Specialty chemicals to take India’s growth to another level
CXOToday has engaged in an exclusive interview with Mr Maulik Patel, CMD Meghmani Finechem Ltd.
- How is India developing as an economy?
India is currently the fastest growing economy and has shown consistent growth over the past decade. The Reserve Bank of India recently projected GDP growth to be at 6.4% in FY24.
Continuously increasing and healthy domestic demand is fuelling the overall growth of the country. A number of Indian States project higher growth than that of India and expect to account for almost 90% of India’s GDP.
- Do you really think we have the potential to become a 5 USD Trillion economy?
Indian economy has witness tremendous boom since the last decade. Like world’s leading economies, we are steadily being a spending one too. Major announcements like spending of over a USD 100 billion on Transport and infrastructure have infused new energy for the manufacturing sector which will further fuel growth.
With this, boosted corporate performance across segments, better infrastructure, technological advancement, various government incentives, progressive schemes will cumulate into an enviable growth trajectory. With firm establishment of this macroeconomic growth and stability, India will become a USD 3.7 trillion economy in 2023.
India is poised to remain world’s fastest growing economy and surpass developed nations in the coming decade. Various national and international financial agencies resonate the same narrative and believe that within a decade, India has potential to climb to world number three economy with more than $5 trillion.
- What kind of a role do you think specialty chemicals would play in this growth?
With India emerging as a suitable China alternative for countries seeking to broad-base their purchases, we foresee Indian chemicals sector at the cusp of considerably larger demand, influenced by sizable growth in our infrastructure and exports.
Specialty chemicals market has shown exceptional results and is growing rapidly with sectors like construction, F&B, automobile, textile and others witness healthy growth. If we look at only the next five years, we can expect 13% -15% sector growth domestically.
The specialty chemicals & petrochemicals industry contributes almost 22% to India’s overall GDP. Valued at USD 32 billion, it also is huge on exports. The global market is expected to register growth at 4.7% CAGR and reach $882.6 billion in 2028. So, both national and international markets depict positive business sentiments. Global exigencies may prove to be a brief impediment but opening up of Chinese markets can have positive impact as well.
- Capex seems to be very common. What is your take and your own plans?
Globally speaking, we anticipate economic recovery post waning of the pandemic in global pockets thus reviving capital expenditure and rise in demands of chemicals. Meanwhile, talking about India, our domestic demand is quickly increasing to support the multifaceted growth we have witnessed in various states. The private sector is expected to move parallel with India’s economy and increase spending to pump in more capital in capex. As income levels of Indian people increases, the demand for consumption of quality products is also expected to go up. This will create tremendous opportunities for the manufacturing segment and hence, to meet this demand, we are witnessing capex in all segments.
At Meghmani, we have also selected our product line wherein we are either the first or the largest in India. We foresee good growth in the coming decade. This year we commissioned India’s first Epichlorohydrin plant of 50 KTPA, India’s largest CPVC Resin plant of 30 KTPA and Caustic Soda capacity of 1,06,000 TPA. In CPVC Resin, we achieved optimum capacity utilization, way ahead of our estimation. Considering the growth potential in this segment we are further increasing our capacity to 75 KTPA, by adding another 45 KTPA. We are also entering into Chlorotoluene & value chain (MFL to be 1st in India to manufacture) and also setting up R&D centre to strengthen our position in Specialty Chemical segment. Recently, we acquired 2,89,844.41 sq. m. land in Dahej (Gujarat) to implement our future growth plans. We see ample opportunities and we are all geared to grasp the same.
- What kind of technology-centric investment you plan to make in coming five years?
At Meghmani Finechem Ltd, we firmly believe that investing in technology is a continuous journey. However, all our plants have latest technology and equipment through which we achieve improved efficiency, better output with lesser input and wastage. For smooth functioning of our plants, we have adopted modern technology which enables us to effectively monitor and control through central systems. It proves crucial to take key decisions and prompt actions in trying situations. We also have latest tools and systems up & working for various departments that help us in analytics that give us an edge over the others.
- India is also serious about clean energy. What is your take?
Energy is something that is crucial for each and every business regardless of industry, segment or size. India is today a one of the topmost economies actively working towards reducing dependence on fossil fuels. It has ambitious targets of achieving installed capacity of 450 GW worth of renewable energy by 2030 and is sincerely working towards it. If by various permutations and combinations, India can become energy efficient, it can reach a different level altogether.
We recognized the importance of conserving environment and reducing carbon footprint through proactive investments in advanced technologies and clean energy. We have set up an 18.34 MW Hybrid Power Plant that will enable us to meet our energy requirements and reduce our carbon footprints too. We are almost done with its installation and expect commissioning this Q1FY24.
- How was the business in FY23 and what are your plans for FY24?
We have witnessed 18% volume growth in Q3FY23 resulting in YoY revenue growth of 27%. 9MFY23 revenue, EBIDTA and PAT has surpassed FY22’s full year numbers. Even in this volatile market, we witnessed volume growth in all our products and have grown on absolute basis. New products that we commissioned in 9MFY23 have started contributing to our revenues which is expected to boost up from Q4FY23 onwards. Revenue contribution from Derivatives & Specialty segment increased to 31% in Q3FY23 vs 25% in Q3FY22.
FY24 growth is expected from new plants commissioned in FY23 as CPVC, Epichlorohydrin and additional capacity of Caustic Soda will start contributing at optimum level as well.
For FY24, we already have started capex for expansion in CPVC Resin and Chlorotoluene & value chain. These projects are expected to get commissioned in Q4FY24 which will fuel our growth for FY25. With substantial expansion plans in place, we are moving in line with our long-term vision to become a fully-integrated-facility company catering to diversified industries with consistent growth.