Chemplast Sanmar Ltd, a well-known chemical manufacturer, anticipates reasonable growth of 20-25% in its custom-manufactured chemical segment for the current fiscal year. However, the company foresees certain challenges in its other business sectors in the short term.
Ramkumar Shankar, MD commented, “Despite global cues of weakness in the end markets, the enquiries from potential customers of our custom manufactured chemicals division remain robust. To effectively address the growing demand, we continue to enhance our capabilities. Overall, this business is on track to achieve 20-25 per cent growth this year”.
The company recently signed its third Letter of Intent (LOI) with a leading global agrochemical innovator for the production of a new active ingredient (AI). This development has provided the company with a high level of confidence in achieving consistent capacity utilisation for their new production block. As a result, the company is expecting to generate ₹1,000 crore in revenue from this business within the next 3-4 years.
Phase one of the newly established multi-purpose production block in Berigai, Tamil Nadu, for the custom manufactured chemicals business commenced operations in the second quarter of this fiscal year and is currently undergoing a ramp-up process. Phase two of this project is anticipated to become operational by the end of the current fiscal year.
As reported by businessline, the company has allocated a capital expenditure of ₹680 crore for these expansions, which will significantly enhance the division’s production capacity from 1,068 million tons per annum (MTPA) to approximately 4,500 MTPA. The deliveries for the two molecules covered by the recently signed LOIs are scheduled to start during the latter half of this year.
Shankar further said, “The recovery in the PVC business will be gradual over the next two or three quarters. The imports of both suspension and paste PVC witnessed an increasing trend towards the end of Q2 with a surge in imports from China. The trend is continuing in this quarter as well, which is resulting in some correction in prices in October. While PVC prices have started moving up again from the end of October, the scale of the drop in the early part of October will impact our margins in Q3”.
