September 29, 2022

Speaking to Pravin Prashant, Editor, Indian Chemical News, Tarun Sinha, President – Technical Ammonium Nitrate, Deepak Fertilisers and Petrochemicals Corporation Limited (DFPCL) talks about demand drivers in mining chemicals, TAN market share, greenfield ammonia and TAN project, Capex plan, managing supply chain disruptions, diversifying fertilizer business, and company's outlook. 

What is driving demand in mining chemicals? How did the company manage to improve its margins despite the adverse impact of increasing ammonia and commodity costs?

India depends on coal as the primary source of power generation. For Infrastructure development, minerals such as limestone (for cement), iron, copper, zinc, and many others are required. Demand for all such minerals is increasingly driven by rising economic activity and investments in infrastructure development projects. For example, Coal India Limited (CIL) which is the largest coal mining company in India has set an ambitious target to produce 1 billion MT of coal in FY25. Moreover, the Government of India has opened coal mining for the private sector through ‘Commercial Coal Mining’ auctions, many of the coal mining blocks will soon come into operation. In the infrastructure sector, in the Union Budget, the Government of India has set an ambitious target with 35.4% increase in capital expenditure, infrastructure development projects such as national highway expansion by 25,000 km, PM Gati Shakti etc. All of the above will lead to increased demand for minerals and therefore for Technical Ammonium Nitrate. In view of the rising demand, the company is currently executing capacity enhancement through debottlenecking as well and also announced a new greenfield capacity expansion in Odisha. All of these investments are aligned with the Government of India's vision of atmanirbhar Bharat.

How much is the company's TAN business share in India across different verticals like: Pharmaceuticals, mining, power, construction, and steel industries? How are you performing internationally?

The main consumption points of TAN are: Coal mining, non-coal mining (various types of minerals) and infrastructure projects. Our overall market share (above 3 end-use segments combined) has been in excess of 40% in the last 5 years. Currently, majority of TAN capacity is utilized to service domestic demand of India in order to make India atmanirbhar for its TAN needs. Historically, TAN exports have been made to South Asia, South-East Asia, Middle East, and Africa. 

What is your objective behind the plan to forward integrate TAN business into high energy cartridge explosives as compared to the conventional ones?

TAN business transformation aims at partners for delivering value by improving mine and quarry productivity, through last mile execution excellence, using specialty products and customized solutions, in a safe and consistent manner. TAN business has made significant in-roads in its transformation journey from ‘product to solutions’. One such initiative is forward integration into high energy cartridge explosives. Through forward integration, we have developed superior explosives which coupled with our best-in-class technical services capability, we are able to demonstrate and deliver productivity benefits to the end-consumers.

What is the current status of DFPCL's 520,000 tonnes/year greenfield ammonia project and 377,000 tonnes/year project at Taloja in Maharashtra? What is the overall Capex for these projects? How will it add value for DFPCL in the long run?

The greenfield ammonia project is under fast track construction stage and is currently planned to be commissioned in Q1 FY24. The greenfield ammonia project will enable backward integration as ammonia is a key raw material for many of our company’s products. Backward integration will enable cost efficiencies for the DFPCL group, economy of scale benefit, and opportunity to provide feedstock for both Dahej and Gopalpur locations. Overall, the expected Capex is about Rs. 4,350 crore for the greenfield ammonia project.

The laying of the foundation stone of the Technical Ammonium Nitrate greenfield project at Gopalpur, Odisha was done at the hands of the Chief Minister of Odisha, Naveen Patnaik, in December 2021. Greenfield TAN project at Gopalpur, Odisha is also moving as per plan and is currently scheduled to commission in Q2 FY25. This project which is at the heart of the key mining belt of India will help meet the domestic demand, enable import substitution, and also support potential export opportunities in the future. Overall, expected Capex is about Rs. 2,200 crore for greenfield TAN project.

Please elaborate on several Total Cost of Ownership (TCO) and downstream productivity improvement projects with consumers in the mining (coal & non-coal) and infrastructure sectors?

In order to demonstrate value to the end-consumer, we are undertaking TCO and downstream productivity improvement projects with mining and infrastructure companies. TAN business executed its first TCO project at a prestigious infrastructure project of India. It partnered with a leading mining educational institution as a ‘scientific partner’ for execution of this project. The project report identified significant cost benefits as well as potential downstream benefits to the infrastructure project. The business has planned more such TCO projects in FY23 through investments in advanced tools such as: Sensor system for capturing excavator productivity; bore-tracking system for hole deviation measurement; and online fragmentation measurement system etc. Such projects are being executed through collaboration and partnership with leading 3rd party institutions such as CIMFR (Central Institute of Mining and Fuel research), IIT (ISM) Dhanbad, NIT Rourkela etc. in order to deliver improved efficiencies and productivity improvements to the mining and infrastructure sectors in India.

What is the progress on the 377,000 tonnes/year TAN line in Odisha? Capex spent by the company and the expected date of commissioning? What are your long-term expectations from this plant?

The laying of the foundation stone of the Technical Ammonium Nitrate green field project at Gopalpur, Odisha was done at the hands of the Chief Minister of Odisha, Naveen Patnaik, in December 2021. Greenfield TAN project at Gopalpur Odisha is also moving as per plan and is currently scheduled to commission in Q2 FY25. This project which is at the heart of the key mining belt of India will help meet the domestic demand, enable import substitution, and also support potential export opportunities in the future. Overall, expected Capex is about Rs. 2,200 crore for greenfield TAN project and the company has spent about Rs. 394 crore till 30th June 2022.

The company has been catering to International markets such as the Middle East, Africa, and South-East Asia. Who are your clients and what are the primary growth drivers?

Our exports to nearby geographies have been to a wide cross section of customers - mining companies, quarry operators, and dealers. As the greenfield TAN plant in Gopalpur, Odisha becomes operational in Q2 FY25, the company will explore additional international markets for exports.

What has been the impact of ammonia shortage on the TAN production volume in Q4? How do you plan to recover from the same?

In Q4 FY 22 TAN production was not impacted and 100% utilization was achieved.

How has the company managed to cope up with steep increases in prices and supply chain disruptions?

We have taken several steps that have helped us to manage the vagaries in the raw material prices and supply chain disruptions. Some of the actions we have taken and continue to follow are: Closely tracking the demand in the domestic market to understand the needs of our customers & consumers in order to provide reliability and security of supplies; and demonstrating value to our end consumers through downstream productivity benefits through a combination of sales, technical services & operations excellence.

What are your supply chain digitization plans for FY 2022-23?

TAN business continuously strives to deepen the engagement with customers & consumers by leveraging digital platforms. The business has launched an online Portal ‘AN Care’ - a customer engagement portal, which provides basic functionalities of complaint management and its prompt resolution. Recently, the ‘AN Care’ portal has been significantly upgraded with additional features including: Feedback system; Purchase Documents Repository – to view and manage transactional invoices, account statements, credit/debit notes etc.; Technical Data Sheets & Material Safety Data Sheets. ‘AN Care’ is an important customer engagement tool in order to create exemplary customer experience. The business is working on further enhancements to the ‘AN Care’ portal with the ultimate aim to provide a one-stop-solution for all of the customer’s needs.

What strategies are you employing to diversify your fertilizers business? 

We are looking at transforming product offerings in the crop nutrition business. We have planned our journey in a staged manner and are progressing well as per our plan. In 2018, we launched a unique enhanced efficiency NPK product called ‘Smartek. Smartek enhances bio nutrient availability, nutrient use efficiency and crop performance. We have sold over 1 Million MT of this product, which has benefited nearly three million farmers.

We have recently introduced ‘Mahadhan Croptek’ in the CNB segment, which is uniquely developed by a deeper understanding of farmers’ need to address balanced nutrition and usage efficiency in the target crops. Each granule of Croptek provides all essential 7-8 nutrients including micronutrients in a balanced formulation. Croptek is powered by Nutrient Unlock Technology (NUT) which unlocks nutrients and enhances bio-availability thereby enhancing nutrient use efficiency. We have launched Croptek grades for onion, sugarcane, and Cotton. Other 2-3 grades are in the pipeline to be launched soon. 

Crop-specific fertigation solutions launched under brand ‘Solutek’, for grapes and tomato crops, were highly accepted by farmers for improving their yield and produce quality thereby helping them get higher realisations in the market. We have built a strong pipeline of crop-specific and stage-specific products which will be launched over the next 1-2 years.

How has DFCL performed in terms of revenue and profitability during FY 2021-22? What are your expectations from FY 2022-23?

DFPCL delivered a robust consolidated financial performance in FY22 on the back of its unique advantage of integrated operations and diversified end-user segments of core products. With a topline of Rs. 7,663 crore, the company has crossed the milestone of US $1 billion. PBT also crossed the Rs. 1,000 crore milestone. Chemicals segment contributed about 60% of total segment revenues and 80% of segment profits in FY21-22.

As of March 31st, 2022, overall net debt has reduced by Rs. 400 crore and Debt/Equity ratio improved from 0.93x (FY21) to 0.67x (FY22). This is indeed the best performance despite unprecedented challenges of COVID-19 and geo-political turbulence.

Long term growth is expected to be underpinned by change in product mix, head room availability of additional capacities emerging from better operational management and debottlenecking along with Greenfield expansions. Continuous endeavour to transform from a commodity to specialty in each of the products. Although, uncertainties around raw material prices and its availability remain a cause of concern considering the current geopolitical situation.

Outlook for the company's TAN business in the next one year?

TAN demand is likely to grow at a CAGR of 6-7% in the near foreseeable future driven by the increasing demand of coal, other minerals, and infrastructure projects. While this will create a strong demand for TAN, the company is accelerating its forward integration initiatives for downstream productivity improvements in mines, quarries & infrastructure projects which will enhance the revenue and margin streams going forward.

September 12, 2022

With the right combination of skill sets, partner ecosystem, and business models, Tridiagonal Solutions supports companies in providing Industry/Chemical 4.0 solutions.

How can chemical and petrochemical companies leverage Industry 4.0/digital solutions to increase their profitability?

The digital economy is expanding. The availability of digital technology and its application will enable the data-driven decisions across the board. The organization’s digital capability shall help in stabilising operations and control the desired throughputs by using Advanced Process Control (APC). The role[1]based visibility of plant and enterprise-wide intelligence using data science/analytics will increase competitiveness, decrease costs, and improve productivity. With the right cultural transformation agents (internal/external), implementing Industry/Chemical 4.0 such as data infrastructure, APC, APM, supply chain analytics, etc. can be leveraged for sustainable and profitable operations.

Would you brief us about Consulting Solutions and how will it be beneficial for chemical and petrochemical companies?

Today, chemical and petrochemical companies are on the cusp of digital transformation. There are multiple challenges in making this transition happen, such as digital maturity or readiness, right road map, selection of right technologies stack, cultural transformation, upskilling, etc. Tridiagonal Solutions play the owner’s consultant role to identify, create and deploy value in a digital transformation journey of the customers. Our core competence is to leverage our deep process understanding and focus on successful implementation of the Industry/Chemical 4.0 technologies.

We undertake digital transformation roadmap preparation focusing on manufacturing operations. It starts with gap identification (processes/IT-OT), defining key pain areas, mitigation actions, digital capabilities to be developed and solutions/tech stack to be deployed. With the right combination of skill sets, partner ecosystem, and business models, we support companies in providing Industry/Chemical 4.0 solutions. It involves data historians, Advanced Process Control (APC), Asset Performance Management (APM), Operator Training Simulation (OTS), asset integrity, data science and analytics for manufacturing intelligence, remote monitoring, etc.

What are Tridiagonal’s offering to petrochemical, hydrogen and gas companies? What’s your USP?

Since its inception, Tridiagonal Solutions has been playing key role of a catalyst to test new technology, optimize existing processes/assets in the chemical, petchem and energy sectors. As the first incubation company of National Chemical Laboratory (NCL), a constituent member of the Council of Scientific & Industrial Research India, we have been leveraging a combination of technologies to support various R&D, operations, digital transformation initiatives of chemical, petchem and oil & energy industry. For e.g. model-based engineering to study various phenomenon’s (combustion, separation, mixing, drying, etc.) physical/digital validation, hybrid modelling, advanced process control, data analytics, etc. We have delivered more than 1,000+ projects in various domains, viz, process/energy optimization studies, debottlenecking, scale-up & tech transfer, batch to continuous, Advanced Process Control (APC), Asset performance management (APM), digital twin, data science/analytics, etc.

We have been continuously evaluating new technologies such as CO2 capture, green hydrogen, etc. and have developed the collaboration ecosystem of R&D establishments, research institutes, technology providers, etc. Our vision is to shortlist the Tridiagonal technologies and evaluate and adapt it to Indian requirements and scale it.

Tridiagonal has tied up with companies like Siemens, Honeywell, Seeq, Factsage and Vidya. How will this help Tridiagonal in providing 360-degree solutions to its clients?

The technology companies have put in huge efforts in the last two decades to develop solutions using the latest tech stack such as Industry 4.0, Web 4.0, data computing & integration, cyber security, etc. The customers on the other hand get lost in buy versus build decisions, or spend time in evaluating multiple solutions/vendors without validating the business requirements.

For a successful digital transformation, one needs the tech stack that meets business requirements. It should be embraceable by different stakeholders (not just skilled resources) and easily scalable. We have built a strong partner eco-system of leading technology providers, for e.g. companies such as Seeq, Honeywell, Vidya, Factsage, etc., which meets these success criteria and pro[1]vides 360-degree solutions to the customers. The solution covers Chemical 4.0 - vertical and horizontal integration, L0 to L4 & above, digital twin, etc.

We at Tridiagonal Solutions specialize in application and implementation of these technologies/solutions and create business value for our customers.

How do you see Tridiagonal Solutions playing a role in digital transformation projects in the Indian chemical industry?

Tridiagonal Solutions have evolved as a technology company in the last two decades and have been consistently creating value for our global (Fortune 100, 500) customers. We have been investing in building the core expertise – breadth, depth and latest technologies. The chemical/petchem companies in India are at an early stage of digital transformation journey and need enablers to initiate, prove and scale the implementation of digital technologies. We play this enabler role with a focus on application of Industry 4.0 technologies (APC, APM, digital twin, data science & analytics, etc.) along with the combination of skill sets and partner ecosystem.

The company has one of the world’s largest multiphase flow laboratories for serving the oil & gas industry. How does this lab help oil & gas companies?

In order to maintain the sustainable operations of E&P companies, the companies invest huge capital in enhancing the recovery of oil & gas post commissioning and operate in the set limitations. They ignore the need for production enhancement studies, flow assurance qualification tests or proof of concept tests of new technologies. It is essential to do such pre-commissioning studies and generate production enhancement/ optimization data to ensure the E&P fields operate with the right operational matrix and take informed decisions. The reason E&P companies in India fail to do such pre-commissioning qualification is due to lack of field scale infrastructure and R&D testing set-up, which can mimic the actual field conditions. We operate one of the largest field-scale flow testing facilities in India, and have been supporting global oil & gas majors like Chevron, BP, Shell, Deepstar consortium, etc. We have some unique assets here for wax deposition, erosion, corrosion and complex multiphase flow testing.

September 12, 2022

Interview with Kush Garg, Assistant Manager, Raj Scientific Company

September 10, 2022

Interview with Kulwant Singh Rathore, Executive Director, Meghna Colour Chem

September 09, 2022

Interview with Chris Sieto, Head of Business Development & Suman Bhowmik, Senior Manager - Commercial, Indian Sub Continent - Coatings, Elementis

September 09, 2022

Interview with C. Rajarathinam, President - Marketing & Sourcing, Pon Pure Chemical India Pvt. Ltd.

September 08, 2022

Interview with Dominik Eugster, Head of Sales & Marketing, Willy A. Bachofen AG & Sebastian Louis, Director, WAB India Pvt. Ltd.

September 08, 2022

Interview with Keita Kusumoto, President, Yosuke Kusumoto, General Manager, International Sales Dept., Additive Division, Kusumoto Chemicals Ltd.  & Minal Thacker, COO, Unique Speciality Chemicals

September 07, 2022

Interview with Gorm Jensen, EVP & Jenny Klevas, Director, Global Marketing (Resins & Coatings), Perstorp AB

September 07, 2022

Interview with Dr. Jayachandran Nair, CEO, GPC