Established in **1961** and headquartered in **Jabalpur, Madhya Pradesh**, Narmada Gelatines Limited (**NGL**) is a specialist manufacturer of pharmaceutical-grade gelatine and bone-based derivatives. Following a landmark change in control in **June 2023**, the company has transitioned into a key subsidiary of the **Pioneer Jellice Group (PJG)**, integrating into a global supply chain that enhances its technical capabilities and export reach. --- ### **Strategic Ownership and Global Integration** The acquisition of a **75%** stake by **Pioneer Jellice India Private Limited** and **Ashok Matches and Timber Industries Private Ltd.** (part of the **Pioneer Asia Group**) marks a new era for NGL. * **The Jellice Synergy:** The **Japan-based Jellice Group**, a top 10 global gelatine manufacturer, holds a **25%** stake in the parent group (**PJG**). This provides NGL with direct access to world-class technical best practices and a global distribution network. * **Market Consolidation:** NGL is aggressively consolidating its domestic position. In **December 2024**, the company acquired a **14.14%** stake in **India Gelatine & Chemicals Limited (IGCL)** for **₹41 crore**. Collectively, the promoter group now controls approximately **53%** of **IGCL**, creating significant regional market influence. * **Regulatory Compliance:** To meet the **25%** Minimum Public Shareholding (**MPS**) requirement, promoters executed an Offer for Sale (**OFS**) of a **2.65%** stake in **September 2024**. --- ### **Product Portfolio and Circular Manufacturing Model** NGL operates a highly efficient, zero-waste manufacturing process where raw bone material is converted into high-value pharmaceutical and industrial products: | Product | Primary Applications | Market Role | | :--- | :--- | :--- | | **Gelatine** | Hard/soft capsules, tablet coatings, gourmet food, joint health supplements. | Core revenue driver (**~75%** of sales). | | **Dicalcium Phosphate (DCP)** | Animal feed and fertilizers. | Key industrial by-product sold to local markets. | | **Ossein** | Intermediate chemical. | Internal consumption for gelatine production. | | **Bone Meal/By-products** | Animal feed and technical applications. | Secondary revenue stream. | The company’s gelatine is a high-protein hydrocolloid derived from **collagen**, serving critical roles as a gelling agent in food (desserts, canned meats) and a stabilizer in the biomedical sector (wound healing scaffolds). --- ### **Operational Infrastructure and Capacity Expansion** NGL is currently executing a **₹33.00 crore to ₹33.30 crore** capital expenditure program to modernize its Jabalpur facility and expand output. * **Capacity Targets:** The expansion aims to add **600 MT** of Gelatine and **1,500 MT** of DCP capacity, with commercial production slated for **January 2027**. * **Energy Rationalization:** To combat rising fuel costs, NGL has commercialized a **2.15 MW solar plant** for captive consumption and improved boiler efficiencies, leading to a **1.5%** reduction in power and fuel costs. * **Quality Benchmarks:** The facility holds prestigious global certifications, including **EDQM** (European Directorate for the Quality of Medicines), **ISO 22000:2005**, **KOSHER**, and **Halal**, allowing it to serve highly regulated international pharmaceutical markets. --- ### **Financial Performance and Risk Profile** NGL has transitioned from a debt-free entity to a strategically leveraged one to fund growth, while maintaining a conservative financial risk profile. **Key Financial Metrics:** * **Revenue & Growth:** Total Operating Income (TOI) reached **₹188.81 Cr** in FY25, with a projected growth of over **15%** for FY26 (Targeting **>₹220 Cr**). * **Profitability:** PBILDT margins have seen a sharp upward trajectory, rising from **10.31% (FY23)** to **18.26% (9MFY26)** due to improved yields and price realizations. * **Solvency:** Overall gearing remains low at **0.11x to 0.19x**. The Interest Coverage Ratio is exceptionally strong at **35.07x**. * **Liquidity:** Rated **CARE BBB; Stable / CARE A3+**, the company maintains adequate liquidity with a projected Gross Cash Accrual (**GCA**) of **₹29-30 Cr** against minimal debt repayments of **₹2-3 Cr**. --- ### **Market Dynamics and Customer Base** NGL serves a blue-chip client base in the pharmaceutical and capsule sectors, including **ACG Associated Capsules**, **Geltec Private Limited**, and **Fortcaps Healthcare**. * **Customer Concentration:** The top 10 customers account for **42%** of sales, reflecting a stable but concentrated revenue stream. * **Macro Drivers:** Growth is fueled by a **9-10% YoY** increase in Indian drug exports and a rising global demand for nutraceuticals (collagen for skin and joint health). * **Efficiency Goals:** Management is focused on optimizing the working capital cycle, aiming to reduce the operating cycle from **113–116 days** to below **90 days**. --- ### **Risk Factors and Mitigation** * **Raw Material Volatility:** Dependence on crushed animal bones from unorganized markets is a primary risk. NGL mitigates this by **importing raw materials** and maintaining rigorous inventory controls. * **Vegan Alternatives:** The rise of plant-based capsules is a long-term threat. NGL counters this by focusing on high-end pharmaceutical-grade gelatine where animal-based collagen remains the gold standard for stability. * **Import Competition:** Low-cost industrial gelatine from **China** often enters the market under-priced. NGL relies on its **EDQM** and **ISO** certifications to maintain a premium position in regulated markets. * **Regulatory Shifts:** The company is monitoring the **Code on Social Security, 2020** for potential impacts on employee benefit costs and maintains a **Vigil Mechanism** to manage ethical and compliance risks. --- ### **Investment Summary** Narmada Gelatines Limited presents a compelling case of a legacy Indian manufacturer undergoing a **high-growth transformation**. Under the umbrella of the **Pioneer Jellice Group**, the company is successfully combining **operational deleveraging** (via solar energy and yield improvements) with **strategic expansion** (capacity hikes and the IGCL stake). With a strengthening margin profile and a robust foothold in the essential pharmaceutical supply chain, NGL is positioned to capitalize on the global "China Plus One" sourcing strategy in the specialty chemicals and ingredients space.