For specialty chemicals sector, nobody would have spoken louder than the stock market as it has given peak returns as high as 90% of earnings and created many new billionaires in India, says Deepak C. Mehta, CMD, Deepak Nitrite Limited while speaking at the 15th Annual India Chemical Industry Outlook Conference and Exhibition organized by Indian Chemical Council (ICC) themed “India’s US $5 Trillion Economy: Role of Chemicals in Navigating the Future.”

Sharing his elaborative thoughts on specialty chemicals, Mehta in the CXO interview with Divy Malik, Associate Partner, McKinsey & Company, said, "First, we saw huge challenges in logistics. For more than a decade, we had lost the need to look at the freight cost but now it became more expensive compared to even finished goods product prices. The unavailability coupled with uncertainty in terms of when will the materials reach us was a huge challenge. The jams at port and all such issues were putting the chemical industry into very difficult challenges. Finally, came the issue of commodity pricing and suddenly there was a never before upswing. Firstly, it was steel but followed by coal and then various building blocks, leading again to a situation that was never anticipated. The doubling of coal prices to more than Rs. 12,000 and natural gas going up by 15 times was unprecedented."

Mehta believes that specialty chemicals actually went through a lot more challenges because of being at the end of the pipeline.

"A lot of companies, be it commodities or intermediates, went through their own ups and downs. I do remember talking to a well-known company in India which is into performance products. They were not sure whether to even pass on the price increase to their customers because if the prices would later go down, they could not do it with their customers. So there were days, we at Deepak had to ensure that we are at the lowest possible cost, ensuring that we have the most reliable suppliers of materials. But soon the new way of doing things emerged, whether it was the cost, keeping maximum suppliers, whether you are ready to move your foot in terms of challenges, whether you are ready to live for the day and prepare for tomorrow," added Mehta.

Talking about the resilience shown by the industry, Mehta said, "With time, new models emerged such as more suppliers. It was more about the short term rather than long term planning. One learning certainly has been that it is critical to look at the entire value chain. Sometimes we generally categorize that specialty chemicals are great or life sciences are great but the last two years have taught us that it is critical to see the entire value chain, if it can be developed as a part of the company, is an excellent idea. If not, then how to have the entire value chain in the country so that we are not dependent on the other countries and we are not hampered by logistics. I think the time is right that the concept of Aatma Nirbharta has been supported by the government both by design and default, the chemical industry has to build resilience in the longer run." 

On new opportunities, Mehta said, "One good thing that is happening from the China challenge is that more and more the world is looking at China plus one, it is good for a number of companies in India. And India itself is growing very well in all sectors. Not only pharma and agrochemicals but areas such as personal care etc. In the last six months, the government has been supporting the PLI scheme for pharma, electronic chemicals, and semiconductors and it will push the chemical industry to go into polymers and as the demand for electronic chemicals increases it will create a new sunrise industry. I believe the best times are now coming to India if specialty chemicals are concerned."

On being asked about the net zero target by 2070 and whether the chemical industry is doing enough, Mehta emphasized that if India has to play a great role globally in the chemical industry, especially specialty chemicals, it has to give topmost priority to Safety, Health and Environment (SHE).

"It is becoming more and more critical here in India as more and more companies are giving priority to SHE related issues. The government has sent strong signals that it will support the industry towards environmental issues, developing the green economy etc. When we look at specialty chemicals, especially the ones with catalyst route based ones, we are making a case that there is benefit in creating economics based on green.