June 20, 2024

Epsilon Carbon and Epsilon Advanced Materials are on an aggressive expansion spree. What is the project wise total Capex planned for both entities till date? 

Currently Epsilon carbon is under capital expenditure cycle, focusing on both greenfield expansion in Orissa and brownfield carbon black expansion. We are targeting a capex of Rs. 2,000 crore over the next two years to build out these capacities. Moreover, Epsilon's strategic vision extends beyond domestic expansions. We're venturing into advanced materials, with plans to establish multiple graphite anode facilities, commencing with operations in India and the US. In the next three years, our investment commitment stands at close to Rs. 8,000 crore in developing facilities in both regions India and the US.

Last year Epsilon announced a US $650 million battery component and anode plant in the USA. What factors promoted you to set up the plant there considering you are a strong advocate of local manufacturing? What is the latest development on this facility? 

We prioritize local manufacturing and customization for diverse/various clientele. Hence, we selected North Carolina’s Brunswick County site for setting up a manufacturing facility in the US. Brunswick county is one of the fastest growing counties in the NC with developed infrastructure, skilled workforce and welcoming environment for business.

Presently, there is a promising opportunity with prominent/larger US-based customers seeking to establish large-scale giga factories. Consequently, our focus is on establishing a facility in India initially, tailored to their needs, followed by the establishment of a plant in the US, particularly in North Carolina, to cater directly to US customers while ensuring compliance with IRA regulations. Currently, our US facility is in the permitting phase, with advanced engineering stages underway. We aim to commence construction early next year and complete the facility within the next 18 months. 

Epsilon Carbon plans to establish Rs. 9,000 crore graphite anode facility in Karnataka. Please elaborate? 

Epsilon Carbon announced this investment of Rs. 9,000 crore in Karnataka last year. The aim is to build a 100,000 ton per year graphite anode facility to cater to both Indian and global customers. This facility will produce synthetic graphite at some of the lowest carbon footprint in the world at about 80% lower than what is produced in China today. Our first phase will be to start off with a 30,000 ton facility and we'll have about a Rs. 3,500 crore investment to build that plant.

Epsilon Carbon also plans to set up a Rs. 10,000 crore Integrated Carbon Complex in Odisha. What will be its salient features, manufacturing capacity, and completion date of this project? 

Epsilon Carbon plans to replicate the integrated carbon complex that has been built in Karnataka over the last 10 years, where we have different businesses of specialty carbon, carbon black, and our advanced materials as well. We are working on the investment to set up a 300,000 ton state-of-the-art coal tar Distillation Plant with downstream units to produce specialty chemicals that are today not manufactured in India. We hope to replace imports with our production capacity there. This plant will cater to local aluminium smelter demand and also export to the Middle East. Our goal is then to continue the journey of setting up a carbon-black plant and advanced materials plant to create this, to become one of the World's largest integrated carbon complexes.

The company has announced an investment of Rs. 1,200 crore in polymetallic nodule plant. What is the current status? 

We've recently signed a Memorandum of Understanding (MOU) with the metals, the metals company to develop this onshore nodular processing facility. Currently, the metals company is waiting for the offshore permit in the US from the EPA. So, we continue to study this project but not much development is happening over here.

What is the big opportunity in the battery industry? Where does Epsilon fit into the battery ecosystem?

Today India relies heavily on imported battery materials.  In 2018, we imported around US$ 1.23 billion worth of lithium-ion batteries, which accounted for more than half of the country's demand. To address this, the Indian government launched the Production Linked Incentive (PLI) scheme for the Advanced Chemistry Cell (ACC) battery to boost domestic manufacturing. This scheme reduced dependencies on imported battery materials and accelerated the rate of innovation within the country. This had a significant impact on the country's battery material industry, which was valued at US$ 1.66 billion in 2020 and is projected to reach US$ 4.85 billion by 2027, registering an impressive CAGR of 17.23 per cent during the forecast period of 2022-2027.

This unprecedented growth was amplified due to India’s strong manufacturing ecosystem, in innovation and a large pool of technical and engineering talent. The industry has gained significant momentum in recent years and has put us in a position of strategic importance in the global battery materials market. 

The magnitude of demand for batteries is high, with the number of GWh (Gigawatt Hours) required increasing from about 700 GWh in 2022 to around 4.7 TWh (Terrawatt Hours) by 2030. Additionally, there are looming concerns about supplies of key battery materials like cobalt and lithium that are pushing the search for alternatives to the standard lithium-ion chemistry. 

This is where India has a major advantage as a leader in the chemical industry to address this challenge. The chemical industry is a crucial contributor to the battery material supply chain, providing essential raw materials to produce batteries.

In 2019, the Indian chemicals industry stood at US$ 178 billion and is anticipated to reach US$304 billion by 2025, registering a CAGR of 9.3%. It is one of the fastest growing sectors in India and is currently the 10th largest chemical trade partner for the US which is estimated to scale up to 7th by 2030. Herein, lies an opportunity for India’s booming chemical industry to take lead and convert minerals into battery materials and reduce the dependence on China.

China has really focused and dominated on developing this material processing industry while minerals continue to be mined in Canada, Australia, and Africa. But the processing industry of both anode and cathode is located in China and this is what we as Epsilon think we can build in India and globally also with our mature technology that we have developed over the last five years. So, we see ourselves being a battery materials company to support energy transition and contribute both to Indian companies and global companies. 

What strategy should India adopt to become a global manufacturing hub for Battery Chemicals and products? And, what role does Epsilon Group see for itself in making India a global manufacturing hub? 

The challenge in battery chemicals today lies in the necessity of achieving a certain scale when constructing these facilities. Currently, India is an emerging market in terms of self-production. Many companies, such as Reliance, Amaraja, and JSW, are investing in manufacturing facilities, but they require time to reach optimal scale. Our industry also needs to match this scale. So, we see an advantage of building these facilities in India to cater to larger facilities that are being built in the U.S. 

As India expands its scale, we are prepared with a cost-efficient, well-established company capable of meeting both global and domestic demand. Our aim is to localize our operations entirely in India and to support PLI winners and other companies in establishing a robust supply chain to meet India's energy transition requirements.

What are the challenges faced by the battery industry in terms of sustainability and recycling? Role of Epsilon in this direction?  

It is very important to understand the process of battery material production, particularly when transitioning from battery minerals to active materials like anodes or cathodes. At Epsilon, we prioritize sustainability by utilizing 90% renewable power and implementing zero discharge facilities. Moreover, we focus on maximizing value through the utilization of byproducts generated during the battery material manufacturing process. This approach not only enhances our cost competitiveness on a global scale but also facilitates the production of more sustainable materials. 

Epsilon firmly believes in the future of a circular industry. We also are into lithium-ion battery recycling, and we anticipate significant growth in this sector within the next three to four years, once our virgin anode and cathode businesses have expanded. By integrating recycling processes into our operations, we aim to create a truly circular business model. This involves reclaiming materials from end-of-life batteries and production scrap, reprocessing anode and cathode materials, and reincorporating them alongside our virgin materials. Today globally this is a necessity, and Epsilon is proud to be at the forefront of advancing this technology and promoting circularity.

Some of the major challenges we face in India for recycling in battery industry are as follows:-

• Lack of organised collection of battery waste

• Lack of education and awareness amongst the population in comprehending the criticality of the minerals found in lithium-ion batteries

• Absence of defined processes or guidelines for lithium- ion battery recycling, 

• Unscrupulous recyclers misusing the system for monetary gain with no accountability

• Dearth of lithium- ion batteries found in the country 

• Exhausting process to import batteries from abroad

Epsilon's performance in FY 2023-24 and what's your expectation from FY 2024-25? 

The company continues its growth. We clocked in at about a Rs. 3,000 crore top line last year. As I mentioned earlier, we are in a large CAPEX cycle this year and anticipate surpassing Rs. 6,000 crore in revenue after the completion of our CAPEX cycle at Epsilon Carbon. At Epsilon Advanced Materials, we have set a short-term goal of reaching a turnover of approximately US$ 700 to 800 million within the next three years as we expand these large facilities.

Epsilon became the first Indian company to export liquid coal tar pitch. How do you see the growth opportunity in the global coal tar pitch market and what is your strategy to tap this?

We believe that India has a huge opportunity to cater to global demands when it comes to these various products, especially coal tar pitch. Coal tar itself is a diminishing commodity in Europe, Japan, and the US. As coal tar production increases in India, we see the opportunity to cater to the Middle East. Currently, the Middle East imports approximately 500,000 tons of coal tar pitch annually and is actively seeking supply chain changes. India is viewed as a potential great supplier in this regard. This is where Epsilon has made investments in its own liquid pitch tanks in Mangalore, becoming the first company in India to export liquid coal tar pitch and support Middle Eastern companies.

Epsilon Carbon aims to become a global leader in carbon products. What strategies would you employ to achieve this goal?

We entered into the carbon black business approximately three years ago. We have been running at 100% capacity and due to the demand from customers, we decided to expand our capacity by adding another 100,000 tons.

In the next six months, we should become a 215,000 ton a year carbon black plant, positioning us as the third-largest capacity provider in India. With our expanded capacity and diverse product range, we are well-equipped to meet the demands of the local Indian tyre market and fulfil a substantial portion of the export market's need for high-quality carbon black. 

Currently, we estimate that our carbon footprint is approximately 20% lower than that of carbon black produced by other Indian manufacturers.

How would you approach the pricing and marketing strategies for Epsilon Carbon's products in order to remain competitive in the market?

As we navigate the competitive landscape for Epsilon Carbon's products, it's imperative to devise robust pricing and marketing strategies to maintain our edge in the market. Here are some additional thoughts and considerations:

Integration of Sustainability: Given the increasing emphasis on sustainability in the market, we ensure our pricing and marketing strategies reflect Epsilon Carbon's commitment to environmental responsibility. 

Data-Driven Decision Making: We analyze our sales data, customer feedback, and market trends to identify opportunities for optimization and refine our strategies for maximum impact.

Brand Building: Investing in building the Epsilon Carbon brand as a symbol of quality, innovation, and reliability. Consistent branding across all touchpoints, including packaging, advertising, and online presence, is reinforcing our positioning in the market and enhancing brand recall among customers.

Epsilon has recently secured Rs. 100 crore sustainability-linked funding. How do you incorporate sustainability and green elements in your project? 

In addition to our circular approach to managing utilities and by-products and sharing them among our specialty carbon, carbon black, and advanced materials businesses, we have outlined a roadmap for the next two to five years to enhance our ESG ratings. Internally, we benchmark all utilities, seeking ways to reduce power and water consumption, improve product yields, and secure sustainability-linked funding. This funding supports our additional capital expenditure and the deployment of necessary technologies to achieve these improvements. We aim to become a leading sustainable company globally, particularly in the production of various carbon products.

June 18, 2024

What are the key trends/challenges facing the Chlor-Alkali industry in 2024 in India?   

It is the usual commodity cycle affecting the larger Chlor-Alkali industry today. The good thing is that it was an anticipated downturn and if I may add, most players were getting prepared to face it. Of course, globally, the downturn was caused by macroeconomic factors due to geopolitical instability such as that inflicted by the Russia Ukraine war. In fact, the industry was recovering post Covid and capacities /consumptions were coming back to normal before the unfortunate and unanticipated war broke off. And to make matters worse and as if one war wasn’t enough of a suffering for the world to endure, the Israel-Hamas conflict started.  

Given that caustic is a globally traded commodity, the Indian Chlor-Alkali market has also witnessed pricing pressures in the recent quarters. Also, with the downstream chlorine industries such as agro-chemicals going through a downwards spiral, the pricing pressures on chlorine have been severe. This has been aggravated by new capacities that many players have commissioned or are commissioning. Also, the issue of chlorine being in an oversupply situation in India is expected to get worse with the additional capacities coming on-line. Balancing the additional capacities with new destination industries within a reasonably short span of time is the challenge that the Indian Chlor-Alkali industry is trying to address now. 

Having said so, on the pricing front, we expect 2024 to be marginally better than 2023 and this marginal improvement is likely to be caused by modest recoveries in the downstream industries.  

How was DCM Shriram Chemicals’ performance during FY 2023-24 and plans for FY 2024-25? 

Like the rest of the industry, DCM Shriram Chemicals has been impacted on volume and prices and we have also suffered from an inability to find adequate homes for our products in 2023-24. Having said so, we have tried to use the downturn as an opportunity and in some manner, have expedited implementation of cost-side interventions, say on fuel mix or salt sourcing, with the objective of improving the overall health of the value chain.  

As I said, the fiscal year 2024-25 is likely to witness a marginal recovery in prices but overall the gradient of recovery is likely to be flat. We have recently commissioned our 850 TPD caustic capacity expansion and this takes our total installed capacity to a million metric tonnes per annum. Plus, we will very soon be commissioning our Hydrogen peroxide (H2O2) and the Epichlorohydrin (ECH) plants and these will mark our continued diversification beyond core-caustic.  

Thus for us, FY 2024-25 will be the year where much of the “new rubber” hits the road and we will be focusing our energies on making sure we stabilize these new plants and run them in a safe and efficient way while working with our customers to offer us the opportunities to maximise their utilizations.  

What is the total cumulative production capacity of all plants and what will be the capacity at the end of FY 2024-25? 

For DCM Shriram Chemicals, as I said, with the commissioning of 850 TPD of additional caustic soda, we now are a million tonnes per annum caustic player. We have 2 plants manufacturing caustic soda: Bharuch is the larger one at 2225 TPD and Kota has a caustic capacity of 550 TPD. In fact, at 2225 TPD, our plant at Bharuch is the country’s largest single location caustic plant. 

The soon-to-be commissioned H2O2 and ECH plants will have capacities in excess of 50 KTPA each. We have also recently commissioned an Aluminium Chloride plant with a total capacity also of over 50 KTPA. We are now in the final stages of commissioning a new 120 MW state-of-the-art captive power plant to meet the expanded power requirements of our operations. All these plants are located at Bharuch. Just a few months back, we also commissioned close to 44MW of solar-wind combo of renewable power through the group captive mode. 

The company has recently signed a MoU with the Gujarat Government for investing Rs. 12,000 crore in the state by 2028. Please specify your plans?   

Over the last 24-30 months, DCM Shriram Chemicals has invested over Rs. 3,000 crore in Bharuch for the various expansion and new products that I mentioned earlier. Also as I said, the Bharuch plant of DCM Shriram Chemicals is already the country’s largest single location caustic plant.  

In Bharuch, we are a part of the GIDC cluster (Gujarat Industrial Development Corporation). The advantage of being in a cluster is that there are downstream consumers of the products that we make. These mutual dependencies with our co-located customer industries have over time evolved into a symbiotic relationship between the players and it is almost a scenario where member industries are cooperating with each other for maximizing their own performance potentials.  

Given this context and in light of the emergence of the belt as a chemicals hub of the country, we continue to remain bullish about the prospects of the state of Gujarat going forward. The signing of the MoU with the Gujarat government of Rs. 12,000 crore is a manifestation of our continued bullishness towards the state and our own conviction about the long term opportunities on offer in the chemicals space for us. We have very recently announced Rs. 1,000 crore investment in setting up a world class Epoxy and Advanced Materials plant, which will be at a greenfield site in close proximity to our existing plant in Bharuch.   

DCM Shriram had approved 2 new projects – Epichlorohydrin (ECH) and Hydrogen Peroxide. Can you share capacities? When will these plants be commissioned? 

Both ECH and Hydrogen peroxide plants are coming up inside our existing operations in Bharuch and each will have an installed capacity of over 50,000 tonnes per annum. We are close to commissioning these plants within the next few months. 

Can you share the plans for Capex investment for FY 2024-25 and the projects where you are planning to invest? 

As I mentioned, we have just commissioned or are in the final stages of commissioning investments worth over Rs. 3,000 crore across 6 projects – Caustic expansion, Aluminium chloride, H2O2, ECH, a new captive power plant and 44MW of renewable power through group-captive mode. For FY 24-25, our focus is simple: “to make the assumptions behind these investments come true”. 

Having said that, we are also working in parallel towards crafting the next wave of investments – As mentioned earlier, we have announced an investment of Rs. 1,000 crore towards Epoxy and Advanced Materials. Significant amount of ground work will start during this fiscal towards setting up of a new Epoxy plant. We are also exploring an opportunistic play in some chlorine downstream areas – some of which are low capex and with short gestation periods. If all goes well, some investments in such areas will also fructify during the current fiscal. 

What strategy should India adopt to become a global manufacturing hub for Chlor-Alkali? What role will DCM Shriram play in making India a global manufacturing hub in this value chain?  

The India story is everywhere to be read, felt and seen. Across sectors and verticals, the India growth story is being viewed with immense positive anticipation and bullishness. Specific to the Chlor-Alkali space, India’s production has been largely a domestic consumption driven affair with modest exports. Going forward, in order to achieve the stature of being a global manufacturing hub for Chlor-Alkali, the industry needs to focus on global scale at competitive costs. Greening requirements in downstream industries will demand Indian players to green their upstream sources, especially around power, a key raw material for the caustic industry. Emissions and effluent handling will play a key and those with optimal realizations across all products and by-products will be the most competitive in the global context. Also one will have to be prudent about future plant locations and convenient access to ports will be construed as a competitive advantage. Ease of doing business will become even more important with increasing constraints on land availability.  

At DCM Shriram, we have a strong balance sheet coupled with the legacy of a 135 year old organization and a deep understanding of the Chlor-Alkali value chain. We have a very strong pipeline of future investments and we are making sure that those investments happen in the right areas and give us that boost in terms of both top-line and bottom-line going forward.  

The company is in the process of establishing a Multipurpose Product Research & Development Centre. How will this centre help to achieve the objectives of the company? Will it also serve in areas like waste to wealth?  

DCM Shriram Chemicals has recently set-up an Innovation Centre (IC) at a state-of-the art facility in Vadodara, Gujarat. This facility is a reflection of our commitment to innovation /R&D as a vehicle of future growth for the business. While the caustic value chain has been at the core of the business thus far, going forward, as our investments in H2O2 and ECH are testimony to, we are keen to move into value-added specialized chemistries. The Innovation Centre has already been certified by DSIR, Govt. of India and it will be working on 4 key verticals, viz. “Green & Sustainable Chemistries”, “Advanced Materials including Epoxy”, “Water Treatment & Allied chemicals” and “Other Emerging Technologies”. The IC will focus on “applied research” and try to remain close to the customer, understand their requirements and work internally with the manufacturing team to come out with newer products in the new age chemistries that we are looking at.  

Can you elaborate initiatives taken by DCM Shriram for enhancing process safety across all facilities/processes to make operation intrinsically safe? 

As DCM Shriram Chemicals, we consider safety as a cardinal and indispensable condition for our existence. As part of a 135 year old group with a rich legacy, we, the current crop of managers, can only contribute to the group’s heritage if we are able to conduct our affairs in a safe and sustainable manner. It is the abiding principle of “zero harm” that guides us as we conduct our day-to-day affairs. It encompasses “zero harm” to the people in our plants, being it on rolls or contractual, “zero harm” to our equipment /assets and “zero harm” to the environment where we operate. There are specific actions around each of these principles that are underway in our plants. 

We have also been working with external safety consultants of global repute and benchmarking our safety systems with those of global Chlor-Alkali players in order to reaffirm our position in the safety journey, especially around the processes and policies we adopt vis-à-vis what the global majors do.  

Recently, the chemicals business has undergone a rebranding exercise. What is the objective behind this exercise and how will it help the business in the long run?  

I would not classify it as a “rebranding” exercise – it is more an exercise aimed at “refreshing” our brand identity and reiterating the brand promise. We have always been “DCM Shriram Chemicals”, but now we have a refreshed logo of the business with a reiterated brand promise of “delivering sustainable solutions”. The objective is to ensure continuity while at the same time, taking up a platform where we are promising ourselves and our stakeholders that "sustainability” is now core to our operations and that the business is getting closer to its customers and moving from being a product manufacturer to being a “solutions provider”. The colour tone’s metamorphosis from blue to green is a subtle play to further emphasize the greening of our businesses, now and going forward. Lastly the word “delivering” implies a combination of action orientation, agility and result focus – all of which are attributes that the business now stands for. 

DCM Shriram’s CSR Policy is aligned with preventive healthcare, sanitation, education, skilling & livelihood, environment sustainability, Agri-skilling & livelihood, and water in agriculture. Can you share details of projects executed in FY 2023-24 and plans for FY 2024-25? 

You are right. As a group, DCM Shriram has always believed in growing with the communities where one operates. Long before rules around CSR were formulated, the group has worked towards improvements of the lives of the people and communities around us.  

At DCM Shriram Chemicals, we're deeply committed to our CSR initiatives, echoing our group's longstanding dedication to community impact. We've tailored our CSR endeavours in alignment with DCM Shriram's overarching objectives, working closely with the DCM Shriram Foundation to craft programs with the core pillars of convergence, collaboration and creating impact. 

For instance, through 'Kishori Utkarsh Pahel' (KUP), supported by the DCM Shriram Foundation, we're actively promoting health awareness with a focus on empowering adolescent girls. The program is in collaboration with the Bharuch District Administration, Health and Education Department and UNICEF as Knowledge partners. We are dedicated to creating measurable impact. 

Going forward we have set targets for the next two years where we are striving to enhance our environmental footprint by aiming to plant 1 million trees and creating surface storage space of 1 billion litres of water. These initiatives aren't just short-term projects. They're part of our ongoing mission, requiring sustained efforts to ensure tangible, lasting results. 

What are the key strategic priorities and growth plans for DCM Shriram Chemicals?  

Going forward, it is a combination of long and short term priorities that will determine the shape of our strategy. While for the long term, it is the opportunities around sustainability and white spaces in the market that will determine our strategic choices, in the short run, finding newer homes for the excess chlorine will be important. Without adequate and appropriately chosen chlorine tie-ups, the caustic capacity utilization has the risk of remaining sub-optimal. The good part is that we don’t need to do everything ourselves and intelligent alliances /partnerships can help meet the chlorine objectives in a much shorter time horizon with much lesser investments.  

Overall, DCM Shriram Chemicals is an exciting place – happening, intense and fast paced. We are in a hurry and believe we have lots to do in a short span of time. We are today a million tonne caustic player and have chosen for ourselves adjacent platforms to play, whether it is around Epoxy /Advanced Materials or chemistries such as those of H2O2 and Aluminium chloride. We are also closely evaluating options around sustainable energy choices and fuel mix options. Fortunately for us, the spaces that we are in, are growing and thus we need to grow even if we were to maintain our relative position vis-à-vis our peers. 

June 18, 2024

2023-24 industry trends/challenges in Chlor-Alkali, Derivatives and Specialty Chemicals?

2024 was a challenging year for the chemical segment. Post-covid the demand surged which led to big capacities coming to market. At the same time, demand was subdued globally thereby impacting India as well. High interest rates forced western world to keep less stock, triggering destocking and low consumption in China. This led to production from China dumped in the global market leading to drop in realizations for all the products. However, we see recovery shaping up quarter on quarter. Although this is not back to normal, it is improving and we expect it to improve further. 

During FY2024, Chlor-alkali was the most impacted because of subdued demand, over supply and realizations touching all-time low. However, we witnessed things improving just below normal level by the end of the year and we expect it to improve. Derivatives & Specialty business was also low in demand and realizations were at an all-time low but we see situations improving quarter on quarter, especially if end user industries are diversified.  

How has Epigral performed during FY 2023-24 and forecast for FY 2024-25?

FY24 was a challenging year for Epigral as well, however, we performed better compared to the industry on account of our strategy to diversify business model. In FY24, Chlor-Alkali was impacted both in terms of realization and demand but our Derivatives & Specialty segment which caters to various industries performing better for us. Also the past Capex we did and the projects that we commissioned in FY23 helped to have volume growth of 15% in FY24. Even in this tough environment, our EBITDA margin improved quarter on quarter from Q1 FY24 and we ended the full year with a margin of 25%. Considering Capex we did in the last 3 years, will drive the volume growth in FY25 and FY26. We believe FY25 would be definitely better than FY24 with a volume growth of around 15%.

Epigral is aspiring to reach revenue of Rs. 5,000 crore by 2027. New plants that you are planning to commission to make it a reality?   

Yes, we are a growth oriented company and very much focused to bring consistent growth. Projects that we commissioned in FY23 and we will commission in FY25 will drive volume growth both in FY25 and FY26. We have a few projects under our evaluation which we will announce soon. This will further drive growth beyond FY26. These chemicals will be import substitutes, having good growth prospects and will also strengthen our integrated complex. 

Total cumulative production capacity of all plants? What would be the capacity at the end of FY 2024-25? 

As on 31st March, 2024, our Chlor-Alkali capacity stood at 421,000 TPA and Derivatives & Specialty capacity stood at 190,000 TPA, which included CPVC Resin, Epichlorohydrin, Chloromethanes and Hydrogen Peroxide. We recently commissioned an additional CPVC Resin capacity of 45,000 TPA in FY24 which makes our total capacity standing at 75,000 TPA (world’s largest single location plant). In FY25, we will also commission CPVC compound capacity of 35,000 TPA and commission Chlorotoluenes value chain capacity.  

Capex invested in FY 2023-24 and projects where it was invested? Capex investment for FY 2024-25 and projects where you are planning to invest?

In FY2024, we invested around Rs. 405 crore in Capex which was towards additional capacity of CPVC Resin of 45,000 TPA, CPVC Compound capacity of 35,000 TPA and Chlorotoluenes value chain capacity. For FY25, we plan to spend around Rs. 300 crore on Capex on a few of the above projects and on ones we will announce soon. 

Strategy India should adopt to become a global manufacturing hub for Chlor-Alkali, Derivatives, and Speciality Chemicals? What role does Epigral sees for itself in making India a global manufacturing hub? 

For India to become a global manufacturing hub, we need to spend more on creating new facilities, invest in R&D to strengthen our position in the specialty chemical segment and to get orders from the global market for niche products. India also needs to focus on strengthening its position in various feedstocks as that will create a whole ecosystem to have a full value chain within India, rather than importing major raw materials. Government needs to focus on various initiatives to motivate the manufacturing segment in India. The government also needs to focus on creating robust infrastructure like the PCPIR region of Dahej, and we need more such parks in India for it to become a global hub for chemicals.  

How rebranding from Meghmani Finechem to Epigral will help the company to transform as a global multi-product chemical conglomerate? 

As per our strategy, we are moving from bulk chemicals to Derivatives & Specialty business. Our Derivatives & Specialty business contributed 45% of total revenue in FY24 vs 0% in FY2019. We have also started exporting our products in the global market. Considering future growth, we are open to various partnerships where we can enter into new chemistries, on the basis of our project execution capabilities. With all these, we are here to enhance the value for our stakeholders. The name change is in line with this spirit and that is where we decided to reposition the company and changed the name of the company from Meghmani Finechem Limited to Epigral Limited. 

Epigral is planning to commission a Chlorotoluene value chain plant. What's the capacity and when are you planning to commission it?   

Yes, we will be the first in India to set up Chlorotoluene and its value chain plant. The basic capacity for the plant will be of around 15,000 TPA. There are 3 blocks, including one multi-purpose plant. We are going to do various reactions in this segment and will cater to the agrochemical and pharmaceutical industry. In the first phase, we will be launching around 10 to 15 products. We are almost there in setting up the plant and phase wise will commission all 3 blocks. We expect the full plant to get commissioned in Q2 FY25.   

Your are also venturing into CPVC compound production with a projected capacity of 35,000 TPA. When are you planning to commission the plant?

We are expecting to commission this plant in Q1 FY25. 

You have inaugurated its R&D Centre in Ahmedabad in November 2023? New products that you are working on and how will it be beneficial in the long run? 

Epigral’s new R&D center is a strong pillar for its growth in the Specialty business. We have a good team and we will further increase the team size. The R&D center is working on various molecules and products but immediate focus is on new downstream molecules of the Chlorotoluene value chain. Research is going on and we are positive to announce further growth prospects in these lines, maybe in the coming years. 

The company has also commissioned 18.34 MW of green hybrid power plants in the last fiscal? How is this beneficial for the company? 

Yes, we commissioned it in FY24 and it has helped us to reduce our carbon footprint and contribute to the environment. It has also helped us to reduce the cost of electricity. 

Initiatives taken by Epigral India for enhancing process safety across all facilities/processes to make operation intrinsically safe?

Epigral is very much focused on Environment, Health and Safety and we continuously improve processes and instruments to have a safe environment for our employees to work. During the year, we have taken various initiatives, few of them are validating firefighting measures, new techniques to recycle various by products and effluents, lifeline protection kit, training on various safety topics, strengthening emergency response team, etc. 

Sustainability roadmap of Epigral and what's the sustainability plan in FY 2024-25? 

The company is focused to drive business in sustainable way by adapting various practices like, improving efficiency to consume less energy per ton of production, adopting latest and best technology to reduce wastage, strong sewage treatment plant to facilitate the reuse of treated water to conserve environment, engaging with local communities through philanthropic initiatives, setting up 18.34 MW wind solar hybrid power plant, creating green belt at the manufacturing facility, etc. 

CSR initiatives of Epigral in FY 2023-24 and plans for FY 2024-25?

We are committed to make a positive societal impact through CSR initiatives. The company believes in giving back to the community and participates in education, health, women empowerment, skill development and environmental protection programmes. We have contributed to various charitable trusts and supported diverse social, educational and economic development initiatives. Epigral focuses on empowering women through education and self-employment and upskilling opportunities. The company has established and supported educational and medical facilities, enhancing access to essential services for underserved communities. 

June 17, 2024

Industry trends in global and Indian petrochemical market in 2024?   

The Indian economy presents an optimistic picture for the growth of the petrochemical industry in the country. With a wide range of applications, we have witnessed a surging adoption of petrochemical products across sectors like Textile, Pharmaceutical, construction, automotive, etc. In the future, petrochemical demand is expected to grow significantly, and the government’s push to make in India has boosted petrochemical capacities. The increasing focus on sustainability and decarbonization are key trends that demand proactive strategies for innovation across the value chain. The need for adapting carbon-neutral practices and showcasing supply chain resilience are critical factors that will define the success for the Indian petrochemical sector in the coming decades. 

Where does India stand in the global petrochemical market and how do you see petrochemical growth in India? 

India is a key player in the global petrochemical market and is showcasing rapid growth and increasing demand. Indian chemical and petrochemical sector continues to grow at a rate of 1.2-1.5 times the GDP. India has emerged as one of the fastest-growing petrochemical markets, accounting for more than 10% of the world's growth in petrochemicals. 

According to leading industry reports, the market size of the Chemicals & Petrochemicals sector in India is around US$ 215 billion; expected to grow to US$ 300 billion by 2025. The Indian petrochemical industry could see around US$ 144 billion (more than~ Rs. 10 lakh crore) worth of new projects as the country moves to bridge the gap between the shortage of domestic supply and increasing consumer demand. The country's strong economic development, coupled with significant infrastructure spending, serves as a catalyst for petrochemical growth. Megatrends of urbanization, rising income, and organized retail is propelling petrochemical demand in India. 

The company announced phase wise development of the petrochemicals division. Can you please share details with us? 

Nayara Energy has strategically planned the development of its petrochemical division in phases. We are in the process of setting up a 450 KTPA Polypropylene plant at our Vadinar Refinery in Gujarat, which includes a Propylene recovery unit and upgrades to the existing FCC Unit. This Polypropylene unit will leverage advanced technology for clean polypropylene production. 

Being tactically located in Western India, near the largest petrochemical consumption region, we at Nayara Energy ensure logistical competence for petrochemical exports and imports, paving the way for further growth and expansion in the sector. 

What is the current status of development of a new polypropylene plant? When is it scheduled for commissioning? How is this going to impact Nayara Energy’s position in the Indian petrochemical market? 

There has been significant progress made on the planned phase-1 execution of the Petrochemical project and we are on track to commence our maiden petrochemical journey in Q3 2024. The strategic positioning of our 20 MMTPA refinery in Western India, will further strengthen our position in the high-growth Indian petrochemical market. This project showcases our commitment to diversifying our product portfolio and driving sustainable growth within the petrochemical industry. 

What is the Capex for petrochemicals of Nayara Energy? What is the future expansion plan? 

We are on track to commission our maiden petrochemical plant consisting of a 450 KTPA Polypropylene Unit in FY 2025 at an investment of Rs. 6,000 crores. Already, as part of the project, two of the units have been revamped and deployed a new unit. The final unit is constructed and is ready to be commissioned. 

What market share Nayara Energy is looking at in the Indian petrochemical sector by 2030? 

With 450 KTPA Polypropylene capacity, Nayara Energy aims to achieve a formidable market share in the Indian PP market by supporting Government’s ‘Make-in-India’ initiative. 

What sort of sustainability and green measures are being incorporated while developing petrochemical complexes? 

The petrochemical industry is proactively addressing its environmental impact by integrating sustainable practices into the development of petrochemical complexes. Key measures include reducing carbon footprint through technologies like carbon capture and storage (CCS) during syngas production and utilizing renewable carbon sources like biomass to produce chemicals. Shifting to lower-carbon feedstocks such as hydrogen and scaling up bio-production with renewable energy further contributes to sustainability efforts. 

Additionally, maximizing material and energy efficiency, creating value from waste, and adopting a stewardship role to consider long-term environmental and social impacts are essential strategies. Embracing large-scale sustainable solutions and transparent reporting signifies the industry's commitment to balancing economic growth with environmental responsibility.  

With the rising importance of the circular economy, what steps is Nayara Energy taking to promote recycling and reduce the environmental impact of its petrochemical products?

Due to our sustainability commitment, Nayara Energy chose high-quality FFS packaging for Polypropylene packaging which is 100% recyclable as compared to prevailing Raffia packaging which is difficult to recycle.  

Several polyolefin players are looking to invest in plastic recycling, via pyrolysis however, the consistent and quality sources of plastic waste are a big challenge. Once reliable feed and technology solutions are available, Nayara will evaluate investment options in plastic recycling. 

What is the current refining capacity of Nayara Energy and what is the future plan? 

Currently, Nayara Energy contributes approximately 8% of India's refining output, showcasing its significant presence in the country's energy landscape. For the last five to six years, the company has achieved reasonably good growth both in the retail business, and the expansion to petrochemicals. 

The company is investing Rs, 4,000 crores in modernising the refinery to improve its lifespan and reliability by 2026.  Our Vadinar refinery is India's second-largest, single-site refinery with an annual capacity of 20 million metric tonnes (MMT) or 405,000 barrels per day (BPD). 

It is capable of processing some of the toughest crudes and yet produces high-quality Euro IV and Euro VI grade products. We can now produce high-quality Bharat Stage (BS-VI) compliant fuels that meet international standards. This brings us closer to the global emission standards. 

What are the key CSR initiatives planned by Nayara Energy for 2024-25? 

Nayara Energy is committed to corporate social responsibility (CSR) and has outlined several impactful initiatives to positively influence the communities it serves in the coming years. Driving inclusive growth and delivering value for all stakeholders is at the core of our beliefs. Through various sustainable development projects in areas of Health & Nutrition, Education & Skill Development, and Sustainable Livelihoods, Nayara Energy continues to play a pivotal role in improving the quality of life of the communities it operates in. 

Additionally, Nayara Energy's CSR efforts are focused on improving the quality of life for communities residing near its operations. By implementing various initiatives, the company strives to be among the most respected organizations in India, prioritizing the well-being of communities and the nation at large.

June 15, 2024

Emerging market scenario for chemical distribution in India? 

The chemical distribution in India is at a crossroad of immense opportunities and soaring challenges. A growing economy, emerging brands, lower per capita consumption, and an increase in R&D spend are driving growth across sectors. A stable political landscape with a favourable push to the manufacturing sector has put India on the priority list of ingredient manufacturers in developed economies. However, the sector, especially industrial, has been fraught with pricing pressures due to overstocking of inventory and continued dumping. The geopolitical disruptions in the Red Sea and Panama Canal have had their own impact on supplies and prices of ingredients. Despite these challenges, the overall outlook is positive for the Indian chemical sector given the healthy annual growth of around 7% in the index of industrial production and a near doubling of the FDI in FY 2022-23 over the previous year. A revival in domestic demand and surging exports is expected to boost domestic manufacturing.  

IMCD India was established in 2008. How has the journey been so far? 

Established in India in 2008, IMCD has grown to cater more than 4,000 ingredients to over 6,000 customers in India and Bangladesh. We are a supplier of Specialty Chemicals across sectors from life sciences (pharmaceuticals, food & nutrition, beauty and personal care) to industrial solutions (advanced materials, lubricants and energy, coatings and construction). IMCD India is the second largest contributor to IMCD Group and has grown four times its size in the last three years. 

IMCD India has been on an expansion/acquisition spree. What is the current status of these acquisitions? 

Over the last two years, IMCD has done five acquisitions - Signet, Parkash DyeChem, TradeImpex, Valuetree and two business lines of CJ Shah & Company. In terms of integration, we believe that finding the right synergies ensures that our acquisitions have been a force multiplier of our human capital which have enabled us to build on each other’s’ strengths. In fact, our Advanced Materials business group is led by the erstwhile Managing Director of TradeImpex. These integrations have not only expanded our size but also enriched the diversity and experience of our teams. Given the focus on acquisitions, IMCD has a structured process that allows the integration of systems, processes and people to happen smoothly with a focus on minimal business disruption.  

How are these acquisitions consolidating IMCD India’s position in the market? 

Diversification and driving consolidation in the distribution space through M&A is a part of IMCD’s growth strategy. Signet, for instance, along with IMCD India excipient business has made us the go-to provider for excipients. We have the number one market position in the excipients space. CJ Shah’s specialty chemical portfolio has helped us fill in select gaps in our portfolio across industrial and life sciences, especially coatings and construction space. Valuetree, the most recent acquisition, has made us the one-stop solution in the beauty & personal care business. With these acquisitions, I am proud of the fact that last year IMCD India imported the highest volume of ingredients into India as a distribution company. 

Key factors that have contributed to IMCD India's success and growth in chemical distribution?

As a chemicals distribution company, our primary asset is our strong network based on long term relationships built with our stakeholders – Customers, principals and employees, the three pillars on whom our success rests. Our endeavour has been to continue to create value and be relevant for all these three pillars for sustainable growth and successful journey.  

Customer centricity remains at the heart of our actions, aimed at improving our offerings, formulations and services. In 2023, we had conducted a customer satisfaction survey with over 100 customers sampled. ‘Trust’ and ‘Ease of doing business’ were stated as top two drivers for working with IMCD, with most customers wanting to not only continue the relationship but also strongly recommending us.  

Our focus on transparency, innovation and sustainability delivered through a dedicated delivery team gives a lot of confidence to our principals. Building strong relationships with our principals ensures a reliable and sustainable value chain with high-quality ingredients. 

Employees are at the heart of everything we do; we strongly believe in entrepreneurship and empowerment. We run many internal programs to support our people both personally and professionally.  

What are the future growth strategies and focus for IMCD India in FY 2024-25? Are you looking at more acquisitions? What is India's investment plan for IMCD? 

APAC market has the largest share of the global Speciality Chemicals pie (Around 45% by value), with India being the second largest dominant region in APAC. Hence, India is a key region for the IMCD group strategically. IMCD’s outlook remains positive, and we target a sustainable growth approach through a mix of organic market penetration and inorganic acquisitions. We continue to identify new areas of growth and fill in gaps in our existing portfolio to provide a holistic offering to our customers. 

With increasing emphasis on sustainability and environmental responsibility, how does IMCD India incorporate these aspects into its operations and solutions? 

At IMCD, sustainability is a top priority for us, and we want to build it into our portfolio of solutions. Moving forward, we expect additions to our existing portfolio that will provide access to sustainable offerings to our customers. This emphasis is also extended to our operations – we recently partnered with a 3PL logistics partner to house our products in a green warehouse which is environmentally friendly as it runs on solar power, is supported by electric vehicles, and has a rainwater harvesting facility. This facility possesses a storage capacity of up to 450 kW of solar energy, generating 6.10 lakh units of energy per year and saving approximately 4,93,000 metric tons of CO2 emissions annually. In addition to this we have gone paperless across most of our internal operations and have made conscious efforts to shift to environment friendlier options on indirect sourcing.  

In the rapidly changing and competitive market landscape, how does IMCD India stay ahead by anticipating customer needs and market trends?

IMCD has the benefit of its reach across regions and applications, which enables it to derive an understanding of market trends and stay ahead of the curve by co-working with customers to deliver products faster to market. Across all our Business Groups, we work very closely with our principals to communicate market trends and leverage technical expertise to build in market applications. Our team of technical experts and our state-of-the-art application centres are at the foundation of our value proposition that propels IMCD as a partner for formulating products that are market-ready. For instance, with a strong focus on electric vehicles and solar sectors, we have been developing the right portfolio to address our customers' challenges and to provide them access supporting them in product development. 

How does IMCD India promote a culture of entrepreneurship and innovation within the organization?

Being a distribution company, people are our key assets, and we strongly believe in investing in our employees. Freedom to act and entrepreneurship are our corporate values, with each employee empowered to think strategically. For example, our in-house leadership development program, IPULSE, selects nominees from IMCD companies across the globe as participants who can bring out their ideas to improve business. An outcome of one IPULSE pitch that was implemented has resulted in the expansion of one of our business verticals. This program allows inputs of ideas from across locations and functions, with a fast-paced and transparent environment conducive to experimentation and implementation. 

Major challenges and opportunities facing the Specialty Chemicals industry and what would be your suggestions to navigate through them?

The volatility experienced globally has caused a spike in shipping costs and raw material prices, as well as adversely impacting delivery timelines. Amongst these challenges, is an opportunity for distribution players to act as mitigators in this disruptive environment, by providing a sustainable supply chain with alternative suppliers located in diverse regions globally, thereby enabling global trade. Inculcating agility and flexibility in the value chain would act as a buffer against the shockwaves in supply and demand. Additionally, the lifecycle of products in the speciality chemicals segment is reducing, and increasingly moving towards commoditization. In such a scenario, investing in innovation becomes imperative for developing potentially market-shaping products that will not fall prey to commoditization. 

How do you ensure highest standards of safety and regulatory compliances in your operations?

Our health, safety, environment, quality and regulatory department is central to our focus on responsible conduct and sustainable development. We have undertaken many programs in our continuous endeavour to augment our compliances for safety and regulatory aspects, and IMCD India adheres to the internationally recognized quality standards of ISO 9001:2015. We assess all our outsourced vendors, including transportation and warehousing, as per our Environmental, Social & Governance (ESG) guidelines in order to ensure adherence to ESG standards across our value chain.  

Additionally, after a thorough evaluation of our processes and premises, IMCD India has been granted the Authorized Economic Operator (AEO) L2 status. The AEO L2 certification enhances our customer servicing ability, through faster customs clearance and shipment release, reduced physical inspection of foods and provides increased security measures and improved risk management.  

How does IMCD plan to leverage digital technologies for optimizing its processes and improving overall operational performance?

IMCD adopted Salesforce (CRM) in 2022 to enable the optimization of internal processes and reporting and since then our digitalization efforts are going up by leaps and bounds. Firstly, the group has launched a global hub for sampling, ordering, product knowledge and documentation – MyIMCD, a full-service platform. This digital portal is available exclusively for our customers round the clock, who can explore our latest product samples, access technical documentation, or place orders with ease. Secondly, we have implemented a new initiative, Customer Care 360, a centralized email address for all routine business inquiries. This will allow our customers to avail benefits of uninterrupted support and faster turnaround. Additionally, we now have a dedicated team focussing on digital marketing initiatives for lead generation to capture the next gen customers who prefer less facetime and more online connection to queries. The aim of digitalization is to improve commercial excellence and to be more effective in customer acquisition.  

Where do you see IMCD India 5 years down the line?

We target to continue our exponential growth to become the go-to distribution partner for our customers across the sectors we cater to. Our aim is to create opportunities for all our stakeholders and continue growing together, while incorporating sustainability, digitalization, and innovation in all that we do. I would personally like IMCD India to be the employer of choice for our growing effervescent workforce in the country.

June 14, 2024

How does Godavari Biorefineries contribute to development and production of sustainable bio based products? 

Biorefinery means conversion of an agricultural biomass into food, energy, biofuels, compressed biogas and even electricity. It also means conversion of biomass into chemicals and materials.  

Godavari has always been pioneering the conversion of biomass into these products. In the 1940s, it was sugarcane cultivation and sugar production.  In the 1950s, it was the conversion of molasses to Ethanol.  In the 1960s, we started small in making chemicals from Ethanol.  In the 1990s, we were one of six projects in the country to be chosen by USAID to show how climate change can be mitigated by greenhouse gas mitigation projects.  We were awarded a grant from the USAID to demonstrate the making of surplus power from bagasse.  In the recent past, we were among the first companies to demonstrate the use of sugarcane juice/syrup as a feedstock for making Ethanol in India.    

The company received a Rs. 15 crore grant from the Department of Science and Technology. Can you please share the details? 

In biorefining, there is a need to have access to biomass and the question that we are trying to ask is how it can be done with reasonable cost which refers to Capex and Opex. Sugarcane processing companies save bagasse (8-9% on cane) and so have abundant feedstocks.  Secondly, the distilleries make Ethanol seasonally.  They have idle capacity.  The idea is to use this idle capacity with a bolt-on facility to make Ethanol from bagasse with the addition of bagasse pre-treatment.  So, there is no need to create a new facility all the way from biomass pre-treatment, collection, pre-treatment, fermentation and purification. We just need the treatment of the biomass to convert to sugar for fermentation. This is the whole concept and we want to try and pioneer and see how it is possible. 

When do you see this finally shaping up?

To be able to demonstrate this in a reasonable manner, a policy environment needs to be in place.  The creation of PPAs (Power Purchase Agreements) enabled sugar mills to install power plants.  Similarly, a mandate for Ethanol blending with a declared price for juice/syrup helped create that investment).  Similarly, a policy framework for 2G Ethanol will help spur investment.  The moment we create a framework and a market, only will then one allow or incubate innovation to make it happen. 

How favourable government policy is accelerating growth of bioenergy, Ethanol and bio-based speciality chemicals? At the G20 Summit, many nations came together to create an association for Ethanol. How will this help companies like you in the long run? 

One is the Indian context and the other is the global context. In India, there is a need to have energy security that supplements and substitutes the energy that the country imports from overseas. India is rich in biomass and the policies have to encourage the conversion of biomass. The government mandates Ethanol blending and is targeting 20% blending in the next couple of years.  Similarly, there is a mandate that is going to come for Compressed Biogas (CBG).

India has to look at it also from an energy security as well as climate change angle. India is committed to achieve net zero by 2070. Moreover, India has a lot of small farmers and their income security is necessary and this is helped by a dual product from sugarcane if it can go to sugar and Ethanol. The infamous sugar cycle that used to have big surpluses and deficits gets insulated because these surpluses can go into the Ethanol. 

Are you also looking at focusing on CBG? How many plants are you planning to set up? 

We will certainly do that and at the moment we are exploring the setting up of a CBG plant. 

How is Godavari contributing to the Government of India's ambition on these fronts? 

As mentioned, we were the first off the post when the policy of Ethanol from sugar cane juicer syrup was announced. 

We increased our Ethanol capacity from 200,000 to 320,000 litres per day. Later, we increased the capacity from 320,000 to 400,000 litres per day and now we have gone from 400,000 to 600,000 litres per day. We are very active in increasing the Ethanol programme. We are looking at grain and maize as a feedstock in the coming future to make this a multi feedstock facility. We are also looking at CBG in the future. 

You are setting up a grain-based Ethanol project. What is the current status of the project and when are you planning to complete it? 

We have already received necessary approval from the government. It will help us as a dual feedstock and lead to risk mitigation. As it is a short-term crop, in case there is a monsoon failure, it also gives us a twin feedstock to run our facilities, enhancing capacity utilization of the distillery. Grain-based plant is being planned for two lakh litres per day.  

What are your plans for bio-based chemicals? 

In addition to making our Ethanol facility, multiple feedstock facilities, we are also looking to add Specialty Chemicals to our portfolio. We believe that the use of bio-based biomass to make chemicals, and in particular Speciality Chemicals, is going to be also an area of future development.  

There is a big thing of looking at biogenic carbon as a feedstock compared to fossil carbon. This is encouraged by either boardroom commitments, regulations or customer preferences. So, Godavari is continuing to work to make Specialty Chemicals that may find application in Pharma Intermediates, Agro Intermediates or in Coatings, Paints and a wide variety of chemical applications.  

We are working with customers closely to see whether we make a drop-in product or it could be a green substitute with slightly better properties so that the substitution may create a better category of product.  Traditionally, these things don't happen overnight. You are not substituting a fossil commodity with a green commodity and that would not work because it has a very different economic base. It takes time to work with customers. Godavari is definitely looking to work on bringing in new products in the next financial year. 

How does biorefinery foster a culture of innovation and how will research and development play in its growth? 

We look at research from four points of view. We look at research on the farm and agriculture site because ultimately biomass is grown on the farm. We have laboratories in Mumbai for lab work. We have pilot plants and research facilities with slightly larger lab facilities in the plants and finally we have some pilot plants where we can do a semi-commercial business before we go to commercial. So, we have a comprehensive culture of innovation. We have many Scientists and Engineers working with us and we also collaborate with people outside. 

What sort of approach to waste management and utilization of waste streams in the operations that you do?

I think the first idea is to think of waste as wealth and see how one can find use in all the waste streams that we have. Recycling brings value from it. Around 50-60 years ago, molasses itself was a waste stream and it became Ethanol. Bagasse was a waste stream and it became electricity. We have various streams today. Now, we are looking at finding ways to extract potash out of the ash of the incineration boilers in a distillery. We are making bricks from some of our other ash. We are also working very seriously on recycling streams. 

How does Godavari ensure sustainable sourcing practices and support the local agriculture community?

We are now focusing on research for sustainable sourcing. We often see depletion of oil reserves, gas reserves, trees or coal but we don't observe the depletion of the soil carbon. Ultimately, it is the soil carbon that will convert to biomass, which we can either use for food or energy. The depletion of soil carbon depletes will reduce yields of these products. At the same time, if we can increase this soil carbon, we are going to improve the yields and sequester a lot of carbon in the atmosphere. We are executing a big project on this with Somaiya Vidyavihar University. Agriculture researchers are working on this with a lot of farmers and trying to see whether we can do this on a large scale. 

How do you see Godavari Refineries integrating sustainable practices into its overall operations, including resource consumption and emission reduction? 

Sustainability is part of our DNA. When we work with farmers to improve soil carbon, we also ask them if they can intercrop with nitrogen fixing kinds of crops such as soya to reduce the use of chemical fertilizers. We are working with them to use traditional agro-ecological practices. The success of this will automatically start sequestering more soil carbon and reduce Scope 3 emissions. Secondly, once CBG is in place, one can also work with tractor manufacturers to start using tractors on CBG. This is futuristic thinking but it is doable.  

We are constantly thinking of how we work on energy efficiencies to further reduce Scope 2. We can produce more electricity from the same biomass. When we are continuously innovating to make products from biogenic carbon, we will continue to reduce Scope 3 as we supply.  

For us, sustainability is not just environmental but also social, and we keep educating farmers about soil carbon. Hence, it is the wider definition of sustainability that we work on. When we are able to produce a product that may have a better profile for customers, you have actually achieved a complete win. We are also getting certifications from global bodies such as Bonsucro.  

When are you planning to achieve net carbon zero?

We published our first sustainability report and we will articulate a strategy going forward. We want to build our strategy of converting biomass into biofuels, foods, sugar, electricity and more a whole range of new chemicals. This is not a 12 month exercise but a continuous exercise. We will continue to innovate and the effect will be seen in quarters and also in years. 

Your thoughts on the future of the biofuel programme?  

The Prime Minister at the 90th anniversary of the RBI mentioned about the Ethanol programme. He gave an interview in which he talked about the Ethanol Blending Programme and it finds mention in the BJP manifesto. I believe if India has to maintain its path to net zero and maintain its energy security in the light of current geopolitics, the Biofuel programme will grow.  

Does the company plan to go for the IPO in this financial year?

We are certainly looking at filing DRHP this year. 

June 11, 2024

Rajesh Kamat, Head - Sales and Marketing, Tata Chemicals Limited shares his perptectives on the emerging trends in the chemical industry, his company's overall plans on expansion, R&D, digitalization and sustainability amongst others. 

Industry trends/challenges in Basic Chemistry and Specialty Chemicals in 2024?

India’s economy has been remarkably resilient, weathering the storms of post-pandemic supply disruptions, the war between Russia and Ukraine, and monetary tightening across economies. [1]The International Monetary Fund (IMF) recently raised its growth projection for our GDP for this fiscal to 6.8% reveals the optimism about India’s future. [2]Chemical industry too is showcasing promising trends for 2024, and is projected to hit the $300bn-mark by 2025. The Indian market is fairly balanced, even as the European market continues to face pressure. As for the basic chemicals market, the focus will remain on sustainable and eco-friendly products and services. The area of specialty chemicals, particularly, is experiencing significant growth, notably in sectors such as pharmaceuticals and advanced materials. In the era of digital revolution, companies are lapping up every chance to innovate and expand, creating numerous opportunities for new products and ventures.

As far as challenges are concerned, global economic slowdown could continue to keep the demand for chemicals across industries (especially those dependent on exports) at a low for now. Another important factor to consider is the increasing stringency of environmental regulations. While these regulations are becoming stricter, they are essential. They present an opportunity for us to take the lead in sustainability efforts. In this scenario, industry needs to keep sustainability at the forefront and adopt sustainable practices in production, packaging and distribution – keeping our planet at the heart of our operations. 

Financial performance of Tata Chemicals in FY 2023-24 with respect to revenue and profitability? Plans for FY 2024-25?

There was a net loss of Rs 850 crore in the quarter ended March 31, and revenue from operations fell 21% due to challenges in UK operations and impairment charges. In India, we have adjusted prices for soda ash products several times since April 2023 to remain competitive and responsive to market trends. For FY24-25, demand in India remains stable and we see recovery across various markets globally. We believe that the new capacity additions of Soda Ash would get absorbed. We remain optimistic about the future with newer applications such as solar glass and lithium fueling industry growth.

How has the company performed internationally? Are you focusing on any new geography/product?

We are a global organisation, with a strong presence in Asia, Europe, North America and Africa. Tata Chemicals remains focused on the timely execution of planned expansion projects and efficient cost management across all geographies. We are committed to collaborating with our customers and other stakeholders to advance our sustainability and digitization initiatives. Our efforts will be broadly concentrated on three key areas: Decommoditization, Decarbonization, and Digitalization.

We continue to cater to customers across the globe across all product segments, including solar glass. Going ahead, we are working on increasing the extent of direct relations with our key customers across all our products.

Capex investment made in FY 2023-24 and projects where the company invested? Capex plans for FY 2024-25 and projects where the company is planning to invest? How will these investments help the company in the long run?

[3]We allocated Rs. 8,000 crore for over the next three years capex plan for various projects. We invested in delivering capacity expansion for Soda Ash, Bicarb and Salt. We will increase the soda ash capacity by another 1 million tonne (MT), taking the total global capacity to 5.3 MT. The company’s 380 kilo tonne of salt capacity addition in the UK and Mithapur in India would increase its global capacity to 2.3 MT and that in India to 1.8 MT. The company is also expanding its specialty silica capacities by five times, in a phased manner, to reach 50,000 KT to support the emerging demand of sustainable materials of tyre industry.

On our long-term investments, expanding capacities in core businesses such as soda ash, bicarb and salt will allow us to cater to growing demand and serve our customers across the world. Focusing on specialty products and potentially new ventures will diversify the portfolio and reduce dependence on traditional segments. Investments in green technologies and sustainable solutions will help improve our environmental footprint and potentially attract environmentally conscious customers. Modernisation and capacity expansion can lead to improved operational efficiency and potentially lower production costs.

On the R&D front, the company has initiated work on new sustainable chemistries in bio-based surfactants, conversion of CO2 to value-added materials, applications in Bicarbonate and Soda Ash. What's the update on these fronts?

Innovation would remain a catalyst for the industry, and Tata Chemicals has kept this at the forefront of its operations. We are actively investing in creating environment that encourages innovation. We are committed to developing sustainable world class practices across all our R&D efforts. Our carbon capture plant in UK is now operational, producing high-grade sodium bicarbonate using captured CO2. This not only reduces emissions by 10% but also creates a more circular process. We are working on new sustainable chemistries and bio-based surfactants, and also on bicarbonate for Flu Gas Desulfurisation (FGD) applications. Additionally, our Mithapur Salt Works utilises solar energy, avoiding appx 33.5 MMT of CO2 emissions annually. These initiatives demonstrate our steadfast commitment towards sustainability.

What strategy should India adopt to become a global manufacturing hub for Basic Chemistry and Specialty Chemicals?

India has the potential to be one of the world’s largest chemical manufacturing hubs. Chemical industry is the backbone of the entire manufacturing sector, and therefore, focus needs to be on boosting investments keeping sustainability as a pillar. Driving exports to bridge the trade deficit will be critical to ensure we are able to find markets for the products that we manufacture. [4]As per a recent industry report, the key segment projected to aid India widen its exports could be the specialty chemicals, whose net exports is likely to grow 10X from $2 billion in 2021 to $21 billion by 2040.

However, despite growth projections and reasonably favourable market conditions, India is likely to face tough competition from Saudi Arabia, China, Indonesia, Vietnam, Germany and South Korea. Through the Petroleum Chemicals and Petrochemical Investment Region (PCPIR) policy, India aims to get an investment of $284 billion by 2035, helping create new jobs, in the near term, and boosting exports in agrochem, dyes and pigments, and food additive chemicals, in the long term. 

The chemical industry is witnessing momentum in new areas like Hydrogen, Battery Chemicals, and Green & Sustainable Products. What is Tata Chemicals strategy on these fronts?

The chemical industry has immense potential in developing innovative solutions to enable the shift towards a sustainable and circular economy. [5]Worldwide, there has been a significant push for EVs, and India, too has framed policies encouraging EV adoption and propelling the nation’s green growth. Chemical companies like TCL, thus, have a unique advantage here as soda ash is a key component in making battery chemicals.

[6] Chemical companies across the world have capabilities to tap into the opportunities of the emerging hydrogen economy by utilising green hydrogen as a source of energy. Collaboration will play a role here as organisations can utilise their global assets and knowledge resources to kick-start green economy initiatives, and make the shift to a more sustainable portfolio in a profitable way.

 What are the company plans related to digitalization across all its operational facilities? How are you planning to leverage it?

[7]Tata Chemicals embraced technology early in the day to enhance digital capabilities to update processes leveraging industry 4.0 perspective. By leveraging the digital twin tech and prescriptive analysis system, hosted on Azure, we have notably enhanced the soda ash carbonation process. Digital dashboards have been implemented to showcase key performance indicators (KPIs), providing enhanced visibility and facilitating data-driven decision-making across multiple business domains. We have implemented e-logbooks to digitise data capture, in various projects.

Furthermore, our ongoing digital transformation efforts encompass improvements in data, logistics and security systems, infrastructure modernisation, and expansion of our logistics control tower to ensure real-time visibility across transportation modes. This initiative has paved the way for enhanced reliability and efficiency in financial systems through the adoption of robotics process automation (RPA). Additionally, we have initiated business process reengineering (BPR) for harmonization purposes and commenced the implementation of a cloud-based ERP system.

The company is also strengthening cyber security for IT and Operational Technology (OT) systems, which is a priority, ensuring they are secure and protected against cyber threats. Using historical sensor data, the AI-based system provides recommendations for optimal device design, demonstrating improved performance. We plan to devise and use more such controls at other plants.

The company has bagged a lot of awards on sustainability and it is focused on People, Planet, and Profits. What's the strategy for green energy, energy efficiency, water neutrality, zero solid waste and recycling, and conservation and restoration of biodiversity? Sustainability roadmap in FY 2024-25?

Sustainability and green growth are at the core of our strategic framework, guiding our endeavors to create long-term value for all stakeholders by adhering to green chemistry principles. Our decarbonisation strategy comprises four primary pillars: Low Carbon Fuel Switch, Renewable Power, Energy Efficiency, and Carbon Capture and Utilisation. Renewable energy will play a crucial role in the circular economy by facilitating the adoption of circular business models. [8]

Tata Chemicals has ambitious plans for 2030, including a 30% cut in carbon emissions and water neutrality and zero waste into landfills. Going forward in terms of environmental concerns, we will continue with biodiversity preservation and sustainability, as integral parts of our plans’ roadmap for 2024-2025. We also aim to initiate the commercialisation of RHA Green Technology for highly dispersible silica production. Additionally, our Mithapur manufacturing complex is already operating as freshwater neutral. At the same time, a high-performing green portfolio of products is being developed by our Innovation Centers in Pune and Bengaluru, leveraging green fermentation technology to enhance our nutrition offerings.[9]

Looking towards the future, what are the key strategic priorities and growth plans for Tata Chemicals?

Our key strategic priorities are to focus on growing the core, protecting margin across geographies, generating cash and deleveraging. Our priority for Indian market is to deliver consistent performance through customer engagement and further delivering capacity expansions on soda ash, bicarb and salt.

[10]We are also looking at increasing our investment in marketing, manufacturing and digitization capabilities to build differentiation.

On the international front, for the USA market, we are looking at maximising volumes through customer engagement, increasing our focus on cost management and generating cash and. For UK, we are ensuring operations are in line with market dynamics, by focusing on value added products like pharma salt and premium grade bicarb. In Kenya, we want to sustain volume delivery to customers through customer engagement and continue focus on cost.[11]

Anything you would like to add from your side...?

The Indian chemical industry is poised for significant growth, and Tata Chemicals is well-positioned to capitalize on this momentum. By focusing on volume expansion and strategic pricing, we aim to further contribute to the industry's success. TCL is committed to embedding sustainability and innovation into our core.  We are actively pursuing climate positivity, embracing the circular economy, and fostering biodiversity.  Through these efforts, we believe we can play a leading role in building a greener future for the Indian chemical industry and the planet.

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June 10, 2024

Industry trends with respect to digital transformation solutions?

In the last few years, Industry 4.0 revolution has been taking place and there are a lot of digital technologies that have been spawned from this revolution. There have been a lot of new software and analytical tools, all of which has been made possible because of higher computational and storage capabilities and communication speed. 

Early adopters have found out that just adoption of technology is not going to really provide them value unless there is proper monetization and utilization of these technologies to actually solve business problems. With learning from failures by early adopters, a lot of companies are now focusing more on getting value out of these technologies. 

Both globally and in India, we are beginning to see companies realizing that people and processes are equally important in addition to technology. Involving the right people with industry domain expertise is necessary, to restructure work processes to harness these technologies, to improve efficiency, safety, reliability, ease of working, etc. 

Percentage of companies opting for new digital technologies? 

When we first started deploying these digital solutions, there were very few MNCs who were willing but today, almost everyone in this industry wants to do something and explore. Globally, they are in different phases at various levels of advancement but almost everyone is looking at it positively. Here in India, industry players including refiners are exploring and trying to see what they can do in this area. More than 80% of the people are at least trying to put some sort of digital element in place while just 10-15% have actually set up some real applications. At the same time, one would see a higher percentage of adoption in the western world and in the Middle East. 

How do you see deployment of AI based engineering solutions?

AI is a key component of value generating digital solutions.  I would call such digital technology based solutions relevant to our industry as Applied AI solutions. Applied AI helps in achieving more objectives, faster and better and in automating mundane tasks. It provides augmented intelligence, for making better decisions, maybe more optimally. It also enables faster learning, ability to create new revenue streams, better collaboration, better user experience and enhanced efficiency, safety, reliability and all this in a more sustainable manner. 

Do you see new technologies like ChatGPT being incorporated for industrial applications?

Ever since it was introduced in the market last year, ChatGPT has helped to bring a lot of focus on digital and more specifically AI. In our industry too, there is a lot of merit and value being created to utilize some of the Machine Learning tools for analysis and ChatGPT for information generation. Companies are trying to figure out how they can utilize ChatGPT to find easier ways to interact with the machine. 

Earlier one had to type something and do things physically but here you are able to sit back, ask questions, maybe voice questions or just a prompt or series of prompts to get the answers. It's the next level of being able to interact with the machine and extract value. 

ChatGPT has helped this whole area and the applications are still evolving. There are all types of applications where ChatGPT can be used in a modified way. It can be done using retrieval and augmented generation. We have to remember that it is one portion of bigger set of AI technology applications. 

Ingenero has been promoting IngeneroX (Ingenero’s digital solutions). Do you see solutions catering to sustainability, innovation, supply chain, process, and manufacturing? 

IngeneroX is a suite of Applied AI based solutions that help us to make better decisions in the supply chain and Manufacturing. It includes data collection and handling, analysis and intelligence generation, communication through more intuitive visualization of results, prescribed actions and implementation of actions.  We have been deploying IngeneroX solutions for almost eight years.  

The solution helps in making better plans and reacts quicker to changes that happen in the marketplace through optimal planning. In terms of innovation, one is able to build a model for the manufacturing process, supply chain process or any of the other business processes using a digital twin, which helps speed up the innovation process 

The digital twin traditionally was based on purely fundamental models but today a hybrid of fundamental models and data-driven models are possible with machine learning. Hence with this digital twin, one is able to be more innovative. It offers a clearer picture of what is happening in terms of level of emissions, for example, and helping us to make appropriate changes to lowering them.

 How will Ingenero solutions help companies with respect to digital transformation?

We work with process manufacturers and provide a combination of software as well as associated services for achieving operational excellence. There is a lot of generic foundational software that is available in Artificial Intelligence or Machine Learning but one has to combine it with people and process. Our focus is to provide a solution that will actually help in certain areas like safety, reliability, sustainability and efficiency. It is more proactive and it is a lot safer to operate these facilities. If something is going wrong it will be able to fix it. In terms of production, one can do remote tracking, guiding of production reliability, better yields with its efficiency, better recoveries, better conversions, cost efficiency, energy efficiency, and much better sustainability. 

Solutions provided by Ingenero? 

Broadly, I can divide solutions we provide into three verticals for the process industry. These are: design engineering, operations engineering, digital solutions for both design and operations engineering that includes Efficiency, Reliability, Safety and Sustainability.  

On design engineering, we get involved right from the conceptual stage to processing engineering skills and then going into the early decision phase followed by taking it all the way through construction commissioning. So, while we are involved in each of these stages but our core strength is conceptual design and operations engineering. 

Ingenero has been providing complete systems with validation and mitigation services to ensure that clients are safe and compliant with all API and OSHA regulations. Solutions under this category?

In whole area of process safety, each country has its own regulatory body. OSHA in the US took a lead and it became a template for others to follow. The US was the first to make a lot of things mandatory including process safety management. It has a set of 14 elements and with time it has evolved. The Centre for Chemical Process Safety which is part of the American Institute of Chemical Engineers is again emulated by regulatory bodies across the globe. They have come up with a little more practical risk based approach with 20 elements. 

We really provide services to make sure these elements can be followed. For example, we do safety audits, management of change, pressure relief system adequacy checks, flare load adequacy, anomaly detection, SIL, LOPA among other services. 

In the next 2 years, Ingenero will be celebrating its 25th year. What's your target for this special occasion?

We have been actually deploying automated digital solutions in the past ten years. Earlier, we were providing a lot of operations support, but today we have automated software using applied AI doing end to end things. In the first year, we started conceptualizing and putting digital solutions in place. And in the next nine years, we deployed our solutions at 50 plus sites. We have about 500 plus use cases in five different regions including the US, Middle East, India, and Asia Pacific. We have worked with refineries, petrochemicals, and midstream. The type of use cases that were covered include profitability, reliability, safety, efficiencies, energy sustainability, waste management, and water management. 

Orders bagged and executed in FY 2023-24 both in Chemical and Petrochemical?

In addition to proof of concept and pilots, last year we covered about 30 sites.  That’s the volume of digital business we are doing and it is continuously growing, in addition to the work we do in design engineering and operations support, including safety. 

Company’s performance in FY 2023-24? Growth that you foresee in FY 2024-25?

Being a privately held company, we don't reveal revenue and profit numbers, I would like to mention that we bagged orders worth Rs. 200 crore in digital solutions last year. Last year, we saw a 60% growth and we have been growing at almost 20% to 25% consistently. At the same time, we have been flowing back a significant portion of our profits back into the company for development and that's why we've been able to really come up with a lot of these solutions. 

Given the current visibility, we continue to see the type of growth today that we have seen in the last couple of years and expect good growth in the next year or two. We are very bullish about things in all three categories but digital has really taken the lead. At the same time we also see a good amount of growth in engineering as well as safety. We have been doing a lot of sustainability engineering work with several customers. We are seeing new projects and interestingly, these are happening in the Middle East, even more than the West. 

Manpower recruitment plan for the next two years?

When we first started and built our company, our core strength was all kinds of specialized process engineering type of work. A lot of our people had operations experience and it was a very unique combination of people with operations shop floor experience as well as design engineering, and technical, analytical, and software. Comparatively, the group has evolved now with 50 percent of this core team involved with digital solutions. It is a diverse team with domain experts with experience in process, operations, process modelling, and software architecture. Another 25 percent is in the more traditional engineering both Process and multidisciplinary engineering. Remaining 25 percent is focuses on safety and sustainability. 

We have a very active hiring process and anticipate 40-50 percent growth in manpower. We expect to be adding 100 to 200 resources in India itself. 

Ingenero has been perfecting robust and reliable Machine Learning models. How many of these models you have perfected?

There are a lot of generic foundation models and ML algorithms in the market and a lot of people think that they can just use them easily for various applications but that is far from the truth. There is a lot of specialized engineering that is required to sustainably monetize these.  Over time we have built a lot of modules which require lesser specialized engineering even for more complex unit operations like distillation columns, reactors, and furnaces. However, specialized engineering is still an important piece in any applied AI implementation in our industry. 

Any modules for enhancing process manufacturing applications?

Our digital twins don’t just update us on the current scenario but also have the ability to go back into history and run scenarios from the past. This is made available to people at the plant or anywhere else. That's the beauty of the Internet of Things (IoT) and ability to remotely access. 

Today a lot of it is driven either through dynamic dashboards or even voice activated chatbots. But over time, we are trying to evolve it into being like an agent where the machine will go do searching, computations and present the possible solutions for the complications. 

We have done dynamic benchmarking for the entire facility, whether it's an individual asset or the entire plant, or even for the asset level, we have now specialised modules for optimizing the control systems that are already there and improving  asset health for furnaces, distillation columns, compressors, pumps, heat exchangers. We have been fairly unique in being able to modularize it and actually being able to deploy them.  Some examples of modularized Apps we have successfully deployed are: 

APCPro (Optimize underperforming APC controllers for improved performance and efficiency).

OptimaX (Dynamically identify best operating condition and close the gap).

ActionX (Real time identification of process deviations and prescriptions to rectify).

AgentX (GenAI based conversational application with the digital solution for proactive interactions). 

Partners for providing complete AI based solutions?

While some of the software solutions that we build by and large are proprietary to us, we also have partnered with Honeywell, AspenTech, IIT Bombay, Gent University, and others. Wherever necessary we partner with others as we don't want to really reinvent the wheel in certain areas. But when providing proprietary solutions, we package it around open algorithms. 

How do you see competitive landscape?

In Applied AI, there's a lot of noise around the foundational models and generic models. However, we are focused on value addition beyond these models and are very specialized. We provide a comprehensive Applied AI solution where we have actually deployed the technologies and have been fairly unique. In terms of competition, we have a subset of the end to end Applied AI technology areas being addressed by a few companies, providing simulators hardware data platforms, Business Intelligence software, making this a very confusing space for a lot of customers. We have fairly unique set of offerings that ensures value generation and have taken a good lead with a lot of very good applications. 

In the design engineering space, there are a lot of engineering companies. So our claim to fame there is more strength in process.  

In process safety again, there are very few players in India and we have a unique edge having been part of the safety reviews and audits of almost every refinery in the US over the last 15 years, in one way or the other. We have tremendous experience and are now trying to combine it with digital solutions. 

On sustainability, we have been actively supporting clients with digital solutions to do the best they can with existing assets.  We have also been supporting decarbonization technology companies with design engineering.  We are also in the process of partnering with some of the CSIR facilities and some of the institutes where some very good work is happening. We are trying to work jointly on a few of these technologies and ultimately take these to our customers.

June 03, 2024

 Demonstrating bulk filling solutions with Robotics and Koldpack: Tushar Patel, Director, KB Associates

June 03, 2024

Developing five new molecules in combination chemistries in next 4-5 years: Abhijit Bose, Chief Marketing Officer, Tagros Chemicals India