After establishing itself in benzene-based derivatives for over three decades, Aarti Industries diversified into toluene-based derivatives in this financial year by setting up 30,000 tonne per anum greenfield capacity at Jhagadia (Gujarat).

On peak capacity utilisation, the project could generate revenues of Rs 350-400 crore over the next three-four years according to Chetan Gandhi, chief financial officer of the company.

“We plan to leverage established existing customer relationships to cross-sell toluene derivatives for their downstream use in the products already serviced by the company – (optical brighteners, agrochemicals, pigments and pharmaceuticals). Even as these spaces (benezene and toluene-based derivatives) may appear different, there is an underlying thread running through them: they operate around the same chemistries and address the same customers, which could translate into a quicker ramp-up and returns,” said Rajendra Gogri, chairman and managing director of Aarti Industries said in the company’s FY16 annual report.

The project, which is expected to commence operations in second half of FY17, will achieve capacity utlisation of 25-30 per cent in FY17 and 70-80 per cent in FY19. The company has already commissioned an ethylation unit with capacity of 8000-10000 TPA capacity to manufacture ethylene derivatives at Dahej, which will receive input material from the toluene plant.

Aarti Industries is the only Indian player developing benzene-based fluoro compounds and would be the second largest producer of toluene-based products. The management said that the margin profile of both products are same but there will definitely be operating synergies coming in.

The company has guided for 15-20 per cent and 20-25 per cent growth in revenues and profit respectively for next three years to analysts pointed out. Accordingly, toluene based diversification will form around 10 per cent by FY20. Consolidated revenues and profit after tax stood at Rs 2,780 crore and Rs 257 crore respectively in FY16.

The company’s benezene and toluene based derivatives form part of its speciality chemicals business, which forms over 80 per cent of total revenues. The division produces polymer and additives, agrochemicals and intermediates, dyes, pigments, paints and printing inks, pharma intermediates, fuel additives and rubber chemicals among others.