Vinati Saraf Mutreja, Executive Director, Vinati Organics Ltd.

Vinati Saraf Mutreja, Executive Director, Vinati Organics Ltd. joined in 2006. She is instrumental in securing long-term sales contracts with several MNC customers as well as in streamlining finance, production processes. Prior to joining Vinati Organics, Ms. Vinati worked as a Consultant for Mercer Oliver Wyman, a New-York based consulting firm specialising in financial services and risk management. Vinati attended the University of Pennsylvania where she received Bachelors in Economics (Finance) from the Wharton School and Bachelors in Applied Science, Biotech and Pharmaceutical Development from the School of Engineering and Applied Sciences.

Vinati Organics Ltd (VOL) engages in the manufacture and supply of chemicals primarily specialty organic intermediates and monomers primarily in India. Vinati Organics primarily produces isobutyl benzene (IBB) and 2-Acrylamido 2- methylpropanesulfonic Acid (ATBS). Its products include (IBB) which is used a basic raw material for manufacturing Ibuprofen, an anti-inflammatory analgesic bulk drug. IBB is also used in perfumery industries. The company also offers C10, Hexenes & NBB. ATBS is used in oil–field recovery, water treatment, acrylic fiber manufacturing, adhesives, and personal care products, as well as in mining industry, coatings, and as dispersing and flocculating agents.

Replying to Anurag More of India Infoline, Vinati Mutreja says, "Vinati Organics is only the third company in the world to manufacture ATBS."

What is the size of the industry? Brief about the specialty chemicals industry in India? Your share in the market?
The world market for Specialty Chemicals per se would constitute a wide range of specialty chemicals.. We are mainly manufacturing two chemicals - Isobutyl benzene (IBB) and 2-Acrylamido 2- methylpropanesulfonic Acid (ATBS) and in both the products we enjoy global oligopolistic position. IBB is used to manufacture Ibuprofen, an anti-inflammatory analgesic bulk drug. In IBB VOL is the market leader with over 60% global market share. The world demand for IBB is 22,000 TPA and with a capacity of 14,000 TPA VOL is the largest manufacturer of IBB. Our other product is ATBS, which is a specialty monomer. VOL is only the 3rd company in the world to manufacture ATBS. We are the 2nd largest manufacturer in ATBS with a capacity of 10,000 TPA The total world market would be around 25-30,000 ton and we have more than 25% market share.

Brief us about your expansion program? How are you going to fund it?
Recently, we doubled our ATBS capacity from 5,000 to 10,000 TPA. Now we are backward integrating to make the raw material for ATBS which is Isobutylene (IB). We are also building a pilot plant to run trials for the manufacture of a drug intermediary using a highly environment friendly and cost-effective technology. All these plans are going to be funded through internal accruals and term loan.

Comment on your backward integration activity at Isobutylene facility at Chiplun? How do you propose to raise Rs400mn for it?
Currently, IB is imported from Europe and Taiwan and the backward integration will allow VOL in saving significant logistics costs. The capex for the project is approx Rs380mn and is being funded through internal accruals and debt. The IB plant is located alongside our ATBS plant at Lote, Maharashtra.

What are the entry barriers. What edge do you hold in technology?
VOL enjoys cost leadership and economies of scale in IBB. Technology is an entry barrier in ATBS. Our technologies are licensed from French institute of petroleum and National Chemical laboratories in Pune.

What is the revenue break-up from various products. How are the margins in each of them?
We have 50% each from IBB and ATBS. Margins from IBB, will be 15-20% and for ATBS it will be 25-30%.

Comment on exports?
70% of our products are exported to USA, Europe, Asia, Middle East and China. Our exports have been growing steadily year after year and we expect further growth hereon.

Brief us on your financial performance. Which are the triggers for growth going ahead?
VOL has been growing from strength to strength over the years and a glance at its financial indicators would reaffirm the same.

Over the past 5 years VOL had Sales CAGR of 41%; EBIDTA CAGR of 52%; PAT CAGR of 67%

For FY10 we expect sales growth of 25% and margins growth of 50%. Increased capacity and sales of ATBS & the backward integration into IB would act as a trigger for growth.

Any initiatives regarding environment? What steps are you taking to become more environment friendly?
VOL has always focused on manufacturing products through an environment-friendly process, that involves avoiding polluting chemicals and treating the effluents to make profitable by products from them. It uses innovative methods to create wealth from waste while reducing environmental pollution and both our manufacturing facilities, follow zero emission policy.

What is the usual contract period and to what extent are you able to pass on any increase in raw material prices?
Our contracts vary from one to five years, depending on the customer and products; further our contracts have price escalation clauses whereby we are able to pass on any increase/ decrease in raw material prices, which allows us to maintain our margins.

Who are your competitors and what edge do you have over them?
In both our products, our competitors are MNCs but the Company’s product customization capability in the specialty chemical business has resulted in strong customer growth and satisfaction. Further, our operational efficiency and continued focus on product and process improvement gives us an edge over others.

What is your staff strength and attrition level?
Our staff strength is about 350 employees. VOL’s commitment towards providing an enabling work environment has help it in not only in attracting but also retaining a highly qualified, experienced and motivated workforce with hardly any attrition.

How does India compete against China in similar products?
Before VOL started production, IBB was imported largely from China. Thanks to VOL’s strong focus on clean technology and operational efficiencies, India is a net exporter of IBB, with China being one of the important destinations of export. Even ATBS is exported to China and we don’t see any threat from China.

Comment on your R&D initiatives. Give us some examples of certain breakthroughs you may have achieved?
Lot of R&D is outsourced from institutes like National Chemical Laboratories (NCL), Pune and IICT, Hyderabad. We also have a full fledged R&D unit, which is engaged in developmental activities such as developing product applications and attaining better production efficiencies.

Tell us more about your marketing initiatives.
We do mainly B2B sales, we also have agents in some countries like Europe and China.

What advice would you give those who wish to join this industry from the B-Schools?
In terms of recruitment through B-schools, we put more emphasis on the kind of internship or case study they have done rather than quality of the marksheet.

What do you think B-Schools need to do to make their students ready for the job?
I think they should have more case study and internship involved. For eg. in Europe in a 12 months course at B-schools, 6 months is internship. It really prepares you more for the job.

What are your hiring plans?
We recently hired some management trainees, and keeping in view of the various expansion and growth plans of the company we shall recruit accordingly.