. Of this, Inox Wind will repay ₹800 crore it has taken from GFL for 100 MW wind power commissioning.

"GFL has a gross debt of ₹1,550 crore and net cash of ₹450 crore as on March 31, 2022. Once Inox Wind repays its debt of ₹800 crore to GFL, the net debt of GFL will reduce to ₹300 crore from ₹1,100 crore," Jain said.

While the renewable sector is getting investors' interest due to its focus on clean energy, the chemical sector has been a beneficiary of the China-plus-one strategy of global buyers. Shares of Inox Wind surged 70% in the past three months, while GFL stock gained 37% during the same period. The Nifty index has risen 14% during this period.

Jain said both chemicals and renewable businesses are gearing up for a high growth phase. "GFL has recently seen a big jump in its revenues and profits, and we expect its growth momentum to continue, backed by the increased capacity in its new fluoropolymers business."

He added that GFL's new fluoropolymers capacity would increase from 700 MT per month as of March 2022 to 1,500 MT by the end of FY23.

GFL revenues rose 50% in FY22 to ₹3,954 crore. The company has reported net profits of ₹776 crore compared to a loss of ₹222 crore in FY21.

The company will participate in green industries like electric vehicles, solar, and hydrogen through new fluoropolymers and battery chemicals. These areas provide significant growth opportunities for GFL, said Jain.