What are the global trends in Dyes Intermediate, Dyestuff, Sulphuric Acid, Chlor-Alkali, and Pharma sector in 2023?

India’s Chemicals and Petrochemicals (CPC) industry is one of the most critical and indispensable industries and a consistent GDP contributor. The ship of growth has started its journey from ashore towards a sea of unrealized potential on the backdrop of amenable government policies and initiatives and ever-rising demand and strong markets. This extremely diversified industry is transforming into a powerhouse, providing a fertile ground for stakeholders to grow and thrive.

Talking of global trends, global inflation is weighing heavily on the end market textile, paper, pharma, plastic, agrochem, water treatment, etc. Consumption of end users’ industries has been sluggish due to overall slowdown in the global market. Uncertainty about the European market has further decelerated the demand scenario of the chemical industry. When it comes to China, the policy of zero covid has slowed the economic growth for a while.

The global sulphuric acid market reached a volume of almost 284.4 million metric tons in 2020. The industry is further expected to grow at a CAGR of 1.5% between 2023 and 2028 to reach a value of almost 311 million metric tons by 2026. The major drivers of the industry such as the rising population, increase in fertilisers and chemical industry, the rising demand for the developing regions, and the increase in the demand from major consuming industries like agriculture are expected to aid the market growth.

Chlor Alkali business will continue to perform well and will contribute meaningful business in the coming period. We foresee demand for Caustic Soda to remain healthy from FMCG, textile, and paper industries. The global Chlor Alkali market size grew from US $74.34 billion in 2022 to US $80.35 billion in 2023 at a compound annual growth rate (CAGR) of 8.1%. The Russia Ukraine war disrupted the chances of global economic recovery from Covid-19 pandemic at least in the short term. The war between these countries has led to economic situations in multiple countries, a surge in commodity prices, and disruption in supply chain causing inflation across goods and services, and affecting many markets on a global level.

Key milestones achieved by Bodal Chemicals during FY 2022-23? Performance of different divisions - Basic Chemicals, Dyestuff, Dye Intermediates, Caustic Soda, and TCCA? Plans for FY 2023-24?

Milestones achieved during FY 2022-23: The company has successfully completed the technology upgradation of the Rajpura Chlor Alkali unit. The company can now meet the increased Caustic Soda demand for the north India market and also cut energy costs owing to the technology upgrade. This will establish the company for the next growth phase and strengthen its Chlor Alkali chemical market position.

Performance of different divisions - Overall business performance for 9M FY23 has been weak with total revenue of Rs. 1,178 crores, a de-growth of 20% on a YoY basis. Consumption of end user industries has been sluggish due to overall slowdown in the global market. Uncertainty of the European market has further decelerated demand for the chemical scenario of the chemical industry. Revenue contribution from dye intermediates chemical stood at Rs. 258 crores in 9M FY23.

Coming to our dyestuff business end application industries like textile, leather, paper, and other dyestuff consuming industries have not been performing well during the last few quarters. The dyestuff business for nine months FY23 stood at Rs. 442 crores.

More than 50% of our basic chemicals are captively used for dye intermediates. Overall basic chemicals contributed around Rs. 134 crores. Chlor Alkali business performed reasonably well with a revenue of Rs. 229 crores for the nine-month FY23.

Plans for FY 2023-24: Completion of greenfield Saykha project and addition of Benzene downstream products at Saykha Location. We anticipate significant quantity growth in Chlor Alkali business after the successful completion of technology upgradation at our Punjab plant.

How have three subsidiaries - BCTPL, Sen-er Boya, and BCL China performed in FY 2022-23? Plans for FY 2023-24?

Most of our subsidiaries have reported a weak performance due to a soft demand except for Sener Boya which has reported total income of Rs. 56 crores in 9M FY23 and has reported noteworthy profitability. Performance of other subsidiaries has been lower than expected due to soft demand.

Plans for FY 2023-24 - Due to a severe earthquake, Turkey is disturbed and that will not allow us to do growth at Sen-er Boya. At the same time in the initial part we have to struggle for breakeven. No significant improvement is expected at other subsidiaries due to soft demand worldwide.

Revenue mix within India and outside India in FY 2022-23 and do you see any change in revenue mix in FY 2024-25?

Total revenue stood at Rs. 1, 178 crores for 9M FY23.This Included exports of 33% and domestic sales of 67%. We do not expect any significant change in revenue mix.

Capex investment incurred in FY 2022-23 and projects where it was invested? Capex plans for FY 2023-24?

For Punjab Rajpura Plant, we spent about Rs. 150 crore as far as acquisition is concerned and another Rs. 160 crores we spent for modernization and capacity expansion as well as some normal replacement Capex. In toto, we spent a total about Rs. 310 crores in Rajpura Plant.

The company has invested a Capex of Rs. 270 crores during FY 2022-23 and plans to spend Rs. 250 crores during FY 2023-24.

What's the update on the Saykha greenfield project for manufacturing Benzene Derivatives and when are you planning to restart the Sulphuric Acid & Derivatives project?

The Saykha greenfield project is progressing well and is expected to start by December 2023. Civil structure is almost completed and detailed engineering of the process plant is also completed. Major machineries have already been ordered and start deliveries of the same by June 2023. Project is going as per revised schedule.

Currently, we have put the Sulphuric Acid & Derivatives project on hold seeing the present situation. Overall demand for Dyestuff and dyes intermediates is not good considering the current global situation. Once we have decent visibility of demand for our product portfolio and the new site is stabilized, we will restart the Sulphuric Acid project.

How is the company strengthening its in-house R&D capabilities to expand innovative and customized solutions for customers? How many new products are expected from your innovation funnel in FY 2023-24?

We have modern well-equipped in-house laboratories for testing and continuous improvement of existing products, particularly to inspect the quality. Our R&D team has been working on process reengineering and downstream derivative products based on Benzene chemistry. As a result, our laboratories are actively evolving in Chlorination, Nitration, and now Benzene chemistry. Our team has developed several API intermediates for which we will consider setting up manufacturing facilities and commercial production in coming times.

Level of automation and digitalization projects carried out in FY 2022-23? How do you plan to move ahead on this front both on brownfield and greenfield projects in FY 2023-24? 

In upcoming projects at Saykha Gujarat, Bodal has acquired state-of-the-art technologies for Nitration reaction from Germany and Crystallization from Switzerland. This technological upgradation has allowed us to venture into an arena where automation and digitalization holds paramount importance because of the critical nature of such operations. This will ensure high quality products and services to our customers.

Key sustainability initiatives started by the company?

We have restructured our safety functions and enlarged their role as Environment, Health, Safety & Sustainability (EHSS) Function. We are reducing our environmental footprint, conserving natural resources and managing waste is the key to our circular economy approach. Some of our pollution control systems include Effluent Treatment Plant (ETP), Brine Treatment Plant (BTP), Multiple Effective Evaporator Plant (MEE), and Effluent Spray Dryer Plant (ESDP). The company has taken various environment friendly measures in its different units for promoting a better environment.

When is Bodal Chemicals planning to achieve Net Carbon Zero and milestones set up by the company to achieve it?

Technological advancements, across the globe, have opened new avenues for aspiring economies like India to ensure a more sustainable work ecosystem, be it in chemicals, textiles, power, etc. So this opportunity has been grabbed by Bodal Chemicals as well. By virtue of imbibing newer and greener technologies like Nitration and Crystallization, Bodal is on its way to becoming a minimalist contributor in carbon footprints in short version. However, as a firm believer in sustainable and reciprocating business, Bodal management is committed to becoming zero carbon emitter in times to come. And, for this, we promise ourselves to improve upon every day to fulfill our vision in order to create a win-win situation for the country and this universe at large.

CSR projects executed in FY 2022-23 and plans for FY 2023-24?

Corporate Social Responsibility (CSR) is a mirror that reflects the company’s internal workings from outside. The fundamental goal of Bodal’s CSR programme is to create social value via activities in the area of healthcare, education, infrastructure development, sports promotion and social concerns. Major CSR activities undertaken by the company are in the areas where the company's manufacturing plants are located.

The CSR activities undertaken during FY 2022-23 are: Promoting healthcare and sanitation; Drinking water facilities; Conducting of regular health check-ups; and Promoting sports and individual talents in various fields. Further, the company as a whole will be continuing with several future initiatives under the CSR program directly as well as through different agencies.