There has also been strong domestic demand, which is our main region of activity and we have been excited about the opportunities that have arisen since the beginning; says Aarti Jhunjhunwala, Executive Director, Fineotex Chemical Ltd
As the chemical industry enters 2022, strong demand for base and specialty chemicals is expected to keep prices high throughout the year. In your opinion, what major trends are chemical manufacturers expected to adopt in the coming year?
As we have seen in the past, there has been an unprecedented shortage of container availability and skyrocketing freight costs, resulting in a shortage of raw materials. In addition, some of the important international ports in the Far East are blocked, indicating that similar trends may occur in the future, thus affecting the supply chain. Key trends chemical companies should establish include strong supply chains and back-to-back orders to cover position in case raw material prices fall.
In FY22, 42% of Fineotex Chemical’s revenue was from international operations, while 58% was from domestic operations. Does the company plan to increase the contribution of international activities to the revenue mix?
It depends on several factors such as the margin of imports over domestic sales; export opportunities; government policies, etc. We will explore all arbitrage opportunities to maximize our bottom line and also grow our revenue to capture market share to establish our leadership position. There has also been strong domestic demand, which is our main region of activity and we have been delighted with the opportunities that have arisen since the beginning.
Fineotex Chemical’s diversification into the health and hygiene segment has helped the company gain traction in the detergent market. Can you shed light on the company’s future plans to diversify its product portfolio, if any?
For diversification, we rate each project on one of two factors –
- Synergy of operations with the existing installation.
- Our strength in chemicals to make inroads into other product categories.
While Biotex’s operations have the synergy with those of FCL and have therefore been able to provide us with the R&D capability to bolster our current crop of textile related products, our entry into the hygiene product range is based on the chemistry being similar to that of the cleaning chemistry, which is used in our product range for the textile industry. Moreover, fungibility gives us the strength of flexibility and capacity enhancement at the shortest time intervals. We work with FMCG detergent companies and anticipate this segment to be one of the fastest growing verticals.
Can you tell us about the earnings outlook for FY23?
Over the past three quarters, we have experienced robust growth. In Q2FY22 we grew by 64%, in Q3FY22 by 81% and in Q4FY22 by 64%. During Q4FY22, our new manufacturing facility in Ambernath (Maharashtra) also started operations and rapidly ramped up. Our volume growth in Q4FY22 is 62%, while over the last three quarters we were able to achieve an average growth of 70%. Also, at the global level, India is emerging strongly at the expense of China which is taking a hit, we are much more optimistic. This national perspective helps domestic industries reach attractive export markets in addition to attracting global investment. Additionally, with the pandemic out of mind and business reverting to the pre-COVID days, we are confident to grow at a much faster rate than ever before. Therefore, looking at the order books and the cost advantages that India has over China for export business, we are confident of registering strong and sustainable growth in the future.