Indian specialty chemical products will make the highest ever capacity expansion investment in fy2019 and continue to make capital expenditure to meet the growing demand of domestic and foreign markets. Earlier, factories in China, the world’s largest producer and exporter, were closed.
According to data compiled by sbicap securities, special companies such as aarti industries, fine organic industries, himandri specialty chemical products and bodal chemicals had revenue of 92 billion rupees in FY20, compared with 14 billion rupees in the previous financial year. These companies plan to spend 50 billion rupees and 65 billion rupees in FY20 and fy21, respectively.
In the past few years, the demand of special chemical products companies in India has increased sharply. As a result, Indian chemical companies’ profit margins are likely to remain strong in the next few years due to improved demand.
Most importantly, these specialty chemicals companies have diversified their product portfolio to meet customer needs.
Function. The expansion of toluene derivatives and new long-term contracts are expected to drive the company’s next phase of growth.
With the structural transformation from synthetic products to natural derivatives, the production capacity of fine organic industry is expected to more than double to 131000 tons per year by 2021 to meet the demand.
Himandri’s flagship product, coal tar pitch, is well positioned for a strong recovery in demand. At present, the company is expanding its business to higher value-added products, such as special carbon black, with an annual installed capacity of 20000 tons by fy21.
Similarly, bodal chemical is looking at collaborative expansion into related products, such as dyes and thionyl chloride.
“Strict pollution regulations disrupt and slow down China’s chemical production. Companies are either transferred to specialized areas or restricted in production. Both of these situations are likely to increase the manufacturing costs of Chinese enterprises. Companies that used to buy from China are now looking for alternative sources of supply, such as India, “said dibesh Mehta, an analyst at sbicap securities.
“China’s pain is India’s gain. The decline in supply from China provides a huge opportunity for Indian enterprises to increase their supply to the world market and open up new markets for sustained exports. ” Punit makharia, chairman and managing director of shree Pushkar chemical and fertilizer Co., Ltd.
At the same time, cheap labor costs and extensive government support will also help India’s specialty chemical industry. To support the industry, the centre allows 100% foreign direct investment to enter the industry.