Neogen Chemicals has accepted an additional insurance claim of ₹152.00 crore as a part payment for losses incurred due to a fire incident. This brings the total on-account claim received or receivable, including salvage sales, to ₹316.49 crore. Further settlement will be determined in stages as assessments for property damage, business interruption, and asset reinstatement are completed.
Insurance Claim Update Following Fire Incident
Neogen Chemicals has provided an update regarding its insurance claims following a fire incidence and subsequent insurance claims. The company has communicated its acceptance to the Insurance Company for an additional claim amount of ₹152.00 crore. This amount is set to be released in due course as a part payment out of the entire claim receivable.
Total Claim and Future Settlements
The total on-account claim received or receivable, inclusive of this latest acceptance and the sale of salvage scrap, now stands at ₹316.49 crore. The further settlement of the claim will be determined in various stages. These stages are contingent upon the completion of assessments for loss of property, plant, and equipment, including other assets at the Dahej SEZ Plant, as well as loss of profit due to business interruption and the reinstatement value of assets.
Details of Damage and Recovery
The company has recognized a loss of ₹348.16 crore (₹362.90 crore on a consolidated basis) due to damage to property, plant & equipment, inventory, and incidental charges. An insurance claim receivable of ₹334.60 crore (₹348.82 crore consolidated) has been recognized, reflecting the estimated recovery after deductibles and considering claim admissibility. The company has not accounted for claims related to loss of profit or excess reinstatement value, adhering to accounting conservatism. The net impact of these losses and claims is ₹13.56 crore (₹14.08 crore consolidated) in FY 2024-25. To date, ₹9.49 crore has been received from the sale of salvaged scrap, with additional incidental charges of ₹1.41 crore claimed.
Restoration Efforts and Business Continuity
In response to the fire, the production/operation of the Multi-Purpose Plant (MPP3) Facility, warehouse, and tank farms were temporarily suspended. Construction of the replacement plant is partially completed, with trial runs commencing. To mitigate business disruption and minimize the impact on earnings, Neogen Chemicals has shifted production of critical specialty products to other sites with customer approval. This, combined with the planned expansion at the Patancheru Plant, aims to ensure business continuity.
Source: BSE
