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Tuesday, Jul 04, 2006

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Navin Fluorine: Losing ground?

Navin Fluorine International stock continued to drift downward even as the company moved towards generating and trading carbon credit. A section of market players is understood to be selling in absence of clarity regarding actual financial benefit for the company.

The company, which has recently initiated its clean development mechanism project to reduce greenhouse gas emissions by over 2 million tonnes per annum, is expected to generate very significant cash flow for the company within a year. According a street estimate (allowing substantial discount to the current for each unit of carbon credit), the company's share (the technology partner for the CDM project — INEOS Fluor of UK — will also share a portion of the credit) of the annual proceeds from selling of certified emission reductions should be at least Rs 600 crore. However, the company has not provided any income projection on this score so far. The project will be shortly submitted to the Government of India for approval and then to the Executive Board of the United Nations Framework Convention for Climate Change for its registration as a CDM Project.

The stock closed at Rs 194.70, down 5 per cent on the BSE. In the last one week, it has declined by over 12 per cent and in the last one month around 24 per cent.

Jayanta Mallick

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