Concocting The Chemistry Of Growth

Vinati Organics Ltd (VOL) is a specialty chemical company producing aromatics, monomers, polymers and other specialty products.

VOL has been able to deal effectively with the cost advantage of Chinese counterparts in the recent past. Technological advance and economies of scale have helped the company to become a key producer of specialty chemicals. VOL is amongst the largest producers of 2-acrylamido 2 methylpropane sulfonic acid (ATBS), IBB (iso butyl benzene) and IB (iso butylene) products in India. While ATBS is widely used to manufacture dispersants in water chemicals, adhesives, textile companies, mining etc, IBB is used as a pharma intermediate for Ibuprofen, which is generally used as a painkiller. IB has its applications in the fragrance industry and is used as a fuel additive. These three products contributed about 80 percent of the company’s topline in FY18.

Apart from these three products, the company also has some production in terms of TBA (tertiary butyl acrylamide), TOA (N-tertiary octyl acrylamide) and TB amine, that are IB derivatives and contribute about 6 to 7 percent to the company’s top line. The company owns and operates two manufacturing facilities at Mahad in Raigad district and Lote in Ratnagiri district in Maharashtra. VOL has presence in over 22 countries worldwide and exports its products to customers across Asia, USA and Europe.

Sector dynamics

Backed by increase in volumes, the chemical sector continued to maintain its strong performance in the first quarter of FY19. The performance was driven by the increasing competency of Indian players as the disruption of the chemical market in China continued to persist. However, as the crude oil prices had been fluctuating during the quarter, companies dealing in crude derivative products witnessed a shrinkage in their gross margins.