March 28, 2024

Hydrogen, Energy Transition and Semicon is our future focus area

March 28, 2024

We are committed to invest Rs.1, 000 Cr on expansion in India between 2025-28

February 20, 2024

In an exclusive interview with Pravin Prashant, Executive Editor, Indian Chemical News, Mitsuo Ohya, President, Toray Industries, Inc. talks about achievements in the last 98 years, global business sentiments, success mantra for continuous innovation, strategy to grow India market, future plans, role of Toray in hydrogen ecosystem, and development on AP-G 2025.     

Toray will celebrate its 100th Anniversary in 2026. Would you list ten achievements which were truly transformational?

It would be immodest to list ten achievements but I will try to share some successes from the past decade. First and foremost is the fact that we are closing in on a 100 years-reflects long term success which can only be made possible by our employees, serving and retired, and without them we couldn't do anything. This would not be possible with the one constant through the last 98 years - Toray's corporate philosophy which has not changed from day 1 and guides us through our purpose and the reason for being.

Secondly, without great customers, we wouldn't exist! What pleases me is that we have been selectively expanding our footprints from the Asia Pacific region to the European Union (EU) and North America, and in the past decade, to the Indian subcontinent. In India, in 2012-2023 period, Toray has grown from zero assets to four manufacturing assets (Engineered Plastics Compounding, Polypropylene spun-bound, Air Filter, and Airbag Cushion) and several hundred employees operating across India. We expect to invest and expand further in this decade in India. Favourable tail winds of India's 7% GDP growth, higher consumption, favourable demographics portend an attractive macro-economic environment for Toray in India.

Current business sentiments globally with respect to the company's targeted industry verticals?   

The world is experiencing a tough situation with wars and political uncertainty. Hence today's business sentiment is cautious optimism. We can hope for the best while preparing for the worst.

Thanks to the tagline - Innovation by Chemistry, the company has come out with many high quality products and superior services in its different divisions - Fibers and Textiles, Performance Chemicals, Carbon Fiber Composite Materials, Environment and Engineering, and Life Science. What's the success mantra for doing continuous innovation?

People! Our greatest assets are our people. Each and every one of the 48,000 employees. Our management is centred on the employee. Our employees drive new product innovation through close contact with customers and the sales team. Our R&D people are located across the world in our businesses, laboratories, technical centres, and even in universities. For example, we have one scientist conducting water research in India at IIT Madras.

How important is India as a market and where does it stand in terms of the global scheme of things? What's the strategy to grow the Indian market and new products which you are targeting in future?

Toray is a maker of premier, advanced raw materials not finished products. Hence our strategy leans heavily on Business to Business rather than Business to Consumer approach. Because of its size, population, institutions and global leadership, India is an important market for Toray and a very important market for the future. Many of Toray's raw materials go into high tech product offerings like aerospace, automotive, batteries, water and air purifiers, fast fashion industries etc. with higher function and quality.

How does Toray ensure safety and environmental sustainability in its operations? What's your future plan for all your operations?     

Toray is a chemical manufacturer. Safety is our first and primary goal. For all employees, and for all our diverse products. Because of a multitude of products, it would be difficult to have a one-size-fits-all answer to your question. Each product falls under its own category of industry quality, safety, and efficacy standards, product stewardship and perhaps, compliance. We adhere to comply with best of breed local and global quality and environmental policies.

Globally, Hydrogen has a great future due to its sustainability factor. The role Toray will play in the hydrogen ecosystem both as a solution provider and as a co-partner? How do you look at the India market from the hydrogen ecosystem perspective?

India, a large country, is experiencing continued economic growth and is expected to continue increasing its energy consumption in the future, and it already has the third largest total (not per capita) amount of CO2 emissions in the world after China and the United States. Therefore, we believe that the hydrogen ecosystem in India is particularly important and that a very large market can be expected. Toray intends to cooperate and contribute from various angles to realize a hydrogen society in India.

The Group announced AP-G 2025 with value creation as the theme. What is the development on this front?    

Toray uses strategic pricing as a centre pillar of value creation. Strategic pricing implies best pricing keeping in mind supply-demand balance and competitive intensity while adding value to our customer. AP-G-2025, incorporates this theme, to give Toray revenue, margin, operational excellence and customer satisfaction targets till 2025 which are on their way to being achieved.   

February 05, 2024

In an exclusive interview with Pravin Prashant, Executive Editor, Indian Chemical News, Navanit Narayan, Whole Time Director and Chief Executive Officer, Haldia Petrochemicals Ltd. talks about petrochemicals market, policy measures, challenges, specialty chemicals, market share increase, Capex investment, R&D, automation, Net carbon zero, and CSR plans.    

How do you see the Indian Petrochemicals market in 2024?

While remaining cautious, I see, Petrochemicals industry delivering a comparatively better performance in 2024 on account of gradual softening of feedstock prices and global demand-supply outlook. After three years of successive large capacity additions exceeding demand growth, 2024 is the first year when project demand growth exceeds capacity growth. To that extent, there would be an improvement in business sentiments globally.

In the domestic market, we have seen robust performance in terms of demand, which is further likely to continue in 2024. We expect gradual easing of interest rates, which are likely to further drive consumer demand.

However, there is still a large capacity overhang which needs to be absorbed in global supply-demand balance. Margins are likely to remain subdued till it is fully accommodated either through demand growth and/or closure of inefficient plants. There is also the risk of geopolitical issues jeopardising Petrochemicals business through extreme volatility in feedstock prices.

Major challenges faced by the Indian Petrochemicals sector and the suggested solutions?

In 2023, India was the brightest spot on the global Petrochemicals scene and thus had been on the radar of all major global producers to place their surplus products. Many of these players in the US and Middle East have significant feedstock cost advantage which provides them additional strength to compete with domestic players in terms of product pricing. Cheaper imports from these regions adversely impacted the pricing sentiment and margins of Indian players, which are also reflected clearly in their financial reports.

India is not endowed with large hydrocarbon resources and thus has heavy dependence on crude and its derivatives to meet the feedstock requirements of Petrochemicals. Considering that the industry supports large scale value creations and direct/indirect employment creation.

It is pertinent to provide a policy framework to incentivise growth of petrochemicals in India. Feedstock cost disadvantages need to be compensated through adequate duty protections and government incentives, failing which it would be difficult for industry to sustain business and invest in new capacity creations. In this context, we also need to protect industry interests in various FTAs or CEPA (Comprehensive Economic Partnership Agreements) agreements being entered as in some cases it can lower the competitive strength of Indian producers.

Policy measures which will help make India self-reliant in Petrochemicals?

India is dependent on imports for almost most of the product segments. Apart from capital intensity and feedstock availability, restrictive availability of technology is another major challenge in achieving self-reliance. To make the country self-reliant, we need to encourage investment by Indian and global players directly or through JVs and need to promote early adoption of new technologies which are specifically suited to Indian conditions like new thermal crude to chemical technologies.

Some of the potential policy push helpful to achieve self-sufficiency goals can be presented as: Ensuring stable policy framework for long period – e.g. Guaranteeing duty protection for fixed number of years; Reducing customs duty on feedstock Naphtha used by Indian producers; Declaring Income Tax Holiday/PLI for Petrochemicals; Waiver of GST/CGST on project procurements to minimize capital investment; Simplifying statutory clearance processes; Facilitating/developing large industrial tracts for promoting investment; and

Specialty Chemicals contributed Rs. 999 crore revenue in FY23. HPL has been exploring the possibility of becoming a leader in the niche segment of Specialty Chemicals. What's your strategy to make this happen?

We are working in a very focused manner to become a leading player in Specialty Chemical segments and results would be visible in the next 12-18 months. In FY 2023-24, we expect revenue to remain largely unchanged.

What is HPL’s refining/processing capacity per annum and what is your share nationally in the Indian Petrochemicals market? How do you plan to increase market share?

Our capacity is 700,000 TPA of Ethylene. We produce about 1.5+ million TPA of Polymers and Chemicals and command 8-9% of polymer market share in India. We are focusing on diversifying the product basket in medium terms and becoming the market leader in those segments. We are also working on a long-term plan to improve our market share in terms of Ethylene capacity.

What is HPL’s Capex for FY 2023-24? Projects where you are investing?

We are currently undertaking an investment of about Rs. 3,000 crore in an Integrated Phenol/Acetone Plant.

HPL is setting up the first on-purpose Propylene plant in India based on Olefin Conversion Technology (OCT) and the largest Phenol plant in India at Haldia with a capacity of 300 KTPA Phenol and 185 KTPA Acetone becoming India's first integrated player in the Phenolics chain. Completion and Capex investment in these projects?

We are planning to commission the project in end 2025 or early 2026 and investment is approximately Rs. 3,000 crore.

What is the latest development on the R&D front at HPL?

HPL’s in-house application research activities in polymers are focussed at developing Polypropylene products for growth sectors like automotives and appliances. HPL also has collaborations in research for value addition in existing and future chemical products from its C3 and C6 streams.

HPL’s automation and digital roadmap for new and existing facilities?

Our vision for digital transformation is to build an ecosystem of trusted business stakeholders both internal and external which is agile, innovative and shifts business decisions from reactive to proactive, to predictive, and ideally to automated prescriptive.

Our digital transformation journey is people centric with digitized and optimized processes as the baseline. The integrated and collaborative digital platform will enable people with right cutting edge tools, tailored to their environment and with effective digital transformation objectives encouraging a digital culture. The integrated digital environment of having a 360-a degree view of the organization across all value chains will propel the teams to seek innovation and agility across the organization.

New key technology interventions as follows: Blockchain Technology on Ethereum/MCUBE platform deployment through Electronic Proof of Delivery E-POD solution; Advanced video analytics deployment through Jarvis CCTV Solution; IIOT sensor based predictive analytics deployment for Asset Monitoring through Machine Doctor Solution; and ISO Certification. We are an ISO 27001-2022 certified organization which signifies a strong and governance structure of information security towards digital transformation.

What sustainable measure HPL has adopted towards carbon neutrality? When are you planning to achieve Net Carbon Zero?

Following sustainable measures are adopted by HPL towards carbon neutrality: Use of Renewable Energy: Installation of 1 MWp solar power plant in township (December 21); Rainwater harvesting: Usage of more than 5.5 Lakh m3 of rainwater (FY 2022-23), thereby conserved the natural resources (fresh water); Development of Green Belt: Planted 7,100 casuarina saplings during February - March 23. Planned to plant another 5,000 saplings by December 23. There are a total 1.25 Lacs of trees in our greenbelt; and Clean Technology: Implementation of Pipe Coal Conveyor to transport coal from port to plant to replace transfer thru trucks.

The company is planning to utilize plastic waste? HPL plans in this direction?

HPL at present complies with the statutory requirements in plastics recycling as brand owners in collaboration with third party agencies who have necessary infrastructure for utilizing plastic wastes.

HPL acquired US based Lummus Technology at an enterprise value of US $2.73 billion from McDermott International in 2020. How are you planning to leverage it going forward?

Acquisition of Lummus has provided a unique platform of licensor-operator collaboration having potential to benefit both the parties. HPL is leveraging Lummus expertise to improve operating performance in terms of reliability, throughput improvement and yield besides ensuring quick troubleshooting of the plant when need arises.

With the commissioning of new plants, the overall chemical business portfolio is expected to increase by an additional Rs. 5,000 crore. So what's your future revenue expectations and its timeline?

We expect this incremental revenue potential to be realized by FY27. We are planning commissioning of the specialty LMW Polymer project in current financials which will increase the topline of the Specialty Chemical business by about Rs. 100 crore per annum.

What is your CSR plan for FY 2023-24?

The CSR plan for FY 2023-24 of HPL is focused on seven verticals in line with being along the SDGs and India’s position in strengthening SDG Goals. The verticals are: Education; Healthcare; Infrastructure; Sustainability; Women Empowerment and Equal status; Sports; and Environment.

HPL’s three primary thrust area verticals are promoting higher education including infrastructure and healthcare. Under the education category, the company has taken up of supporting in building of a new school in a remote village by an Education Trust, infrastructural development projects for schools, building of smart classrooms, upgradation, and construction of science laboratories for schools which were spread in and around Purba Midnapore District.

For healthcare, medical equipment donation to the Haldia sub divisional hospital, PG hospital Kolkata, and many more hospitals across West Bengal along with donation of ambulances. HPL is involved in bringing sports activities into the social fabric which is the need of the hour. With the present living style and the societal needs, HPL is getting self defence training imparted to school children of many Schools at Haldia to develop sports as an essential part of development of mind and body.

Also mangrove forestation in Sundarbans, women empowerment program through Jute product making training are the major projects considered this year to reiterate HPL’s commitment towards the society and the environment.

January 28, 2024

In an exclusive interview with Pravin Prashant, Executive Editor, Indian Chemical News, Dr. Minshad Ansari, Founder & CEO, Bionema Ltd. shares insights about the company, current operations, latest initiatives, funding, range of products, India plans, US and EU plans, and future revenue streams

Please tell us about your company?  

Bionema is dedicated for biocontrol, crop protection, stimulation for crop enhancement, and biofertilizer for crop nutrition. More importantly, we focus on formulation and delivery systems. Having spent around 15 years in academic research in India, Belgium and the UK, I founded Bionema in 2021. While we have been working on a few interesting projects, I must say that the entrepreneurial journey from academia to industry is a very classical transformation. 

Bionema has recently received grant funding from Innovate UK and that helped us to develop a groundbreaking technology called IncapsuleX, the encapsulation formulation or microbial microencapsulation, essentially a microbial formulation for pest and disease control. 

You have spent around 15 years in Belgium, India, and the UK so what portion of your research happened in these countries?  

My earlier study in the area was during my post-graduation from Aligarh Muslim University. Following that I joined ICRISAT for a few years before moving to Belgium in 1998 until 2005 for higher studies as a part of the PhD programme. It was followed by a one year post-doctoral fellowship as I moved to the UK in 2005 until 2012 with another seven and half years of research at Swansea University. 

When I began my journey in academia my idea about entrepreneurship was limited. The initial phase was very difficult and painful but years of research and dedication at Bionema resulted in development and commercialization of a number of technologies for the UK and other markets. In the early days, we commercialized three products and those were for pest management. Those were patented and later acquired by Syngenta in 2021 and that provided a boost to the company as well as moral support. Around  the same time we were recognized as one of the Top 20 leading companies in the world. After that acquisition, we started working on a number of other technologies which we have in the pipeline. 

Biopesticides have been criticized in many countries, probably just because the farmers and growers are not satisfied with the efficacy which has to do with two things, one is the innovation and the secondly the formulation. Unfortunately, these two things are very much limited in the market. So we have a few products in the market and we will have a few innovations in the market as well. So again my focus is very much on developing innovative products and formulations. The microencapsulation project was funded by Innovate UK and it really helped us to work on this ground breaking technology. The product is not yet in the market, but very soon it will be available in the UK and then EU. Later, we plan to go to the North American market as well. 

Apart from the funding by Innovate UK and acquisition of a few of your products, what is the investment that you have made in this company?  

Raising investment is a tough journey. We got seed rounds raised in 2018 and 2019 worth £680,000. During that time I realized that most of the investors will ask about the turnover and for technology companies it is very difficult to raise any turnover when they are in the early days of development. But I think I have learned a lot and we are utilizing the same, in this case to now raising £5 million in Series A, expected to get closed before Christmas 2023. We have a number of investors who are interested, particularly looking for the Syngenta deal where we have demonstrated commercialization and innovation and secondly, they are seeing a very powerful range of products that are coming out in pipelines. 

We will have another round of £10 million which will then bring us to the other markets. The first round will help us to accelerate the market where we will start selling products in the UK market and then we will be registering products in the UK, Canada, EU, and Mexico. The registration will take at least three to four years before the product will come in the market. 

Can you please explain the USP of RootVita? 

RootVita is part of our 10 years’ research and it falls into both the categories of biostimulants and biofertilizers. It is a unique blend of biofertilizers, PGPR (Plant Growth Promoting Rhizobacteria), essential nutrients, prebiotics, and vitamins. The product will be used in the turfgrass industry, horticulture, and forestry in the UK. 

The benefit of the product is that it can fix the nitrogen and phosphorus besides silica and contributes micro nutrients, improving soil health. Therefore, it is an all in one basket compared to some products in the market which are individually applied for nitrogen fixing, phosphorus alkalization, and silica. All these micronutrients and nutrients are very important for the plants to release their stress and make them healthier, providing strength to fight pests. 

What are the other products that you are planning to launch in future?  

We have a number of products, especially the two upcoming products from the microbial range. It’s called the Metarhizium, Meta 101, a bioinsecticide designed for controlling soil pests, currently getting registered in Canada. There is another product, Meta 101 SC formulation that is also getting registered in Canada and will follow. And the third one is the microencapsulation technology platform which is not a product but that will actually include formulating a number of microbials with better efficacy. And that's where farmers and growers basically will get better value for money. 

We also have one product, a bioinsecticide in the US market and that is in collaboration with a company. We also have four bio fertilizer products launched in the UK, which are BioNfix-PA, BioNfix-AC, BioNfix-AV, and BioNfix-AL. There are seven other products in biostimulants. Those are already launched in the UK and now we are preparing for registration in the EU and the same product will register in Canada, US, and Latin countries. We also have registered some bio-based polymers which help boost the efficacy of existing or new pesticides. 

When do you feel these products will get commercialized? 

The seven biostimulants and four biofertilizers have been already launched in the UK market. The Meta 101, which is a bioinsecticide microbial product is going to come out sometime in early 2026 in the Canadian market followed by the US, and later in Australia, New Zealand, EU, and the UK. 

How big is the market for these products and when are you planning to launch?  

When we talk about biological agriculture which includes biocontrol, it is about US $6.6 billion worth market size. The second category where RootVita comes in is biostimulants with market size of US $3.5 billion and biofertilizer market is US $3.1 billion. In total, we are looking for US $14.2 billion which is mainly covering US, EU, Canada, and Latin countries. Out of all these countries, Brazil has basically simplified the regulatory system and is now leading in this segment.   

Out of US $14 billion you talked about, what would be your market share? 

If Bionema continues accelerating everything as per plan, we will be looking for the US $100 million market in the next five years. 

What about India plans?  

Recently, we have opened a subsidiary in India, but I believe that the Indian biopesticide market is not mature enough compared to the EU and elsewhere. We are looking for another 10 years before we can do anything in the Indian market. There are one or two products about which we are talking about to a few very visible players in India and those can be marketed once a deal is reached The problem is that these products are costly as they are being manufactured in the UK or in the EU. That makes these very difficult to sell in developing countries whether in Africa or India. Therefore, those products need to be produced in India if we want to be competitive in the market. 

Which AgroChem companies in India are you in talks for these products?  

We have discussed with many players in India and manufacturing might be possible if the deal goes through. They have already tested it for cotton bollworm, all soft bodied insects or other threats. This is a sucrose based product originated from coconut and has been registered as a bio-insecticide in the US. We expect that product registration in India will not take a lot of time because it is already approved and certified as organic bio-insecticide as well. It is a very good product which will fill the gaps in the Indian market. 

What regulatory obstacles or hurdles do you think are for the Indian market?  

All these products including bioinsecticides, biopesticides or biofungicides are regulated in India by the Bureau of Indian Standards (BIS) New Delhi and Faridabad. We have seen that if the product is already registered in the US and EU, there is always an edge and it makes things a little bit easier, however, it has to go through full registration. 

We are talking to our partners to register the products in India. The deals are getting finalized and hopefully by March 2024, we might launch the product. If not then it might take another 12 months for the regulatory process. 

Which product are you initially planning to launch in the Indian market? 

It is an organic product that has an active ingredient derived from coconut. It has been registered as an insecticide in the EU and designed for killing the soft bodied insects. There are some pesticides and insecticide there in the market but most of them have become resistant. So this is another opportunity for the biocontrol industry to come up with a solution which can not only be used as an alternative but can fill the gaps in the market. 

How will farmers benefit from your product?  

Firstly, the product has a two year shelf life so that they can store and use it for multiple seasons. Secondly, if the product is produced in India, it will not be costly, so we will still be competitive. Thirdly, they can immediately control their plant diseases wherever they are finding their insecticide is not working or has become resistant. As we have already done trials in the UK, EU, Canada, and Mexico, we are very confident that the product is already working. There are hundreds of publications already available to demonstrate that the product works. 

What's your plan for 2024?  

We are signing some sort of deals with multinationals for US markets and we are going to soon launch in the EU. The decision will start from March 2024. So a lot of preparation is going on for launching this product. Initially we will be doing it in a few states in the US but later on we will have a deal with those companies that are very interested to launch or market this product there. Bionema's business model is to invent the product and make it more interesting to multinationals. We take all the risk from that point to sell and supply to their market, helping them on the technical side because that's where our strength is, whereas their strength is very much on the commercial side.

What is the current status of your revenue stream?  

We are still in millions but we have built a product worth US $50 million IP patent and that is how it is attracting investors otherwise it is very difficult to get investment. Unless you are not very clear about the revenue, getting investment is not a problem, but if you are not then it is difficult. 

What would be your annual revenue during 2024?  

We are looking at making close to US $4 million based on EU and US market foray. If we launch into Mexico and Brazil markets, we will exceed a little bit more. That's the kind of optimistic figures we are looking for. 

October 20, 2023

In an exclusive interview with Pravin Prashant, Editor, Indian Chemical News, Ravi S. Jalan, Managing Director, GHCL Ltd. talks about company's achievements, future plans, diversification, revenue forecast, renewable capacities, digitalization, R&D, CSR, and net zero

Key milestones achieved by GHCL in the last 40 years and what is the way forward?

As an organisation, GHCL has achieved many milestones but, if I have to recount a few, I would like to mention that today, we have India’s largest Soda Ash plant at a single location, with a production capacity of 1.2 MMTPA. We have been certified a Great Place to Work for seven years in a row. Our revenue is more than Rs. 4,500 crores, which is a six fold increase since 2010. Our profits are close to Rs. 1,000 crores, ten times higher than our profits in the same period. We have been able to reduce our debt from almost Rs. 1,900 crores in 2010 to become a net cash surplus company in 2023. If you look at market capitalization, we are now at Rs. 7,000 crore plus, for both the combined entities as the demerger is completed in the current year. Our investor pay-out is close to Rs. 700 crores through two buybacks and dividends in the last six years.

The spinning business has also seen a similar turnaround. It was a sick company under BIFR when we acquired it in 2002, and today it is a profitable spinning mill and one of the most reputed in South India. We have an installed capacity of 224K ring spindles which is a significant increase from 65K spindles when we began. Our Green Energy portfolio which is now more than 62 MW caters to almost 75% of energy requirement of the spinning division and is a benchmark in the industry.

There has been a complete transformation of GHCL in every possible way. The company has moved from a general manufacturing company to a value creator for the stakeholders in terms of RoI, corporate governance, CSR, adoption of environmentally friendly policies, and digitalisation, to name a few. As an organisation we have come a long way and we are grateful that we have been able to create value for our stakeholders. We have also had to take certain difficult but necessary decisions along the way - we divested from the Home Textiles business in 2021, which was important from a capital allocation perspective. We also demerged the Chemical and Spinning businesses into separately listed companies in the current year.

Going forward, we want to continue creating value responsibly for all our stakeholders. Our customers are our top priority, our relationship with vendors is more of a partnership. Society is an important stakeholder for which we have launched many initiatives under the aegis of GHCL Foundation that focus on agriculture, healthcare education, skill development, and empowering women to be equal contributors to India’s growth journey. We also have a target of 30% reduction in emissions by 2030.

From being an unknown company, GHCL, today is recognized by the stakeholders as an organisation that truly represents their interests. All these milestones give us the confidence that we are on the right path. We have delivered what we had promised to our stakeholders and the journey shall continue.

From this fiscal, you are leaving your legacy and focusing more on chemicals. What are your plans for the next 2-3 years and how do you plan to execute it?

The greenfield project in Kutch is being set up with an initial investment of around Rs. 4,000 crores and will take at least 2-3 years to complete. This project, once implemented will cement the growth of GHCL, create a robust foundation and provide responsible and enhanced growth for all our stakeholders.

Secondly, we will continue the journey of good governance practices and our focus on the cost and serviceability to customers. Our business practices shall continue to centre on accountability, transparency, efficiency, inclusivity, and compliance with the law. Without compromising on our values and governance we will continue working on the growth and expanding the product basket to enhance our opportunity size going forward. Soda Ash has huge demand and requirements across sectors including green initiatives such as solar energy, EV batteries, flue gas treatment etc. But product basket diversification is essential for expanding our footprint and future proofing the business.

In GHCL Textiles, we believe that we are on the growth path with an optimum mix of the right management team, a well-diversified product basket, value added products to fulfil specific customer requirements and almost 75% of energy requirements being fulfilled through renewable resources. Going forward, we are positive that the business will continue to take forward the GHCL legacy of creating value responsibly for its stakeholders.

You talked about product market basket diversification. Areas where you are looking for diversification?

We are setting up a vacuum salt infrastructure that will initially be B2B and ultimately B2C. We are also looking at bulk chemical opportunities especially through the inorganic route. In this direction, we are identifying chemicals that have huge growth potential in future.

Can you shed more light on the vacuum salt project?

Vacuum evaporated salt is a better form of edible salt as compared to solar evaporated salt. It is a premium product and has been well appreciated by consumers. Our manufacturing process will entail using the waste heat from the existing plant for making this product which will make it more competitive for the consumer. We will be investing roughly Rs. 170 crore in this project which will start production by December 2024.

What is the revenue you are expecting in the next three years?

This year our revenue was about Rs. 4,500 crore. Once the greenfield project is implemented, we believe our revenue will be close to Rs. 7,000 crore.

In terms of renewable capacity you have done pretty well in textiles but how do you see renewable capacity being added in the Chemicals business company?

Enhancing our renewable energy portfolio is one of the major areas of focus. In the new greenfield project, we will have a combination of both green energy and technological upgradation in a manner that our carbon footprint is considerably low. In the existing plant we are already implementing a 6.7 megawatt green energy initiative and we will gradually expand our renewable energy footprint further. 

What is the proposed investment and model you are implementing?

We will be investing close to Rs. 5,000 crore in the course of three years in the new greenfield project which will be mainly from internal accruals and some amount of leveraging, however our debt equity ratio will still remain less than one. 

You are setting up the greenfield operations in the Kutch area. Is this in a chemical park?

Chemical Park is a very good idea but the size of the business we are talking about is around 1,000 acres. Hence, the idea of a chemical park is not good for us as we have huge requirements. Ideally, the chemical park will be good for small and medium players.

You have been promoting IoT and AI with focus on digitalization. How do you see brownfield and greenfield operations where technology will play a big role?

This is definitely one area of focus for us. We have started using digital tools at the existing plant. We have digital twins for a number of equipment and our aim is to ensure that our plant is completely managed by digital platforms. We are also using technology to optimize operations and create a process driven organisation. Many initiatives have already been taken in terms of hiring people and procurement. Similarly, we have linked our systems with the banks so that all the payments from the customers are stored digitally and thus eliminates the requirements for paper. Even approvals will be on digital platforms. We have created a completely digital supply chain and data analysis for route information for effectiveness. The digital platform also helps in the overall decision making.

What are the new things that you are planning for automation and digitization for the upcoming facilities?

First and foremost, in the greenfield project the concept of the project is completely different. The basic focus is on two things - Operations & environment and digitalisation - all the equipment will be talking to each other. We are working with global experts who have implemented the digital initiative in one of the largest Soda Ash plants in the world.

How do you plan to increase your market cap from Rs. 7,000 crore so as to add more value for shareholders?

Like I said earlier, our market capitalization at present is at Rs. 7,000 crore plus for both the companies as the demerger is completed in the current year, and our investor pay-out is close to Rs. 700 crores through two buybacks and dividends in the last six years. Our objective is very clear - to create value for all stakeholders - including our employees, customers, society, partners, and investors. However, we cannot shorten this process. We are doing our job and ultimately the shareholders will reward those who grow the business and make money and also do it the right way in terms of environment and governance.

Are you looking at internal R&D or looking at external R&D?

We are not planning any big R&D initiative at this point of time and specifically not working on new molecules. Whatever small and relevant R&D we have done, we have been able to come up with a lot of innovations but these are all process improvements. For example, we are the only ones in the industry to have come up with innovation to convert coke waste into energy.

With respect to CSR, the company focuses on health, education, and agriculture. What are the new initiatives in CSR?

On the education side, we started vocational training last year and within six months close to 800 students have been placed in the areas of medical, engineering, and BPO trade. Another initiative is to help villages become completely self-sufficient in their water requirements. In the past we have built around 10,000 toilets in villages. We have also done many initiatives in drip irrigation and organic farming.

You plan to decrease carbon emissions amid talks about net zero. What target have you set for achieving net zero?

Frankly, we are planning to first achieve carbon neutrality by 2050 and after that we will focus on net zero.

October 16, 2023

In an exclusive interview with Pravin Prashant, Editor, Indian Chemical News, Narendra Varde, Managing Director, IMCD India & Bangladesh talks about company's achievements, role of Mumbai Technical Centre to Asia-Pacific region, changes in chemical distribution business, partnerships. acquisition strategy, safety and regulatory compliance, sustainability practices, company's growth, and CSR initiatives

Overview of IMCD's journey and growth in India in FY 2022-23? Company's plan for FY 2023-24?

We, as IMCD, a global leader in the distribution and formulation of specialty chemicals and ingredients, provide solutions to our customers and support the smooth and successful delivery of their projects. IMCD in India has a diversified business model catering to industries across advanced materials, beauty & personal care, coatings & construction, food & nutrition, lubricants & energy, and pharmaceuticals. As of today, we serve 5K+ customers in India in approximately 40 end markets across our business segments. We have grown 400% in the past 3 years through organic and inorganic growth in the region.

FY 2022-23 has been a year of price corrections and slowing demand apart from the China competition. While this year was tough on the industrial segment due to price correction and excess availability of inventory, the life sciences segment saw excellent double-digit growth. Robust supply chain setup and agility to adapt helped us meet the growing demands of customers and support our principals.

As we embark on 2024, we continue to deliver on the commitments we’ve made to our customers and principals by going deeper into existing segments and exploring growth markets, expanding our technical capabilities, and reach, and accelerating our talent pipeline.

IMCD operates in a diverse range of industries. Strategies or initiatives that have helped the company's growth and success in the specialty chemicals and ingredients sector in India?

We are a company that has a global vision with empowerment and accountability at the local level to do what’s right for our principals and customers in India. Our goal is to support more and more customers through our technical expertise, state-of-the-art laboratories, and strong feet on the ground. Our application laboratories across beauty & personal care, coatings & construction, and pharma in India are well appreciated for bringing value to our customers by being innovative and agile to specific expectations and requirements. We do not hesitate to invest in new resources and capabilities to stay ahead of industry trends and evolve in the markets we are present in.

Support provided by Mumbai Technical Centre to the Asia-Pacific region? Do you see an increased role for Mumbai Technical Centre going forward?

Certainly, we see an increased role of Mumbai Technical Center as our labs work closely with sales and marketing teams along with our principals and customers to provide the right formulation and dedicated support to our local and global partners. For instance, in our Pharma lab, we have initiated around 80 projects in 2022. The same holds true for our other laboratories across segments.

Chemical distribution industry has undergone significant changes due to factors like digitalization and global events. How has IMCD navigated these changes and capitalized on new opportunities?

Given the virtual world created during COVID-19, we were quick to adopt technology for business transactions. We launched a B2B portal - MyIMCD that allows our customers to place orders through the portal without any manual intervention. We have been at the forefront of updating customers and principals on new market trends through digital media. We have strengthened our internal systems such as strong CRM capabilities, EDI-connected warehouses, and tax compliances in ERP to fully capitalize on newer opportunities.

However, while we see a lot of digitalization happening across industries, in the distribution space, there is minimal adoption and impact seen of these advancements.

Share examples of successful partnerships signed in FY 2022-23 that IMCD has undertaken in India to expand its reach and product portfolio?

We acquired Parkash DyeChem (signed in November 2022) to expand our construction and inks portfolio within our Coating & Construction vertical. Similarly, we acquired TradeImpex (signed in April 2023) to expand our converters and automotive portfolio in our Advanced Materials vertical.

IMCD India has acquired many distributors including Signet, Parkash Dyechem, and Tradeimpex Polymers in the last 2-3 years. How have these acquisitions helped the company? Going forward, what would be your acquisition strategy?

Acquisitions help us to strengthen our existing portfolio and enhance our technical expertise by bringing in complementary products; this helps to support our customers through a one-stop solution for their product value chain needs. IMCD has an increased focus on India and we are on the lookout for the right business partners across segments.

The commitment to safety and compliance is crucial. Could you elaborate on the company's approach in ensuring the highest standards of safety and regulatory compliance?

We have a zero-tolerance policy when it comes to compliance across all policies and regulatory requirements. We set up an elaborate HSEQR function - Health, Safety, Environment, Quality & Regulatory - to make sure we run our business in the right and sustainable manner. We are constantly improving ourselves to get the latest ISO and Eco Vadis certifications. Given our operating principles and transparency, it gives our principals across the globe a lot of confidence in the IMCD way of operation.

Sustainability and environmental concerns are increasingly important. How is IMCD incorporating sustainability practices?

We have been taking voluntary measures to reduce our carbon footprint. Sustainability has become an integral part of financial reporting to ensure independence and transparency. We are committed to offering products and solutions within our portfolio that focus on the health and well-being of our consumers, the environment, and society while responsibly managing our operations. IMCD is dedicated to the safe and reliable handling of chemicals, ensuring its warehouse operations and transport comply with all relevant standards. IMCD safeguards ethical and sustainable sourcing from its suppliers and service providers, to ensure responsible ESG practices.

In an industry that is continually evolving, how do you envision IMCD's evolution, future growth, and its role within the broader specialty chemicals and ingredients industry in the next 5 to 10 years?

IMCD has aggressive growth plans in India. We will continue to grow both organically and inorganically to help us serve our customers better. While we grow rapidly, ensuring that we grow in a sustainable manner is core to the company's ethos. We will focus on recruiting and developing the right people and adopting the right technology that will take IMCD to its next phase of growth.

Could you elaborate on CSR initiatives undertaken by the company in FY 2022-23 and plans for FY 2023-24?

For all of us at IMCD, Corporate Social Responsibility (CSR) is a heartfelt opportunity to make an impact in the communities that we are part of across the globe. At the IMCD India level, we’ve undertaken quite a few projects with the active involvement of our employees. So far in FY 2022-23, we’ve contributed towards the following NGOs and causes: Khushii, an NGO that works towards creating quality and equitable opportunities for children and communities to learn and grow with a view to long-term sustainable change; Udaan India Foundation ensures every child of school-going age is gaining a strong and holistic educational foundation; Goonj which focuses on clothing as a basic but unaddressed need; Force for creating awareness on water conservation; Sparsha which works towards the cause of child education, child rights, safe homes, youth skill development, school development, and early childcare; and Animals Matter to Me (AMTM), an NGO that rescues and cares for animals in need.

October 02, 2023

What are the major global trends in bio-based chemicals and ethanol sector? 

There is an upcoming trend of renewable chemicals also called the biogenic carbon to meet the needs of our fuels and chemicals. The world is seeking to mitigate climate change and the Government of India has announced an aggressive programme called E20 i.e. 20% ethanol blending goal by 2025. This is a tremendous programme and it would need close to 10-11 billion litres of ethanol by 2025.  

The government estimates to create 15 billion litres capacity, half from grain and half from sugarcane. And, as ethanol has other uses, the 10 to 11 billion litre will go into the blending programme as there is ample demand. This serves three purposes. First, energy security as it supplements India's energy security especially in the current geopolitical situation. Second, it also helps in mitigating the negative impact on climate change and third, it helps assure farmer incomes. These three reasons give the Indian sugar crushing industry an edge as the surplus sugarcane in the country is used to meet the energy needs of the country. So, I think there is a tremendous opportunity for growth. 

As far as chemicals are concerned, the entire world is looking at mitigating climate change, boardroom commitments, customer preferences, regulation, and incentives are all driving companies towards paths to net zero. 

With the path to net zero, companies across the world are looking to partner with companies such as Godavari Biorefineries who use biogenic carbon to make these chemicals. Hence, we have global and local opportunities with respect to biogenic carbon being converted to fuels and materials. 

How has Godavari Biorefineries performed in FY 2022-23? What is your plans for bio-based chemicals, ethanol, and power portfolio for the current financial year? 

Godavari has performed better than the previous year. There were challenges last year, especially the geopolitical situation including the war in Europe that caused disruptions. In our case, we had an increase in energy costs and a reduction in demand with certain chemicals. On the other hand, we witnessed an increase in ethanol capacity and greater demand. Overall, the company has performed better in 2023. Going forward, we continue to look at opportunities to grow ethanol capacity further and also develop new chemicals which we have been working with partners across the globe to meet their path to net zero approach. 

What were the ballpark numbers for revenue in FY 2022-23?  

In the last financial year, we crossed Rs. 2,000 crore in terms of revenue at around an annual growth rate of 10 percent. 

Revenue forecast numbers for the next financial year?  

We will see how that goes, but it will be around the same range as last year. 

In terms of Capex, what was the investment made in FY 2022-23 and what are your plans for FY 2023-24?  

Last year, we grew our ethanol capacity from 400,000 litre to 600,000 litre. We produced 100 million litre in the last financial year. We also expanded our sugarcane crushing capacity by close to 20,000 tonnes per day and are investing in increasing the capacity of some other specialty chemicals. The Capex last year was somewhere between north of Rs. 150 crore. Going forward, we will continue to look at expansion of our ethanol capacity as well as specialty chemicals. 

Do you see the same Capex numbers this financial year as well?  

No, I think the expansions that we are targeting will more or less happen in the following financial year. There is always a lead time as we target expansion and as it comes out.  

For the next two years, what is the Capex plan?  

This is still a work in progress. We have a plan and we will be deciding that and taking it to the Board for approval. We will have a much better idea only after that but the broader direction is that we will continue to increase the capacities in ethanol, renewable chemicals, and more towards specialty and maybe some increase in our co-generation of biomass based power. 

What are Godavari Biorefineries plans for FY 2023-24? 

As mentioned, most of the investments that we are contemplating to make will come on stream in the year after. We are looking at better performance in FY 2023-24 primarily because of two reasons. First, we expect the energy prices have come to a better level compared to the last year. Second, we are seeing some growth in the specialty chemicals that we are making. Third, the ethanol capacity that we brought on stream from 400,000 to 600,00 litre per day which happened towards the end of the last year. So, we will see better numbers in FY 2023-24 than FY 2022-23. 

The company is also looking at setting up grain based ethanol capacity. When it will be operational and how will it help in increasing overall ethanol capacity?  

We just got the environmental clearance for the grain based ethanol plant and we see it as a bolt-on facility, i.e. we will supplement our current capacity of ethanol. Grain is a short duration crop such as maize and also climate resilient. With that, when the sugarcane crushing season ends and we stop using the sugarcane syrups to produce the ethanol, we will combine grains with the molasses at the dual feed facility to optimize ethanol production. 

Once both the current expansion on sugarcane based as well as grain based are operations, what will be your annual ethanol production?  

We will exceed the production of 150 million litre of ethanol per year after the implementation of this project. 

You are talking about specialty chemicals as a focus area and also bio-based chemicals. Please shed some light on how you plan to expand on these fronts?  

There are companies which either through -- board room compulsions, regulations or regulatory incentives or through customer preferences -- are looking to reduce their carbon footprint and have all made commitments to use renewables or a path to net zero or reducing the total carbon footprint.

Our company is known to be innovative and of course, using renewables as a feedstock. Many of these projects involve working with global companies in which you work to either exactly substitute a fossil equivalent, which is often called a drop in, or you might make an equivalent item which may have slightly different properties, and those properties may be superior to what it replaces, or may sometimes be equal to. It is certainly a requirement. We are working with a few companies globally, right now and in time we will be working at pilot level followed by bench scale pilot level, semi commercial and commercial level. We look forward to seeing some of these projects on a commercial level. 

Which are your priority areas on the R&D front currently? 

 On the R&D front, our main focus is on converting renewable biomass feedstock into chemicals and into bio-based products. As a research driven company, we also wanted to think about creating a molecule that addresses an unmet need globally. We have targeted breast cancer, particularly with reference to triple negative breast cancer. We have been working to create such a molecule for more than 13 years. I am happy to say that we have done it through the preclinical stage and currently the molecule is under testing for safety studies. 

Godavari is partnering with Somaiya Vidyavihar University, KJ Institute of Applied Research, and Michigan State University to improve soil carbon and overall soil health. Would you like to explain the decarbonization process? 

The whole point is that it is the carbon that has been depleting. Keeping the whole depletion process in center, we are looking at depletion of gas reserves, oil reserves, coal reserves and even before these trees. However, what we don’t see is the soil carbon. It is the soil carbon that converts itself into carbon in plants. This carbon in plants is what we eat to make ourselves what we are. It is important to regenerate this carbon but unlike the carbon storage of one that is generated in a chimney. 

The other point which we are trying to say is how would you take the CO2 in the atmosphere and find a way to increase soil carbon. The whole earth soil can be used, therefore, to regenerate itself and increase all carbon for mitigating climate change and meeting the biomass leaves that we have.  

Godavari Biorefineries cannot operate on its own. It has been a long time since the KJ Somaiya Institute of Applied Research has been supporting this as an independent research body, looking at various issues relating to agriculture. We are adding a facet to this which is regenerative carbon and working in partnership with Somaiya Vidyavihar University which is here in Mumbai and I am very proud to say that even universities such as Michigan State in the US, some of their faculty are working with us to help take this whole goal forward.  

To put in a perspective, we are a company using renewable carbon to meet needs of food, energy, electricity, and materials. And we are innovating more materials from renewable carbon and renewable biomass. At the same time, when we look at circularity we also want to look at carbon source itself and the whole regenerative carbon is to make sure that while we use atmospheric carbon which comes through the soil, we also have to make sure that that soil carbon is actually improved. 

As our feedstock comes from soil, I often think this is overlooked and it will affect years of food and biomass, and this has to be addressed on a global scale. Our attempt is to do it in an ecosystem that we serve. This is why we brought the University into it is because if it's successful, it can work on a wider ecosystem. We are also working with a University in Kenya.

August 31, 2023

How do you look at the hydrogen opportunity for the company globally? Size of hydrogen market that Alleima is targeting in the next two years? 

We see hydrogen as a megatrend and an important resource for the world, especially with the increasing push to reduce carbon emissions for the last five to ten years. However, it is difficult to put an exact number. Our customers in energy have also shared that hydrogen has gained significant prominence in their processes, and within the industry, hydrogen has become a central theme in conferences focusing on engineering or technology.

Alleima is committed to supporting our customers in their hydrogen transition journey. In the hydrogen market, we have different focus areas. In India, we primarily focus on fuel injection lines for automotives, hydrogen refuelling stations, and specialized industrial equipment using heat exchangers.

Challenges that you foresee with respect to materials technology and hydrogen? 

Hydrogen is a very peculiar molecule that can affect materials in a significant way. Hydrogen embrittlement can happen when a material is exposed to high-pressure hydrogen, which can cause it to lose some of its important properties like ductility and elongation because hydrogen is very difficult to detect and can cause catastrophic failures, its management and impact on materials are very important matters to take note of.

And how do you plan to rectify this?

Hydrogen is not a new phenomenon, and industries have been handling its applications for several decades. Our experience in hydrogen has allowed us to gain a better understanding and develop materials that perform well under such conditions. We have conducted extensive testing in high-pressure hydrogen environments to prove that some of the alloys from our existing portfolio have excellent hydrogen embrittlement resistance. Additionally, we have produced specific classes of materials, particularly high-performance stainless steels, that have demonstrated excellent resistance. As a result, we have a large portfolio of materials that we are actively introducing to our customers.

Steps that one needs to follow to choose the right materials for hydrogen technology? 

If you look at any application, not just specific to hydrogen, the first step is to always understand its conditions by considering important parameters like temperature, pressure, and operating environment. In the case of pure hydrogen, temperature and pressure are the two primary factors to consider.

The second step is to work closely with our customers, leveraging our expertise and experience in various applications to provide customized material solutions that align with the specific requirements for their applications.

Alleima alloy goes into different aspects of hydrogen manufacturing and transmission so one needs to be careful while choosing the right material. Steps to be taken to choose the right material?

Hydrogen applications can be tricky because of possible hydrogen leakages. Choosing the right material for hydrogen applications requires a thorough and cautious approach, so we conduct rigorous testing in extremely severe conditions to ensure our materials can withstand the challenges. For example, when an application operates at 350 bars of pressure, we subject our materials to even higher pressures during the testing phase to verify their suitability.

The choice of material can also depend on the pressure in the application. Legacy alloys may be suitable for lower pressure and pure hydrogen applications, but for high-pressure applications exceeding 1,000 bars, specialized materials are required.

Bouquet of products from Alleima which form part of the hydrogen ecosystem?

Austenitic steels are known to have good hydrogen embrittlement resistance. Alleima 3R60, positioned at the top end of the ASTM 316L specification, exhibits excellent properties and easily withstands hydrogen exposure, making it an ideal solution for various hydrogen applications. We have observed through our tests that the alloys at the lower end of the ASTM 316 specification do not perform well in terms of hydrogen embrittlement.

Sanicro 35, our latest innovation, is an alloy combining the best features of a super austenitic stainless steel and a nickel alloy. The grade has excellent corrosion resistance, for service in sea-water applications and other highly corrosive environments. It is another material that demonstrates great potential for utilization in refineries that handle hydrogen.

How can Kanthal help Alleima to provide hydrogen solutions?

Industries are increasingly realizing the advantages and competitive edges associated with cleaner heating technologies across sectors such steel, cement, and petrochemicals. Kanthal, an Alleima company, is presently engaged to create an extensive array of high-temperature electric process gas heaters designed to facilitate the transition to electrification and the reduction of carbon-intensive processes. One particularly in-demand technology, Direct Reduction of Iron Ore, requires the heating of substantial amounts of hydrogen gas at elevated pressures and high flow rates. Kanthal is actively developing breakthrough electrical heating solutions tailored for such processes. These solutions offer outstanding efficiency, dependability, and operational stability, along with compatibility and scalability.

How will acquisition of Gerling, a German based precision tube engineering company, strengthen the position of Alleima in the hydrogen refuelling station market? 

Our acquisition of Gerling, now Alleima engineering solutions, will allow us to harness our expertise in materials and combine it with Gerling’s engineering solutions. Together, we have pioneered mobile, digitally connected on-site tubing solutions, enabling precise tube straightening and cutting, reducing the need for material joining and minimizing loss of material due to length requirements. These on-site tubing solutions also facilitate in reducing the number of joints that are required at fuelling stations, streamlining the engineering process and enhancing the efficiency of our solutions.

Clients which have signed Alleima for the hydrogen project with respect to fuel cell technology and onsite high pressure tubing for hydrogen refuelling stations?

In India, I would say that we are partners with most of the automotive companies, working closely with them on fuel cells and hydrogen internal combustion engines. As a result, we extensively supply our materials for the fuel injection lines and hydrogen refuelling stations to all the companies in India working in this area. Today, Alleima stands as the exclusive material solution provider in the hydrogen space.

Outside of India, we have a wide array of global clients in the fuel cell industry. One notable product we offer is the bipolar plates for fuel cell applications. From fuel cells to hydrogen integration into internal combustion engines, we have a growing list of customers domestically and globally.

New developments on the R&D front with respect to the hydrogen ecosystem? How will it be helpful in the long run?

Alleima has very strong roots in R&D and innovation, which have been the backbone of our success for over 160 years. We are constantly on our toes and continuously develop cutting-edge materials for various applications, including hydrogen. We have a very vibrant portfolio of research projects focused on advancing materials for hydrogen, and are introducing more of these products to the market in the coming years.

How is Alleima balancing safety and performance with respect to hydrogen?

Safety is paramount when it comes to handling hydrogen, therefore materials require stringent tests to prove that they are suitable for these applications. However, many of these tests need to be done in highly specialized facilities that may not be readily available everywhere. At Alleima, we conduct extensive testing in international laboratories to validate the suitability of our materials, especially at very high working pressures.

How do you see Alleima moving forward with respect to hydrogen?

It is a very exciting market for Alleima. As the world rapidly embraces hydrogen technology, we are here, ready to support our customers on their journey by providing our existing solutions and continuously innovating to develop new solutions to meet the demands of challenging applications.

August 15, 2023

In an exclusive interview with Pravin Prashant, Editor, Indian Chemical News, Arun Singhal, Founder & CEO, Source.One talks about revenue performance and forecast, network coverage, company's USP, technology differentiation, entering new territories, manpower addition, and international and domestic listing.      

Source.One performance in FY 2022-23 and forecast for FY 2023-24? 

Source.One started in 2018 and in less than five years, we are the single largest company in polyolefins. We are fast growing as far as engineering plastics and elastomers are concerned and we are well on our way to expand to other forms of chemicals, namely bulk chemicals. In 2023, we almost touched Rs. 2,000 crore of topline and we will continue to grow at 25-30% for the next 3-4 years.

How are you planning to achieve 25-30% growth?

First, the industry is pretty fast growing and we are catching up with the industry and are trying to keep ahead of the industry. Second, in the last few years there has been a lot of traction in plastics, polymers, and chemicals. India is a vast country and no matter what we do, there are always areas which have been left out or which have evolved from the last time we visited or the kind of work we do in those areas. We are the only pan-India player that has the largest network of imports in terms of both supplies and demands and still we have not covered 100% of the country. 

What is your network coverage?

On the petrochemical side, we have largely explored a large majority of applications where petrochemicals are used and we have almost touched base a very high fraction of the processors that appear in the industry. In terms of geography, we have covered almost 96% of the pin codes. As and when the new processors came up in the industry we tried to cover them as fast as possible. Four years back, we were covering new processors within six months of their incorporation, two years back we were doing it within two months of their incorporation but the challenge is how do we incorporate the buyer on the day of their incorporation.

As far as applications are concerned, even plastics are witnessing new applications on a daily basis and we have put in place a mix of process and technology where we are able to explore these newer applications. We are probably one of the first people in the industry to reach them first and serve their raw material demand at a super-fast pace.

What's your USP and how do you plan to create differentiation vis a vis your competitors?

There are two USPs. First, is the network. Since day zero and even today, everybody in the company is involved in building networks whether it's a network of processors, stockists, transporters, and producers or different kinds of movement algorithms. Everybody is eventually involved in strengthening and building the network and it would be difficult for someone to replicate that network in the industry.

Second, the US $25 billion industry is undergoing disruption. We were lucky to be a part of this industry at a time when GST had started streamlining a lot of processes and a lot of trade in the industry. We were lucky to be in the industry before the pandemic struck and so we were born in the period between GST and the pandemic. We took our own free time of two years to build a base and since the pandemic, we have witnessed disruption from very close quarters. This experience teaches you a lot of stuff which is not taught in any schools or books. This kind of disruption holds you high for decades because you have seen companies changing behaviours, impossible things getting done, and thousands of people adopting something which they never thought of doing. So this whole experience will always stay with us and it will keep teaching us that everything is possible if your intent is right.

Is technology Source.One's key differentiator and how will this change in future? 

We have a favourite line which we keep repeating within Source.One which is yesterday's technology is today's tradition and anybody working remotely with technology would relate to this because the whole technology itself undergoes disruption after every few years. In 2023, the concept of ChatGPT has caught up with everyone and everybody is coming up with their own version to solve their problem. People are building their products on the back of ChatGPT. This is just one example of how yesterday's technology can be today's tradition. The challenge for us remains the same and that’s how to keep innovating and how to keep coming up with new modes of technology which will help us catch up with the trade.

In 2018, we started with WhatsApp as a key partner in distribution and WhatsApp was a communications partner. In 2021, we started working on our own mobile app and in 2023, we have a good mass base having adopted mobile apps and it is India's only mobile app where one can do transactions of chemicals. This is not an app only for information or knowledge or only to put bids but it is a whole ecosystem where if you want to consume anything, whether you want information on the product or price or any analytics, this is the app for the whole industry. And that's something we've been building on for the last two years and in 2023 we are going to build further. Other features on this mobile app is to make it a complete ecosystem as well as use a lot of predictive analytics. On this mobile app today we are sitting on a heavy load of data and it is our responsibility to make good use of this data to service the trade in a manner which makes it better.

One can think of monetizing this data, one can think of increasing sales backed up by this data but our intent is to know how to use this data to serve the buyer better and that is a huge responsibility. It looks easier said than done and that cannot be done without technology.

From WhatsApp to mobile app to ChatGPT in due course of time. Is your team working on integrating ChatGPT also for financial transactions?

Yes, we have already integrated. We have already started solving a few problems based on ChatGPT. At the end of the day, ChatGPT is nothing but a large language model where we train the software to make decisions or to give answers based on the past. The kind of data we are sitting on has helped us give answers or solutions based on how it has happened in the past. ChatGPT is already a part of a lot of solutions to the problems that Source.One faces on a daily basis and we are going to make it bigger and better.

Source.One future rests on DE (Square) which is Delivery, Expansion, and Ecosystem. Can you explain this formula?

I will talk about the delivery, expansion, and ecosystem trio one by one and then establish a relationship between the three. On the delivery side, we will always focus on last mile deliveries. We feel that the single largest problem in the whole supply chain ecosystem is the last mile delivery because it is very micro spread across a country like India which does not have a pan-India smooth logistics system and you need to aggregate and correlate multiple stakeholders to make a smooth experience whether it is a shipping line or a container or even a last mile truck. All needs to be on time for the final processor to get the material on time. We're going to expand on this delivery Pan-India as we have already covered close to 73% of pin codes and we will continue to achieve 100% of pin codes.

On the expansion side, we started with polyolefins and over time, we expanded to engineering plastics and elastomers and this year we also expanded to bulk chemicals. The idea is to be all pervasive in the complete chemicals domain. We are going to enter agrichem and speciality chemicals as well.

On the ecosystem part, we do not want to get stuck to being a distribution company or a transaction company. We have already evolved ourselves to disseminate intelligence analytics based on data so that the whole trade can make better decisions rather than intuition based decisions. Within the ecosystem, we also started two years back when we started our packaging division. It is a line of business for us where we are going to aggregate the whole packaging supply chain into one single shop and provide a solution to the consumer of packaging and on the supply side use the ideal inventory or use the idle machinery to be engaged in providing that solution.

Source.One is looking to enter new territories such as bulk chemicals, specialty chemicals, and agrochemicals. How are you planning to move in these verticals?    

I will take the last question first. The logistics framework policy that the government came out early this year has been a great boost but does it solve the whole problem? No, it has been a start and I am sure there will be more participation between the government of the day and private players to start solving many problems and because the problem we have at hand is huge and it cannot be just solved with one policy or one framework. It will be an ongoing dialogue between multiple stakeholders and we plan to participate a lot in that framework.

The second part, are we going to involve multiple partners? Yes, we do not plan to move mountains alone. We are already working with 13 different partners. Few of them work in core technology areas like AI, and a few of them are coming up with cutting edge technologies like ChatGPT. The face of Source.One might be a distribution company or a technology enabled distribution company but the backbone is these partners who have helped us solve some fundamental problems like creating a Pan-India logistics network, making sure that buyers are being replied irrespective of the time of the day; and most competitive stockists get business on a regular basis. These are the technology partners that have helped us achieve these mini goals.

What's your present manpower and how do you see it adding up in the next two years?

Today, we are about 150 people, divided between petrochemicals, bulk chemicals, and packaging business that we have with certain centralized teams like technology and logistics. We have done the bulk of the hiring in the last 12 months and almost hired almost 80 people in the last 12 months. So more than 50% of the company have less than one year in the company and that has been done with a very specific vision of what we want to achieve in the next 3-4 years. Our talent acquisition strategy or hiring strategies is largely from outside of the industry because we find it very difficult to make people unlearn and we find it very easy to make people learn. Coming to the next 2-3 years, there might be 20-30% growth in this whole talent pool every year. But largely, I think we have to build a very strong fundamental base of talent and from here it's only the top line that's going to grow.

Revenue and profit numbers by FY25? Are you looking at funds for future expansion?

We are going to continue growing at a 25-30% CAGR which makes it Rs. 3,000 crore by FY25. As far as funds infusion is concerned, fortunately we are in a business model where we are making reasonably good profits to sustain and fund our growth. We have partnerships with a lot of banks that have stood with us. We have been largely bootstrapped and will continue to remain bootstrapped for the period.

For fund infusion, we will look for strategic partners more than finance partners. Anybody who brings in knowledge of how chemicals are distributed, anybody who has stakes in the Indian chemical industry, and anybody who understands the pulse of Indian MSMEs are welcome. We are keen to join them but we are not looking for partners who only bring capital and do not bring intellect.

Three years down the line are you looking at international or domestic listings?

Value creation is more important for us than valuation. We are not in the game of valuation as we have seen how the valuation chasing sector has shaped up once a bad year comes in. Our trade is beautiful which keeps us humble and engaged in day-to-day activities so valuation, IPO, and any other forms of long term growth take a back seat. We have a very strong relationship with the debt partners and they continue to repose a lot of confidence in us and as long as that remains I don't think we could look at some mega event to justify what we are doing.