GLOBAL ECONOMY
The global economic landscape continued to demonstrate a fairly resilient performance in 2023, showcasing a steady growth rate of 3.1%. For 2024, the projections indicate a steady growth of 3.1%. Furthermore, for 2024, advanced economies are anticipated to grow at 1.5%, while emerging markets and developing economies are forecasted to record a growth rate of 4.1%. On the other hand, by 2025, advanced economies are anticipated to experience a growth rate of 1.8%, with emerging markets and developing economies expected to see a slight increase to 4.2% with global economy growth rate projected at 3.2%.
(Source: World Economic Outlook, International Monetary Fund (IMF), January 2024)
On a global scale, the economy is witnessing high interest rates, a deceleration in consumer spending, and subdued labour market conditions. These trends are likely to moderate growth in several major and developing economies. However, the outlook remains optimistic for numerous developing nations, especially those in vibrant regions, such as East Asia, Western Asia, and Latin America and the Caribbean. Despite the prevailing headwinds, such challenges are likely to present invaluable opportunities for innovation and strategic shifts, resulting in enhanced economic resilience and sustainable development. Global headline inflation is projected to decrease to 5.8% in 2024 and further decline to 4.4% in 2025, reflecting a downward revision in the 2025 forecast. (Source: World Economic Outlook, International Monetary Fund (IMF), January 2024)
However, many countries are witnessing elevated price pressures, and any further escalation of geopolitical conflicts could pose risks to renewed increases in inflation. There is still uncertainty about the extent of slowdown in the US, and the situation in Europe and China could still intensify. At the same time, downside growth risks have eased to some extent and the forecasts project improved growth conditions by the end of the year.
To reduce inflation, major central banks raised policy interest rates to restrictive levels in 2023. This step has resulted in high mortgage costs, challenges for firms refinancing their debt, tighter credit availability, and weaker business and residential investment. But with inflation easing, market expectations of a decline in future policy rates have given rise to reduced longer-term interest rates and rising equity markets.
World Economic Outlook
Growth Projections (%)
| 2023 | 2024 | 2025 | |
| Global Economy | 3.1 | 3.1 | 3.2 |
| Advanced Economies | 1.6 | 1.5 | 1.8 |
| Emerging Markets and Developing Economies | 4.1 | 4.1 | 4.2 |
(Source: World Economic Outlook, International Monetary Fund (IMF), January 2024)
INDIAN ECONOMY
The Reserve Bank of India (RBI) projected a GDP growth rate of 7% for the fiscal year 2024-25. This forecast was made during the Monetary Policy Committee (MPC) meeting announcements on 5th April, 2024. The forecast indicates expectations of sustained robust economic expansion for the Indian economy. The predictions for GDP growth in specific quarters of the fiscal year 2024-25 indicate that the first quarter is anticipated to achieve a growth rate of 7.1%, which represents a slight adjustment from the previous estimate of 7.2% made in February. For the subsequent quarters, the GDP growth forecast stands at 6.9% for the second quarter, and 7% each for the third and fourth quarters.
(Source: https://www.indiatoday.in/business/story/rbi-mpc-gdp-growth-projected-at-7-percent-for-2024-25-2523565-2024-04-05)
The second advance estimates (SAE) indicate that real GDP growth for 2023-24 stands at 7.6%, marking the third consecutive year of growth at 7% or higher. This robust economic performance can be attributed to several factors, including a rebound in private consumption, increased investment activity, and a recovery in exports. The revisions in GDP growth reflect enhanced government capital expenditure and strong manufacturing activity. Positive trends in GST collections, rising auto sales, consumer optimism, and strong credit growth showcases resilient urban consumption demand. Additionally, expanding manufacturing and services PMIs signal sustained solid economic momentum on the supply side.
The investment cycle is gaining steam, aided by a sustained thrust on Government capex. Such efforts have led to an increase in capacity utilisation, the flow of resources to the commercial sector, and the policy support from the Production Linked Incentive (PLI) and other schemes. As of September 2023, investments of nearly Rs 95,000 Crores have materialised under the PLI schemes. These investments have resulted in the production of goods worth Rs 7.80 Lac Crores and the creation of direct and indirect employment to over 6.4 Lacs. Additionally, the PLI schemes have led to exports surpassing Rs 3.20 Lac Crores. The various sectors contributing to these exports include large- scale electronics manufacturing, pharmaceuticals, food processing, and telecom and networking products. A revival in private corporate investment is also underway, with both services and infrastructure firms being optimistic about the overall business conditions. Net external demand is also on the rise, with narrowing merchandise trade deficit.
Moreover, the Government has allocated a significant proportion towards infrastructure development in the interim Union Budget for 2024-25. The interim budget proposes an infrastructure capital outlay of Rs 11.11 Lac Crores for the fiscal year 2024-25. This move is an attempt to spur private investments across various sectors like railways, roads, and renewable energy.
(Source: https://economictimes.indiatimes.com/news/ economy/policy/interim-budget-2024-25-rs-11-11-lakh-crore- allocated-for-infrastructure-creation/articleshow/107316381.cms?from=mdr)
As per recent discussions at the RBI meetup, headline Consumer Price Index (CPI) inflation is projected to hover around 5.1-5.0% throughout the first quarter of 2024-25. Subsequently, it is forecasted to moderate to 3.8% in the second quarter of 2024-25, followed by a rise to 4.8-4.6% in the latter half of the same fiscal year.
Excluding food & beverage, pan, tobacco, intoxicants, and fuel and light, CPI inflation is forecasted to stand at 3.4% during the fourth quarter of 2023-24 and the first quarter of 2024-25. This figure is anticipated to increase marginally to 3.7% in the second quarter of 2024-25, with a further uptick to 4.1 -4.3% in the subsequent two quarters.
(Source:https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/SPF8705042425182A580CFE4F51A4247AA97D5EF40B.PDF)
GLOBAL CHEMICALS MARKET
The global chemical industry stepped into 2024 with a positive outlook. Despite the challenges faced in 2022 and 2023, the industry rebounded with moderate growth in
2024. Some of the challenges still persisted in the industry. However, there are many positives to look at, including rising demand, favourable regulations, and the industry focus on sustainability & decarbonisation, digitalisation, and innovation. The combined effect of these positive trends is laying a strong foundation for growth and success in the years ahead.
The Global Chemical Market was valued at US$ 2.9 trillion in 2022, and is projected to reach US$ 4.66 trillion by 2030. Furthermore, the market is likely to register a compound annual growth rate (CAGR) of 6.1% during the forecast period from 2023 to 2030.
(Source: https://www.snsinsider.com/reports/global-chemical-market-4043#:~:text=The%20Global%20 Chemical%20Market%20was,period%20from%202023%20 to%202030.)
The global chemical market stands as one of the largest and most diverse sectors in the world economy. It encompasses an array of products, including basic chemicals, specialty chemicals, and agrochemicals, among others.
With the increasing demand for these products across various industries, the chemical market continues to expand rapidly. Furthermore, the chemicals sector has outperformed the broader market since 2011, largely due to the increased demand from emerging markets, such as China and India.
(Source: https://www.mckinsey.com/industries/chemicals/our-insights/india-the-next-chemicals-manufacturing- hub#/)
Additionally, the rising demand for specialty chemicals across various industries is fuelling market growth. Specialty chemicals find applications in sectors such as automotive, electronics, construction, and agriculture. Their unique properties and functions are currently driving innovation and creating new market opportunities. With industries becoming for specialized, the demand for tailor- made chemicals is expected to surge, which will provide a significant impetus to the global market. Other significant factors driving the demand for chemicals are the rapid industrialisation and urbanisation in emerging economies. With growth in these economies, there is a substantial increase in infrastructure development, manufacturing activities, and agricultural activities.
Country-Wise Distribution of Indias Chemical Exports for 2023-24
(Source:https://www.grandviewresearch.com/industry-analysis/specialty-chemicals-market,https://www. globenewswire.com/en/news-release/2023/10/30/2769273/0/en/Chemical-Market-to-Surpass-USD-4-66-Trillion-by-2030-Driven-by-Increased-Demand-for-Specialty-Chemicals-and-Growing-Sustainability- Initiatives-Research-by-SNS-Insider.html)
GLOBAL SPECIALTY CHEMICALS MARKET
Specialty chemicals are specific molecules or combinations designed to provide unique functionality or performance in various industries. These include automotive, construction, electronics, consumer goods, pharmaceuticals, food & beverage, flavours & fragrances, specialty polymers, paper & pulp, mining, and industrial sectors. The global market for these chemicals is likely to possess high growth potential in emerging markets over coming years. Factors such as industrialisation and the rising prevalence of consumer- driven economies are expected to drive this potential.
The global market size for speciality chemicals stood at US$ 641.5 billion in 2022-23, and is anticipated to register a compound annual growth rate (CAGR) of 5.2% from 2024 to 2030. (Source: https://www.grandviewresearch.com/ industry-analysis/specialty-chemicals-market)
The geopolitical conflict in Europe triggered an increase in oil costs, which affected the price of producing chemicals. This rise in oil prices is anticipated to have a significant impact on the market for speciality chemicals. From the manufacturers viewpoint, the impact of rising energy prices resulted in higher chemical prices and eroded profits to some extent. The import and export of raw materials across regions, particularly in the European region, were impacted by supply interruptions, ultimately affecting the overall speciality chemicals market. Alongside, the market is characterised by significant efforts towards research and development, focussing on creating new products consistently. This keeps the degree of innovation at a moderate to high level. The specialty chemicals are function-specific products thus there is need of continuous innovation in this industry.
In 2023, the Asia-Pacific region dominated market with the highest revenue share of 49.9%, followed by the European Union by 25% and the US at 23%. This can be attributed to factors such as economic progress, industrialisation, and the growth of major end-user sectors. China and India are major countries contributing to the growth in Asia-Pacific region, much akin to the global chemicals market. The demand for additives in the region is influenced by food & beverage, personal care and cosmetics, and pharmaceutical applications. China, India, and Japan are the key manufacturers of speciality chemicals in the Asia-Pacific region, with China as global manufacturing leader which also leads to product market growth.
KEY GLOBAL INDUSTRY TRENDS IN THE NEXT FIVE YEARS
Green Chemicals: Green chemistry aims to reduce the environmental impact of manufacturing chemical products by minimising the use of hazardous substances. These green chemicals come with diverse applications. These include their use as precursors for agricultural chemicals, anti-oxidants in the food and feed industry, key components in the production of Active Pharmaceutical Ingredients (APIs), and in the manufacturing of polymers and monomers. According to the UnivDatos Market Insights Analysis, the shift from a reliance on fossil fuels to renewable energy sources is propelling growth in the green chemicals sector. The Green Chemicals Market, with a value of US$ 100.9 billion in 2022, is projected to grow significantly and reach US$ 274.2 billion by 2032. Over the period from 2022 to 2032, this market is forecasted to clock in a Compound Annual Growth Rate (CAGR) of 10.8%. This indicates substantial expansion and opportunity within the green chemicals industry over the next decade.
(Source: https://market.us/report/green-chemicals-market/)
Regional Dominance: The Asia-Pacific region is set to dominate the market, driven by factors like rapid urbanisation, the increasing demand for application-specific chemical compounds in the construction and manufacturing sectors, rising population growth, and growing awareness about agrochemical use. China holds the largest share in the Asia-Pacific specialty chemicals market, while India is the fastest-growing country within the region. (Source: https:// www.businesswire.com/news/home/20230518005615/ en/Global-Specialty-Chemicals-Market-Report-2023-A-738.23-Billion-Market-in-2022---Forecasts-to-2028---Rising-Demand-For-Sustainable-Specialty-Chemicals-High-Performance-Materials---ResearchAndMarkets.com, https://finance.yahoo.com/news/chemical-distribution- global-market-report-122500679.html)
End-User Demand: The global market for performance chemicals experienced substantial growth. This growth is said to be driven by the increasing demand for high- performance materials across various industries, such as automotive, construction, electronics, agriculture, and consumer goods. The market size for performance chemicals was US$ 275.8 billion in 2022, while it is projected to achieve a market size of US$ 453.4 billion by 2032, registering a CAGR of 5.2% during the period from 2023 to 2032. (Source: https://www.acumenresearchandconsulting. com/performance-chemicals-market)
The global pharmaceutical chemicals market demonstrated noteworthy growth, with projections indicating substantial expansion in the coming years. Its market size is expected to reach US$ 197.4 billion by 2030, expanding at a growth rate of 6.9% from 2021 to 2030 This growth can be attributed to multiple factors. These include the increasing demand for pharmaceuticals, the development of novel medications, the rising need for better healthcare infrastructure, and a surge in desire for improved healthcare systems globally. (Source: https://www.biospace.com/ article/pharmaceutical-chemicals-market-size-growth- trends-report-2021-2030/)
Also, there is a growing demand for fast-moving consumer goods (FMCG). These comprise packaged meals, personal hygiene products, and household cleaners. Notably, the size of the global FMCG market was valued at US$ 11,782.6 billion in 2022, with a projected CAGR of 5.3% from 2023 to 2032. (Source: https://www.acumenresearchandconsulting.com/ fast-moving-consumer-goods-market)
INDIA SPECIALTY CHEMICALS MARKET
India currently holds a market share of 22% in the global specialty chemicals market.
(Source: https://www. icis.com/explore/resources/ news/2023/11/24/10947845/india-specialty-chemical- makers-struggle-amid-poor-global-demand-dumping/) The Indian specialty chemicals sector envisages a period of fast-paced growth driven by several market forces. The country is emerging as a preferred manufacturing hub for both domestic and export markets. Forming approximately 20% of the total chemicals market in India, the specialty chemicals sector has been playing a pivotal role in driving the growth of the chemicals industry.
India is the second-largest market for specialty & fine chemicals in the Asia-Pacific region. The market growth for the country can be attributed to the presence of its companies manufacturing these chemicals on a large scale.
Moreover, the penetration of specialty & fine chemicals in India is high owing to the presence of mature end-user industries in the country. For instance, India is among the major automotive manufacturing countries in the Asia-Pacific region. The use of specialty chemicals such as fibres, sealants, paints, and adhesives in the automotive industry of the country is expected to fuel the growth of the market in India in the coming years.
(Source: https://www.grandviewresearch.com/industry- analysis/specialty-chemicals-market)
Indias specialty chemicals sector continues to thrive, buoyed by several inherent growth drivers. These encompass a robust domestic demand base, burgeoning exports with ample room for expansion, and significant opportunities for import substitution. Key catalysts driving this growth include competitive manufacturing costs, a relentless focus on R&D and innovation, the availability of a skilled and experienced workforce, and stringent compliance standards. Moreover, the Governments proactive measures to enhance the ease of doing business and provide comprehensive policy support across various industries further bolsters the sectors growth trajectory. The chemicals industry in India is valued at US$ 220 billion and is projected to record a growth rate of 9-12% p.a., aiming to reach US$ 300 billion by 2026. (Source: https://www. trade.gov/country-commercial-guides/india-chemicals)
The specialty chemicals sector is expected to drive this growth substantially and promote industrial expansion, ultimately yielding a noteworthy market value. With Indian companies displaying remarkable dynamism, the global market share of India in the specialty chemicals arena is anticipated to witness a two-fold increase in the foreseeable future.
(Source: Specialty Chemicals Market Size & Share Report, 2030 (grandviewresearch.com), Indian Specialty Chemicals Industry: ready for a quantum leap (ey.com))
Key Growth Drivers for the Indian Specialty Chemicals
Export Opportunities - India has emerged as a major exporter of specialty chemicals, capitalising on its competitive manufacturing costs, skilled workforce, and favourable government policies. With increasing demand from international markets, there is significant potential for export-led growth in the sector. The growth in chemical exports has been possible due to a surge in shipments of organic and inorganic chemicals, agrochemicals, dyes and dye intermediates. India is poised to clock in a CAGR of 11% from 2023 to 2026.
(Source: India: The next chemicals manufacturing hub McKinsey)
Rise of Domestic Demand - Indias rapidly expanding economy and growing middle-class population are fuelling the domestic demand for specialty chemicals across various industries. These include pharmaceuticals, agriculture, automotive, and construction. The domestic demand is expected to rise to US$ 850 billion to US$ 1,000 billion by 2040.
(Source: https://economictimes.indiatimes.com/industry/indl-goods/svs/chem-/-fertilisers/indian- chemical-industry-to-be-valued-at-1 -trillion-by-2040/ articleshow/98334280.cms)
Technological Advancements - Investments in R&D and innovation are promoting technological advancements within the sector. These are driving the development of high-value-added products with enhanced performance characteristics. Such an innovation-driven approach is making the sector more competitive and opening up new growth avenues.
Rise of Green Chemistry - Green chemistry reflects a growing awareness of the need to minimise the environmental impact of chemical processes and products.
Simultaneously, it focusses on the importance of addressing concerns related to health and safety. Factors such as Government initiatives, consumer demand, and industrial awareness have contributed to the rise of green chemistry in India. With the growing awareness of sustainability and technological advancement, green chemistry is expected to boost innovation and growth gradually in the Indian chemical sector.
Make in India and China+1 Strategy - The Make in India initiative, alongside the China +1 strategy, has been instrumental in propelling the Indian chemical industry forward. By encouraging global companies to diversify their manufacturing beyond China, India has emerged as a favourable destination for investment and expansion. This manufacturing shift has reduced its dependency on China, opening up new export opportunities and spurring domestic manufacturing. Government support, encompassing incentives and policy measures, has further bolstered the industrys growth.
Outlook
The Indian specialty chemicals industry is expected to continue its growth trajectory, driven by increasing demand from various sectors, export opportunities, and favourable market conditions. The industrys resilience, competitiveness, and potential for expansion position it as a key player in the global market, with a positive outlook for the year ahead.
The Indian specialty chemicals industry is expected to clock in a Compounded Annual Growth Rate (CAGR) of more than 9.3% from 2023 to 2030. This growth is estimated to outpace the industry from the rest of the world in the coming years. The industry represents 22% of Indias chemicals and petrochemicals market and is valued at US$ 32 billion, with significant growth prospects expected in the near future. (Source: https://www.grandviewresearch.com/industry- analysis/india-specialty-fine-chemicals-market-report )
While the industry faces challenges such as poor global demand and competition from imports, there are opportunities for growth through capacity expansions, new chemistries, and forays into innovative products.
The Indian specialty chemicals market is poised for substantial and rapid growth, driven by factors like strong process engineering capabilities, low-cost manufacturing, and government initiatives that support local investments and production. The chemicals industry in India is valued at US$ 220 billion and is projected to grow at a rate of 9-12% per annum, aiming to reach US$ 300 billion by 2026. (Source: https://www.trade.gov/country-commercial- guides/india-chemicals )
(Source: Specialty Chemicals industry - India - KPMG India)
COMPANY OVERVIEW AND PRODUCT PORTFOLIO
Clean Science and Technology Limited (also referred to as CSTL or The Company) is a trusted producer of Performance Chemicals, Pharma & Agrochemicals, and FMCG chemicals. CSTLs core strength lies in its capacity to design innovative and atom-efficient technologies, demonstrating a commitment to molecular excellence. This capability is complemented by the Companys in-house project engineering skills and is further enhanced through backward integration. This competitive advantage allows the Company to consistently deliver high-quality products that meet global regulatory standards.
At CSTL, innovation is not just a concept but a way of functioning. The Company continuously strives to redefine its chemistry through ground-breaking research and development. In the process, it ensures every molecule it creates and every process it undertakes exemplifies excellence in its molecular design and application.
Clean Fino-Chem Limited uses the tagline Redefining Chemistry to highlight its dedication to pushing boundaries and setting new standards in chemical manufacturing. The Company is committed to achieving molecular excellence through continuous innovation and transformative solutions that make a positive impact on the industry and beyond.
The Company strongly emphasises designing novel atom- efficient technologies and commercialising them through innovative engineering skills. This strategic focus helps lower the costs of effluents and capital expenditure (capex) compared to peers in the industry. As a consequence, the Companys return ratios consistently outperform those of its peers. Its commitment to continual improvement in novel technology ensures that there is a continuous enhancement in its capabilities. As a result, the Company has positioned itself as a leading name in efficiency and innovation within the industry. CSTL has emerged as one of the top global players for its key products, with exports to China, the US, and Europe. CSTLs state-of-the-art facilities and strong R&D capabilities enable it to meet the highest quality standards, while efficiently addressing the regulatory compliance requirements of its global clientele.
Sustainability is deeply integrated in the business practices across the entire value chain. CSTL prioritises health, safety and environmental concerns, ensuring the well- being and security of all the stakeholders. The Companys comprehensive sustainability efforts make it a reliable long- term partner for customers worldwide.
CSTLs focus on technology, innovation, and strategic growth will certainly enable the Company to continue and thrive as a leader in the specialty chemical industry.
Its specialisation lies in producing essential functionally critical chemicals across three key sectors. These sectors include performance chemicals, FMCG chemicals, and pharma & agro intermediates. With such a diverse range of products, the Company caters to multiple industries, including personal care, food, agriculture, pharmaceuticals, water treatment, construction, and consumer goods. Leveraging its strong R&D capabilities, CSTL continually develops groundbreaking and environmentally-friendly processes. Adopting this approach helps the Company meet the evolving demands of global markets consistently.
Performance Chemicals
Performance chemicals is the largest, fastest-growing and most margin accretive segment of the Company and contributed to 67% of revenues in 2023-24. The segment includes chemicals like MEHQ, BHA, AP TBHQ, and the recently introduced HALS series.
Performance chemicals cater to various industries, including food, acrylic acids, and plastics, among others. In the process, they meet the growing demand for additives like antioxidants, preservatives, and stabilisers in these industries.
The rising consumption in these sectors is a notable driving force behind the growth of specialty chemicals. Also, the increasing focus on product safety, quality, and environmental regulations, besides the demand for specialty chemicals like antioxidants and stabilisers, ensure rising product stability and longevity.
Pharma & Agro Intermediates
The Pharma and Agro Intermediates segment contributed to 19% of revenues in 2023-24. Some of the chemicals in the segment include Guaiacol, DCC, Veratrole and p-BQ. These chemicals serve critical roles in pharmaceuticals, agriculture, and other industries with a growing demand for their applications. The increasing need for pharmaceutical intermediates, reagents, and specialty chemicals in various sectors is a significant driver for the growth of Guaiacol, DCC, and p-BQ.
The production of import substitution products like DCC, which is used in the pharma industry, can increase CSTLs demand and market share. Being the only manufacturer of such products in India provides the Company with a competitive advantage and growth potential in the market.
FMCG Chemicals
The FMCG chemicals segment contributed 13% to revenues in 2023-24 and has two key chemicals, Anisole and 4-MAP
These chemicals are essential for the production processes in various industries such as cosmetics, and precursor
to perfumes and fragrances. Their rising demand owing to their versatile applications and significance in manufacturing processes is a valuable growth driver in the market.
| Products | Applications | Outlook/Growth Prospects |
| MEHQ (Monomethyl Ether of Hydroquinone) | Used as polymerisation inhibitor in acrylic acids, acrylic esters, and super absorbent polymers (diapers and sanitary pads). Is also a precursor for the agrochemical industry, selectively. | MEHQ serves as a stabilising agent for monomers. With the rising consumption of acrylic acids and super absorbent polymers, the demand for MEHQ is expected to experience steady growth. |
| BHA (Butylated Hydroxy Anisole) | Used as antioxidant in food and feed industry. | The rise in global demand for processed foods and animal protein, has led to an increase in demand for BHA. |
| AP (Ascorbyl Palmitate) | Used in infant food formulations, breakfast cereals and cosmetics. | The breakfast cereals market is predicted to reach US$ 140.8 billion in revenues by 2033 with CAGR 6.0%. (Source: https://www.globenewswire.com/en/news- release/2024/02/13/2828086/0/en/Breakfast-Cereals-Market- Predicted-To-Reach-USD-140-8-Billion-in-Revenues-By-2033- With-6-0-CAGR-Market-Us.html ) |
| TBHQ (Tertiary Butyl Hydroquinone) | Used as a stabiliser in oil industry. | The global oil stabiliser market is set to experience steady growth in the coming years. This is growth is expected to be driven by a combination of continuous technological advancements, growing environmental awareness, and the rising need for streamlined operations. |
| HALS (Hindered Amine Light Stabilisers) | Used as stabilisers in range of polymers that find application in diverse end-user industries like automotive, among others. | The market size for global polymers is expected to reach around US$ 1,207.11 billion by the end of 2032. (Source: https://www.precedenceresearch.com/polymers- market ) |
| Guaiacol | Used as a precursor to manufacture APIs for cough syrup (pharma industry). Key raw material to produce Vanillin. | The market size for cough syrups is poised to grow from US$
4.8 billion in 2022 to US$ 6.42 billion by 2030, recording a CAGR of 3.7% during the
forecast period of 2023. (Source: https://www.skyquestt.com/report/cough-
syrup-market#: :text=What%20is%20the%20global%20 market,period%20(2023%2D2030) |
| DCC (Dicyclohexyl Carbodiimide) | Used as reagent in anti- retroviral. | The discovery of new applications and improved formulations is enabled by investments in R&D, thus broadening the utility of DCC across industries. |
| p-BQ (Para Benzoquinone) | Used as an intermediate in agrochemical industry. | The market size for global agrochemicals was estimated at US$
234.27 billion in 2023, and is anticipated to register a CAGR of 3.1% during 2024-2030.
(Source: https://www.grandviewresearch.com/industry-
analysis/agrochemicals-market#: :text=The%20global%20 agrochemicals%20market%20size,of%20agriculture%20 across%20the%20globe.) |
| 4-MAP (4-Methoxy Acetophenone) | Used as a UV blocker in sunscreens (cosmetics industry). | The Indian cosmetics market, which is one of the largest in the world, is expected to clock in a CAGR of 6.7% over the next five years. (Source: https://timesohndia.indiatimes.com/blogs/voices/ the-future-of-indian-cosmetics-industry-recommendations-for- newcomers/) |
| Anisole | Used as a precursor to perfumes, insect pheromones, and pharmaceuticals. The majority is used for captive consumption | The market for anisole is likely to reach US$ 132.8 million by 2030, registering a CAGR of 5.3%. (Source: Anisole Market Size Worth $132.8 million by 2030 (kbvresearch.com)) |
Navigating through the challenges presented by the current economic environment, CSTL has demonstrated commendable financial resilience throughout the year. The Company has adhered to disciplined financial management and implemented strategic foresight, which have been pivotal amid the economic uncertainties and market volatility. This ability to adeptly adjust to fluctuating market conditions while keeping its financial foundation strong highlights its effective business model and the teams dedication to their work.
Looking ahead, CSTL is optimistic about its future growth prospects. The Company has identified promising opportunities for expansion and is actively pursuing strategic initiatives to capitalise on them. Its focus remains on delivering sustainable value to its shareholders while ensuring prudent financial stewardship.
(Rs million)
| Particulars | 2023-24 | 2022-23 |
| Export Revenues | 4,972 | 6,713 |
| Domestic Revenues | 2,807 | 2,552 |
| Other Operating Income | 116 | 93 |
| Total Revenues | 7,894 | 9,358 |
| Cost of Material Consumed | 2,755 | 3,260 |
| Employee Costs | 465 | 450 |
| Power & Fuel Costs | 643 | 898 |
| Other Expenses | 659 | 724 |
| Total Expenses, excluding Depreciation and Interest | 4,522 | 5,332 |
| EBITDA | 3,372 | 4,026 |
| EBITDA (%) | 43.4 | 43.5 |
| Depreciation Costs | 438 | 358 |
| Interest Costs | 8 | 2 |
| Other Income | 384 | 388 |
| PBT | 3,310 | 4,054 |
| PBT % to Sale of Goods | 42.5 | 43.8 |
| Tax Expenses | 833 | 1,019 |
| PAT | 2,477 | 3,035 |
| PAT % | 31.8 | 32.8 |
Financial Ratios
| 2023-24 | 2022-23 | % Change & Comments | |
| Inventory Turnover (Cost of Goods Sold/ Average Inventories) | 2.5 | 3.3 | The slight decrease in CSTLs inventory turnover from 3.3 in 2022-23 to 2.5 in 2023-24 is due to decreased sales. |
| Current Ratio (Current Assets/ Current Liabilities) | 4.9 | 5.1 | The slight decrease from 5.1 in 2022-23 to 4.9 in 2023-24 is owing to the increase in trade payable of the Company. |
| Debtors Turnover Net Sales/ Average Trade Receivables | 5.0 | 6.2 | A decrease in the debtors turnover ratio from 6.2 in 2022-23 to 5.0 in 2023-24 is due to lower sales during the year. |
| Operating Profit Margin (Profit before Interest and Taxes/ Net Sales) | 37.7 | 39.6 | The Companys operating margins declined slightly from 39.6% in the previous year to 37.7% this year, reflecting declined sales. |
| Net Profit Margin (%) (Net Profit after Tax/Net Sales) | 31.8 | 32.8 | Decline in net profit margin from 32.8% to 31.8% is on account of sales. |
| Return on Net Worth (%) (Net Profit after Tax/ Average Net Worth) | 22.2 | 34.0 | Decline in return on net worth from 34.0% to 22.2% is on account of lower profitability. |
| Interest Coverage Ratio (Earnings before Interest and Taxes/Interest Expenses) | |||
| Debt-Equity Ratio (Net Debt/Net Worth) |
HUMAN RESOURCES
Employee Well-Being and Safety
CSTL prioritises maintaining stringent safety standards to guarantee employee well-being at the workplace throughout its operations. Employees undergo comprehensive training related to safe work practices and behaviour. Apart from this, they are trained with the correct utilisation of personal protective equipment (PPE). The Companys Occupational Health Centre (OHC), staffed with qualified doctors and nursing professionals, is readily accessible for employees seeking medical assistance. Also, CSTL has partnered with local hospitals to ensure prompt medical support and organise health check-ups for the workforce routinely. Regular training and refresher sessions in the Company emphasise the importance of strict adherence to safety protocols across all levels and departments. Additionally, CSTL offers medical insurance coverage to its employees and proudly maintains a record of zero fatalities in its plants and offices.
Training and Development
CSTL is dedicated to enhancing its employees capabilities continuously through diverse training programmes facilitated by both internal and external expert faculties. These programmes not only encompass technical subjects but also behavioural and managerial topics. Training sessions are conducted through various methods, such as classroom lectures, project assignments, and simulated drills. The Companys training initiatives substantially impact performance by bolstering productivity, elevating product quality, and mitigating workplace incidents. Additionally, regular compliance training sessions are conducted to uphold regulatory standards. CSTL has embraced digitalisation across most of its HR processes, fostering accuracy, transparency, and accountability within its operational framework. Prioritising employee well-being, the Company is actively revising its policies and practices to align with industry-leading standards.
Clean Connect Annual Day
CSTL provides a range of employee engagement programmes designed to foster a vibrant workplace culture. One such initiative is the Annual Day celebration, offering employees an exceptional platform to display their talents. A notable feature of the event is the recognition of employees who have shown persistent commitment by completing 10 or 5 years of service within the organisation.
To build better employee engagement and prioritise employee well-being, the Company also organised a cricket tournament for its employees. Furthermore, it celebrated key festivals as part of employee engagement initiatives, including Republic Day, Independence Day, Diwali, and Womens Day, among others. These initiatives not only fostered team spirit and camaraderie among employees but also promoted a sense of unity and cultural appreciation within the workplace. By encouraging participation in sports and celebrating diverse traditions, the Company actively builds a positive and inclusive work environment that values employee well-being and happiness.
Smooth Onboarding
CSTL firmly emphasises the significance of not just recruiting the right individuals but also ensuring a smooth onboarding process for new team members. The Company prioritises helping new entrants get acclimatised to the work environment. It also provides dedicated support during their induction into respective departments. Furthermore, CSTL organises communication meetings specifically designed to offer additional assistance and outreach to new hires.
Talent Acquisition
CSTLs strategic campus hiring from reputed colleges effectively attracts fresh talent from both local institutions and esteemed engineering colleges. With a focus on cultivating internal leaders for the Companys success, it implements high-potential programmes designed to nurture talent and prepare individuals for future leadership positions. Moreover, CSTL offers accelerated growth opportunities for high-potential employees across various departments. The organisation also prioritises skill development through internal job rotations, providing ample opportunities for employees to broaden their expertise and contribute to the Companys success.
Inclusive Workforce
As an advocate of equal opportunity, CSTL promotes diversity and inclusion throughout the workplace. The Company provides an enabling environment that supports the growth of its female employees. It encourages the appointment of women in various leadership positions within the organisation.
Total employees and workers - 1,155 Women employees and workers - 42 Women employees and workers (in %) - 3.63
CSR
CSTLs CSR philosophy is intertwined with its core focus on sustainability. The Company is committed to creating a better future and continuously endeavours to contribute to the social and economic development of the communities it operates in.
Since its inception, CSTL has deployed and supported numerous initiatives, especially in key areas, such as education, environmental sustainability, health and sanitation, skill development, and community development. The Company is sensitive to the greater needs of the nation. In this regard, it supports projects for the preservation of environment and encourages disabled people to become self-reliant.
CSTLs objective is to shape a sustainable future for generations to come, with the goal of fostering the development and upliftment of society as a whole through its initiatives. The Companys employees engage actively in all its CSR initiatives, thereby enhancing the effectiveness of its efforts for community outreach.
ENVIRONMENT, HEALTH AND SAFETY MEASURES
CSTL prioritises safety as one of its core values. The Company is committed to continuously improving its safety performance by benchmarking against industry leaders and implementing world-class environmental, health, and safety practices. The health and safety of CSTLs employees are integral to all its activities. The Company strives to prevent accidents and health risks by continuously improving its work environment and safety measures. Its efforts have resulted in a significant reduction in injury incidents across all its manufacturing plants. CSTL has implemented the ISO 45001:2018 Occupational Health and Safety Management System at all its manufacturing locations. In addition, the Companys ISO 14001:2015 and Responsible Care certifications, demonstrate its commitment to reducing environmental impact and upholding the highest health, safety, and sustainability standards. CSTLs initiatives towards ensuring sustainability have helped the Company successfully reduce its GHG emissions and water consumption over the years. More than 65% of CSTLs power requirement is met through Company-owned, open access solar power projects.
KEY RISKS AND MITIGATION STRATEGIES
CSTL faces multiple risks that are likely to affect the smooth functioning of its business. These risks may be posed by internal or external factors. As a result, they can adversely impact the effectiveness of the Companys strategies, its operational and financial objectives, earning capacity, and financial position. Higher energy costs due to increased expenditure on coal and fuel pose a significant risk to the Companys business performance. Other risks include risk of pricing on account of capacity additions in the US & China, higher inflation and recessionary pressures (both global and domestic). These risks can lead to a demand slowdown, currency devaluation, and changes in exports or imports from global markets.
The Risk Committee regularly convenes to deliberate on key risks and update the Risk Register with any new insights. Individual risk owners drive the responsibility of identifying key risks, assessing their impact, and outlining mitigation strategies to manage these risks effectively. This proactive approach to risk management ensures that the Company is well-prepared to address potential challenges and maintain operational stability.
The Companys risk management and mitigation activities are designed to recognise, assess, and manage risks in their early stages. Simultaneously, they implement appropriate measures to mitigate those risks. At CSTL, risk management is a continuous process involving the analysis and management of all risks posed to the business, and it has adopted a structured framework to achieve this.
1. Regulatory Risk
Impact - CSTL needs to obtain, renew, or maintain statutory and regulatory permits, licences, and approvals at various stages of its operations. These procedures can help manage its business and manufacturing facilities effectively. Any failure or delay in the same may adversely affect the Companys operations.
Mitigation - CSTL maintains a compliance checklist, including information on the scheduled renewal dates for various licences and approvals. The Company monitors this checklist closely, and conducts regular internal audits, while ensuring its manufacturing facilities comply with local and international regulatory requirements.
2. Environmental Risk
Impact - CSTL faces the risk of inefficient handling of effluents. Certain environmental laws impose strict liability for accidents resulting from hazardous substances, and non-compliance with these laws may lead to penalties.
Mitigation - CSTLs effluent treatment procedure is one of its key criteria for product commercialisation. The Company has achieved the lowest effluent cost across products due to its innovative technology and clean processes. Investments in its ETP plant continue to be driven by advanced equipment and strong controls.
CSTL has also installed ~17.4 MW offsite solar capacity and 2.0 MW roof top solar and through these the Company obtains solar power for its manufacturing units. Furthermore, the Company has planted 11,000+ trees which will lead to Water Rejuvenation and
Restoration in the surrounding area and will also help to reduce carbon footprint.
3. Raw Material Risk
Impact - CSTLs raw materials mainly comprise commodities and hence, are subject to high volatility in price. Any adverse movement in raw material price could have a negative impact.
Mitigation - The Company maintains long-term relationships with suppliers and adopts robust inventory management practices. This way, it ensures a steady supply of raw materials at a competitive cost. The Company is also not dependent on a single source and has multiple suppliers for all its procurement needs.
4. Macro Risk
Impact - CSTLs extensive global sales profile makes it susceptible to worldwide disruptions. Any adverse macro-factors, such as geopolitical tensions or supply chain disruptions, can have a significant potential impact on its business operations. For instance, the Red Sea crisis this year exemplified one such macro risk that posed challenges to the Companys operations.
Mitigation - The Company greatly de-risks its sales profile while catering to diverse end-user industries across multiple geographies. CSTL continues to be a key player and a preferred supplier in the products it manufactures. Hence, it is relatively well-positioned to mitigate the adverse impacts of macro conditions.
5. Forex Risk
Impact - CSTL has a considerable net forex exposure, with 64% of revenue derived from exports. As such, it faces the risk of financial loss on account of volatility in foreign exchange.
Mitigation - The Company tracks currency movements regularly under its Forex Police are tracked regularly, and all foreign currency exposure is hedged using plain vanilla forward contracts.
6. Technology Risk
Impact - CSTL faces risks generally associated with adopting new process technologies and product introductions.
Mitigation - CSTL has 4 R&D centres, and a strong, dedicated team of 100+ individuals, including nine individuals with PhD degrees. CSTL is committed to strengthening its R&D capabilities, thus enabling the consistent introduction of new products and processes.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
CSTLs Board of Directors are responsible for the implementation and assessment of effective internal financial controls. To that end, the Company has established policies, procedures, control frameworks, and management systems.
Such initiatives ensure compliance with all regulatory requirements, internal controls, and accurate financial and operational reporting requirements. At the entity and process levels, internal control mechanisms are designed to ensure adherence to the established procedures and ethical codes of conduct. The Senior Management certifies the effectiveness of internal controls. Alongside, it ensures compliance with financial and commercial transactions, and declares any conflict of interest observed. The Companys independent internal auditors further bolster the internal control process. CSTLs Audit Committee reviews and approves the audit plan. In addition, regular meetings are held to review auditor reports and compliance. Significant audit observations and follow-up actions are reported to the Audit Committee for further review.
CAUTIONARY STATEMENT
Statements in the Directors Report, Management Discussion and Analysis or elsewhere in this Annual Report, may be forward-looking, including, but without limitation, statements relating to the implementation of strategic initiatives and other statements related to Clean Science and Technology Limiteds future business developments and economic performance. While these forward-looking statements indicate CSTLs assessment and future expectations concerning the development of its business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from the Companys expectations. These factors include, but are not limited to, general market, macroeconomic, Governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect CSTLs business and financial performance. The Company undertakes no obligation to publicly revise any forward-looking statements to reflect future/likely events or circumstances.
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