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Navin Fluorine International was born out of a restructuring exercise of its parent,

Mafatlal Industries. It has been operating the largest integrated fluorochemical plant in
India since 1967.

There are three segments to its business – speciality fluorochemicals, bulk fluoride and
refrigerants. The speciality fluorochemicals are used in making agrochemicals, antibiotics
for the pharmaceutical industry, pigment for the petrochemical industry and toothpaste
for the personal-care industry.

Bulk fluoride is used by aluminium

companies. Two more products derived from fluorine, CFC and HCFC 22, are used in
refrigeration. CFCs (chlorofluorocarbons) are used primarily as refrigerant gases, the
production of which is being phased out under the Montreal Protocol. CFC is being
replaced by HCFC (hydrochlorofluorocarbon) for air-conditioning and as refrigerant
gases. HCFC-based gases will be phased out by 2040. HFC 134a is the next generation
gas after CFC and HCFC.

Currently, Navin Fluorine imports HFC 134a and sells it in the domestic market.The
company has been stagnant for the past several years. The core business of fluorine is
slow. Offtake depends on sales growth of air-conditioners, aluminium products and the
pharma sector. The demand for refrigerators is expected to be driven by the replacement
market and higher demand from rural India, where the primary concern is availability of
power rather than affordability. Refrigerant gases are also needed for car air-conditioners.

The size of the Indian pharmaceutical industry is poised to treble by 2015. This means
more use of fluorine. However, Navin Fluorine has another source of cash.It will
continue to get large carbon credits for phasing out CFC. HFC 23 is a designated
greenhouse gas under the Kyoto Protocol which leads to the depletion of the ozone layer.
Once released, it stays in the environment for 260 years, the longest staying time among
all HFC-based gases. Emission of this gas is to be reduced under the Kyoto Protocol for
which the company is implementing a clean development mechanism project. The project
will install a system to capture, store and destroy HFC 23 by thermal oxidation. This is
expected to generate 2.8 million CERs (certified emission reductions) or carbon credits
annually for 10 years. For every metric tonne of carbon dioxide (CO2) cut, the project is
awarded one CER. This assures a certain amount of cash flow for the next 10 years.
Given that, the stock is cheap. A great buy at sub 120 levels.
Source: MoneyLife

Market Cap 163.62

* EPS (TTM) 44.84
* P/E 3.61
P/C 2.83
* Book Value 226.75
* Price/Book 0.71
Div(%) 100.00
**Div Yield(%) 6.17
Market Lot 1.00
Face Value 10.00
Industry P/E 7.90