DICABS plans ₹170 crore polymer complex for 66–400 kV

Diamond Power Infrastructure Limited (DICABS) plans a ₹170 crore, 84,500-metric-tonne-a-year polymer complex at Vadodara, with an 18,000-tonne Phase II super-clean line targeted for early 2028 for 66–400 kilovolt (kV) insulation; management estimates earnings before interest, tax, depreciation and amortisation (EBITDA) of ₹122.8 crore in financial year (FY) 2031, subject to validation and Board approval.

What will DICABS build at Vadodara?

DICABS plans seven compounding lines at its existing Vadodara plant with 84,500 metric tonnes per annum (MTPA) of total capacity. Phase I comprises six lines and 66,500 MTPA, while Phase II adds one 18,000-MTPA super-clean line, taking the product range from 1.1 kV to 400 kV cable compounds.

Phase I is intended to produce polyvinyl chloride (PVC), flame-retardant and flame-retardant low-smoke sheathing and bedding compounds, silane cross-linked polyethylene (XLPE) for 1.1–11 kV cables, catalyst masterbatch and peroxide XLPE for 33 kV. DICABS schedules PVC and catalyst lines first within a June to December 2027 commissioning window, followed by pilot trials using its own raw materials.

Phase II is designed to make super-clean peroxide XLPE insulation for 66, 132, 220 and 400 kV cables. The combined construction cost is estimated at ₹170 crore, comprising ₹78 crore for Phase I and ₹92 crore for Phase II, compared with ₹188 crore for a sequential build; management puts the stated saving from building together at ₹18 crore.

Why is DICABS bringing cable compound production in-house?

DICABS is pursuing backward integration because compound accounts for about 40% of cable cost and the presentation identifies imported compound as the binding constraint on extra-high-voltage cable growth. It says only three overseas suppliers make super-clean 66–400 kV compound and that supply was intermittent through 2026.

The immediate captive requirement is linked to DICABS’s planned 66 kV cable increase from 45 kilometres a month to 200 kilometres a month from April 2027. Phase I output is designated for captive use, while Phase II is expected to allocate about 40% of its 18,000-MTPA capacity to DICABS and about 60% to merchant sales for other Indian high-voltage and extra-high-voltage cable makers.

Management cites import-parity pricing of about ₹230 per kilogram for Phase II merchant compound, rather than a contracted selling price. It also estimates that conversion margins now paid to compounders and importers are about ₹17 per kilogram for low- and medium-voltage grades and about ₹50 per kilogram for high-voltage grades, equivalent to roughly ₹120 crore of annual EBITDA at DICABS volumes before growth.

How will DICABS qualify its super-clean compound?

DICABS plans to install a Swiss-engineered reciprocating co-kneader for Phase II, with closed peroxide absorption and dosing, clean-air pellet conveying, pellet classification and contamination scanning. The equipment package includes formulation know-how and two contracted acceptance tests, labelled SAT-1 and SAT-2, with zero contaminants above 100 micrometres specified by the presentation.

The planned production chain includes dedicated resin silos, sealed material handling, clean-room compounding and clean-room packing. DICABS says this will be matched to the Class 6 clean-room continuous vulcanisation (CCV) extrusion already operating at Vadodara, and it plans to qualify the material on its own 66 kV cables in its 765 kV laboratory.

The Phase II order is conditional on pilot-plant trials using DICABS’s raw materials, making those trials an execution gate before the proposed 12-month equipment delivery period begins. Management says the supplier carries technology risk until the compound qualifies through the acceptance tests, while the presentation targets early 2028 commissioning and the full product range being on stream in FY 2027-28.

How will DICABS fund the project and what does management project?

DICABS proposes ₹100 crore from qualified institutional placement (QIP) proceeds allocated to general corporate purposes and about ₹70 crore of term debt for Phase II. It expects working capital to come from accruals, while the indicated debt structure includes a two-year moratorium followed by six annual instalments and about ₹9 crore of DICABS support beyond QIP proceeds and debt across FY28 and FY29.

Management’s consolidated model values compound at market prices and projects revenue rising from ₹204 crore in FY28 to ₹1,043 crore in FY31. EBITDA is projected to rise from ₹9.5 crore in FY28 to ₹122.8 crore in FY31, before easing to ₹121.5 crore in FY32; these are planning estimates rather than reported operating results.

Management estimates a consolidated post-tax internal rate of return of 30%, a net present value of ₹224 crore at a 12% discount rate and a 4.2-year payback from October 2026. It assigns Phase I a 29% post-tax internal rate of return and ₹103 crore net present value, versus about 26% and ₹96 crore for Phase II, while noting that transfer prices, raw-material costs, merchant demand and debt terms remain under validation.

Conclusion

The ₹170 crore project links DICABS’s cable expansion to captive insulation supply: Phase I addresses PVC, 1.1–11 kV silane XLPE and 33 kV peroxide XLPE, while Phase II is intended to provide 66–400 kV super-clean compound for DICABS and merchant customers. Management’s ₹1,043 crore FY31 revenue estimate depends on import substitution, internal consumption and Phase II merchant sales.

The next disclosed milestones are Phase I commissioning between June and December 2027, pilot trials on DICABS raw materials and the Phase II order after those trials. Early-2028 commissioning, the two cleanliness acceptance tests, final debt terms and Phase II merchant demand remain the principal matters to watch before the projected FY31 EBITDA of ₹122.8 crore can be assessed against operating delivery.