May 15, 2023

What are the key milestones achieved by Aarti Industries during FY 2022-23?

In 2022, Aarti Industries Limited (AIL) sharpened its focus on building a company that is increasingly agile, resilient, and future-ready. The company reached new heights and set aims for bigger milestones in the journey of becoming a world class company. 

Major milestones achieved during FY 2022-23 are: Catering to the third long-term contract, the company commercialized a new manufacturing unit at Jhagadia. The company anticipates plant expansion and production ramp-up in a phased manner as per the contract terms in the coming quarters. The company secured a binding 20-year term sheet with Deepak Fertilizers worth more than Rs. 8,000 crores, assuring a consistent and sufficient supply of Nitric acid, a crucial raw material used in manufacturing processes. This partnership will begin on April 1, 2023 and will eliminate the need for investment in concentrated Nitric acid backward integration. The company also demerged its Pharma division into a separate listed company called Aarti Pharmalabs Limited, enabling both companies to concentrate on their respective businesses and growth opportunities independently.

Capex investment in FY 2022-23 and plans for FY 2023-24. Projects where you are investing? 

In FY23, we invested Rs. 1,200-1,300 crores in new projects, scaleup activities, asset restoration, debottlenecking, site development, setting up pilot plants and sustainability initiatives. In FY24 and FY25, we plan to invest a total of Rs. 3,000 crores in new chemical value chains and high-potential products to increase the addressable market size and meet the growing demand of key customers. Our upcoming Capex projects include NCB (Nitro Chloro Benzene) capacity expansion and downstream product plants that are expected to start contributing from H1 FY24. 

Update on commencement of capacity expansion for NCB manufacturing facility at Vapi; Expansion cum asset upgradation for Acid Unit at Vapi; Expansion of Ethylation and NT capacities; and expansion, asset restoration, and sustainability Initiatives planned by the company?

Brownfield expansion of the NCB facility at Vapi and a few other Speciality Chemical blocks have been progressing well. These will become operational over the next couple of quarters and start contributing from H2 FY24. We have started the initial work around expanding the Ethylation capacity at Dahej SEZ by 3x with an investment of Rs. 200 crores. Further, with our NT capacities reaching over 90% utilisations, we have commenced the work related to debottlenecking of Nitro Toluene capacities. We target the capacity increase by about 50% with an objective to cater to certain high-growth applications in agrochemicals. We expect both these units to commercialize in H1 FY25.

Update on site development work initiated on 100+ acre land at Jhagadia (Zone IV) and when are you planning to commercialize it? Products to be manufactured?

The project development work at Zone IV is progressing well, with the pilot plant currently under development. We have received environmental clearance and the facility will manufacture more than 40 products related to the Chlorotoluene value chain which will be commercialized in three phases. 

Work for Phase - 1 has already begun. The project is expected to be commercialized from H2 FY25 and is likely to contribute significantly to the growth of the company. The project will provide a wide range of locally produced chemicals that are currently imported by the Pharmaceutical and Agrochemical industries. Around 50% of the products will be targeted for the export market. The introduction of new products will extend our value chain advantages further downstream. This will strengthen our relationship with existing customers and create new customer relationships. Additionally, the project will also enhance our chemistry and technology capabilities into newer areas that can be leveraged in the future to further expand product offerings.

The company is looking at growth through five pronged strategies - Introducing Chlorotoluenes Value Chain; Setting up Multipurpose Plants (MPP); Newer range of Value Added Products & Other Speciality Chemicals; Manufacturing Outsourcing/Strategic Alliances; and Custom Manufacturing Opportunities. How will these strategies transform AIL?

Earlier in our legacy Benzene value chains, we adopted a sequential approach of adding new products incrementally based on demand from existing or new customers. This meant making incremental investments in upstream and downstream capacities as and when needed. However, for the Chlorotoluene value chain, our strategy is a bit different wherein we have looked at the value chain holistically and planned product capacities in sync across the value chain. This will enable us to be Capex-efficient and facilitate faster ramp-up of capacities once commercialized. 

The upcoming multipurpose plant will enable Aarti Industries to enter into higher value-added products that will build on its traditional value chain-centric approach. It would also enable faster commercialization of new products and reduce time-to-market (product inquiry/conception to commissioning). Over the past five years, we have achieved considerable success with our manufacturing outsourcing and long-term contracts that not only provide stable business to the company but also introduce our team to new technologies and global best practices. With the growing trend of China+1 and Europe+1 in the chemical industry, we believe that India is well positioned to attract long-term partnerships from global chemical firms. This will enable us to expand our business and capabilities further while also contributing to the growth of the chemical industry in India. 

Initiatives for enhancing process safety across all processes? How are you collaborating with business partners to imbibe ESG practices? 

In order to enhance process safety and ensure zero deviation for sustainable growth, we have taken several initiatives. We have established a dedicated Process Safety team at our corporate and manufacturing locations, and have also set up a world-class infrastructure and research facility - Aarti Research and Technology Center. We have strengthened the Hazards & Operability study procedure by introducing different guidewords, and implementing applicable learning from external process safety incidents. Our process safety audits are conducted with external subject matter experts, and we have also introduced the concept of TACIT Knowledge sharing activities for learning and development.

Furthermore, we monitor daily process deviations, interlock bypass, and CAL mode on a daily basis, and have enhanced our Chlorine Handling System across AIL with the help of a Chlorine subject matter expert. We have a robust Hazard Identification and Risk Assessment procedure (HIRA) in place, which is done for each individual activity/step involved in Standard Operating Procedures (SOPs). Additionally, we conduct process safety studies for existing and new projects, including Thermal Safety Studies (DSC, TSu, RC1e) for all new and existing processes, and Powder Safety studies (MIE, MIT, LIT, Powder Resistivity, etc.) for all new and existing powder handling operations. We also validate process parameters at the pilot and commercial level, and conduct Criticality Class Study, SIL Study, QRA, and HAC study for all commercial plants.

We are committed to enhancing our sustainability performance in supply chain by engaging with suppliers on ESG practices. We have prepared a strategy for sustainable supply chain management, in which we screen all existing and potential suppliers on sustainability criteria to identify risk and ensure a sustainable supply chain. We also collaborate closely with our identified high-risk business partners to build their capabilities, strive to imbibe ESG practices in their operations, and encourage them to adopt best practices that align with our sustainability goals. We believe that by working together, we can create a sustainable ecosystem that benefits all stakeholders.

Sustainability roadmap of Aarti Industries and when are you planning to become Net Carbon Zero? Sustainability plans for FY 2023-24? 

Aarti Industries is committed to sustainability and has signed the Science Based Target initiative (SBTi) commitment. We plan to set targets at the earliest in order to become a Net Carbon Zero company. We have identified a number of initiatives to reduce our energy consumption, including energy efficiency improvement projects and energy loss reduction. In addition, we have invested Rs. 18 crores to source 147 MW/day of renewable energy which is a significant step towards reducing our carbon footprint.

Furthermore, we aim to reduce our carbon footprint by replacing conventional fossil fuels with biomass. Moving ahead in FY 2023-24, we have set our sights on various additional sustainability initiatives, including exploring new technologies for clean energy and continuing to invest in renewable energy sources. We also plan to improve our energy efficiency and reduce energy consumption to become an environmentally responsible company. Through our investments in renewable energy sources and exploration of new technologies, we are well-positioned to achieve sustainability goals in the coming years.

CSR initiatives being undertaken by Aarti Industries in FY 2022-23 and plans for FY 2023-24? 

At AIL, we continue to seek avenues to foster and support the aspirations of communities with a firm belief of touching and transforming lives of people around us. True to our belief that CSR projects must be robust and impactful to bring about transformational changes in the lives of our stakeholders, we collaborate with our trusted partners having strong grassroot presence for executing our CSR interventions. All our community actions are carried out through Aarti Foundation. 

We do this by focusing on the themes of healthcare, education, and environmental protection. Towards education and skill development, we associated with Shri KVO Jain Mahajan for a project. This project aims to provide interest-free loans, scholarships for higher education and medical aid to the underprivileged.  

In our endeavor towards upliftment of underprivileged clusters and communities, we have joined hands with Bhansali Trust and took up the Musher Integrated Development Project in Fatehpur, Gaya. This project focuses on education, health and hygiene, microcredit, and nutrition for the villagers. We also contributed to the reconstruction of the school building of Sheth M. P. Rashtriya Shala Trust in Mumbai to promote education. Additionally, we have assisted Matruvandana for the Navneet-Chandravallabh Mahila Arts College to aid needy girl students in completing their graduation and senior citizens in receiving better medical welfare, food, and milk. 

In FY 2023-24, we plan to continue supporting our current projects. We also aim to strengthen our efforts towards sustainable development. Moreover, we have planned to initiate new projects that align with the United Nations' Sustainable Development Goals (SDGs) and make a positive impact on our society. With a commitment to creating long term value for all our stakeholders, we will continue to strive towards achieving CSR goals and positively impact society. 

Other achievements in FY 2022-23?

As a testimony of our commitment towards sustainability, we received following recognition and certifications: Permission to use Responsible Care Logo for a period of 3 years from April 2022 - March 2025; Gold medal in EcoVadis CSR Assessment 2022; Best Environment Friendly Company of the Year at FICCI Chemicals and Petrochemicals Award 2022; Most Innovative Environmental Project Award at the CII National Award for Environmental Best Practices 2022; Platinum Title of 12th Exceed Environment Award 2022 in the category: Environment Preservation; “B” Rating in CDP Climate Change disclosure; “A-” Rating in CDP Supplier Engagement disclosure;  For our futuristic approach and readiness to thrive in the age of uncertainty, we were recognized as the Economic Times Future Ready Organisation 2022 in the ‘Large Category’; and we became the only Indian company to win the Best Supplier Relationship Management Initiative Award during the prestigious CIPS Asia Excellence in Procurement Awards 2022.

April 19, 2023

Address by Nikhil R. Meswani, Executive Director, Reliance Industries Ltd. at ICC Chemical Outlook Conference 2023.

April 16, 2023

Address by Erik Fyrwald, CEO, Syngenta at ICC Chemical Outlook Conference 2023.

April 16, 2023

Address by Arun Baroka, Secretary, Department of Chemicals and Petrochemicals, Ministry of Chemicals & Fertilizers, Govt. of India at ICC Chemical Outlook Conference 2023.

April 05, 2023

Edited excerpts of interview with Capt. Pankaj Mehrotra, Director, Zodiac Tank Container Terminals Pvt. Ltd.

March 11, 2023

Edited Excerpts of interview with Claudio Bonafede, Managing Director, Maag Automatik s.r.l. & Vinod Hatkar, Sales Director - India, Dover India Pvt. Ltd.

January 29, 2023

In an exclusive interview with Pravin Prashant, Editor, Indian Chemical News, S. K. Chaudhary, Founder & Director, Safex Group shared his views on the company's recent acquisitions, growth plans, technology adoption, and future expansion. Excerpts of the interview:

How is Safex Group contributing to the Indian agrochemical business? How do you look at the future?

Safex Group began its journey in 1991. Many of the companies – Briar Chemicals Limited, IndoSwiss Chemicals Limited, Smith N Smith Chemicals Limited, Shogun Organics Limited, Him Bio Agro, and Best Crop Sciences - were added during the course of the 30 years long journey. The agrochemicals industry is growing at 7-8 percent annually, subject to normal weather conditions. Comparatively, Safex Group has been growing quite fast, achieving a 24% growth in the last 5 years. The organic growth has been 15% and the rest has been inorganic through acquisitions. In the last 18 months, we have acquired three companies - Briar Chemicals Limited, Shogan Lifesciences, and Shogun Organics Limited. We aspire to become the number one agrochemical company in India and globally and we hope to continue the current growth rate.

What is the status of acquisition of companies and what portion of revenue coming from outside India?

The acquisition of the companies is complete as these are complete buyouts. Only Briar Chemicals is located outside India and the annual revenue is expected to be around Rs. 700 crore.

With the acquisition of Briar Chemicals, what would be revenue and profitability numbers of Safex Group in FY2022-23?

If we take the revenue from the date of acquisition in October, 2022 to March 31st, 2023, it would be around Rs. 300 crore. The annual revenue is expected to be around Rs. 1,200 crore and profitability would be approximately Rs. 175 crore.

How is Briar Chemicals acquisition different vis-a-vis others?

There are two things about Briar Chemicals - One, it is outside India and second, it is a CDMO (Contract Development and Manufacturing Organization) company where major thrust is on specialized manufacturing processes. The company manufactures Active Ingredients and Intermediates for the world’s topmost agrochemical players. This has changed the focus of the group. The best part about Briar Chemicals is that it has completed all the verticals of the agrochemical industry, be it brand formulations, technical manufacturing, specialty chemicals manufacturing, and storage solutions.

Are you planning to set up a CDMO unit like Briar Chemicals in India?

We haven’t yet thought about it but we can plan a CDMO company in India in the long run. Before we go ahead with such a plan in India, we would like to consolidate Briar Chemicals first.

How many manufacturing plants does Safex Group have in India?

We have six manufacturing plants in India - Two units in Jammu & Kashmir besides one each in Himachal Pradesh, Rajasthan, Gujarat, and Maharashtra. While we are fairly spread out in terms of manufacturing facilities in Northern and Western parts of India and have presence across major cities of the country.

What is your total production of agrochemicals in India?

In case of formulation units, one has to look at sales rather than capacity. Formulation units can be produced in large quantities. We are expecting Rs. 200 crore business in Shogun Organics in FY 2023-24. Capacity wise, the Pune plant will manufacture 1,000 tonnes of Active Ingredients.

What are your expansion plans in 2023? How do you plan to achieve the same?

We want to consolidate in three ways - Exports, Active Ingredients manufacturing in India, and optimization of manufacturing business. The whole team is working towards achieving the same. Optimization is a continuous process and we are reviewing it on a regular basis. Optimization is under discussion and whatever needs to be done will be done.

Safex Group is exploring both the Indian and global market in a big way so innovation will play a huge role. What is your innovation strategy?

There are a lot of molecules going off patents including herbicides, weedicides etc. We are establishing manufacturing facilities at Maharashtra plant to manufacture the latest of patent molecules. These include the entire range of herbicides, pesticides, weedicides, etc. which is a major area of growth.

Apart from developing patent molecules, are you looking at developing in-house molecules through R&D?

Developing new molecules is something very typical and beyond the scale but we are doing it at our level, whatever we can. Shogun Organics has one patented molecule that we have studied and are developing its formulations currently for household use and for agriculture as well. It is a lengthy process and will take a year or so to become fully commercial.

There is a growing focus on organics in agrochemicals. How do you see the organic market in India and outside India? 

It is very much hyped out but the reality is different. Life won’t be easy without pharma for humans, similarly for crops, agrochemicals are important to treat their diseases. When we talk about organics, we don’t think of masses. With the absence of agrochemicals, the production will decrease by almost 25 percent and cost will become four times. Then it will not be just a matter of affordability but people won’t have food to eat.

If we take the case of Sri Lanka where agrochemicals were banned due to the Presidential order, the situation became worse and the economy went down. The Sri Lankan model has shown the relevance of chemicals for agriculture productivity. There are many misconceptions about agrochemicals including the myth that these cause cancers but there is no conclusive evidence to prove that.

The company is planning to invest Rs. 100 crore into agri-technology. Which technologies are you looking at?

We want to go directly to the farmers so we are building an e-commerce platform that delivers quality products to farmers at their doorsteps. The trial run of E-commerce is underway and the platform is expected to be launched in April, 2023.

Are you planning to implement drone technologies?

I think drones are not suitable at a very large scale in India. Currently, we are evaluating it from a commercial angle and don’t find it viable yet. Once we feel that it would be valuable for farmers we will take the plunge.

There are a lot of fake and spurious products in the market. How will agri-technology help the farmers to find out the difference?

I don’t think there is any such technology. We may check the duplicacy of the products but we can’t find if someone has produced below standard agrochemicals intentionally or not. The technology can check barcodes etc. and that we are in the process of implementing.

What are the CSR activities planned this year by Safex Group?

Education and sports have been our thrust areas and we will continue with these areas. We would be adding two more areas including the chilled water for school children and distribution of hygiene products in schools and colleges.

Are you fully funded or would you be raising funds?

We are fully funded and won’t require any funds as of now.

What are your expectations for the agrochemicals industry from the Budget 2023?

There is 7.5% custom duty on Intermediates and 10% on Active Ingredients. The gap is very small and this should increase, meaning either the custom duty on Intermediates should get increased or there must be a decrease in custom duty on Active intermediates. This will help Indian manufacturers. From the farmer’s angle, I would request the government to decrease the GST percentage from 18 to 12%.

Are you looking at the FPO route for promoting products?

Presently, we are not looking at it but we may definitively look at the FPO route for promoting our products. 

January 17, 2023

Interview with Mayank S. Sharma, Chief Marketing Officer - Chlor Alkali, Aditya Birla Chemicals

December 15, 2022

Address by Ravi Kapoor, MD, Heubach Colour Pvt. Ltd. at ICC Sustainability Summit 2022

December 15, 2022

Address by Jacqueline Alvarez, Chief - Chemicals & Health Branch, UNEP at ICC Sustainability Summit 2022