Madhav Prasad Aggarwal, Promoter, Sajjan India Ltd.
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.
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