April 06, 2021

Rajendra V. Gogri, Chairman & Managing Director, Aarti Industries Limited shares his views on global trends on Speciality Chemicals and pharma, plans for FY 2021-22. Excerpts of the interview:

What are the global trends in speciality chemicals in 2021 and how will it impact India?

The global trends in speciality chemicals are a well-known combination of global companies diversifying their supply chain with a China+1 strategy, as well as the US-China trade issues and China’s environmental policies driving many opportunities and interest in sourcing from India.

The speciality chemicals story in India is quite attractive with three drivers - growing domestic demand, the substitution of imports and harnessing export opportunities. Within speciality chemicals, there are many segments such as agrochemicals, dyes and pigments, flavours & fragrances, water treatment chemicals, polymer additives, etc. Each segment will have its growth trajectory driven by end-user demand and also differing industry-market dynamics. Some of these segments were negatively impacted by the COVID-19 disruption whereas others were quite resilient or even registered growth in the pandemic year.

In 2020, as the US and Europe were hit by multiple waves of COVID-19 infection, China emerged as a key export destination for Indian chemical players. Going forward, as countries and economies return to the growth path in 2021, this is expected to reverse and some speciality chemical segments may see a strong revival in demand. I think this period may see major disruptions in global supply chains as demand for some products may rise very sharply and may be accompanied by a corresponding rise in prices. As crude prices continue to move upwards, there would be further inflationary pressures on chemical prices across the board.

We believe Indian companies are at a good inflexion point and are well poised for high growth in various end-user applications. On an overall basis, we are entering the golden era for the Indian chemical industry and much more is to be achieved in this decade.

Global trends in the Pharma industry in 2021 and how it will impact India?

According to the IQVIA’s 2019 Global Use of Medicine in 2019 report, the spending will exceed US $1.4 trillion by the end of 2021. The growth is driven primarily by new products and innovative technologies in leading pharmaceutical markets, such as India, China and the United States.

This trend will likely continue through 2023 despite the pandemic. There is an opportunity for the Indian pharmaceutical industry to play a larger role in global drug supply-security. As per a McKinsey survey report, from a market size of US $12.6 billion in 2009, the Indian pharmaceutical market grew to US $ 55 billion by 2020, with the potential to reach US $ 70 billion in an aggressive growth scenario very soon. India’s domestic pharmaceutical market turnover reached US $ 21.5 billion with a growth of 9 per cent y-o-y in 2020. The advantages of Indian pharma companies are cost efficiency, innovation, economic drivers, policy support, and increasing investment.

Key milestones achieved by Aarti Industries in FY 2020-21 and what are your plans for FY 2021-22?

During the year, the company commercialised a few of its critical projects for instance the expansion of Chlorination capacity from 110,000 tpa to 175,000 tpa. There are various other projects such as projects for long term contracts, Expansion of USFDA approved facilities, etc. are lined up for commissioning and commercialisation which will drive the growth of the company for the next 3-5 years.

We have a strong project pipeline and based on the opportunities available, we firmly believe to drive the growth forward while continuing onto the growth momentum. We expect to continue investing over Rs. 1,000 - 1,200 crore annually for various such growth initiatives over the next five to six years and create a stronger presence of the company in the global speciality chemicals space.

Despite the challenges faced during the lockdown, Aarti Industries has honoured every offer that we had made and hired more than 700 people in the last year. In addition to 700 employees coming on-board, we also on-boarded 150 management trainees from various colleges and universities across the country. We also announced brownfield and greenfield expansion, and this will require additional manpower which will be hired.

Company's performance expected in terms of revenue and profit during FY 2020-21 and what is the forecast in FY 2021-22?
Aarti Industries has a high brand position in areas such as reliability, productivity and reduction in the total cost of ownership to customers. Our strategy has expanded PAT from around 7 per cent to 10-11 per cent. The Group has been growing phenomenally at a CAGR of approximately 13 per cent over the last six years.

Our financial performance in Q3 showed continued improvement and we have forecast a stronger turnaround in the second half of the financial year. The sustained strong momentum on both operating and financial parameters during the third quarter is based on improving visibility across all end-user markets. During Q3, we reported a revenue of Rs. 1,311 crore, which was higher by 7.6 per cent Y-o-Y, driven by a turnaround in demand for our regular markets and established relationships. The company also recorded its highest-ever quarterly EBITDA, PBT and PAT for the company in Q3 FY20-21.

Our long-term ambition is to further embrace open innovation and create a fit-for-purpose and sustainable organisation. We will continue to expand our manufacturing base; launch new products; and invest in R&D, product and process development. We are also geared to benefit from the trend of global supply chains favourably looking at strong Indian chemical companies to establish long-term strategic supply arrangements. We see multiple avenues for growth, in expanding our existing value chains, getting into new value chains, co-developing new products with our customers, forming strong partnerships for tapping manufacturing outsourcing and pursuing available opportunities in the pharmaceutical sector.

How has the company performed internationally and what are your plans for exports? Are you focusing on any new geography internationally?

Direct exports account for about 40-45 per cent of the total revenues. However, a bulk of the company’s products sold in the domestic market is value-added by its customers and exported for global market requirements. Thus in a way close to 65-70 per cent of the company’s produce is directly or indirectly exported.

Aarti Industries has a de-risked portfolio that is multiproduct, multi-geography, multi-customer and multi-industry. Its 200+ products are sold to 700+ domestic and 400+ export customers spread across the globe in 60 countries with a major presence in the USA, Europe and Japan. Its speciality chemicals and intermediate products find usage in pharmaceuticals, agrochemicals, polymers, pigments, printing inks, dyes, fuel additives, aromatics, FMCG and various other industrial sectors. Presently, the company continues to focus on various opportunities in the end-user applications of pharmaceuticals, agrochemicals, eng polymers & various other speciality products.

The company is planning to increase its efforts towards R&D and innovation. Please take us through key R&D initiatives that the company is focusing this year and your achievements in 2020?

Aarti Industries has evolved from being a vendor to becoming a partner of choice. Our four state-of-the-art R&D centres located at Dombivli and Navi Mumbai in Maharashtra, and Vapi in Gujarat, are continuously researching to develop new products and finding a way to make the by-products marketable. Equipped with modern machinery and dedicated laboratories, these research centres promise to further enhance the product portfolio and improve the manufacturing process.

We have a clear strategic focus to become a reference in speciality chemicals and pharmaceuticals the world over. Our long-term ambition is to further embrace open innovation and create a fit-for-purpose and sustainable organisation.

Key R&D initiatives that the company is focusing on in 2021: Continue building and commissioning Phase-2 of Navi Mumbai R&D centre with a further doubling of manpower while adding new capabilities and dedicated state of the art infrastructure for process safety and scale-up data generation facility; Setting up state of the art Bio-fermentation laboratory to support Bio innovation aspiration of the organization; and Scaling-up of several molecules from lab to pilot scale, which are critical raw material and intermediates for agro, pharma and special application.

What's your plan on speciality chemicals expansion and products which you are planning for expansion?

In line with our value chain approach, our focus is to set up complete value chains in India with no dependence on imports for key raw materials. We set up the nitrotoluene value chain in 2016, which created an opportunity for setting up metolachlor manufacturing by UPL (since the key intermediate of MEA became locally available). We are now working to expand our nitrotoluene value chain as well as set up a value chain starting with chlorination of toluene over the next 3-5 years. This value chain has a current import bill of nearly US $ 300 million and also a sizable export potential. Besides, the availability of early intermediates is expected to spur downstream investments in India.

While we work to set up new capacities in new and existing value chains, we are building our capabilities in new chemistries and setting up multipurpose plants to improve our speed to market going forward. We are also actively seeking opportunities to work with global chemical majors to set up manufacturing facilities in India to leverage the India advantage in terms of cost of manufacturing and investment, technical capability, improving regulatory environment and sizable domestic market.

What's your plan on API, Intermediate and Xanthene expansion?

Our Pharma business continued to deliver growth in revenue with positive operating leverage on increasing volumes. Segment revenue grew by 32 per cent Y-o-Y during Q3 FY21 to Rs. 232 crore, which is the highest ever top-line achieved historically by the pharma business. Based on the higher utilization, continued throughput from our regulated market and higher contribution from value-added products and a growing pipeline of new introductions, the segment margin is seeing structural improvement.

Currently, Aarti Industries manufactures various commercial APIs with 30 US Drug Master Files (USDMF), 12 Drug Master Files (DMF), of which seven are under assessment, and 18 Certificates of Suitability (CEP), two of which are under assessment. The growth in the Pharma segment is expected to sustain as additional capacity for API and intermediates are getting operationalized soon. We are also seeing the benefits of India's improving position in the global value chain. Going forward, we will continue to drive deeper penetration in therapies such as Antihypertensive, Cardiovascular, Oncology, Corticosteroids etc. We have a strong pipeline of approval and visibility to maintain our growth. Over the years, the pharma segment has grown to a substantial scale and size, having significant further growth opportunity for it to continue with a growth rate of about 20-25% for the next 4-5 yrs.

Capex invested in FY 2020-21 and what is the plan for FY 2021-22? Plans related to automation and digitalization?

Capex for FY2020-21 is expected to be around Rs. 1,200 crore and we expect a similar range in the next financial year as well.

We at Aarti believe in constantly evolving and transforming ourselves and we have gone through transformation journeys in the past however now we are at the cusp of our next wave of business transformation which will be primarily driven by digital technologies.

Sustainability is our topmost strategic dimension and we plan to leverage AI/ML-based video analytics for contextual intelligence to improve safety and perimeter security etc. Digital levers like Artificial Intelligence(AI), Machine Learning (ML), Internet Of Things (IoT), and Cloud Technologies will be the underlying foundation to derive Real-Time Manufacturing Insights. This will empower each of our employees to make faster business decisions and help the organisation achieve data-driven excellence across the value chain of operations, expansion, R&D, strategy, people and governance.

Chatbots and Robotic Process Automation will amplify organisational productivity and improve scalability and provide 365 days of 24x7 experience to stakeholders. In the areas of operational technology, we have taken efforts to inculcate technology across all levels of Aarti Industries. The latest innovation and technologies were adopted for Digital Control Systems (DCS), Programmable Logic Controller (PLC), Foundation FieldBus, Wireless Networks, e-logbooks and SCADA systems.

We will continue to leverage advancements in cloud and information/cyber security to ensure reliability and data security.

How is the company striking a balance between environment-friendly policies and sustainable growth?

We strongly believe that sustainability and business must go hand in hand. For us, sustainability is more than just countering risks. It is a path to generating inclusive growth while reducing our ecological footprint along the value chain. Sustainability, therefore, underpins our core principles and is our driver for growth, innovation, and productivity.

Since its inception, we have strived to provide responsible solutions to our customers. And we are doing this in a manner that balances the short- and long-term interests of our stakeholders and the business, and that integrates economic, environmental and social considerations into decision making.

All our operating processes and manufacturing facilities reflect our strong commitment to environmental protection. We are constantly on the lookout for energy-efficient systems and systems that sustain air and water quality or reduce or eliminate waste. In 2020, we achieved ZLD status for two additional divisions, making 14 out of 17 manufacturing sites ZLD.

Future business outlook for Aarti Industries in FY 2021-22?

Aarti Industries, with its integrated value chain and diversified product mix, strong technical capabilities, robust track record and cost-efficient operations, forms an ideal fit for entities looking for alternate suppliers independent of China. Aarti Industries is a knowledge-driven organisation, where we strive towards converting today’s knowledge into tomorrow’s chemistry. We remain committed to investing in technology and innovation to create new chemistry and unearth novel solutions that will contribute to long-term sustainable value creation for all our stakeholders. We are therefore continuously pushing the boundaries of innovation. We will continue to expand our manufacturing base; launch new products; and invest in R&D, product and process development.

We are also geared up to benefit from the trend of global supply chains favourably looking at strong Indian chemical companies to establish long-term strategic supply arrangements. Going forward, our strategic focus is on creating a sustainable growth framework as we align with India's growing position as a preferred partner of choice to global supply chains with scalable capabilities that will help us maintain our growth guidance of 15-20 per cent bottom-line CAGR for the next 4-5 years.

April 05, 2021

Ankit Patel, Executive Director, Bodal Chemicals Ltd. shares his insights on global trends, milestones achieved, growth forecast, R&D initiatives, expansion plans, Capex and others. Excerpts of the interview:

Global trends in Dyes, Intermediates and Dyestuff in 2021 and how will it impact India?
Indian dyestuff sector has been a consistent and strong supplier across the world for a few decades now. Bodal being most integrated and with large export and domestic sales network, it is going to benefit a lot from the fast-growing dyestuff demand from across the world. Dye Intermediates sector does not have much availability from Chinese players so Indian players are going to have a good run in 2021. Bodal is the largest dye intermediates player in India with 20-25 per cent capacity of India’s total capacity.

In the current global Industrial trend, the entire world is seeing India as the upcoming second largest manufacturing hub of the world and it is obvious that all the manufacturing companies specifically chemicals will benefit from the same.

Global trends in Speciality Chemicals in 2021 and how will it impact India?
The COVID-19 has opened doors for many Indian chemicals companies. Now the world has started seeing India as an alternate and strong source for their chemical requirements and they are seeing companies who can provide a one-stop solution for many of their requirements and Bodal has that platform, where it can fulfil the requirements of different industries by our integrated ecosystem.

Key milestones achieved by Bodal Chemicals in FY 2020-21 and what are your plans for FY 2021-22? What are the new products that you are focusing on and its impact on the company?
If we see FY 2020-21, it will be a very challenging year for the entire world as the economical trend is down on all fronts. As per Bodal Chemicals focus, we are in acquisition mode for the last three years and in those acquisitions, few are strategic and has built our strength and helped us to enhance the overall ecosystem. Our expansion of business is not limited to India only but also at a global level in countries like China, Turkey, Europe, Indonesia etc. We are also focusing on new products like Benzene and its derivatives. We are now entering Chlor Alkali with the latest acquisition in North India so these new sectors will contribute to our existing business performance.

Company's performance expected in terms of revenue and profit during FY 2020-21 and what is the forecast in FY 2021-22? What are the growth drivers?
In the coming year, we are looking forward to achieving higher growth. The latest acquisition and new product development will help Bodal to grow big.

How has the company performed internationally and what are your plans for exports? Are you focusing on any new geography internationally?
We have acquired companies in Turkey, Europe and have a subsidiary in China so we can easily cater to the respective geographical territory. We are also planning to focus on other global territories, where we have a good customer base and demand. These business decisions will help us to enhance our export business and develop a global presence.

The company is planning to increase its efforts towards R&D and innovation. Please take us through key R&D initiatives that the company is focusing on in 2021 and your achievements in 2020?
We have a dedicated R&D lab for the Dyes & Intermediates and now we are focusing on Specialty Chemicals so keeping that goal in mind we are enhancing R&D capacity for the new products and derivatives. We continuously work with the chemical departments of prestigious universities of Gujarat.

What's your plan for Speciality Chemicals expansion. Areas where you are expanding?
The strategy for expansion is on two fronts - one is acquisition and another is a venture into new product manufacturing plants. We are now entering Chlor Alkali and also working on Benzene based speciality chemicals at Saykha GIDC, Gujarat.

What's your plan on Dyes, Intermediates and Dyestuff expansion. Areas where you are expanding?
We had expanded our production capacity last year in Dyestuff. We are planning to start VS capacity at our subsidiary SPS processors in the next few months.

Capex invested in FY 2020-21 and what is the plan for FY 2021-22? What are the plans related to automation and digitisation across all its operational facilities?
In 2020-21, Bodal invested Capex of around Rs. 10 crores and acquisition of Chlor Alkali complex will be done at around Rs. 145 crores. In FY2021-22, Bodal is planning to invest Rs. 300 crores for greenfield plants Saykha GIDC. In FY 2022-23, Capex will be Rs. 200 crores to finish greenfield projects and capacity upgradation and expansion.

How is the company striking a balance between environment-friendly policies and sustainable growth?
We have installed the world's best-advanced technology at the environment front, for that, we have a tie-up with Advent Envirocare at the technology front. We also have sustainability as one of the goals and to give focus input for the same we have restructured our safety function and enlarged their role as Environment, Health, Safety & Sustainability (EHSS) function. We are also participating in different certification programs and acquainted with ECO certifications like ISO, Bluesign, ZDHC and GOTS.

Key CSR initiatives being undertaken by the company and plans for 2021?
As an organisation, Bodal Chemicals believes in everyone’s growth and success. During this pandemic period, we did lots of activities like distributing food to the needy; providing shelter to the migrants; extending and driving special support to the front runners such as police, medical staff, etc.

March 31, 2021

Maulik Mehta, CEO, Deepak Nitrite Limited shares his views on global trends, company’s performance, R&D plans, supply chain plans, plans of DPL and DNL, expansion plans and CSR activities. Excerpts of the interview:

What are the global trends in the chemical sector and how will it impact India?

The chemical industry across the globe is undergoing a strategic shift in the supply chain from China to India as a source of raw materials. This presents an opportunity for India to be the global hub for chemical manufacturing.

There is an increased focus on downstream value-added products. We expect govt to promote the setting up of new Naphtha cracking units to meet the growing demand for building block chemicals for down-stream industries.

China’s commitment to be Carbon Neutral by 2060 is one major reason for stringent environmental norms and tightening of financing options for polluters. This evaporates their erstwhile advantage and now brings such companies on par with Indian environmental and financing benchmarks. If Indian manufacturers can supply quality material in the desired quantity, then this shift of sourcing from China to India will become sustainable.

Post-Covid, countries across the globe are focusing on China+ 1 Policy, we expect the Government to extend the Productivity Linked Incentive (PLI), scheme to the chemical sector to capture the global market efficiently.

Trade conflicts across major economies present an opportunity for Indian chemical manufacturers to consolidate their position as a supplier to the global chemical market.

India's growing per capita consumption and demand for agriculture and pharmaceutical-related chemicals offer a huge scope for the sector. The government has promised to bring PLI in agrochemical manufacture but the government should also include AI (Agro-ingredients) manufacturers for Agrochemicals to complete the value chain and lower our dependence on AI import from China.

With the increase in upward mobility and per capita GDP, Indians will not only increase consumption of bulk chemicals that eventually go into end segments like consumer goods and automobiles etc. but it will also consume more of personal care products, Agro-chemicals and in-turn speciality chemicals.

Key learnings for the company during COVID-19 and how are you planning to deploy these learnings in 2021?

COVID-19 challenged a lot of preconceived notions of business. The company decided to double down on its responsibility for protecting both the safety and livelihood of its employees during the pandemic ensuring that nobody was let go and salaries and wages were not only paid in full but even increased to tide them through a difficult period. The company prepared for worst-case scenarios and created 'safety bubbles' where critical employees would be housed in safe zones and transported between pre-booked houses/hotels and the factories. It also ramped up social outreach to improve health and nutrition in villages surrounding all our facilities. Safety of men, material, and equipment was taken as a top priority which helped us avoid accidents that could arise from limited manpower and mitigate potential damage from Cyclone Nisarg that ravaged the coastal areas in Maharashtra in July’20.

We studied the challenges of the lockdown and the reopening of the economy in China and chose to prioritise local employment in contract labour and forward booked container and shipping rates in anticipation of shortages.

Company's performance in terms of revenue and profit during FY 2020-21 and what is the forecast in FY 2021-22? What are the growth drivers?

For FY 2019-20, consolidated revenue stood at Rs. 4,265 crore while Profit was at Rs. 611 crore. For the quarter ended Q3 FY21 Revenue was at Rs. 1,240 crore, up by 9 per cent YoY and profit stood at Rs. 217 crore, up by 38 per cent YoY.

Our major growth drivers are a consistent focus on production, productivity, and a customer-centric approach.

In production, we focus on opportunities such as Brownfield expansion of key products; downstream production in existing value chains; and new product development for new platforms.

In productivity, our focus is mainly on: Process before product; Value from waste initiatives; and Improvement on SHE scores and asset integrity.

In a customer-centric approach: We ensured timely delivery and good quality products to our customers when demand for an end application returned, and offer innovative solutions to customers to help them reduce their Opex.

What are the upcoming research initiatives at Nandesari R&D centre and any plans of adding manpower in the R&D division?

We focus on 2 channels: product development and process intensification. The company has quadrupled investment into R&D with a mix of talent, instruments, and software and plans to set up a new R&D centre at the outskirts of Baroda.

How is the company developing robust supply chain infrastructure and logistics? What are your plans for 2021?

To monitor a vast network of logistics and vehicles covering raw materials, finished products, including spent, we have implemented a GPS enabled tracking system, monitored 24/7. This system has been implemented by one of the best-in-class vendors, LCS. Further, Deepak Nitrite Limited (DNL) is a Star Export House and Authorised Economic Operator (AEO) holder.

How has Deepak Nitrite performed in 2020 and plans for 2021? What is the current manufacturing capacity and how do you plan to scale it up and make India self-reliant?

We follow lean manufacturing concepts and work on sweating our plants to maximise plant utilisation. Our asset turnover is more than 2.5 (Net sales/Gross assets). The company has begun site development of its newly acquired land parcels in strategic locations that will house new products from DNL and its subsidiary Deepak Phenolics Limited (DPL).

How has DPL performed in 2020 and plans for 2021? What is the current manufacturing capacity and how do you plan to scale it up and make India self-reliant?

DPL witnessed revenue increase by 37 per cent q-o-q to Rs. 747 crore in Q3 FY21 compared to Rs. 545 crore in Q2 FY21. Initiatives such as elevating plant efficiency have resulted in utilization above 115 per cent of stated capacity. Growth in EBITDA at 36 per cent was in line with revenue growth and the EBITDA margin was stable.

The current manufacturing capacity of Phenol is 200 KTPA, Acetone 120 KTA, IPA 30 KTPA. Further, IPA capacity will double within the first two quarters of FY22.

On the lines of Aatmanirbhar Bharat, DPL aims to make India self-reliant on Phenolics and explore various value-added, downstream products from Phenolics and Acetone.

Our Phenol and Acetone and upcoming derivatives project are all - a step towards building India’s chemical security. At full capacity, we anticipate that Deepak Phenolics will save close to US $400 million in the value of imports for the country. Besides, many small and medium enterprises will also benefit due to the local availability of Phenol and Acetone.

Deepak Group has six manufacturing facilities. Does the company plan to set up any new manufacturing plants or expand into new territories?

Deepak Nitrite has recently acquired 127-acre land in Dahej, which will be developed over the next couple of years. Further, it has plans for medium to large investments each year for the next 2-3 years.

We are looking at creating value by backward integration, export substitution as well as exploring possibilities in new territories of speciality chemicals. We are aggressively investing in R&D to build in-house product development capability. This will help us to create a pipeline of products to drive future growth.

How is the company striking a balance between environment-friendly policies and sustainable growth? What are the key CSR initiatives being undertaken by the company?

The company is accredited with Responsible Care and has taken targets for achieving TfS scores of 90+ for all its sites.

New products will be launched keeping the strictest effluent treatment norms in mind, with ZLD wherever possible. We will also enhance the focus on developing a circular economy with our value from waste initiatives.

As a part of building R&D capability, we have put up a treatability study lab to develop the most environmentally friendly treatment processes. Our investment in R&D will also help us develop and implement green chemistry to drive growth in an environmentally friendly manner.

March 30, 2021

Anil Bhatia, Vice President and Managing Director for Emerson’s Automation Solutions business in India, shares his insights on digital trends in India and globally, his company’s performance in India, as well as expansion plans, and solution offerings. Excerpts of the interview: 

What are the global digitisation trends in 2021?
As we bid goodbye to 2020 and welcome 2021, digitisation has led to transformation across industries in the aftermath of the pandemic. A large number of organisations globally have taken significant measures to enhance digitisation in their working methodologies. According to a Gartner report, 89 per cent of hi-tech CIOs expect the increase in the use of digital channels to reach customers. Digital transformation will become essential for economic recovery in 2021. Digital trends like cybersecurity have become the need of the hour; work-from-home, remote and virtual spaces shall remain the new normal; Artificial Intelligence (AI) and Machine Learning (ML) will be the backbone of most digital tools, and the concept of software as a service (SaaS) is gaining momentum. Creating a digitally empowered workforce with actionable insights is the next step to achieving game-changing performances.

What are the digitisation trends that you see in India?
Advanced analytics powered by AI and ML are the critical enablers that will fuel India’s digital transformation. We’ve seen repeatedly how a practical approach – one that generates short-term wins with measurable gains – can be replicated for an enterprise-wide impact., Indian chemical companies are investing in digital technologies such as sensors or connectivity devices, as well as software and applications. This would generate a lot of data, requiring big data solutions.

By using data-driven approaches to our plant operations, which are the most energy-intensive processes, ML and AI-based analytics are the best place to start. A classic example is a heat exchanger which is a high-energy intensive asset in any chemical plant.

Today, data from multiple host systems, both structured and unstructured, is being brought to a data lake wherein it can be analyzed in a secure way to help operators make the right decisions.

The pandemic has certainly brought agility into this process because of the RoI it yields by helping the chemical industry achieve significant cost reductions, enhanced safety and improved reliability.

How would you rate Emerson’s performance in 2020 and what is your forecast in 2021?
In 2020 we were doing very well until the pandemic stuck. It affected the industry as a whole, so ripple effects were felt in more ways than one. But we were able to get back on our feet soon, with the momentum picking up by September 2020. I am being cautiously optimistic about decision-making and I hope the markets will recover soon as more and more companies start investing in new projects or upgrades. I feel we will lead the pack as we move forward towards economic recovery during 2021.

Will this cautious optimism be for the entire year or do you see it changing in the second half?
I believe our outlook will improve significantly in the second half of the year. As the COVID-19 situation gets better on the ground, so will the momentum of activities that are already moving in the right direction.

Are you seeing any new projects coming up?
We see a lot of promising new projects in the refinery sector. The market has slowed down but now EPCs are getting awarded and the projects will get executed. Even in the chemical space, we foresee many new projects gearing up for launch. I am very positive about the recovery of the chemical industry and I am sure the geopolitical situation will further support the chemical sector in India.

How is Emerson’s automation business geared to take up this challenge in India? What solutions will make it a reality?
Emerson has introduced the Digital Maturity Model Quick Index, which is a tool that lets businesses know where they are in their digital transformation journey in comparison to others in the industry. This is based on decades of Emerson domain expertise as well as the Smart Industry Readiness Index and the Biophorum Digital Maturity Model. We are encouraging the executive leadership of the chemical process industry to adopt this index to understand where their organizations stand in various areas like risk and security, health, safety and environment, people and culture, business insights, and analytics, reliability and maintenance. This will help them identify specific operational improvement areas which will then yield high RoI and improve KPIs regarding their business value propositions.

At Emerson, we take pride in being associated with the chemical sector as a most trusted partner in their journey towards automation and modernisation. With all these sensors in place, Emerson is now ready with its software solutions and IIoT platform to ensure how we make data accessible and then get the right data to the right person, in the right format, at the right time to make a decision. It’s about transferring digital data into digital intelligence by using the thousands of touch and sensing points in a chemical plant. With the help of advanced analytics and ML, business leaders can recognize patterns and make decisions based on these patterns instead of individual measurements. As I always say, start small, think big and move fast to start the digital journey. If already initiated, scale it up quickly to remain relevant in this highly competitive business environment.

Recently, Emerson has deployed smart wireless technology. Do you see its deployment in the chemical and petrochemical sector?
The chemical and petrochemical sectors are always early adopters of new technologies. Some of the largest WirelessHART installations in India and globally are in the chemical and petrochemical sectors. This is hardly surprising. The environment in these plants is much more corrosive compared to other industries such as power, food & beverage or metals. So, the failure of instrumentation signals due to the corrosion of wires is one of the perennial problems these industries face. With WirelessHART that problem gets nipped in the bud. Also, employee safety and emissions are two other important metrics monitored by the top management of the plant. WirelessHART has very effective solutions addressing both these areas. Some of the benefits derived from wireless technologies are non-intrusive measurements that do not require mechanical penetrations, elimination of manual operator rounds at hazardous locations in the field, timely and accurate detection of passing valves contributing to emissions and monitoring the health of critical plant assets. With these solutions, plants benefit in terms of increased safety, improved equipment availability and reduced emissions.

When do you see chemical factories being run remotely in India?
Large petrochemical complexes have been running remotely with nominal personnel intervention. But smaller chemical plants have the potential to run remotely in clusters with the right investments and technical support.

How will an integrated manufacturing campus help chemical and petrochemical companies in the country?
The Emerson Integrated Manufacturing Centre (EIMC), in Talegaon, near Pune, is one of Emerson’s biggest capital investments in India to date. It will help consolidate our manufacturing footprint and improve service levels for our customers in India and around the world. Developed with full support from the Maharashtra Industrial Development Corporation (MIDC) and Invest India, the total build-out in phase 1 is over 450,000 square feet of manufacturing and engineering space, with an opportunity for future expansion. We inaugurated this facility virtually on December 16th, 2020, with our isolation valve and actuation businesses moving in first. With the addition of the Pune facility, we will not only strengthen Emerson’s Automation Solutions manufacturing capabilities and network across the region but also foster a hi-tech workforce and enable operational excellence that will drive our ongoing commitment to exceptional customer service and sustainable future growth for all process industries across India. In addition to our KTM Virgo ball valves and Keystone butterfly valves, we will also be manufacturing our prestigious Vanessa triple offset valves at EIMC, while we continue to add new product and engineering capabilities to better service our customers. In addition to valve manufacturing, our capability to automate these valves with actuation technologies brands such as Biffi and Bettis, the chemical industry will greatly benefit from reduced lead times driven by products manufactured in India and strong local aftermarket support.

Is the manufacturing plant at Pune already operational?
Phase 1 has started and we have moved the actuation unit there already. Since we have to get certifications, the valve unit will move there in phases. Then in the next six months, the isolation valves will also move there. In the coming four to five years, we are also planning to expand further and for that, we have acquired land from MIDC. Overall, in the next six months, it will be fully functional.

In phase 2, the plan is to have our measurement systems business relocate to this site and if we acquire other companies, we plan to integrate them into this one location. We have three manufacturing facilities in India and we are now expanding our base.

What solutions do you offer to chemical companies for better energy management?
Extracting value from applied industrial energy requires a holistic approach all along the value chain. Energy is purchased, converted, distributed, consumed, and sometimes exported on every industrial site and the environmental, financial, and productivity impacts are significant and complex. Emerson’s industrial energy experts can tame complexity and improve business results. From the captive powerhouse to energy-intensive process units, we have monitoring, control, and predictive solutions to optimize energy performance. Our flexible, integrated and scalable Plantweb digital ecosystem provides secure and robust real-time insight from pervasive sensing technologies. A suite of analytical applications is available to provide embedded domain expertise across the enterprise. Steam trap monitoring for steam blow-through and/or blocked flow to reduce energy wastage, critical asset monitoring of energy-intensive assets like pumps, heat exchanger monitoring that provides a complete report on energy consumption and loss, and real-time predictive energy alerts, have been deployed at multiple chemical and other process industries sites across India.

Do you see India latching onto hydrogen? What is Emerson’s role with regards to hydrogen?
There is no doubt that India will have to catch the hydrogen wave to stay competitive. Green hydrogen is evolving quickly on the economic side, so Emerson is fully engaged in the US-India Hydrogen Forum and working with petrochemical companies in this regard. We look forward to positively contributing to this sector.

You mentioned deep tech technologies such as AI, NLP, blockchain, ML as well as software and cybersecurity as a service. How will these technologies help Emerson to be more sustainable and economical for clients?
Deep tech technologies like AI, ML, data science analytics, and the Industrial Internet of Things are built into our digital transformation software portfolio. Our analytics software, including Plantweb Insight and Plantweb Optics Analytics, use AI, ML, and data science analytics to provide smart persona-based real-time predictions to our customers. Many of the other technologies you mentioned were developed for other industries and applications but will soon find their way into control systems to support what’s required and continue to operate as safely, efficiently, reliably and profitably as possible. Some of the features which will deploy these technologies are facial recognition for secure operator login, voice and gesture user interface for simplified operations, drone inspection of problems in the process, augmented reality to overlay diagnostic information with artificial intelligence, location awareness for safer field operations, and predictive analytics for optimized operations.

February 09, 2021

February 05, 2021

February 04, 2021

February 01, 2021

Madhav Prasad Aggarwal, Promoter, Sajjan India Ltd. in exclusive interaction with Pravin Prashant, Editor, Indian Chemical News talked about industry trends, company’s expansion plans, R&D plans, revenue forecasts, global activities, government policies, corporate social responsibility (CSR) initiatives, employee friendly policies, future outlook and much more. Excerpts of the interview:  

Sajjan India aims to become a top contract manufacturer of specialty chemicals. Would you like to talk about your plans in this direction?

We have been in this space for the last couple of decades starting with dyes and pigment intermediates. For the last 20 years, we have been into custom manufacturing or contract manufacturing where we obtain technology from foreign partners and fine-tune it. We make it more efficient and competitive than it has been with the inventors, scaling it up as per current manufacturing excellence standards which also means automating the plants. Not just during the COVID-19 situation but we were always working on improving technologies and automation. Currently, such activities continue on full-fledged mode and are the best way forward for the chemical industry.

We see encouraging opportunities, mainly for existing players who have a proven track record and who can handle complex reactions and hazardous raw materials which I would say is knowledge based. With the experience, we have gained over the period of time and the fantastic team we have created, we see ourselves being able to perform very efficiently to the satisfaction of our foreign partners.  

You have been very active in the chemical sector for a long time. Please throw some light on industry trends during 2021?

I think it will be a year of consolidation during FY 2020-21 and FY 2021-22 in the sense that Chinese industries have faced immense challenges in the last few years due to environmental and safety reasons. A lot depends on what happens vis-a-vis Chinese industry as well. Having said that the Indian industry has matured quite a bit and all the new expansions which are being undertaken by the existing players are of very good standards.

I think rather than new entrants coming in, existing players who have learned excellence in manufacturing during the last 20-30 years are better able to cope up with the pressures and invest sensibly. There are a lot of entry barriers with respect to the IP situation as well as high investment needed for the manufacturing of specialty chemicals besides technical know-hows, waste treatment plants affordability etc.  Therefore, I don’t see too many new players entering into this space but the existing ones growing bigger as this is the best space to be in for them due to advantages.

Would you like to talk about your new plant located in Ankleshwar, Gujarat?

We are setting up a new manufacturing plant on a newly acquired 16-acre plot, diagonally opposite to our current site in Ankleshwar, Gujarat. As such Sajjan India has been into chemicals since 1974 but Ankleshwar plant was commissioned during 1997 and it has since grown steadily. We have more than 500 people on the site now despite the COVID-19 situation. Our team has done an exceptional job since April 2020, operating very safely with no surprises.

We hope to commence the manufacturing in the new plant by the end of 2021, as planned and this will be for some new agro-molecules to be produced for the first time in India, involving very complex chemistry and reactions. We are all very excited and hope to be market leaders in the product segments which we anticipate to be launching by the end of FY 2021 and FY2022 onwards.

What is the investment you are planning and these molecules will cater to which markets?

In 2020, we have already invested Rs. 140 - 150 crore and going forward in 2021, we are planning to invest an additional Rs. 300 crore on expansion. I am glad to mention that we are the only company operating in this space with zero debt and we expect to remain so.

This will be an agro-based molecule being developed in partnership with foreign partners and a lot of fine-tuning by in house process experts to make it efficient and cost-effective.

How are you trying to bring down the cost? What kind of processes is your full-fledged R&D team working on?  

We have a couple of PhDs who are heading different verticals in our R&D team and there are well-qualified employees and some chemists who are working 24*7. With brainstorming internally and with foreign partners who are from top-line multinationals based in Europe and the USA, they try to make the process and manufacturing much more efficient besides trying to minimize waste which is very critical.

Please tell us about your revenue expectations and profit forecast during FY 2021 and FY 2022 respectively?

It is not actually out of design but out of default that somehow our revenues have grown more in the agriculture space contributing to more than 75% and we think it will be in the same range, 75-80% in next few years as well. In terms of numbers, up to March 2021, I think our top line will be around Rs. 1,100 - 1,200 crore. In 2022, we expect it to be more than Rs. 1,500 crore and this entirely exports. We are a 100% EOU and even though it permits a lot of sales domestically, a lot of products, close to 95% are for exports only.

We are cautious in outlook. We don’t want to grow just for the sake of numbers but it should be a win-win situation both from top-line and bottom-line. As far as profitability numbers are concerned, these are more or less aligned with industry trends. We actually beat the industry a bit because of zero finance cost and better cost structure. I think our numbers are better than the industry average.

Any specific reasons for not taking debts from the market and pushing projects through internal accruals?

Right from the inception itself, we have been very conservative about borrowing. We have never been comfortable with debt as we are cash surplus and always witnessed positive cash flow. Also being a 100% closely held company, I don’t see any reason to borrow so far.

With a lot of initiatives, you are an employee-friendly company. Any role models that you always wanted to replicate?

Yes, of course, I think so. My grandfather who started our textile business and my father are my role models. I am proud that some of our employees who had been hired by my grandfather as early as 1957 when he bought a textile mill in Madhya Pradesh, remained with us throughout. One of them recently passed away after a long association with us. There are second-generation employees as well who are attached to us for a long time.

What I have understood and always believed in is that while no doubt qualification is important, discipline, dedication and loyalty are equally important too. That’s what I firmly believe in and with the same spirit, we treat a large number of employees in a dignified manner, doing innovative things and helping them in ways that are not just standard but out of emotions. When we are doing a lot in the CSR space then why not begin at home and that’s the spirit we operate with.

What were the various CSR activities of the company in 2020 and CSR plans in 2021?

So far what we have done is a lot more in the area where we exist in Gujarat and that includes Plant Technology Study Centre, Sajjan Lions International Academy, one of the modern schools in that area. We also promoted the Department of Chemical Engineering which is a part of SR Shroff Institute. I am glad to mention that we have a long association with Breach Candy Hospital in Mumbai and now are also a part of their expansion plan. They are developing an eleven-storeyed building and for two floors we are contributing Rs. 22 crore that will host ICU and other ultra-modern facilities. We are also in process of such initiatives with new colleges and universities in Gujarat. Healthcare and education appeal to us most and we are committed to it.

What are your views on government support and your comments on the upcoming PLI scheme?

My personal opinion is that while we have many disadvantages compared to other countries, we must learn to live within the limited resources and tackle the challenges. I feel one should not just rely on incentives but perform honestly and efficiently. At the same time, I am not saying that we are not entitled to schemes or these are not required but I feel these should be made more stable and we must increase their visibility. One major concern is that policies are issued at short notice and withdrawn at short notice therefore these schemes should be consistent and with enough notice so that plans can be made well in advance. I hope there is more timely clarity about such schemes and inconsistency gets addressed appropriately.

Since your company has been predominantly into exports are there any plans to cater to domestic customers?

It’s not that we don’t want to sell domestically but the products we are manufacturing don’t have any use for domestic customers. These are very specialized end-use applications for products that are by and large patented by the inventor companies. Some times we have seen that some product line from Germany and Switzerland has moved back to India and that is contributing to 5 - 7% of our sales. We would be happy to cater to Indian market if there is an opportunity.

From jute to textiles to chemicals, Sajjan Group has acquired a lot of new skill sets and also verticals? What is the success mantra?

For continuous success in any business, we have to follow a simple rule and that is to maintain financial discipline, stay honest, remain simple and be delegative.

January 29, 2021

January 29, 2021

Samir Somaiya, CMD, Godavari Biorefineries Ltd. spoke exclusively to Pravin Prashant, Editor, Indian Chemical News on expansion plans, revenue forecast, Capex plan, market share in Ethanol blending, R&D and sustainability. Excerpts of the interview:

What's your expansion plan for the next 2 years?
We have just completed an expansion plan in our Ethanol capacity. We have spent Rs. 70 crore and have expanded our Ethanol capacity from 200,000 liters per day to 320,000 liters per day last year and 400,000 liter per day in past few months. So, we have effectively doubled our daily capacity of Ethanol. I think in the next couple of years we would like to spend more money further expanding our Ethanol capacity and also enter into specialty chemicals based on Ethanol.  

Two years ago we put 38 million liters into the Ethanol program and in the coming year we expect to deliver 70 million liters and we would like to create an Ethanol capacity in such that it can go to 100 million liters to deliver it into Ethanol production capacity. We make chemicals that go into pharma intermediates and agro intermediates so we have lined up couples of new chemistries that we want to invest in the future so we are planning to expand our footprint in specialty chemicals as well.

I would say 90% of what we produce probably will go under Ethanol blending and 10 to 15 % of production would continue to be catered to customers of ours which we had over the last many years.

What's your revenue forecast for FY 2020-21?
We are anticipating a turnover of Rs. 1,500 crore in 2021. If you look into the past, sugar used to be a large percentage of top line mix. Going forward we anticipate sugar, Ethanol and chemicals will contribute one third each in terms of revenue. Sugar would be about Rs. 400 - 500 crore, Biofuel or Ethanol will be Rs. 400 - 500 crore and Chemicals will be Rs. 500 crore. That's how we are rebalancing our portfolio and then going to grow Chemicals and Ethanol space.  

What is Godavari Biorefineries doing so that its chemical division grows to one third?
I look at Sugarcane and agriculture as a great feedstock for food, fuels and specialties and in specialties we look at the sugar and fibers as the source. So going forward, we would further see the use of Ethanol also for chemical making specialty chemicals and bagasse also to be used making specialty chemicals which go into the market. In the past one year and coming year and a half you will see Ethanol portion expand because that’s where our focus has been and post that we would definitely see emphasis on chemistry and chemical coming out from bagasse and Ethanol.  

Are you planning to have new factories under your expansion plan?
Our current aim is to do expansion in both the current locations. We think that we have a very good base in terms of infrastructure, people and it is easier to do the ground field expansion right now. So this is how we are expecting to go forward from the logistical standpoint and from the human standpoint and this is where we will grow our business.

Are you looking for any Capex expansion in the next two years?
We would be looking at those currently under preparation but we will definitely do a Capex expansion and we would look at expansion in Ethanol and in chemistry and renewable chemistry which we are talking about.

What is your market share in Ethanol blending and how do you see the biorefineries policy of the government of India?
I think the government policy in biofuels is very good. The previous policies used to look at molasses or Ethanol as a bioproduct of the sugar industry. The current policy mixes Ethanol and sugar industry as substitutes and they give optionality to de risk the business as well as to de risk the farming sector so I think the policy is very good.

India has to look at sugarcane surplus as an asset and this policy recognises it as such. So this surplus sugarcane with the policy will start converting to Ethanol and I believe in the next couple of years we will see local Ethanol meeting almost 20% of the gasoline needs or the petrol blending needs all over the country.

I think the policy is very good and as a company Godavari Biorefineries is actually diverting more than 40% of its sugar and cane to Ethanol so we have gone almost towards the Brazilian model where companies in Brazil have and optionality towards almost 50% of its sugars where they can swing between sugar and Ethanol and this is what we have created in our company.

More than 3 billion litres have been bid and we will be around 17 million litres so market share is actually small but I would like to say we have pioneered the use of sugarcane juice and syrup for Ethanol. This is a new policy by the government of India earlier it was molasses and they have also allowed sugarcane juice and syrup and I would like to say that we have been working on one of the first few to pioneer the use of this to make Ethanol. So in that sense we have done a good job.

How big is the biorefineries blending market in India?
This coming year we should blend about 7-8% of gasoline or petrol with Ethanol and the government wants to take it to 20% that’s how big it is. The nice thing about Ethanol is it's a low carbon greenhouse gas or climate change mitigating fuel and it drives the rural economy so in terms of rupees, I think they are wanting about 300 crores litres and if you multiply with about Rs. 55 - 60 a litre.

Where do you stand viz a viz other players in the biorefineries blending market?
We would be one of the larger players. The issue is we have one Ethanol based facility and this one Ethanol based facility is at a single point I think we do 400,000 litres per day and it’s among the larger one in the country but there might be others who have 100,000 litres per day and we might have 5 or 6 of them. Our approach as a company is to go deep rather than to do a horizontal experiment. We want to make value out of that stick of cane and we want to go into the de risking approach. We would be amongst the largest.

Do you have inhouse R&D or do you have tie-ups with R&D institutions?
We have a combination of both. We have a very good research lab in New Mumbai and we do a lot of our own research with our scientist and we don’t think we have the answers for everything so we do tie-ups with education institutions with research labs and we think its partnership and collaboration which will take us forward.

Any numbers to the R&D budget which you invest?
More than numbers, it's lots of people. We have 25-30 scientists working on the R&D front and that numbers change year on year. We have accruable research which is a strong point for us. Like all chemical companies we have also launched your own hand sanitizers product called ‘Pavan’.

How has the hand sanitization market done for Godavari Biorefineries?
To be honest in the beginning it was very good but we need to develop a much better B2C marketing capabilities to succeed.

On the sustainability part are you also looking at becoming net zero at some point of time?
Currently, we are measuring our current carbon footprint. We are quite ahead already but definitely our game is to be sustainable even outside the ecosystem which is farming system and sustainability with the company. We were in fact one of the first in India to even get a million dollar to set up a cogeneration plant 20 years ago and at that time cogeneration from Bagasse was not very common in India. We got grants from the USA and to demonstrate how greenhouse gas mitigation plants can be done in the company. Our focus entirely is to be a renewable company with a low carbon footprint.

Anything specific which you are working on sustainability?
I talked about the whole emphasis on sustainable farming and that itself is a big focus on how to make farming more sustainable. I talked about simple issues like extracting potash from ash that itself creates a more circular economy and also creates a different sustainability.

Godavari Biorefineries would be completing 81 years. How do you see this complete journey?
I would love to say that we are ready for the future.