Industry trends and challenges in the segments Silox India is focusing on?  

We are primarily into the inorganic chemical space serving diverse end market segments like Textiles, Automotive, Consumer, Paints and Coatings etc. 2023 has been a mixed bag. The textile industry has been most impacted, especially the denim segment, factors including global recession, war impact, reduction in demand from North America and Europe, fluctuations in cotton prices and unpredictability of the business badly impacted the demand from textiles. However, the market started stabilizing and picking up and the capacity utilisation improved from 40-50% to around 80% in Jan – March 2024 quarter. The biggest challenge we are facing is whether it's going to be sustained for a longer period of time at this level. The domestic demand for textiles in India seems to be more stable. Also, the demand for synthetic textiles is more predictable and continues to be quite strong. Overall, the textile industry is a mixed bag and while it was tougher, it's getting better.  

We primarily supply Zinc oxide and Zinc derivatives to the automotive market (tyres and tubes). We have seen sustained good demand from both the OEM and retail segments. Retail has seen some impact due to unavailability and high price of raw materials a year ago but overall the industry seems to be positive in terms of demand.  

Moreover, the coatings and infrastructure market is seeing robust demand due to continued investment by the Government of India and private players in infrastructure like railways, airports and roadways.

We see a sustained demand both from the domestic market and global key players whom we work with.  

In the consumer segment, we are in unique market segments like jaggery processing, dates processing, etc. We are seeing moderate increase in demand as people are getting more health conscious consuming more jaggery than white sugar. However, availability of sugarcane but for this particular industry getting limited and hence would say this market is more muted.  

Combining all these different factors we have seen moderation in export but robust domestic demand. On overall performance, we had pretty strong financial performance even though our top line have seen moderation but improved bottom line due to efficiency improvements, improved Zinc valorisation, and introduction of value added product in Zinc derivatives increased our bottom line.   

Almost 80% moderation has happened globally. Do you see things going back to 100% if it goes as per plan?

We were hoping to get better, but unexpectedly Red Sea issue impacted significantly both from freight point of view which is more than five times and shipping times which has doubled affecting  the competitiveness of the industry. But looking forward we are positive and most of our customers  were seeing an increase in the demand in short term, but considering dynamic geopolitical situation, visibility is limited and it is very difficult to predict beyond a quarter.  

How has Silox India performed in FY 2023-24 and what's your expectation in FY 2024-25? 

We had a good  year considering the challenges during the year. We have seen a significant drop in demand for Sodium Hydrosulphite (Hydros) products which primarily gets into the denim market but it has been compensated by the robust demand for value based products. We are able to deliver for other markets like automotive and industrial segments. We were down on the top line, but we have fared better on the bottom line primarily due to efficiency improvement, commercialization of some value added products and addition of new segments.

Do you think that FY 2024-25 would be compensating for whatever losses that you made in the last fiscal?

We are positive that the demand will pick up and the situation will continue to improve unless we see any other major disruption. From the domestic market side, once the election is over, we see there is going to be continued focus on enhancing infrastructure. We are positive about being able to capture whatever the loss, not in the next quarter, but overall for the financial year.

Any numbers with respect to FY 2023-24?

Last year, we saw a double digit growth in profitability. We have seen a single digit decline in top line and that's primarily to do with the metal pricing. We don't disclose individual unit numbers, but we had one of the strongest financials in terms of the bottom line performance.  

What's your cumulative production capacity of all the three plants (Silvassa, Ekalbara, and Atladra)? How do you see this capacity changing at the end of FY 2024-25? 

We completed a significant expansion of Zinc powder capacity in Silvassa. In 2023-24, we were able to fully utilize the capacity of the Silvassa plant. We added new capacity Hydro Zinc in our Ekalbara site and expect additional capacity to be helpful in terms of meeting future growth. Overall, our capacity has increased by almost 10% with the debottlenecking and with efficiency improvement initiatives. We aim to further increase capacity for our zinc powder by 8,000MT/year, we have received the board approval and will be executed during FY 2024-25. 

What is the total capacity that you have right now? 

The total capacity will be close to 170,000 kilo tonnes per year. We continue to invest in expansion and will be able to enhance 5-7% of the capacity during the current financial year.  

What was the investment that you made last year and what's the plan for this year?

We expanded a new line for our Silvassa facility that was 7,000 tonnes capacity expansion and also executed debottlenecking for our overall capacity. Both of them were growth Capex. In terms of overall Capex which includes operational debottlenecking and growth Capex, we invested around Rs. 30-40 crore last year and we expect to continue to do the same. We have our new site coming up near Dahej and there is going to be a significant amount of Capex that we will be spending.  

Strategy for India to become a global manufacturing hub for the segments that you are in and what role does Silox India play in making it a reality? 

Silox India has been a significant contributor to the overall turnover of chemicals globally and will see the highest capital investment in the next two years. In terms of being global and relevant, Silox India has almost 40% of its produce being exported to more than 65 countries. We have a significant presence already in exports. Our major focus will be on enhancing our Sustainability footprint, Improving efficiency and Safety at operations and new Product Innovation. These are the three fundamental blocks on which our future investments will be based. Our major Capex is being invested in enhancing our sustainability footprint in the areas of power, water and waste reduction.  

In FY 2023-24, Silox India acquired a 35 acre land parcel at Payal industrial Park? What's the Capex that you are investing and what products are you planning to manufacture?

We have successfully completed the acquisition of the land parcel in the last quarter of last year. The plan is to set up a new greenfield site for all our Sulphoxylate products and Zinc Oxide and Zinc derivatives. This will be a greenfield project and will be consolidating product line currently produced in Atladra site to the new site.

The new facility will use new technology and significant improvement in terms of overall ESG impact and  will be more self-reliant including backward integration. In terms of the capacity, we are going to build almost 30% additional new capacity compared to our existing product line for these products. We expect the construction activity to start by the third or fourth quarter of this year and we expect to start commercial production and regular supplies in the second quarter of 2026.  

Any numbers on the Capex, what amount of investment you are planning to do in the next two fiscal years?

Including the land, we will be investing more than Rs. 500 crores on the new site over next three years. Essentially, this plant is going to be inherently safer, ESG compliant, Digitisation and Automation of critical operations, and we want it to be the factory of the future. At the same time, it is going to be much more backward integrated meaning more self-reliant.  

Silox India has been focusing on innovation. What is the next product you are planning to take to the global level?

We are putting more and more focus in terms of delivering value-added new Zinc derivatives which will help in enhancing customers' product performance. We have quite a few new products in the pipeline which we will be commercializing soon catering to the coating industry, rubber industry, industrial application and automotive industry. In the medium term, we are going to see a lot of new products coming from Zinc derivative product pipelines. For the long term, we have new innovation for recycling Lithium ion batteries by capturing the value and giving back to the industry for future use.

This is our new piece of business where we are putting a lot of our R&D effort in terms of technology and also getting into commercial operations. We have earmarked significant investment in R&D to enhance the footprint of our processes. We have taken new initiatives based on the theme Reduce, Recycle and Reuse. Our future facilities are more focused on digital tools and it’s about enhancing what we were with the current facilities.

In terms of recycling of Lithium ion batteries, we have moved from lab to pilot plant scale and are able to produce a tonne of material. We are in the process of getting the material qualified from a third party and from our key long term customers. We are pretty much close to finalizing the technology development and expect to have a new commercial facility start operating from 2027. We are in the process of completing the acquisition new land in Paradip (Orissa) and will be making an announcement once we have the final agreement.  

New technologies which you are focusing on which will deliver best quality products?

We have been focusing on reducing our energy intensity. For example: earlier when we were using Zinc powder, we now use specialized grade which will enhance efficiency of the product and reduce energy consumption by five percentage points. We have been putting a lot of R&D effort in terms of water reduction and recycling, reuse both from process and non-process areas.

At one of our sites, we are able to reduce the total water consumption, especially in the process area by 38% in the last two years. This comes from not just one initiative but a combination of almost 40 different programmes. Since water is one of the main resources, we are putting a lot of focus on that one. We are using more recyclable materials to generate less waste and also reduce the hazardous chemicals, improving the tolerances and the tightness in the control of the process.

Sustainability roadmap of Silox India and when are you planning to achieve Net Carbon Zero?

Being a European entity, there are declaration requirements starting from 2025-26. Therefore, we need to report all our ESG initiatives at the global level. We are working towards that roadmap and have already started taking certain initiatives. We are one of the major steam producers and earlier it used to be produced 100% from fossil fuels. Today, close to 70% of steam generation is done through a bio- waste fuel, currently our energy mix is both biofuel waste and gas.

Going further, we will be reducing even the gas requirement to sustainable energy. In terms of the electricity, we were almost 1-2% of the sustainable energy three years back. We are looking at fulfilling 55% of our energy needs from solar and wind by September 2024. This will have an impact in terms of 18,000 to 19,000 tonnes of CO2 reduction considering the energy mix of what we buy just for the electricity. We have significantly reduced consumption of water in all our plans.   

Manpower that you are planning to add for two new plants?

We will be recruiting quite a few people to work for the design stage for the new project and for the battery recycling project. There is going to be a significant new recruitment coming up in the next two to five years. In the current year, we are going to be limited in number where we will select a few high level project management professionals. Our major recruitment is going to be in 2025 and 2026.