Ellenbarrie commissions Durgapur plant on 15-year contract

Ellenbarrie Industrial Gases Limited commissioned its 325-tonnes-per-day (TPD) Durgapur on-site plant in September 2026, beginning revenue generation under a 15-year take-or-pay supply agreement and taking installed on-site capacity above 1,000 TPD. Management expects the plant to provide its first full-quarter operating contribution in Q3 FY27.

What happened at Ellenbarrie’s Durgapur plant?

Ellenbarrie commissioned the 325-TPD on-site gas plant in Durgapur, West Bengal, in September 2026. Commercial operations and revenue generation started in the same month, management said during the Q2 FY27 earnings call held on November 5, 2026. Its start late in the September quarter means Q2 captured only a partial operational contribution.

The facility increased Ellenbarrie’s installed on-site capacity to more than 1,000 TPD. Management described the commissioning as a move from capacity creation to capacity monetisation, with priorities now centred on utilisation, sustainable revenue and returns on invested capital. The call did not disclose the plant’s customer, production mix, utilisation level or revenue contribution.

Durgapur began operating as Ellenbarrie reported Q2 FY27 revenue from operations of Rs 114.3 crore, up from Rs 98.7 crore in Q1 FY27 and Rs 89.2 crore in Q2 FY26. Revenue therefore rose 16% sequentially and 28% year on year, but the September commissioning means those reported figures do not reflect three months of Durgapur operations.

How does Ellenbarrie’s Durgapur contract provide visibility?

Ellenbarrie said Durgapur operates under a 15-year on-site gas supply agreement with a take-or-pay structure, which management said provides long-term revenue visibility. The company did not disclose contractual pricing, committed volumes, annual revenue, customer identity or provisions governing the arrangement.

The on-site model differs from merchant gas deliveries that may require transportation to customers over varying distances. In Q2 FY27, Ellenbarrie said higher diesel prices and some longer-distance deliveries increased transportation costs. Durgapur’s supply arrangement is on-site, while management did not quantify whether the plant will change the company’s overall freight-cost mix.

Management said industrial customers are increasingly outsourcing gas production to specialised suppliers, supporting longer-term on-site contracts. This was management’s view of an industry trend rather than a forecast of Durgapur’s profitability. The disclosed fact is that Durgapur has entered commercial service under a 15-year contract and has started generating revenue.

What will Durgapur add in Q3 FY27?

Ellenbarrie expects Durgapur to provide a full quarter of operations in Q3 FY27, after commencing commercial operations near the end of Q2 FY27. Management did not issue Q3 revenue guidance for the facility, disclose its expected margin, or provide a consolidated earnings forecast for the quarter.

The wider gases business provides the relevant comparison. Revenue from gases-related products and services rose about 27% year on year in Q2 FY27, while the gases segment margin increased to about 39% from about 38% in Q1 FY27. Company-wide earnings before interest, tax, depreciation and amortisation (EBITDA) margin, however, declined to about 36% from about 39% over the same sequential comparison.

Management attributed the lower consolidated EBITDA margin to transportation costs and employee expenses. Employee costs included annual-increment arrears relating to prior quarters and further expansion of the project-engineering team. Management said long-term contracts with most customers allow cost increases to be passed on, and it expects transportation-cost effects to normalise over the next couple of quarters.

For H1 FY27, Ellenbarrie reported Rs 213 crore of revenue from operations, 23% above H1 FY26. Management retained its longer-term guidance of 20% growth in the core gases business, but did not identify how much of that growth would be attributable to Durgapur or state a revenue target for the new plant.

How does Durgapur fit Ellenbarrie’s expansion plans?

Ellenbarrie said its previously announced capital-expenditure plan of about Rs 450 crore for FY27 and FY28 remains on course. For the rest of FY27, management’s stated priorities are increasing utilisation at Uluberia 2, stabilising the new West Bengal on-site facility, and progressing planned merchant-capacity additions in northern and central India.

The company said it has historically built its presence in eastern and southern India and is expanding towards northern and central India to access further industrial clusters and diversify its customer base. Durgapur adds capacity in West Bengal, within the eastern footprint. Management did not provide a commissioning schedule or capacity figure for the planned merchant additions during the call.

Alongside Durgapur, Ellenbarrie received a Rs 480 crore contract from BHEL near the end of September 2026. The eight-quarter engineering, procurement and construction project covers a 1,200-TPD cryogenic air separation unit in Odisha, with commissioning expected in FY29. Unlike Durgapur’s continuing on-site gas supply arrangement, Ellenbarrie will design, engineer, supply, erect, commission and hand over the BHEL unit to the customer.

Management said BHEL revenue will be recognised according to project progress and applicable accounting requirements. Its immediate focus is engineering, procurement, contractual milestones, working capital and cash flows. At 1,200 TPD, management described the Odisha assignment as the largest air separation unit Ellenbarrie has undertaken, while Durgapur provides recurring operating revenue from September 2026.

Conclusion

Durgapur gives Ellenbarrie a commissioned 325-TPD on-site asset with revenue generation underway under a disclosed 15-year take-or-pay agreement. The plant lifted on-site capacity above 1,000 TPD and begins contributing as gases-related revenue rose about 27% year on year in Q2 FY27, while segment margin increased to about 39%.

The next disclosures to watch are Durgapur’s first full-quarter contribution in Q3 FY27, the stabilisation of the West Bengal facility and utilisation progress at Uluberia 2. Management also plans to advance merchant-capacity additions and initial BHEL engineering, while the Rs 480 crore Odisha project is scheduled for commissioning in FY29 after eight quarters of execution.