Source: https://www.bseindia.com/xml-data/corpfiling/AttachLive/2faf0a9e-9367-44ce-a460-ad7f082cc2f0.pdf
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Nitta Gelatin Expansion Plans
- In the past, they talked about increasing their production of Collagen Peptide, a substance they make. They were planning to add 1000 metric tons (MT) of it.
- However, they’ve changed their plans. They looked at the project again because of things happening around the world, like worries about a global economic downturn. These concerns are affecting the demand for Collagen Peptide from customers overseas.
- After discussing it, they decided to increase their Collagen Peptide production by 550 MT per year (on top of the original 1000 MT plan). This means they’ll be making 550 MT more of this substance every year.
- To pay for this increase, they’ll use a mix of things: a Rights Issue (a way to raise money from existing shareholders), their own earnings, and a term loan (a type of loan).
- They’re also thinking about expanding their production of gelatin, another substance they make. But they’ll make a final decision once they’ve finished the plan for it.
The company is changing its plans for making Collagen Peptide, and they’re thinking about expanding another product, gelatin. They’re also figuring out how to pay for these changes.
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You are right, this company pops up on my radar a lot of times. However I have stopped myself due to the risk of potential alternatives and regulation on animal products.
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The alternatives to conventional sources of gelatin will not easily replace the animal source because (1) Vegetable sources are far less nutritional than animal/fish sources. The vegetable source is relatively low in vitamins and essential nutrients. (2) The application needs specific preparation. (3) They cost 3 times that of Gelatin from animal and fish sources.
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@RajeevJ are you still following this company ? If yes, what are your thoughts about the sustainability of their margins and potential risk of regulation and alternatives
Any body has revenue breakup of Gelatin and Collagen peptide ?
What could be the asset turn for this 200 Cr of investment ?
As per their Annual report, price erosion of Gelatin & Collagen is happening. This could impact the rev & margins going forward. Closure of the subsidiary will impact the top line by 10%.
Will watch out 2-3 Quarters for any opportunity for entry
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From Crisil rating update report released yesterday link
“The group plans to incur a capital expenditure (capex) of ~Rs 250 crore over fiscals 2025 and 2026 to expand capacity in its gelatin and collagen peptide unit. It has announced withdrawal of its proposed rights issue of Rs 40 crore to fund the above capex and plans to finance the proposed investment through a mix of internal accrual and external borrowings. Though this could be partly debt-funded, financial risk profile is projected to remain comfortable on the back of expected annual cash accrual of over Rs 50 crore and adequate liquid surplus, which stood at Rs 76 crore as of March 31, 2024.”
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Wrote a detailed article covering the tailwinds + headwinds of the company in this article - here
Great insights in this thread btw! 
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