Sudarshan Chemical Industries Ltd (SCIL), the fourth largest pigment manufacturer in the world, plans to become the third-largest pigment manufacturer globally by developing R&D capabilities, operational efficacy, and expanding to new geographies and improving manufacturing and operations, says a research report published by HDFC Securities. 

 

The company’s current Capex cycle was started in FY17. It has incurred Rs 550 crores over FY17-20 and planned for Rs 350 crores over FY21-FY22E. “While a significant portion of Capex targets growth, some part of it is targeting margin expansion,” the report says. The capex is being spent on the development of two new molecules in high performance pigment, backward integration, infrastructural investments and debottlenecking at Roha and Mahad facilities.

 

On R&D front, SCIL is focusing improving research capabilities and infrastructure. “It’s R&D would drive technical innovation and continually improve product development. Last year, the company launched high-performance yellow pigment, which is strategically a crucial molecule for the company,” the report says adding that SCIL developed the entire technology in-house and launched it within eighteen months of inception.

 

On strengthening global presence, the report states that SCIL opened a subsidiary, Sudarshan Japan Limited in Japan to serve the Japanese market last year. “It also plans to expand in It also plans to expand in South East Asia and South Korea,” it adds.

 

Working on a strategic roadmap, SCIL divested its stake in other businesses such as Prescient Color Limited, Agro-Chemical Division and Industrial Mixing Solutions Division to achieve its aim of becoming third-largest pigment firm globally. The company is enhancing its product mix to higher-margin and higher-realisation speciality products like high performance azo pigments, cosmetics and pigment dispersions vs. the non speciality portfolio, the report adds.

 

According to the report, SCIL has a global distribution network, with eight sales offices, around 60 channel partners, and sales in over 85 countries. It has also set up marketing subsidiaries in Europe, North America and Mexico to support revenue growth from these markets in coming years. . Its wholly-owned Chinese subsidiary is engaged indistributing pigments in local markets and improving sourcing efficiencies. 

 

SCIL sources ~30% of its raw material from China. Pigment exports of the company constituted 50% of total sales in FY20, up from 32% in FY10. Export contribution to revenue is expected to go up with rising production of high-performance and effect pigments and global expansion.