Budget 2024: Chemical industry expects faster approval for product facilities, Gopal Agrawal, CEO, Anupam Rasayan

The Specialty chemicals manufacturers have faced regular headwinds led by global inventory destocking, higher China exports etc. However. Gopal Agrawal Chief Executive Officer-Anupam Rasayan India Ltd said that though headwinds have been seen, nevertheless end application demand has not come down and the headwinds are temporary. The recovery is already being seen and  Agarwal expects a complete recovery to take place by March’2024.

Agrawal says that the majority of Anupam Rasayan sales are to contracted customers. The same has ensured that the company saw a double-digit revenue growth of 10% during the first half. On the impact of destocking Agarwal is of the view that some of the customers may have delayed their shipments but the supplies will eventually happen.

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More than 70% of the company’s revenues (73%) are from contracted customers while less than 3% is on order-to-order basis.

Agrawal does not expect any impact on margins and says the margins have stayed in 26-28% range and will continue to remain so. Anupam Rasayan has long standing relationship with customers. There is transparency which is maintained with the customers on raw material costs and end product prices. Hence the margins can be maintained as higher cost get passed through while benefits of lower raw material prices are also reaped by customers.

The Indian manufacturers that have expanded capacities also benefit from backward integrations and quality of produce. They are also likely beneficiaries of China+1 and Europe +1 (cost of production is also rising for European producers). Agrawal however points that growth in the market itself is so strong that Indian producers can easily deliver a 10% CAGR (compound annual growth) even if China+1 or other opportunities are not considered.

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Anupam Rasayan has added orders worth ₹4000 crore in FY24 while also has interest shown by customers for orders worth ₹8000 Crore. The orders that it has garnered will ramp up gradually and steadily and contributions to revenues will rise steadily.

Agrawal says that while the government has provided significant support to the industry, fastening the pace of product facility approvals will improve ease of doing business. This will be amongst the budget wish lists of the industry.