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MOSCOW (MRC) -- Sudarshan Chemical
Industries Ltd (SCIL), the largest pigment manufacturer in India (with >35%
market share) is aiming to achieve the top 3rd position globally by market share
by focusing on its core business, developing R&D, expanding to new markets,
and improving manufacturing and operations, according to Kemicalinfo.
Currently, SCIL is the
fourth-largest pigment manufacturer by market share,
globally.
Having this global scale is essential to success in
pigments as it leads to sustainable growth, cheaper feedstock, and access to
cutting-edge technologies, a report published by HDFC Securities
said.
“SCIL’s current Capex cycle was started in FY17. It has incurred
INR 5.5 billion over FY17-20 and planned for INR 3.5 billion over FY21-FY22E.
While a significant portion of Capex targets growth, some part of it is
targeting margin expansion. We expect asset-turnover to be ~2.3-2.5x at peak
utilization” the report said.
Further, SCIL is enhancing its product mix
towards higher-margin and higher-realisation speciality products such as azo
pigments, cosmetics and pigment dispersions vs. non-speciality ones. It plans to
launch ~25 products globally.
Two major global players shifting
away from the pigment business could act as a tailwind for Indian pigment
manufacturers. “We believe SCIL is in a sweet spot to seize this opportunity by
offering products similar to those of global players,” the report
added.
The report states that SCIL opened a subsidiary, Sudarshan Japan
Limited in Japan to serve the Japanese market last year and also has plans to
expand in South East Asia and South Korea. “We expect revenue to grow at a 14.8%
CAGR over FY21-24E given SCIL’s plans for geographical expansion and new product
offerings,” it added.
The company launched high-performance yellow
pigment in 2019 which SCIL developed the entire technology in-house and launched
it within eighteen months of inception, the report added.
According
to the report, SCIL has a global distribution network, with eight sales offices,
around 60 channel partners, and sales in over 85 countries. It has also set up
marketing subsidiaries in Europe, North America and Mexico to support revenue
growth from these markets in coming years.
Its wholly-owned
Chinese subsidiary is engaged indistributing pigments in local markets and
improving sourcing efficiencies.
SCIL sources ~30% of its raw material
from China. Pigment exports of the company constituted 50% of total sales in
FY20, up from 32% in FY10.
Export contribution to revenue is expected to
go up with rising production of high-performance and effect pigments and global
expansion.
As MRC wrote
previously, in H2 October, 2020, Clariant has relaunched the sale of
its pigments unit, after putting the auction on hold as the coronavirus pandemic
engulfed the world and disrupted talks with prospective buyers. The
Muttenz-based company sent out information packages to prospective buyers of the
unit in October, and people familiar with the preparations added that
buyout groups including PAI, Lone Star, Triton and SK Capital are expected to
express interest.
We remind that in early September, 2020, the
Competition Commission of India (CCI) cleared
SABIC BV's incremental acquisition of a 6.51% shareholding in Clariant AG. The
transaction, which will raise SABIC's stake in Clariant to 31.5%, is part of
SABIC's growth strategy in specialties.
We also remind
that Russia's output of chemical products rose in September 2020 by 6.7% year on
year.
At the same time, production of basic chemicals increased year on year
by 6.1% in the first nine months of 2020, according to Rosstat's data. According
to the Federal State Statistics Service of the Russian Federation, polymers in
primary form accounted for the greatest increase in the January-September
output. September production of primary polymers decreased to 852,000 tonnes
against 888,000 tonnes in August due to shutdowns in Tomsk, Ufa and Kazan.
Overall output of polymers in primary form totalled 7,480,000 tonnes over the
stated period, up by 16.4% year on year. |
