Packing batteries with more punch
Indian researchers are working on cells that can store more energy, last longer
Ashwin Muthiah - Bijoy Ghosh
Notwithstanding the huge consolidation in the global speciality chemical business, Ashwin Muthiah-headed Manali Petrochemicals and Tamil Nadu Petroproducts Ltd (TPL), both of which are a part of AM International, are investing in cost-saving projects and securing raw material from domestic sources rather than depending on imports. In an interaction with BusinessLine, Muthiah said the fresh investment will help the company improve margins and beat the domestic economic slowdown. Excerpts:
What are your capex plans? How you are funding it?
We will implement a capital expenditure of about ₹300 crore which will increase throughput in the next three years between the two manufacturing plants. The outlay will be towards augmenting our LAB (linear alkyl benzene) and HCD (heavy chemicals division) capacities as well as increasing PO (propylene oxide) derivative capacities.
While TPL will invest about ₹180 crore, MPL has a capital outlay of about ₹120 crore. Most of the funding will be done through internal accruals and any gap will bridged through external debt. Both companies have no long-term debt in their books.
How will the capex plan work in the light of slowdown and foreign chemicals holding sway in Indian markets?
With a conservative approach to capex, our investments are fairly moderate and almost always been brownfield. They will be by way of augmenting capacities to achieve economies of scale. We foresee an increase in domestic demand for our value added products over the medium-term period.
Being a domestic-bred company, we hold edge over competing foreign players. In speciality chemicals business we have to work closely with customers to develop products for them.
When do you see a turnaround in the economy?
There has been a general slowdown in specific sectors, including the automobile sector. Our companies have a fairly diversified market reach, which will help soften any impact of the slowdown. In fact, fresh capital expenditure planned by the company will bring down cost of operations and enable us to tide over the current slowdown, besides removing the bottlenecks and enhancing production capacity.
We have sold our non-core assets during the peak cycle of economy to de-leverage the balance sheet of the companies.
What are your plans to bring down the cost of production?
The increase in capacities should help spread the fixed costs. We intend to double the turnover and margins over next the years. The current split of commodity business and value added business is 65:35 which is expected to be 50:50 in three years. Value added business would typically give 6-8 per cent incremental margins.
We will focus on technology across the manufacturing process and build more digital solutions for sales and customer service. It is proposed to introduce innovative production processes to achieve cost savings. These improvements are expected to add 1-2 per cent to bottom line.
How is the recent acquisition of Notedome in UK helping your business?
We are integrating the UK acquisition (Notedome) benefits across the group. We will roll out new solutions across all markets giving the company significant brand and premium pricing advantages. We have already started producing a few Notedome products in India and will soon have the whole suit of the UK products manufactured in India.
From a modest sales of 120 tonnes per year, it is proposed to increase five- to six-fold per year in three years which will facilitate achieving the planned targets.
Are you looking at buying any stressed assets through IBC process?
I do not think there are any assets under IBC which have synergies with our current businesses and product suites. The IBC process is time-driven and, in most cases, it is difficult to judge what is in store. Moreover, we have to keep cash for quick closure and this may strain liquidity. We would rather focus our energies on brownfield expansion besides process optimisation of our plants.
Indian researchers are working on cells that can store more energy, last longer
To fix a broken bone, doctors often harvest another bone from the patient’s body or from someone else. It ...
Superconductors from IIScScientists at IISc Bangalore have invented a device with a nanocrystal structure ...
Engineering and construction giant L&T has won a licence from the Council of Scientific & Industrial ...
Digital money-lending platforms may be hassle-free and convenient, but look before you leap
Both the Nifty 50 and the Sensex continue to record new highs, but stay alert
Ensure that the investment thesis based on which you bought the IPO still holds good
Care Health Insurance’s new rider offers no great benefit. We review its pros and cons
India is ready with two vaccines to beat the deadliest virus of recent times. The immunisation drive, however, ...
A crackling fire, a tusker and a family scandal bring together a group of fellow travellers in Kerala
Although they match their Gujarati, South Indian and North Indian counterparts bite for bite, Maharashtrian ...
Actor-director Seema Pahwa spent her time in pandemic 2020 building stories around the eccentricities of joint ...
Digital is becoming dominant media, but are companies and their ad agencies transforming fast enough to make a ...
Slow Network, promoted by journalist-lyricist Neelesh Misra, pushes rural products and experiences
How marketers can use the traditional exchange of festive wishes meaningfully
For Fortune, a brand celebrating its 20th anniversary, it was a rude shock to become the butt of social media ...
Three years after its inception, compliance with GST procedures remains a headache for exporters, job workers ...
Corporate social responsibility (CSR) initiatives of companies are altering the prospects for wooden toys of ...
Aequs Aerospace to create space for large-scale manufacture of toys at Koppal
And it has every reason to smile. Covid-19 has triggered a consumer shift towards branded products as ...
Please Email the Editor