Rating agencies conducted a survey of 106 specialty chemical manufacturers, which account for a quarter of the sector’s annual revenue of 30,000 rupees.
Operating profitability in this sector is healthy at 18-20% due to increased operating leverage. This, along with a strong balance sheet backed by sound cash flow and recently procured equity, will stabilize the credit outlook for companies rated by CRISIL, despite increased capital investment.
According to CRISIL Ratings, the recovery of domestic demand and continued strong exports will increase the capital investment (capital investment) of Indian specialty chemical manufacturers this year to 600-620 billion rupees, up 50% from the previous year. It also far exceeds the 5,000 rupees spent before the 2019-20 pandemic.
Rating agencies say capital spending surges in recent years in addition to the large spending already incurred to add capacity, given strong export demand for specialty chemicals boosting profits. rice field.
“Sales growth could surge to 19-20% this year, compared to 9-10%, which was hurt by the pandemic last year, due to a recovery in domestic demand and an increase in realization due to rising crude oil prices. Yes, and better exports, “said Gautam Shahi, director of CRISIL Ratings.
“As Western countries become more environmentally friendly, production is increasingly outsourced to India, which is also emerging as an efficient and cost-effective alternative to China. As a result, Indian players recorded a combined annual growth rate of 11% between the 2014-15 and 2020-21 fiscal years, increasing India’s share of the global specialty chemicals market from nearly 3% to 4%. I let him do it, “he added.
Export growth in this sector will accelerate from 12-13% in the previous fiscal year to 17-18% due to player competitive positioning, recovery of global demand and customer’China Plus One’strategy. Expected. This is also supported by the implementation of strict environmental norms, rising labor costs, and the decline in China’s competitiveness due to geopolitical issues (US-China trade war).
Domestic growth in this sector surges to nearly 20 percent, driven by strong demand and increased discretionary spending from the pesticides, fast-moving consumer goods (FMCG), pharmaceutical and textile sectors. This is compared to last year’s 5-6 percent growth, where sluggish income levels affected any end-user segment such as colorants, polymers, textiles and FMCG.
Fiber2Fashion News Desk (DS)
Capital investment in Indian specialty chemicals, which will increase by 50% in 2010: CRISIL
Source link Capital investment in Indian specialty chemicals, which will increase by 50% in 2010: CRISIL