Interview with Meghmani Finechem Ltd
We feel that demand for derivatives is going to remain robust from a long-term perspective and it stands true for the whole chemical industry, asserts Maulik Patel, Chairman and Managing Director, Meghmani Finechem Ltd.
What is your outlook for the chlor-alkali products and value-added derivatives market in FY23?
We see a good demand for chlor-alkali in India as well as in the global market. chlor-alkali is the basic chemical that goes into various necessity products in various industries and hence the growth of chlor-alkali is linked to the GDP growth of the country. Globally also, demand for chlor-alkali has gone up as every government is spending on infra to boost the economy, which is leading to an increase in demand of alumina because of which global demand for caustic soda has gone up and there are no new big facilities are coming in this category.
Over and above the current Government of India has taken various initiatives like Aatmanirbhar Bharat, Make in India and PLI schemes supporting the expansion of various industries. Also, on account of growth in Indian consumption, as the income of the people goes up, it is leading to an increase in demand for chlor-alkali and its derivatives. Hence, we feel that demand is going to remain robust from a long-term perspective and for that matter it stands true for the whole chemical industry.
Can you brief us regarding the key steps taken to materialise the company’s vision of achieving revenue of Rs 5,000 crore by FY27?
For FY22 we ended with revenue of Rs 1,555 crore. We had announced to enter into Epichlorohydrin (ECH), CPVC resin and increasing capacity of caustic soda. We are spending on the above projects for the last 2 years and it is almost on the verge of completion. ECH will get commissioned in Q1FY23 and CPVC resin and additional capacity of caustic soda will be commissioned in Q2FY23. These new projects will contribute partially in FY23 and fully in FY24. Hence, if the current price level situation prevails, we will be able to achieve a topline of around Rs 2,800 to Rs 3,000 crore by FY24. Further, we had announced to enter into chlorotoluene & its value chain that will be commissioned in Q4FY24 and start contributing from FY25. This will lead us to a topline around Rs 3300 crore.
Further to reach to topline of Rs 5,000 crore, we would be announcing the Capex and products in a phased manner. These products will be consuming chlorine and hydrogen as raw materials, hence strengthening our integrated complex, it will be importing substitute and these products will be high-value products generating higher ROCE.
Further we are setting up R&D center which will help us to identify new molecules ultimately strengthening our position in specialty chemical segment.
How do you plan to further leverage high-margin products with low-cost capacity expansion?
MFL has created and invested well in the infrastructure of the current 60 hectares complex, with a vision to create a huge chemical complex. Basic utilities required for any plant are already available at the current complex and because of that any new product Capex that we have to do, we can do much faster and at a lower cost. Also, part of the raw material for the derivative or specialty products that we have and will enter, is available within the plant and hence improving efficiency.
Even after commissioning CPVC and ECH, we will be still left with 30% of land to utilize and hence we have further scope to leverage the investment we made in the current complex by entering into high-value products.
Currently, what are your top three strategic objectives?
First is to identify and enter into high value products which will consume chlorine and hydrogen as a raw material, which will strengthen our fully integrated complex. Our target is that in 3–4 years 90% to 95% of the chlorine should be consumed in house.
Second is to strengthen our R&D team and focus on research which will translate into identifying Specialty Chemical molecules launched first time in India, high asset turnover and a brief payback period. This will lead Meghmani Finechem to be known as a Multi-product chemical company and hence enhancing shareholder value.
Third is to strengthen the knowledge capital through selective recruitment across senior management and across the departments to take the company to the next level.
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