Interview with Vishnu Chemicals on the factors driving the company's remarkable growth

resr 5paisa Research Team

Last Updated: 19th April 2023 - 06:00 pm

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In this interview with Siddartha Cherukuri, Joint Managing Director of Vishnu Chemicals Limited, the company's impressive performance in Q3FY23 was discussed. 

The company witnessed an 11% increase in net sales and a whopping 29% surge in net profit. Additionally, for the first nine months of FY23, net profit surged by a remarkable 91% YoY. In this interview, Siddartha Cherukuri sheds light on the contributing factors to this outstanding achievement and outlines the primary drivers of the company's growth. He also assesses the company's competitive standing in the chemical industry and shares the strategies that the company plans to implement to leverage its strengths for future growth. 

What were the contributing factors to Vishnu Chemicals' outstanding performance in Q3FY23? 

Vishnu Chemicals is a global speciality chemicals business focused on manufacturing speciality chemicals that are critical and essential in applications across the Pharmaceuticals, Consumer and Industrial sectors. Our business model is built on the tenets of structural growth opportunities, differentiated premium assets, strong cash generation, and a focus on the long-term creation of ROCE. 

The key contributing factors to our performance are: 

  • Scale and technology hard to replicate: The Company's improvisation strategy is underpinned by a strong commitment to research and chemistry. With years of perseverance, we have built a world-class infrastructure in an industry with high barriers to entry. 

  • Customer stickiness: Customers rely on Vishnu for their consistent supply as performance ingredients are critical to their end products. 

  • Differentiated product mix to mitigate cyclicality: Vishnu Chemicals has a strong moat of being a leader in a niche industry; our products continue to see robust demand across varied end-user applications in domestic and export markets. 

  • One of its kind backward integration: The backward integration plant is a milestone for the company; it's a very strong asset and it implies that we will be healthy and profitable while focusing on sustainability. 

  • Strong cash generation: We generated Rs 110 crores of operating cash flow during the first nine months of FY23, higher than the PAT during the same period. In the last five years, the company has generated positive Free Cash flow every fiscal on a consolidated basis. 

What are the primary factors driving the company's growth, and what strategies do you plan to implement to leverage them? 

The primary factors driving the company's growth include principled and value-driven experienced management, the size of our operations which is hard to replicate, our commitment to building sustainable and environment-friendly business practices in our day-to-day operations and mitigating cyclicality through diversified product portfolio, strong customer base, and varied geographical presence. 

We plan to continue focusing on our key priorities to operate with diligence and responsibility and create long-term value for our stakeholders. We are fortunate to have a strong foundation, which is centred on EBITDA and PAT expansion through complex manufacturing of diversified performance-enhancing speciality chemicals. With a disciplined approach, we will continue to expand our capacities and increase our global market share to emerge as a global leader in the next five years. Our unwavering focus will remain on manufacturing, and industry leadership in terms of ROCE. 

How would you assess the company's competitive standing in the chemical industry, and what do you believe are its major strengths and weaknesses? 

As per a leading industry report, there have not been any new players in the chromium chemicals industry for the past 25 years. Whereas our persistence and commitment to maximize the benefits of our scale and experience in chemistry are reaping benefits.

 

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