Nitta Gelatin - Nitta Gelatin

📊 BSE: 506532 🏢 Specialty Chemicals 📅 Last Updated: 11/13/2025 15:25

💰 Financial Performance

Revenue Growth by Segment

Total revenue remained flat in fiscal 2025 at INR 533 Cr. Gelatin (56% of sales) contributed INR 294 Cr but saw a decline in product realization. Collagen Peptide (11% of sales) grew strongly by 22% YoY to INR 58 Cr. Di Calcium Phosphate (DCP) sales were INR 92 Cr, representing a 2% YoY decline.

Geographic Revenue Split

The United States accounts for approximately 17% of total revenue. Total exports reached INR 286 Cr (approx. 53.6% of total revenue), with the majority of gelatin exports directed toward the U.S. market.

Profitability Margins

Operating margins moderated to 20.1% in fiscal 2025 from an all-time high of 24.1% in fiscal 2024. This decline was driven by higher crushed bone prices in H1 FY25. Long-term sustainable margins are projected at 12-15% as global demand-supply gaps ease.

EBITDA Margin

Operating profitability stood at 20.1% for FY25, a 400 bps decrease from 24.1% in FY24. The variance was primarily due to fluctuations in raw material costs and export-related headwinds from U.S. tariffs.

Capital Expenditure

The company has planned a total capital expenditure of INR 200-250 Cr over the next 2-3 fiscals (FY25-FY27). This includes INR 155 Cr specifically for expanding gelatin capacity by 1,500 metric tonnes and doubling collagen peptide capacity.

Credit Rating & Borrowing

CRISIL reaffirmed 'CRISIL A-/Stable' for long-term and 'CRISIL A2+' for short-term facilities. Borrowing costs are minimized by low fund-based limit utilization (8-26%) and a very low debt-equity ratio of 0.01.

⚙️ Operational Drivers

Raw Materials

Key raw materials include crushed bone (primary for ossein/gelatin) and bovine hide. Ossein is a critical intermediate; 20% was previously sourced from subsidiary BPL.

Import Sources

The company is sourcing U.S. origin 'Vertebra Free Halal Gelbones' to meet specific Asian export requirements. It also leverages surplus raw materials from Western markets (UK/US) where bone gelatin plants have closed.

Key Suppliers

A significant portion (20%) of ossein was supplied by subsidiary Bamni Proteins Ltd (BPL) before its closure; the company now relies on internal sourcing from plants in Kerala and Gujarat.

Capacity Expansion

Current gelatin plants operated at 100% capacity in FY25. Planned expansion includes 1,500 MT of additional gelatin capacity by FY27 and a recently completed doubling of collagen peptide capacity.

Raw Material Costs

Raw material costs are susceptible to global fluctuations; crushed bone prices were high in H1 FY25 but fell in H2. The company uses agile manufacturing to align production with raw material price cycles.

Manufacturing Efficiency

The gelatin plant operated at full capacity throughout FY25. Efficiency is driven by technology absorption from Nitta Gelatin Inc., Japan, focusing on reducing energy consumption and waste.

Logistics & Distribution

Supply chain costs have escalated due to prolonged lead times (60-75 days) for exports to North America and Europe, requiring strategic manufacturing alignment.

📈 Strategic Growth

Expected Growth Rate

20.35%

Growth Strategy

Growth will be achieved by expanding gelatin capacity by 1,500 MT (INR 155 Cr investment), capitalizing on the 20.35% CAGR of the Indian nutraceutical market, and shifting 95% of production to high-value specialized capsule-grade gelatin.

Products & Services

Gelatin (for pharmaceutical capsules and confectionery), Collagen Peptide (for gut health and diabetes management), Di-Calcium Phosphate (DCP), and Ossein.

Brand Portfolio

Nitta Gelatin India Limited (NGIL).

New Products/Services

Developing collagen peptide products aimed at gut health and diabetes management; collagen peptide revenue already grew 22% in the latest fiscal.

Market Expansion

Exploring alternative international markets to reduce U.S. dependency and targeting the wellness/nutraceutical industry which is projected to reach USD 51.83 Billion by FY31.

Market Share & Ranking

Established leader in the domestic gelatin market, specifically positioning as a leader in capsule-grade solutions by dedicating 95% of capacity to that segment.

Strategic Alliances

Joint Venture with Nitta Gelatin Inc., Japan (43% stake) for technical and operational support, and Kerala State Industrial Development Corporation Ltd.

🌍 External Factors

Industry Trends

The industry is shifting toward specialized wellness ingredients. While there is a global glut of cheap hide gelatin, demand for high-quality bone-grade gelatin for the capsule industry remains robust.

Competitive Landscape

Stiff competition from new manufacturing capacities in Turkey and South America which leverage low-cost raw materials to create a market glut.

Competitive Moat

Moat is built on a technical tie-up with NGI Japan and a 95% capacity focus on specialized capsule-grade gelatin, which has higher entry barriers than standard food gelatin.

Macro Economic Sensitivity

Highly sensitive to global gelatin supply-demand; a surplus of bovine hide gelatin from Turkey and South America has created a 'buyer's market,' pressuring prices.

Consumer Behavior

Increasing health consciousness is driving a 22% growth in collagen peptide demand and sustained demand for protein-based wellness products.

Geopolitical Risks

U.S. trade barriers/tariffs are a primary risk, as gelatin is classified as a food material (70% confectionery use) and does not benefit from pharmaceutical duty exemptions.

⚖️ Regulatory & Governance

Industry Regulations

Gelatin classification as 'food' (HS Code) in the U.S. prevents it from receiving pharmaceutical tariff exemptions, impacting competitiveness.

Environmental Compliance

Significant focus on environment; however, subsidiary BPL was ordered to stop operations by MPCB due to alleged pollution violations.

Taxation Policy Impact

The company is investigating if U.S. customers can secure refunds of duties paid on exports to Asia to mitigate tariff impacts.

Legal Contingencies

Subsidiary Bamni Proteins Ltd (BPL) faces a shutdown order from the Maharashtra Pollution Control Board (MPCB) dated March 13, 2024; operations are expected to remain suspended for 12-18 months.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timeline for BPL's resumption (12-18 months) and the final regulatory text regarding U.S. tariffs, which could permanently alter export profitability.