Chemplast Cuddalore Vinyls Limited

Chemplast Sanmar signs deal with a global firm to supply an advanced intermediate

May 11, 2023

Chemplast Sanmar Ltd. has announced that its custom-manufactured chemicals division has signed a letter of intent (LOI) with a global agrochemical innovator to manufacture an advanced intermediate.

The name of the company has not been disclosed. The LOI covers a period of 5 years.

“We anticipate commercial supplies to start from the Q4 of FY24. This new product will be manufactured at our new multi-purpose production block which is on track for commissioning during the second quarter of FY24,” Krishna Kumar Rangachari, Deputy Managing Director, Chemplast Sanmar Ltd said in a statement.

This development is in continuation of its earlier announcement concerning another LOI (signed in November 2022 with a global innovator company for supplying an advanced intermediate for a new active ingredient), and its announcement in February 2023 to kick-start the next phase of expansion of the multi-purpose facility.

The custom-manufactured chemicals division produces what customers demand. It produces advanced intermediates for agrochemical, pharmaceutical, and fine chemical innovators. The division has invested in state-of-the-art production blocks, pilot plants, and R&D facilities to handle a wide range of chemistries and processes.

 

Chemplast Sanmar to expand plant in Krishnagiri, plans ₹680 cr capex

February 13, 2023

Chemplast Sanmar sets great store by ‘custom manufacturing’ — producing what a customer asks for – and plans to spend ₹680 crore in sprucing up its Custom Manufactured Chemicals (CMC) Division. The capex programme is spread over the next 15 months with a cash balance of ₹1,160 crore. 

This was the central message of the company delivered through an investor presentation that accompanied its October-December 2022 quarter financial results. 

Chemplast Sanmar’s primary product is PVC resin, which accounts for 60 per cent of its sales, but it also manufactures a range of chemicals such as caustic soda, chloromethanes and hydrogen peroxide. 

But Chemplast is giving a thrust to ‘custom manufacturing’, expanding its 1,068 tonnes per annum plant at Berigai, near Krishnagiri, Tamil Nadu. This plant produces whatever chemicals the customer asks for in the areas of agrochemicals, pharmaceuticals and fine chemicals. Its capabilities include “a range of chemistries” such as cyanation, hydrogenation and liquid purification.  

The company believes that custom manufacturing has “significant entry barriers”, such as approvals by customers and expectations from customers of process innovation and cost reduction. 

In a press release issued on Saturday, Chemplast Sanmar’s Managing Director, Ramkumar Shankar, said the company had “received confirmation from one of our customers” that it had been selected for the supply of an ‘advanced intermediate’.  

“Based on this development, along with the announcement in the previous quarter on the signing of an LOI for another intermediate, and a healthy pipeline of products, we plan to kick-start the next phase of expansion of the multi-purpose facility immediately,” the release said.

Rising energy costs hit Q3 profits 

Chemplast Sanmar has reported an 89 per cent fall in its net profit for the October-December quarter of 2022, compared with the corresponding quarter of 2021 — to ₹27 crore from ₹237 crore — even though turnover fell only 18 per cent to ₹1,189 crore from ₹1,452 crore. 

The company attributes this to “headwinds for most part of the quarter”. Falling prices of finished goods coupled with increase in energy costs, which went up by ₹37 crore during the quarter, impacted profits. A revival of PVC prices came only in the end of December, the release said. 

PVC prices on rise

The situation for the PVC segment is turning favourable again, driven by robust domestic demand and China re-opening, it said.

PVC prices have started moving upwards after nine months of falling prices, channel inventory has dried up and volume off-take is back to normal.  

We expect the demand in FY23 for Suspension PVC in India to touch the pre-pandemic levels of 3.3 million tonnes, a 16-17 per cent growth over FY22. Overall, with recovery in PVC prices and healthy demand trends, we expect our Q4 FY23 performance to return to a growth trajectory,” Shankar said in the press release. 

On the NSE on Friday, the Chemplast Sanmar share, of face value of ₹5, ended at ₹432.25, which was ₹1.55 (0.36 per cent) lower than the previous close.