Sudarshan Chemicals plans Rs 1000 cr investment in five years

Pune based pigment and agro chemical maker Sudarshan Chemicals is planning to invest Rs 1000 crore over the next five years. The company is aspiring to become the fourth largest company in the world.  Its products primarily serve the coatings, plastics, inks and cosmetics markets.  It is one of the leading manufacturers of color & effect pigments in India. 

"We have signed a memorandum of understanding (MoU) with Maharashtra government of Rs 1,000 crore of investment in the next five years. The first stage of the investment has already kicked off and we are already seeing very good utilisation of those capacities," said Rajesh Rathi, deputy managing director, Sudarshan Chemicals. 

 

Sudarshan Chemicals is eying international markets to gain fourth largest position. The global market of pigment manufacturing is of $5.5 billion. It has a dominant 35 per cent domestic market share and are seeing the opportunities towards high margin pigment products with sharpening focus in Europe and North America. 

The company would desire to become fourth largest global player in the next three years.  To achieve this, it has started globalising its business from the last two-three years. Its changing the product portfolio to high performance pigments and which go into coatings and also effect pigments which go into cosmetics. Most of these products have a much better margin than the traditional pigments especially in the international markets. 

"We are already a dominant player in India and the Middle East market, but we want to majorly increase our market share in international markets because that is where 90 per cent or more of the market is. Our aim is to gain 10 per cent market share in the international markets" adds Rathi.  

This year, the company is planning to introduce new products in the market. It aims at 15 to 20 per cent  increase in sales with these products in the next two years. In the last seven years, Sudarshan Chemicals has introduced more than 100 products.  It has two manufacturing plants in Maharashtra, one is in Roha and other is located at Mahad.

The other three global players in the market are German giant BASF,  Switzerland's Clariant and Japan's DIC Corporation. Domestically, it competes with Pidilite Industries.  

Sudarshan Chemical's FY16 revenue growth 15.7 per cent to Rs 1,409 crore from Rs 1,218 crore in FY16. Its EBIDTA rose 29.5 percent (YoY) to Rs 167 crore in FY17. For FY17, the company is betting on uptick in approvals for its operations in Europe, Asia and North America to clock a higher growth than FY16. Sudarshan Chemical, which has a capacity utilisation iof 80-90 percent tops the Indian pigment manufacturing market with a share of 35 per cent. 

Speaking about the expansion plans Rathi said that the company has required infrastructure and already expanded for the utilities and boilers. 

"Our exports today would be about 60 percent would be exports and 50 percent would be India market. In near future, we see the export percentage to go much higher up, not that our focus from the India market is going to go away, but 95 percent of the market is out of India," he said. 

Plus, it has planned and executing several strategic initiatives within the company to grow the margins and especially a lot of focus on the return on capital employed and the earnings before interest, taxes, depreciation and amortisation (EBITDA) margins.