Amtech Esters plans CPPL pigment capacity rise to 973.2 MTPA

Amtech Esters Limited plans to provide Rs 8.81 crore of IPO net proceeds as unsecured debt to its wholly owned subsidiary, Croda Pigments Private Limited (CPPL), to raise pigment capacity from 382.2 metric tonnes per annum (MTPA) to 973.2 MTPA. The plan combines Rs 3.41 crore for equipment with Rs 5.40 crore for incremental working capital.

How will Amtech Esters raise CPPL pigment capacity to 973.2 MTPA?

Amtech Esters will expand CPPL through an inter-company unsecured loan rather than through a pigment project at the parent company. CPPL manufactures pigments used as colourants and additives in industrial and household applications at Khasra No. 26/1, MIE, Bahadurgarh, Jhajjar, Haryana. Amtech Esters held 100.00% of CPPL’s equity share capital as of the red herring prospectus date.

The planned equipment addition would increase CPPL’s installed capacity by 591 MTPA, or about 155% of its existing 382.2 MTPA, to 973.2 MTPA. MTPA is the annual quantity a facility is installed to produce. Mech India, a chartered engineer, certified the capacity figures on August 17, 2026, while Amtech Esters’ board approved CPPL’s capital expenditure on April 1, 2026.

The expansion is proposed within CPPL’s existing 11,919-square-foot Bahadurgarh facility. Of this area, 4,701 square feet was already utilised, 2,220 square feet is proposed for the machinery and diesel generator set, and 1,900 square feet for utilities and infrastructure. Mech India’s June 16, 2026 certificate showed 3,098 square feet of balance area after the proposed allocation.

What will Amtech Esters’ Rs 8.81 crore CPPL loan fund?

Amtech Esters proposes to allocate Rs 3.41 crore of the Rs 8.81 crore loan to capital expenditure and Rs 5.40 crore to incremental working capital. Capital expenditure is spending on long-lived operating assets, while working capital measures current operating assets such as inventory and trade receivables less current liabilities. The working-capital allocation represents about 61% of the proposed CPPL loan.

CPPL plans to purchase 14 manually operated triple roll mills and one 82.5 kilovolt-amperes diesel generator set. Triple roll mills grind, disperse and homogenise materials used in pigment manufacturing. The mills have quoted costs of Rs 3.31 crore, including goods and services tax, installation and testing, while the generator set is quoted at Rs 10.66 lakh, producing the proposed capital expenditure of Rs 3.41 crore.

The 14 mills are divided into four groups: four 12-inch by 26-inch mills with 144 MTPA capacity, three 10-inch by 20-inch mills with 90 MTPA, three 15-inch by 30-inch mills with 225 MTPA, and four 10-inch by 26-inch mills with 132 MTPA. The combined 591 MTPA matches the planned capacity addition. Amtech Esters said no second-hand machinery would be funded from the IPO proceeds.

The quotations came from Tuyan Industries for the mills on August 8, 2026 and Jaycee Punching Solutions Private Limited for the generator on August 7, 2026, each with 60-day validity. Amtech Esters had not entered into definitive agreements with either vendor as of the prospectus date. If equipment costs rise, the company said the additional amount would be met through internal accruals.

Why does CPPL need Rs 5.40 crore of working capital?

CPPL’s Rs 5.40 crore working-capital funding is linked to projected growth in inventory, trade receivables, operational advances and other current assets as manufacturing expands. Its working-capital requirement, calculated without borrowings and excluding operating cash and cash equivalents, is estimated at Rs 8.44 crore for FY 2027 and projected at Rs 11.64 crore for FY 2028, compared with Rs 6.50 crore in FY 2026.

The proposed IPO allocation is Rs 2.40 crore for FY 2027 and Rs 3.00 crore for FY 2028, with the remaining projected requirement intended to be met from internal accruals, including share-issue funds and cash accruals, if any. This means the stated IPO support covers Rs 5.40 crore of the Rs 20.08 crore combined FY 2027 and FY 2028 working-capital requirement, while the balance depends on CPPL’s available internal funding.

CPPL’s projections assume 120 inventory days in FY 2027 and FY 2028, below 156 days in FY 2026, and 120 trade-receivable days in both years, compared with 118 days in FY 2026. Inventory is estimated at Rs 2.95 crore in FY 2027 and projected at Rs 3.91 crore in FY 2028. Trade receivables are estimated at Rs 4.89 crore in FY 2027 and projected at Rs 6.60 crore in FY 2028.

The operating rationale follows increased use of CPPL’s current capacity over three financial years. Installed capacity increased from 238.2 MTPA in FY 2024 to 358.2 MTPA in FY 2025 and 382.2 MTPA in FY 2026. Actual production rose from 127.14 MTPA in FY 2024 to 310.00 MTPA in FY 2025 and 311.99 MTPA in FY 2026, while capacity utilisation increased to 83.38% from 53.39%.

What are the loan terms and implementation conditions?

Amtech Esters proposes to lend CPPL Rs 8.81 crore at 6.83% a year, with a 12-month moratorium. The loan period is 10 years plus the moratorium, and repayment is scheduled in 40 quarterly instalments beginning after the first 12 months. The capital-expenditure and working-capital portions would carry the same interest rate, moratorium, tenure and repayment terms.

The proposed deployment schedule allocates Rs 5.81 crore to CPPL in fiscal 2026-27 and Rs 3.00 crore in fiscal 2027-28. Amtech Esters describes the schedule as indicative and says deployment may be reduced, accelerated or extended based on the completion of the offer, market conditions, contractual obligations, economic trends and business requirements. A shortfall or cost overrun may be funded through internal accruals or debt.

CPPL has factory approvals, including a factory licence and Consent to Operate, or CTO, for the existing facility. Amtech Esters said no fresh Consent to Establish, or CTE, is required because the project expands the existing Bahadurgarh premises. The prospectus states that the machinery’s impact is expected mainly from the last quarter of the current financial year, subject to installation and commissioning.

Conclusion

Amtech Esters’ proposed CPPL funding is structured as a 10-year unsecured loan that combines a 591-MTPA equipment-led expansion with Rs 5.40 crore of operating support. The capacity plan follows CPPL’s rise in utilisation from 53.39% in FY 2024 to 83.38% in FY 2026, but the projected expansion also depends on inventory, receivables and internal-accrual assumptions.

The next disclosed milestones are deployment of Rs 5.81 crore in fiscal 2026-27 and Rs 3.00 crore in fiscal 2027-28, followed by installation and commissioning of 14 triple roll mills and one generator set. Supplier selection and final equipment costs remain unresolved because the August 7 and August 8, 2026 quotations were time-limited and no definitive vendor agreements had been signed.