SRFs two projects face cost and time overrun

SRF Limited has informed the bourses that there has been a cost overrun in one of its project due to change in the original design and the installation of additional effluent treatment equipment.

The project has been commissioned and capitalized at a cost of Rs. 166 crores. On February 4, 2019, the Board of Directors had permitted the setting-up of a facility to produce agrochemical intermediates at an estimated cost of Rs. 140 crores.

The Board had also given its node on November 9, 2017, to establish a facility to enhance the HFC capacity from 17,500 TPA to 34,500 TPA at an estimated cost of Rs. 356 crores. However, there has been cost and time overrun in this project too and, therefore, it has been commissioned and capitalized at a cost of Rs. 477 crores on October 31, 2019.

The reasons for the overrun includes change in original design to create scope for capacity enhancement at a future date, cost of installation of assets acquired from Mexichem being higher than initially estimated, adverse movement in forex rates, increase in civil costs due to inflation, and changes in scope and increase in pre-operative interest and pre-operative expenses due to delay in commissioning.

On Thursday, the stock of SRF had closed at Rs. 2,897.30, up by 3.61 per cent. On Friday, it opened at Rs. 2,892. In the early morning session, it touched Rs. 2,915.10 and later dipped by 1.5 per cent to Rs. 2,854.40.