Vinati Saraf Mutreja, MD & CEO, Vinati Organics Limited (VOL), talks about key growth drivers for the company, CapEx, PLI Scheme and export market among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

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Q: How 2021 will be for your company and tell us about the three growth drivers for your company in 2021?

A: The next 5-10 years is going to be very good for the chemical sector. The micro-factors that you have pointed out like things are going to be Atmanirbhar Bharat from China and duties are being imposed. And, globally, companies are looking for alternative suppliers other than China. So, these factors will definitely benefit the Indian chemical companies. As far as the year 2021 is concerned, although COVID has an impact on 2020 and there was a lockdown, we make several products that go in different sectors. The demand for a product that goes into the pharma sector was very high this year due to stocking. But there was a slight slowdown in the second product that is used mainly in the oil & gas sector till November but from December when the economies started opening up, there is a news related to vaccination and vaccination will happen in 2019, so crude prices are going up, crude exploration is increasing, so we are seeing a boom in this product since December.

So in 2021, we have a very very positive outlook for this product and ATBS as well. Coming to our other products, the demand for Isobutylene (IB) that is used in agrochemicals has been stable. Besides, our new products will come on stream in 2021 and they are butyl phenols and they are used in various industries like antioxidants, fragrance, plastic additives. That plant has started at a good scale recently in November-December, so, its potential revenue will be seen in 2021. So, 2021 more or less, I would expect compared to 2020 should be at least 20-25% higher. 

Q: What kind of CapEx is being lined-up? Many companies are applying under PLI scheme and will your company be interested in it?

A: As far as CapEx is concerned, then we have announced a CapEx of around Rs 200-250 crore this year of which about Rs 50 crore will be for expanding our existing product and remaining Rs 150 crore will be for new products. Currently, the products as I have informed about butyl phenols then we will be adding one-two more butyl phenols, which are used in antioxidants. This is a CapEx. When it comes to PLI scheme, then we have also applied for PLI and two schemes of PLI is relevant for our company. 

Durg PLI Scheme – where drug intermediaries, like we make IBB for ibuprofen, similarly, for many years, we are working on a product called PAP for Paracetamol. So, we have applied for that under the PLI scheme. 
The second PLI Scheme, which is about to come is more specific for the chemical sector and there are two-three chemicals of our interest but the scheme has not been finalized yet. When it is finalized, we will apply in it too. 

Q: How the export market is looking? Ibuprofen prices have reduced a bit but IBB prices are still stable. So, what is your view on IBB prices in 2021 and what is your outlook on the margins of the company for next year?

A: 75% of our company’s revenue comes from exports, so, the export market has been more or less strong for us. We export to North America and even to China. So, there is no problem. As you are talking about IBB then you have to realize that IBB is just 20% of the cost of Ibuprofen, so really the price of IBB is not determined by the price of Ibuprofen. IBB prices are determined by our raw material, which is toluene and propylene, which comes from crude. SO, there is not a big change in prices neither there is any change in the margin. 

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