One of India’s largest special paste PVC resin manufacturers intends to raise 3,850 crores through a public offering. Chemplast Sanmar is a specialty chemicals manufacturer in India, focusing on the production of specialty paste PVC resins and other custom chemicals for pharmaceutical and agrochemical companies. The company is one of the leading manufacturers of special paste PVC resins, mainly used in the manufacture of leather fabrics. There are no major substitutes for this product, which gives the company an advantage over other products.
CSL is also the third-largest manufacturer of caustic soda and the largest manufacturer of hydrogen peroxide in South India. In addition, the company also produces methyl chloride and refrigerant gas. It has four manufacturing plants, three in Tamil Nadu and one in Pondicherry. In March 2021, the company acquired 100% of Chemplast Cuddalore Vinyls Limited (CCVL), which was previously separated from the company in the fiscal year 2018. CCVL is the second-largest manufacturer of suspended PVC resins in India and the largest manufacturer of suspended PVC resins in India.
In South India, the annual installed capacity is 300 kg. The company is part of the Sanmar Group, which is one of the oldest and most famous corporate groups in South India, and sponsors the company. The well-known international investment company “Fairfax India Holdings” has invested in the group since 2016. Compared with other developing and advanced economies, the penetration rate of India’s special paste PVC resin market is very low. Almost half of India’s demand comes from world manufacturers.
Therefore, the company also plans to add 35 kg of special paste PVC resin production capacity, which is expected to be online in FY24. The company is vertically integrated. This means that it produces raw materials for special paste PVC resins, reducing your dependence on external suppliers and controlling costs. The company reported a profit before tax for the 21st fiscal year of 4.13 billion rupees. According to a CRISIL report, it is estimated that between 2015 and 2020, the national specialty chemical industry will grow at a rate of 5% to 6%. This will be driven by government initiatives such as increased domestic consumption, increased exports, and “Made in India”. The company also plans to increase its specialty paste PVC resin production capacity by another 35 kg, which will be put into use in FY24. Specialty chemicals are intermediates used in the manufacture of other products. Therefore, the existence of highly recognized brands is limited. 38% of the company’s revenue comes from its top 10 customers. However, it has not made firm commitments in the form of long-term supply agreements with its major customers. Since the company is engaged in chemical manufacturing, it is bound by many important regulations such as the Indian Boiler Law, Explosives Law, and Drug and Cosmetic Law.