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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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