Strategic Alliances

Navin Fluorine International Ltd. (NFIL)

July, 2016

Submitted by: Section A

Achyut Awasthi
(PGP31127)
Ashish Goel
(PGP31141)
Sneha Khurana
(PGP31174)
Varun Gupta
(PGP31182)
Vidhya Subramaniam (PGP31183)

Navin Fluorine International Ltd. (NFIL)

Established in 1967 as a subsidiary of Arvind Mafatlal Group, Navin Fluorine International Ltd. (NFIL) operates one of
the largest integrated fluorochemicals complexes in India with manufacturing locations at Surat, Dahej, and Dewas. Its
business units & their revenue contribution are following - Refrigerants (34%), Inorganic Fluorides (14%), Specialty
Fluorochemicals (38%), Contract Research and Manufacturing Services (14%) & Global Trade.

Alliance & Acquisition History

Swarnim Gujarat Fluorspar A JV with Gujarat Fluorochemicals and Gujarat Mineral Development Corporation
to undertake a fluorspar beneficiation project for supply of fluorspar. The JV is yet to start operations.
Convergence Chemicals NFIL holds 49% in this JV with Piramal enterprises.
Manchester Organics NFIL acquired 51% stake in this specialized chemicals research company in Runcorn, U.K.
NFIL recently entered into a supply agreement and technology license with Honeywell to produce an automobile
refrigerant. Honeywell will license its proprietary process technologies to NFIL

Key Business Units

The refrigerants business is undergoing several regulatory changes and the refrigerant manufactured by NFIL R22 will
be phased out by 2030. No new equipment using HCFC will be manufactured beyond 2020 and usage will fully stop by
2030. Therefore, Specialty Chemicals (38%) and CRAMS (14%) are its growth drivers in this changing business
environment.
Specialty chemicals
In the last five years, Specialty Chemicals business share of the overall revenue has grown from 27% to 38% in the
company. In the FY15, revenue & export grew by 11% & 39% respectively on a Y-o-Y basis and contributed 46% to the
total revenue of this business. According to companys annual report, this business was impacted by the slower off take
from global agrochemical majors as well as domestic pharma companies. To counteract this, the objective of the
company is to continue investment in R&D to build a strong product portfolio with niche fluorochemicals to reach new
customers and new markets. To achieve this objective, company has to secure better alliance up in the value chain with
pharmaceutical and agrochemical firms. In terms of enhancing its manufacturing technology and learning, NFIL can also
go for a joint research and development facility with other players.

Value Chain
1.

Support Activities
Firm Infrastructure:
a.
b.
c.
d.

e.
2.

3.

Human Resource Management:

a. Skilled HR for specialized and value
generating R&D
Technology Development:
a.

4.

Manufacturing locations in Dewas and Dahej

Invested ~Rs. 600mn to upgrade Dewas plant
R&D centre near Surat
51% ownership in Manchester Organics
27000 sq. ft. of lab infrastructure

Designing and implementing cost-effective

fluorination process
b. Seamless transition from lab to plant
c. Ability to handle complex reactions such as
Fluorinations and High pressure synthesis
Procurement:
a. Backward integrated to procure Flourspar
through a JV to set up a fluorspar processing
plant in Gujarat (Swarnim Gujarat)

1.

Primary Activities
Inbound Logistics:
a.
b.

The most important input fluorspar is

procured from backward-integrated JV plants.
Fluorspar processing plant located near the
factory site in Gujarat

2. Operations:
SBUs include refrigeration, Inorganic Fluorides,
Speciality fluorochemicals, CRAMS and Global Trade

3. Marketing and Sales:

a.

B2B clients include industries including

healthcare, agrochemicals, refrigerants

4. Outbound Logistics:
a. Processed chemicals are transferred to site
locations of pharma companies such as
Piramal.

5. Service
a. Knowledge development and assistance in
R&D for clients particularly in the CRAMS SBU

Critical Success Factors

To capture market share, it is critical for the company to deliver product development at a favourable price-toperformance ratio. Other CSFs are listed below:
PP&E Related
1.
2.

Factor inputs such as uninterrupted supply of

water and electricity
Availability of raw materials (esp. fluorspar)
for production

1.
2.
3.

Intangible CSFs
R&D capabilities
Branding and Marketing
Trained labour and technically qualified
Human Resource

The company is transitioning to businesses with higher margins. All the capex incurred in FY15 was towards high margin,
non-commodity and services business, which had higher margins.

Competitors
SRF Ltd
It operates in the specialty fluorochemicals, HFC refrigerants and technical textiles business. The specialty
fluorochemical business accounts for 28% of its revenue and it is the domestic leader in this category. It is also the only
R134 manufacturer in India. In 2015, it acquired the pharmaceutical propellant business of American chemical giant
DuPont specializing in fluorochemicals. The acquisition was aimed at enabling the company to move up the value chain
and enter the niche pharma segment.
Gujarat Fluorochemicals Ltd (GFL)
It is part of the Inox group that has interests in chemicals, power and entertainment. The key business units of GFL
include refrigerant gases, chloromethanes, caustic soda and PTFE (39% of revenue share). The company owns Indias
largest and worlds fourth largest PTFE plant. Its ability to produce a wide range of chemicals through its fully integrated
facility makes it a cost-competitive producers of PTFE.

Specialty Fluorochemicals Industry:

The global market was valued at US$ 17.5bn in 2013 and is expected to grow at 5.3% CAGR to US$ 25bn by 2020 through
the rising share of value-added products.
Customers:
The industry has customers across a diverse range of industries - agrochemicals, animal feed, cosmetics,
refrigerants & pharmaceuticals. It is an Integral part of API molecules & present in 20% of all pharma
molecules.

Several global firms outsource their manufacturing process to India due to compliance, cost and capacity issues
Suppliers:
Fluorspar (or hydrogen fluoride, HF) is the key raw material. Its deposits are highly concentrated and the top 4
countries account for 50% of the total reserves.
Raw material (HF) prices are determined by the steel, aluminum and refrigerant markets
Competitors:
The top four manufacturers account for over 40% of global fluorochemicals market share. However, specialty
chemicals play a key role in the development of new products as these chemicals help in creating product
differentiation enabling the manufacturers to compete in marketplace with unique features and benefits
For Indian companies, the competitive advantage comes from cost leadership. Companies focus on niche
products & backward integration which keeps the costs low
Complementors
As mentioned above, several industries use fluorochemicals and can act as complementors