MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Chemical industry plays a crucial role in modern globalized world economy, converting
raw materials like crude, natural gas, air, water and diverse minerals into ready to use
products which are essential to meet the daily necessities. Apart from producing wide
range of finished goods like paints, plastics, polymers, resins, synthetic fibers, it has
also extensive usage in agrochemicals, urea, fertilizer, pesticides, water chemistry that
benefits to upgrade the living standards of consumers across globe. The chemicals are an
important part of global value chain having widespread application ranging from energy
generation & transportation to constructions - supporting agriculture - providing
clear drinking water Chemistry helps to meet the affordable and clean energy goal through
the development of new materials for renewable energy, by being energy efficient in the
chemical processing industries, and by advancing cleaner fuel technologies. The chemical
industry is quite heterogeneous in characters which ranges from commodity chemicals to
research driven products and can broadly be classified as basic chemicals, specialty
chemicals and knowledge-based chemicals. Chemical play an important role in achieving
clean, green and sustainable growth to the global economies.
The global chemical industry plays an important role in terms of its size and features
which involve significant capital investment, high knowledge content and qualified human
resources. The revenue of global chemical industry has crossed more than US$ 5 trillion.
It is important to note that EU & US which were traditionally key chemical producers,
have been replaced by China as major force post the global financial crisis in 2008. The
share of developing countries like China, South Korea, India, Taiwan, Japan etc. in
chemical revenue had started picking up post 2008. The industry has witnessed global shift
in chemical manufacturing base from western countries to Asia which is being evolved as
global chemical manufacturing hub. Asian countries such as China, India, Japan & Korea
together constitute 56% of global chemical sales and the major driving force for this
being low labour cost, relatively relaxed environment norms, government subsidies etc.
This has resulted in China & India expand their respective share in the global revenue
from chemicals.
The research done by Oxford Economics in 2017 revealed that every US$ 1 of gross value
added by the chemical industry, has generated support and addition of US$ 4.2 contribution
elsewhere in the global economy. Interestingly, the chemical industry supported 7.5% of
global GDP through direct & indirect impacts.
Indian Chemical Industry has evolved from being a basic chemical producer to becoming
an innovative industry. The Chemical and chemical products sector constitute 9.6% of total
manufacturing output in 2021. With increasing investment in R&D, the chemical industry
is expected to register significant growth in fine and specialty chemicals, however, India
continues to be net importer which indicates that growth in exports is not commensurate
with rising import of chemicals.
To achieve selfreliance and reduce the dependency on imports, the industry needs to
focus on boosting domestic manufacturing and exports by adopting a market and product
specific approach. To boost the domestic production of chemicals and petrochemicals and
cut down imports and make India a manufacturing hub for the sector, the "Vision
document 2024" of Department of Chemicals & Petrochemicals has been prepared to
meet the growing domestic demand of chemicals and petrochemicals.
As India progresses towards becoming a US$ 5 trillion economy by 2025-26, the share of
the petrochemicals and its derivatives sector is expected to become even more prominent
considering that it is the backbone of agriculture, infrastructure, manufacturing and
service.
India has ranked as sixth largest player in the global petrochemical business with a
market size of around US$ 190 bn in 2022. Indias strong economic progress, supported by
robust macro fundamentals, and population growth are major enablers for the petrochemical
manufacturing hub.
The flagship programmes such as Make in India and the Aatma Nirbhar Bharat provide
direction to this sector and create a facilitative environment to attract further
investments. The Indian petroleum industrys forward integration into petrochemicals and
subsequent polymer derivatives is a potential gamechanger. The security of feedstock
availability and intermediate products for downstream polymer industries will result in
value maximization across the entire chain of polymer molecules.
Indian Petrochemical Industry
Although India is self-reliant in basic petrochemical products with its export numbers
promising, however scarcity of petrochemical intermediates or derivatives, results in
import dependency of over 50%. It is an opportune time for Indian downstream companies to
invest in developing the polymer intermediate industry by capacity expansions or forging
Joint Ventures within or outside the country. The lack of growth in the Indian
petrochemical intermediate compels Indian companies to become import dependent resulting
in a cumulative loss of US$ 180-200 bn due to high import bill. On the other hand, the
downstream petrochemical industry i.e. specialty chemicals accounted for over 50% of
chemical exports in 2022, dominated by agrochemicals, dyes and pigments etc. due to the
emerging markets like India and China. We have witnessed significant shift in product
supremacy from developing market to emerging markets.
The Indian petrochemical intermediates market is driven by the growth of downstream
industries such as plastics, synthetic fibers, and rubber, as well as the increasing
demand for high-performance materials in various end-use applications such as automotive,
construction, and textiles. It is expected to grow at a steady pace in the coming years,
to fill the gap between basic petrochemical and speciality chemical industry. Companies
operating here need to expand their production capacities, investing in research and
development, and forming strategic partnerships and acquisitions to strengthen their
market position.
The availability of skilled labour, favourable government policies, and a growing
manufacturing sector are expected to provide further impetus to the growth of the
petrochemical intermediates market in India. India has joined the movement of banning
single use plastics along with more than 150 countries, including a nationwide ban on
certain items and initiatives to promote alternatives and recycling. Studies show these
plastics contain harmful chemicals which endangers the ecosystem. The Indian governments
efforts have helped to raise awareness about the issue and encourage positive changes in
behaviour among individuals and businesses.
Indias petrochemical sector is on the cusp of significant growth. This is evidenced by
various factors, such as the impressive return on investment in financial markets, Indias
demographics, increasing affluence, and its global stature. This presents a lucrative
opportunity for petrochemical companies to cater to the domestic market, which could lead
to import substitution and savings in foreign exchange.
The PLI schemes with an outlay of Rs. 1.97 lakh crore to promote vital end-use sectors,
including pharmaceuticals, telecommunications, automobiles, electronics, mobiles, medical
devices, and textiles. This is expected to further boost the countrys demand for
chemicals and petrochemicals.
Strategic global partnerships and collaborative programs with the government will also
be critical in driving the industrys growth. The chemicals and petrochemicals industry
shall be responsible for contributing towards nearly 10 out of 17 UN Sustainable
Development Goals by 2030. Moreover, the petrochemical industry needs to play a vital role
in promoting a circular economy through effective design, reuse, and recycling of
materials, as well as innovation and technology.
The Indian petrochemical industry can facilitate the transition to a circular economy
and explore opportunities in green chemicals to play a pivotal role in this
transformation. Overall, with the right policy support and investment, the petrochemical
industry can contribute significantly to the goal of making India a US$ 5 trillion economy
by 2025-26.
Phthalic Anhydride (PAN)
Phthalic Anhydride is an organic substance that is an anhydride of phthalic. It was the
principal commercial form of phthalic acid, the first anhydride of a dicarboxylic acid to
be commercially available. Indian PAN market is anticipated to increase at an impressive
rate in view of wider uses across industries. PAN is a white crystalline chemical used to
make plasticizers, pigments, dyes and resins.
The consumption of PAN & its derivatives is growing rapidly over the last few
years. Phthalic Anhydride finds application across various end user industries as it is
used for the production of a large number of chemicals. The growth in demand of PAN is
expected from the increasing demand from the Construction and Paints & Coating
Sectors. Phthalic Anhydride is frequently used in paints, plasticizers, CPC pigments
industry and for producing unsaturated polyester resins, which are used in growing sectors
like construction and automotive for the production of their components. PAN is now also
used in the production of speciality chemicals, agrochemicals, specialized polymers,
electric & electronic products, insect repellents and urethane polyester polyols. It
is also being innovatively used for making plastic currency, paper boards, leisure boats
and sail of windmills etc. This industry is primarily served by very few players not only
in India but also globally.
Polyvinyl Chloride (PVC) is one of the significant compounds used in construction sites
owing to its flexible and fireproof characteristics. PAN provide flexibility and softness
to the PVC without which it would be hard and brittle and may not serve the intended
purpose. According to FICCI, India consumes almost 73% of its PVC material in pipes &
fittings industries. The Real Estate Industry (where PVCs finds its extensive application)
in India is anticipated to grow upto US$ 1 Tn by 2030 and is expected to comprise upto 13%
of Indian GDP by 2025. Therefore, an increase in the construction sector market led to
rising demand for the PAN market in the country.
Phthalic Anhydride is a well-recognized industrial chemical used in the production of
certain dyes. As per the report, the Indian paint industry is predicted to be US$ 8.64
billion. There are about 3,000 paint producers in India, and all the major players of the
world are actively working in the regional market. These trends led to an increase in the
demand for PAN market in the projected period with the upsurge in the demand for paint and
dyes. Apart from government schemes, innovative projects like smart city projects are also
helping in propelling the demand of the PAN market.
Maleic Anhydride Market
The global Maleic Anhydride Market was valued at US$ 2.8 billion in 2021 and is
projected to reach US$ 3.4 billion by 2026, growing at a CAGR 4.2% from 2021 to 2026.
Factors such as increasing demand for Unsaturated Polyester Resins (UPR) in the automotive
industry, high growth in the construction and wind energy industries, and growing demand
of 14-BDO in various end-use industries are major driving factors. Commercialization of
bio-based maleic anhydride is the major growth opportunity for the market. Asia Pacific is
the key market for maleic anhydride, globally, in terms of value. It is also the
fastest-growing region in the market followed by Europe as the second-largest market and
thereafter North America .
Diethyl Phthalate
The Diethyl Phthalate market is expected to grow at a CAGR of 4.1% during the period
2023 to 2030 according to the analysis carried out by Data Bridge Market Research. The
major factor driving the growth of the Diethyl Phthalate market is the increasing
consumption of cosmetics and personal care products.
• Developing cosmetics and personal care products have expanded over the years and
the future. In addition, technological advancements in personal products will drive the
global Diethyl Phthalate market in the upcoming years.
• Accelerated industrialization, increase in income, changing lifestyle and
increased application of polymer based products in day to day life have caused the upsurge
of polymer industry. The polymer are used in healthcare, agriculture, clothing, housing,
furniture, electronics and construction
• Diethyl Phthalate is used in agrochemicals to keep away insects and pests from
crops. Due to increasing insects attack on crops, the insecticides demand are too rising.
About IGPL, its plant and vision
IGPL is the largest producer of PAN in India dominating with a market size of more than
50% and is the lowest cost producer. The Companys state-of-the-art manufacturing
facilities along with proximity to the raw material and customers puts the Company in a
sweet spot to generate higher yields. The Company expanded its PAN facilities in 2020 by
53,000 MTPA, thus taking the total production capacities to 2,22,110 MTPA and MAN
facilities to 7,660 MTPA. With further investments to the tune of Rs. 350 crores, another
53,000 MTPA is being added through the brownfield route which will enhance the total
capacity to 2,75,110 MTPA and MAN facilities by 1,500 MTPA to 9,160 MTPA by by FY 2024.
Operational performance overview and the significant changes in ratio
Particulars |
2022-23 |
2021-22 |
Changes (%) |
Reason |
Debtors Turnover |
7.00 |
6.90 |
1.38% |
Strict receivable and working capital management by the Company |
Inventory Turnover |
11.36 |
8.48 |
33.91% |
Efficient inventory management by the Company |
Interest Coverage ratio |
8.98 |
8.75 |
2.67% |
Due to existing debt reduction(excluding debt for PA-5 Capex) |
Current Ratio |
1.64 times |
1.81 times |
-9.47% |
Higher current liability resulted due to increase in creditors and
short - term borrowing thereby marginally affecting the current ratio |
Debt Equity Ratio |
0.16 |
0.11 |
39.92% |
Due to increase in borrowings |
Operating Profit Margin |
12.44% |
19.75% |
-37.01% |
Increase in cost of goods sold and competitive pressure
resulted in decrease in operating margin |
Net Profit Margin |
8.53% |
14.17% |
-39.81% |
Return on Net Worth |
16.28% |
25.14% |
-35.24% |
Risk management
The Companys risk management framework outlines the approach to risk management, its
perception and the mitigation measures. The risk management encompasses the
identification, assessment, analysis and response to factors that pose risk to the
business. The effective risk management process provides an opportunity to reduce the
possibility of occurrence of risk and its potential impact.
The Board of Directors regularly reviews the outcome of the Risk Management Committee.
Corporate Social responsibility
At IGPL, corporate social responsibility originates from the Companys philosophy of
giving long-term benefit to the communities in which it operates. We realise the necessity
of contributing to the development of the underprivileged parts of society while serving
the interests of our stakeholders, and we are dedicated to doing so responsibly. During
the year, the Company contributed Rs. 436.99 lakhs towards the fulfilment of its CSR
responsibility.
The key focus areas were Education, Skill Development and Women Empowerment.
The Company collaborated with Tata Community Initiatives Trust as implementation
partner for setting up skill development centre aiming to upskill around 325 students and
construction of school in association with Saraswati Shishu Mandir Trust. Also, the
Company is working with 5 villages in and around Taloja for Women Empowerment and
Self-help group based entrepreneurial programs to enhance the livelihood and empowerment
of the women in the villages through NGO partner
We are a responsible corporate citizen.
Human Resources
In the face of an ever-changing and disruptive environment marked by concerns over
climate change and events such as the Covid pandemic, Russia War, and the US Bank crisis,
the future of human resources (HR) necessitates significant shifts in mindset, roles, and
capabilities, facilitated by technology. At IGPL, we firmly believe that the achievement
of our goals relies on the ability of our workforce to translate plans into actions. Over
the past period, we have made focused and sustained efforts to enhance capabilities,
enrich our culture, redesign our organization, improve employee engagement, and undergo
business transformation, all with the aim of aligning people and processes with our
overall business strategy.
During the challenging times of the third wave of the pandemic and its aftermath, we
concentrated on engaging our employees through various initiatives to enhance the overall
employee experience (EEX) within our organization. To foster employee engagement and
cultivate a culture of appreciation, we relaunched our Rewards & Recognition program,
which included Annual Employee of the Year awards, Spotlight awards, Take the Bull by the
Horn awards, and introduced exclusive Safety awards throughout the year
Over the years, we have consistently created positive experiences for our employees
through various structured initiatives aimed at fostering higher levels of engagement. Our
focus has remained strong on enriching the work environment to embrace diversity,
nurturing positive relationships, providing challenging assignments, and offering
opportunities for growth and career development based on meritocracy.
We have recently established the People Development Committee (PDC) with a singular
focus on introducing new People Development programs and initiatives to attract, retain,
nurture, and develop talent within the organization. This year, several initiatives have
been launched through the PDC.
In order to enhance our Talent Management efforts, we have relaunched our Performance
Management system, including goal setting, mid-year and annual performance reviews, and
Key Performance Indicators (KPIs). We have also organized various training programs and
published guidebooks to ensure that all employees understand and adopt the Performance
Management system, which is a critical tool for talent development.
Furthermore, we have implemented a new and improved Onboarding and Induction program
with support from all departments. We have also introduced a Buddy program for new
joiners, which provides them with guidance and support during their initial period at the
Company.
In our endeavor to streamline HR processes and systems, we have transitioned several
manual processes to digital platforms. We have also reviewed and updated talent review and
succession plans to ensure the availability of critical resources.
Transparency and collaboration remain paramount, and we have fostered a free flow of
information across all levels of management. Additionally, we have nurtured the 5S
program, which has increased efficiencies and unlocked the potential of our workforce, as
well as initiated the PSM (Performance, Safety, and Morale) program in its initial stages.
At IGPL, we are committed to fostering a culture of continuous learning and development
for our employees. We firmly believe that investing in their professional and personal
growth not only benefits them but also keeps us competitive in an ever-evolving market. To
ensure employees have the relevant skill sets aligned with their learning needs, we have
conducted a structured "need identification" process, followed by customized
learning interventions. Recently, we conducted several training sessions, including
Internal Committee Capability Building (under the PoSH Act), Goal Setting, Time
Management, and Advanced MS-Excel Training.
Our proactive approach to employee engagement has resulted in an attrition rate that
remains well below industry levels. This highlights the effectiveness of our employee
engagement interventions and our focus on people development. Furthermore, our Company
maintains a harmonious and peaceful industrial relations climate. The implementation of
various HR and IT systems has contributed to increased process efficiencies and
effectiveness, further enhancing employee performance.
As we enter the new financial year, the progress we have made thus far instills
confidence in leveraging our HR initiatives to deliver business performance through a
competent and engaged workforce.
Internal Control
The Internal Control process of the Company aims to provide a reasonable assurance of
the effectiveness and efficiency of operations, reliability of financial reporting and
adherence to the applicable laws and regulations. The audit plan is laid out for the year
by the Internal Auditor on the guidelines as set out by the Audit Committee and the
management.
The Internal Control activities are the specific policies and procedures which involves
segregation of duties, proper authorization of transactions and activities, adequate
documents and records, physical control over assets and records, and independent checks on
performance. In order to establish effective internal controls, the Company continuously
assess the risk, monitor control implementation, and modify controls as and when required.
The Internal Auditor participates in all meetings of and reports directly to the Audit
Committee. The internal audit reports dwells on the detailed observations and its rating,
the recommendation and corrective action proposed to be initiated.
The Companys internal financial control systems commensurate with its nature of
business, size and operations.
Cautionary Statement
This report contains statements that are "forward looking statements"
including, but without limitation, statements relating to the implementation of strategic
initiatives and other statements relating to Companys future business developments and
economic performance. While these forward looking statements indicate our assessment and
future expectations concerning the development of our business, several risks,
uncertainties and other unknown factors could cause actual developments and results to
differ materially from our 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 our business and financial performance. Company
undertakes no obligation to publicly revise any forwardlooking statements to reflect
future/likely events or circumstances.
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