For over two decades, the Vadodara-based Chemcon Speciality Chemicals Limited (CSCL) has been in the business of manufacturing chemicals. It manufactures specialised chemicals, such as hexamethyl disilazane (HMDS) and chloromethyl isopropyl carbonate (CMIC) which are predominantly used in the pharmaceuticals industry; and inorganic bromides, namely calcium bromide, zinc bromide and sodium bromide, which are used as completion fluids in the oil field industry (oil well completion chemicals). The company has an installed manufacturing capacity to manufacture 4,200 tpa of HMDS, 600 tpa of hi-purity HMDS, 1,800 tpa of CMIC and 14,400 tpa of oil well completion chemicals.
As per a Frost & Sullivan Report, CSCL was the only manufacturer of HMDS in India and was the third largest manufacturer of HMDS worldwide in terms of production in the calendar year 2019. The company has an opportunity to grow at a compounded average growth rate (CAGR) of 15-20 per cent between 2019 and 2023. While Chemcon was the largest manufacturer of CMIC in India and the second largest manufacturer of CMIC worldwide, in terms of production and capacity in calendar year 2019. The F&S report adds that, Chemcon was the only manufacturer of zinc bromide and the largest manufacturer of calcium bromide in India, in terms of production in calendar year 2019.
“Meanwhile, the company has recently developed two new products – 4-chlorobutyryl chloride (4CBC) and 2,5 DHT (1,4-dithiane-2,5-diol) – and has already executed the first sale of 4CBC in July 2020. The company’s manufacturing facility is located at Manjusarnear, Vadodara in Gujarat,” explains Kamalkumar Rajendra Aggarwal, CMD of the company. He holds a diploma in petrochemical technology (plastic technology) from the Maharaja Sayajirao University of Baroda, Gujarat and has over two decades of experience in the specialised chemicals industry.
The units which consists of seven operational plants of which two plants are dedicated to the manufacturing of HMDS and ancillary products (including one plant dedicated to the manufacturing of high-purity HMDS, one multipurpose plant, currently being used for the manufacturing of HMDS and other pharmaceutical chemicals.
The company’s revenue for FY20, from operations of Rs262.05 crore with EBITDA of Rs70.26 crore and profit after tax (PAT) is Rs48.85 crore. Between FY18 and FY20, it has grown at a CAGR of 29 per cent in sales, 25 per cent in EBITDA and 36 per cent in PAT. As on March 2020, its total borrowing was Rs44.51 crore, while the debt to equity ratio was 0.31 and the interest coverage ratio was 14 times. While, the return on equity was 34 per cent, which is higher than the industry average of 21 per cent, the revenue from exports (including deemed exports) contributed 39.78 per cent.
The company’s customer base includes Laurus Lab, Hetero Labs, Aurobindo Pharma, Macleods Pharma, Lantech Pharma, Vivin Drugs, Ind Swift Laboratories, etc in the domestic market. Its products are shipped to countries including the US, Germany, Italy, South Korea, China, Japan, UAE, Serbia, Russia, Spain, Thailand and Malaysia. Exports contribute, approximately 40 per cent in FY20, to the total revenue.
“We believe that the level of technical skill and expertise that is essential for handling such chemicals can only be achieved over a period of time, creating a further barrier for new entrants. India being a net importer of CMIC and HMDS and the current trade dispute between the US and China & India and China have affected China’s HMDS/CMIC exports to the US,” says Aggarwal.