Phillips Carbon Black Ltd Management Discussions.



The growth recovery in global manufacturing, investment and trade activities that continued till 2017 are showing signs of moderation. The global economy grew by 3.0% in 2018 and is expected to grow by 2.6% in 2019 as per World Bank report. Subdued international trade flow amid escalation of US China trade tensions, lackluster investment in emerging economies, sluggish domestic demand in Europe and China, falling consumer spending and fading impact of fiscalstimulus in US, all have contributed to sluggish global economic growth. The risks surrounding Brexit impact remain heightened.

In China, regulatory tightening to check increasing debt, contributed to slower domestic investment, particularly in infrastructure. Spending on durable consumption goods also softened, with automobile sales declining in 2018 following the expiration of incentive programs for car purchases. These developments contributed to slower momentum over the year, with further pressure from diminishing export orders as US half of the year. As a tariff result, Chinas growth declined from estimated 6.8% in the first half of 2018 to 6.0% in the second half of the year.

Crude prices fluctuated markedly in the second half of 2018 with sharp falls towards the end of the year. Prices of most metals and, to a lesser extent, agricultural commodities also weakened, largely due to concerns about the effects of tariffs on growth and trade.

The outlook for 2019 is more challenging. US economy is projected to grow by 2.5% while the forecast for Euro area is 1.2% as per World Bank. Weak macroeconomic scenario in China is expected to drive the economy growth to 6.2%.

Asia accounts for almost 46% share in US$ 22 bn of planned investments in global capacity addition between 2016-21 while Chinas alone contribution is 19%.

The Indian economy is projected to grow around 7% as per various estimates. Despite the positive outlook, the economy remains vulnerable to geopolitical risks, especially economic and political changes that can affect crude prices and hurt current and fiscalaccount deficit. While inflation expectations are moderate, concerns are there for the two deficits. Fragile situation of NBFCs, weak discretionary spending, expectation of less than normal monsoon, little opportunity for liquidity infusion by Central Bank will further add to the downside risks.

2017 2018 2019 (P)
World Output 3.1 3.0 2.6
Advanced Economies 2.3 2.1 1.7
United States 2.2 2.9 2.5
Euro Area 2.4 1.8 1.2
Emerging and developing economies 4.5 4.3 4.0
Russia 1.6 2.3 1.2
China 6.8 6.6 6.2
India 6.7 6.8 7.0
Brazil 1.1 1.1 1.5
South Africa 1.4 0.8 1.1

# Source: World Bank, Notch Consulting, Internal estimates

Global tyre industry insight

Today global tyre industry development dynamics is majorly global driven by Asia. Asia leads all regional geographies in terms of number of tyre production plants with a share of 60%. Additionally, Asia accounts for almost 46% share in US$ 22 bn of planned investments in global capacity addition between 2016-21 while Chinas alone contribution is 19%.

The tyre industry has witnessed degrowth to muted growth across many geographies in 2018. In passenger car segment, global OEM demand degrew by estimated 2% while replacement demand grew by 1%. The OEM degrowth was prominent in Chinese market (6%) along with rest of Asia (4%) while North America and Europe each degrew by estimated 1-2%. Replacement demand witnessed good growth in North America & Europe (2-3%) while China along with rest of Asia excluding India witnessed negative growth of 2-3%.

On lines of passenger segment, global truck and bus tyre market too recorded poor growth in 2018 except North America. Global OEM grew by merely 1% and replacement demand decreased by 2%. North America OEM grew by an estimated 19% while Europe grew by 3%. Asia OEM demand degrew by estimated 6-7%. Global replacement demand grew by estimated 7% in North America while the same degrew in Asia by 5-6%. Europe witnessed stagnancy in replacement demand.

US$ 22 billion global investments in tyre industry between 2016-21


Indias automobile and tyre industry witnessed good growth during the first half of FY19. However, the second half witnessed degrowth almost across all the segments.

H1 FY19 FY19 full year
Passenger Vehicle 6.88 2.7
Commercial Vehicle 37.82 17.55
Three Wheeler 36.50 10.27
Two Wheeler 10.07 4.86

Source: SIAM

The Indian tyre Industry demand got impacted in response to weak growth in OEM segment and the outlook for FY20 is equally challenging. Government focus on improving infrastructure facilities, low interest cost environment, better than the forecasted monsoon are expected to drive tyre industry growth in FY20.


Global carbon black industry is concentrated with 10 players accounting for almost 62% of the global production capacity while the Indian market is consolidated with four Carbon Black manufacturers. As far as carbon black application is concerned, consumption is predominantly driven by tyres and other rubber goods while specialty black application command relatively small share.

The global carbon black market demand is projected to grow at a rate of 3-3.5% CAGR. The demand in advanced economies such as the US and the European Union (EU) is growing at a relatively slower rate compared to that of the Asian markets.

World demand supply scenario Utilisation

Carbon Black demand spread by application#

Carbon black used in high-end non-rubber applications is commonly known as ‘Specialty Blacks. Specialty carbon black imparts specific characteristics such as high-quality pigmentation, UV protection, dispersion, viscosity control and electrical conductivity. These blacks find applications in plastics, inks, paints and coatings, and batteries. They are used across industries such as automobile, electronics, textiles, construction, packaging and others.

Specialty blacks applications by volume#

Today, most of the worlds carbon black demand is concentrated in Asia, with China alone accounting for ~36%# of the share. India, Japan, Thailand, South Korea and Indonesia are the other key markets for carbon black in Asia. Further, almost 46%# of the global investment in tyre capacities is planned in Asia in next 3 years.

Demand growth across geographies has witnessed major shift. Asias share has increased over time, with demand in China commanding an increase in share on the back of robust automobile and tyre growth. There is also an increasing demand for carbon black in other Asian countries such as Thailand, Indonesia, Japan, India and others due to tyre and other industrial rubber goods investments.

Global carbon black demand regional spread#

Most of the global carbon black capacity is concentrated in Asia, with China alone accounting for almost 43% of the global capacity. Availability of local raw material at low cost provided the Chinese carbon black manufacturers competitive edge over global producers allowing them to export their products at low prices in international markets such as the South East Asia and India.

Global carbon black capacity regional spread#

In the EU, the demand is higher than local supply. Russia and other Eastern Europe based carbon black manufacturers export most of their finished goods to the EU.


PCBL is a part of the RP-Sanjiv Goenka Group, Indias youngest business group, established in 1820. This Group is a large conglomerate having interests in Power and Natural Resources,

#Source: World Bank, Notch Consulting, Internal estimates

Carbon Black, Retail and Fast-moving Consumer Goods (FMCG), Media and Entertainment, Infrastructure and Information Technology (IT) and Education and Sports, amongst others.

With a proud legacy of over 59 years, PCBL is the largest Carbon Black producer in India and the seventh largest in the world. It was set up in association with Phillips Petroleum, a US-based company, in 1960. PCBL started its commercial production in December 1962. PCBL had a technical collaboration with Columbian Chemical for about a decade. In year 1996, the Company acquired Carbon Black Division of Gujarat Carbon Limited. In 1996-97, Carbon and Chemicals India Limited was amalgamated with the Company, effective 1st April, 1997. The company inherits groups core values Customer Happiness, Credibility, Humaneness, Execution Excellence, Speed, Risk Taking, which serves as the guiding principles for our Vision and strategy. PCBL has redefined its business by establishing co-generation power plants at each factory using the off-gas generated from the carbon black manufacturing process, thus creating a sustainable green process. The company has its manufacturing units located across four locations at Durgapur in West Bengal, Mundra and Palej in Gujarat and Kochi in Kerala. The company has recently commissioned a new production line at Mundra plant. The total manufacturing capacity at all four plants combined together is 5,71,000 MT per annum. The brownfield expansion at Palej is likely to be completed by end of the FY20.

PBCLs wide-ranging portfolio of ASTM-certified, high-performance products cater to the customers specific requirements. Gradually moving up the value chain, the Company has been expanding its portfolio of high-performance value-added grades for both rubber and specialty black applications.

PBCL has a strong focus on Research and Development (R&D). We work closely with our customers to understand their requirements and accordingly develop different grades of carbon black. This helps us to focus on manufacturing high-performance specialty carbon black. Further, leveraging on the our R&D wing, we have developed a seamless capability of using multiple feedstocks such as Carbon Black Feed Stock (CBFS), Carbon Black Oil (CBO), Anthracene Oil (ATO) and Ethylene Bottom Oil (EBO) for the manufacturing of carbon black. To further enhance our Research and Development capability, a new state of the art R&D Centre at our Palej Plant has been setup.


PCBL has four manufacturing units located strategically in the vicinity of customer locations and ports in Durgapur (Eastern India), Kochi (Southern India) and Palej and Mundra (Western India).

Carbon black Power
Durgapur 1,63,500 MT 30 MW
Kochi 92,500 MT 10 MW
Palej 1,10,250 MT 12 MW
Mundra 2,04,750 MT 24 MW
Total 5,71,000 MT 76 MW

The Company strives to stay ahead of its competition, with its growing global presence, diversified product portfolio and consistent robust performance, among others.


With its efficient supply chain and distribution network, PCBL has a market presence in more than 30 countries. We ensure timely delivery of products through our decanting stations and our warehouses are in proximity to our customer locations. Our list of customers includes most of the best-known global tyre majors and we have made our mark as one of the key players in the Specialty Black segment.


PCBL provides a wide portfolio of carbon black grades to meet the specific end requirements across tyres and other niche applications globally. The rubber black portfolio caters to the demand of all renowned tyres and industrial rubber goods customers across the globe, helping their products in reinforcing physical properties. Our portfolio also caters to non-rubber high-margin applications, plastic being the largest application globally by market size. The specialty portfolio can serve more than 90% of the plastic market by product segment in various industries worldwide. We have a strong capability in the areas of engineering plastics, fibres, US Food and Drug Administration (FDA) approved food contact grades, conductors and cables, among others. We are also paving a path to build additional capability in ink, paint and coating applications.


Tax (PAT) for the year

Carbon black

PCBLs FY19 EBITDA rose to ? 640 crore as against ? 424 crore in the previous year. The strong increase in EBITDA reflects higher contribution margins on account of a shift in the product mix to value-added premium grades, leveraging on our geographical reach and improvement in operational efficiencies. Profit Before Tax (PBT) for the year increased by ? 235 crore (77%) to ? 539 crore compared to ? 304 crore for FY18.

Profit to After ? 389 crore, an increase of ? 159 crore (69%) over ? 230 crore in the previous year. During the year, the Company also completed its brownfield expansion at its Mundra plant, thereby increasing capacity by 56,000 MT taking the total capacity to 5,71,000 MT as on 31st March, 2019. Project work on brownfield Specialty lines is progressing satisfactorily, and we expect commissioning by the end of FY20.


The Companys power segment revenue (excluding inter segment revenue) was at ? 97 crore (15% higher) compared to ? 84 crore in FY18 on the back of higher sales volume as well as improved realisation.

Particulars Standalone Consolidated
31-Mar-19 31-Mar-18 31-Mar-19 31-Mar-18
(a) Debtors Turnover Ratio - Days 61 71 61 71
(Average Trade Receivables * 365 / Total Sales) (Total Sales = Sales of Finished Goods+Sale of Power) Note : Trade receivables includes amount of Goods & Service Tax.
Sales of Finished Goods for the year ended 31 March 2018 has been netted off with amount of excise duty on sale of goods included therein, to make it comparable with current years number.
(b) Inventory Turnover Ratio - Days 40 40 40 40
(Average Inventories * 365 / Total Sales) Note : Inventories = Raw Materials + Finished Goods + Stores and spares parts (including packing material).
Refer above for Total Sales Sales of Finished Goods for the year ended 31 March 2018 has been netted off with amount of excise duty on sale of goods included therein, to make it comparable with current years number
(c) Interest Coverage Ratio 16.52 6.09 16.34 6.08
[Earning before Interest and Tax (EBIT) / Finance Costs] Note: EBIT = Profit Before Tax (PBT) + Finance Cost Finance Costs = Interest expenses on debts and borrowings + Other borrowing costs + net loss/ (gain) on foreign currency transaction / translation Reason for Variance : On account of operational efficiencies & improved margin leading to higher earning & reduction in finance costs during the year
d) Current Ratio 1.85 1.73 1.89 1.80
(Total Current Assets / Current Liabilities)
Note: (Total Current Assets = Inventories + Current Financial Assets + Other Current Assets) (Current Liabilities = Total Current Liabilities - Current borrowings)
e) (i) Long term Debt Equity Ratio 0.21 0.14 0.21 0.14
(Non-current borrowings / Total Equity)
Note : Non-current borrowings includes Current maturities of Long Term Debt Total Equity = Equity share capital + other equity. For ratios for consolidated financial statements, total equity does not include non-controlling interest
Reason for Variance: on account of incremental borrowing during the year for projects.
(ii) Total Debt Equity Ratio 0.48 0.52 0.48 0.52
(Total Debt/Total Equity)
Note: Total Debt = Non-current borrowings + Current maturities of Long Term Debt + Current
Refer above for Total Equity
For ratios for consolidated financial statements, total equity does not includenon-controlling interest
(f) Operating Profit Margin (%) 18% 16% 17% 16%
(Operating Profit / Revenue from Operations) Operating Profit = Profit before tax + Depreciation and Amortisation expense + Finance Costs + Net loss/(gain) on foreign currency transactions/ translations + Loss on disposal of property, plant and equipments - Other Income Note: Revenue from operations for the year ended 31 March 2018 has been netted off with amount of excise duty on sale of goods included therein, to make it comparable with current years number.
(g) Net Profit Margin (%) 11% 9% 11% 9%
[Profit for the year/ Revenue from Operations] Note : Revenue from operations for the year ended 31 March 2018 has been adjusted with amount of excise duty on sale of goods included therein, to make it comparable with current years number.
(h) Return on Net worth (%) 24% 17% 23% 17%
[Profit for the year / Total Equity]
Refer above for Total Equity Reason for Variance: On account of operational efficiencies, improved margin and reduction in finance cost For ratios for consolidated financial statements, total equity does not include non-controlling interest For ratios for consolidated financial statements, profit for the year is profit for the year attributable to Owners of the Equity

Note :

1. All the Calculation of ratios has been rounded off to the nearest numbers/ two decimal places where applicable.

2 Figures used for calculation of ratios for consolidated financial statements, include share of non-controlling interest wherever applicable. 3. Figures for the year ended 31 Mar 18, used for calculation of ratios for the year ended 31 Mar 19 and 31 Mar 18, are comparative figures of the audited financial statements for the year ended 31 Mar 19 and figures for the year ended 31 Mar 2017, used for calculation of ratios for the year ended 31 Mar 2018, are comparative figures of the audited financial statements for the year ended 31 Mar 18.


Research and innovation are among the most crucial factors influencing sustainable growth in business and maintaining technical and qualitative superiority over competitors products. Research and Development (R&D) practices of Phillips Carbon Black Limited (PCBL) stand out for strategic and novel innovations that help further PCBLs ‘New Product Development Roadmaps in the field of carbon black, nano-structured carbonaceous materials and Carbon Black Feedstock (CBFS). Such an approach allows us to design a robust and competitive product portfolio and achieve a greater degree of business growth. We delve into ‘Competitive Intelligence Study to be able to identify opportunities for development and innovation, customer engagement, market driven research and protection of intellectual property. Furthermore, the R&D wing at PCBL has been functioning tactfully to translate market/business needs for novel carbon black into projects for our portfolio, drive development of novel products, provide cutting-edge technology solutions, boost performance of existing grades, familiarise ourselves with CBFS features in order to create consistent products and continuously looking to harness our partners knowledge and capabilities to establish a harmony with PCBL. PCBL believes in intra and inter organisational collaboration for technology leveraged application research wherein sky is the limit.

All the four R & D Units located at different plants are recognised by Department of Science and Industrial Research (DSIR), Government of India.

The NABL-accredited R&D units serve as the seeding ground for product development as well as cooperating with customers to customise product/process ability to enhance their product/process performance. The R&D units are well supported by a team of highly qualified and experienced process and product development scientists and engineers alongside global infrastructure which includes Gas Chromatography (GC), Elemental Analyser (EDX), Nitrogen Surface Area (NSA) Analyser, Particle Size Analyser (PSA), Dynamic Mechanical Analyser (DMA), optical microscope, rheometer, viscometer, rubber-and plastic-processing equipment and so on.

The R&D team works in synchrony to bring in new products and technologies that are in keeping with the various processing, application and environmental demands of our customers.


Focused strategic initiatives taken across the organisation over last 5 years such as key account management, productivity improvement, new product development, plant reliability improvement, increasing vendor base for sourcing, better working capital management, finance cost reduction and specialty blacks growth have led to consistent improvement in business performance. These initiatives, along with the support from the market have resulted in steady improvement in the bottom line, healthy balance sheet. Newly commissioned production line at Mundra plant has already started producing Carbon Black at full capacity utilisation.

World economy growth is showing some signs of weakness across geographies including India and this is also reflected in the demand for Carbon Black. However, our companys well established brand and relationships with global tyre majors, growing value added products share , efficiency R&D driven focus on new product development enable us maintain an edge in this fiercely competitive industry.


We are constantly on the lookout for opportunities that knock on our doors, while keeping tab on the likely threats to our business.


Gradual recovery of economies across the geographies should increase the demand for automobile, tyres and in turn increase the demand for carbon black.


Increasing competition from low-cost carbon black manufacturers such as Korea, China and Russia continues.


New production line at our Mundra plant got commissioned recently and with this our total manufacturing capacity increased to 5,71,000 MT per annum. Expansion project at our Palej plant is likely to be commissioned by the end of FY20. Location finalisation and feasibility assessment for our Greenfield project in South India is under progress.


The Company continues to focus on several initiatives to improve its operational efficiencies, such as improving yield, exploring new geographies for feedstock sourcing, as well as investing in technical capabilities for developing new grades for high-performance rubber and specialty black applications.


The Company has adequate internal financial control systems in areas of operation. The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. The services of the internal and external auditors are utilised from time to time, as also the in house expertise and resources. The Company continuously upgrades these systems in line with the best available practices.

Reports and deviations are regularly discussed with the Management Committee Members and actions are taken whenever necessary.

An Independent Audit Committee of the Board reviews the adequacy of the internal financial control.


The Company with its internal IT team, supported by IT partners & OEMs, has driven several new IT initiatives, to support the business in line with the business strategy of the organisation. During the year there was no business, financial or reputational loss in the organisation due to IT. No cyber-crime related incident or related legal issue has impacted the organisation.

The Company has successfully migrated its old SAP ECC ERP system to the latest platform of SAP S/4 HANA. The migration has been smooth and painless, without any cost or time over-run.

The Company has migrated most of the critical on-premise servers (including the SAP HANA Server) to Amazon Cloud (AWS). This has enabled the organisation to have more agile and scalable IT Servers and Data-Centre setup without any heavy investment of CAPEX. The setup is highly scalable and adaptable to any new business growth or any new IT-enabled application.

This cloud adoption has immensely mitigated the business-continuity risk of the organisation with on-premise servers.

The most critical business data of the organisation (SAP S/4 HANA PRODUCTION DB) has been secured with a Disaster-Recovery setup at Amazon DC Singapore a near real-time sync/copy of all SAP ERP PRODUCTION data takes place at the DR Server.

A secure mobile App platform of SAP Fiori has been launched, which enables the critical business users to approve/view critical transaction/report from anywhere, with their smartphone/tablet, with two-layer of security. The Fiori platform will be further enhanced with more Apps for quick decision-making and ready-availability of business information to senior officers.

SAP HANA integrated HR platform Success Factors is being implemented for all employees. The project is ongoing with phase-wise roll-out of various modules, which should complete by FY20.

The organisation has undertaken OPEX subscription based licences of Microsoft Office, Adobe & Autodesk software, which eliminates the risk of licence compliance issues with CAPEX perpetual licences.

Hardware, OS & Software refresh has been taken up for very old and obsolete laptops and desktops of users across the plants and offices.

A cloud-based latest anti-virus platform of Trend Micro has been deployed to secure the laptops and desktops for virus and malware. USB port blocking has been driven across the organisation to prevent data-leakage.

The Company has partnered with M/s IBM for critical IT Hardware, Software & SAP related support.

A digital strategy has been adopted by the leadership team of PCBL, to facilitate and leverage the business for coming years with the latest technologies. The Cloud architecture and S/4 HANA have laid the foundation for the same.


PCBL recognises that its operations have environmental impact and therefore has implemented several initiatives to reduce its carbon footprint, recycling wastes and undertaking steps that encourage resource optimisation. The Company has in place various equipment and systems to generate renewable energy, manage waste, harvest rainwater and create green belts. Besides, it also enjoys co-generated power from the tail gas of the carbon black process, thereby replacing equal amount of fossil fuel used by the manufacturing unit. The Company also emphasises on recycling waste, reusing wastewater and zero discharge in its resource-optimised operations. It also conducted sapling plantation drives to develop green belts inside and outside the factory premises. Additionally, PCBL has institutionalised safety and conducted customised risk-based training programmes to enhance its safety standards. During the year under review, we improved our environmental compliance with innovative implementations like installing bag filters with contemporary and brownfield projects thereby curbing waste.

Being cognisant of the requirements, aspirations and expectations of the community, the Company extends its social responsibility towards providing inclusive growth in the realms of education, art, healthcare, sports, environmental sustainability and conservation. It provides financial assistance to government-run schools in the vicinity of its facilities and helps them in infrastructure development, computer literacy programmes, facilitation of tuitions, distribution of school-aid materials and uniforms. As part of its CSR programmes, the Company is helping build individual household toilets under the Swachh Bharat Abhiyaan and helping develop infrastructure of hospitals. It also organises pulse polio camps near its operational units. The Company also funds projects in backward areas that focus on infrastructure development and livelihood generation.


An organisations vision is lived by and fructified by its People. In our continuous endeavor to drive our Vision, PCBL, this year, has led focussed organisational level interventions in line with the People Philosophy pillars- Leadership, Culture, Capabilities, Demography and Rewards, to create a culture of transparency, inclusivity and a global mindset fostering innovation and leadership building.

PCBL has marked itself as the first of its kind in introducing AMBER to its employees. Amber, an artificial intelligence enabled chatbot, helps create touchpoints with all employees, thereby making efforts in creating a culture of transparency and inclusivity. It provides the leadership team with a real-time dashboard and helps to point the needle in the right direction on our cultural transformation journey.

As part of the organisations digital strategy, PCBL has migrated to SuccessFactors (SF)- a cloud based Human Capital Management platform - People Connect. It covers every process of an employees lifecycle with the organisation from pre-hire to exit and empowers employees to be their own HR. People processes like - Learning Management System (LMS), Continuous Feedback, and Performance Management are integrated on this platform. The LMS also hosts the Virtual Gurukul platform offering a bouquet of technical and behavioural online modules across the clock, for employees to learn and build their competencies. This will induce self-learning, and help in building organisational capability.

Using technology as a HR enabler, the new online induction module has been designed to make the new joinees aware about the Growing Legacies of the RP- Sanjiv Goenka Group, the story of PCBLs Transformation Journey, impact of PCBL on the stakeholders, the Group Core Values, Senior Leadership Teams thoughts and ideas.

PCBL launched the first season of ‘PCBL Challengers- a pan-India business case study competition across premiere B-schools. The case study was designed around a live business concern. The competition observed participation from about 70 teams from across institutes who came up with valid marketing strategies, feasibility study, ROI mapping substantiating their solution to the cited concern. This leveraged the employer branding of the organisation and positioned it as a preferred employer across premier B-Schools of India.

Our Companys Industrial Relations (IR) continues to be harmonious. Not a single man-day was lost in this financial year

On 31st March 2019, there were 964 permanent employees on the rolls of the Company.


We have devised a robust system to scan the risks landscape and formulate appropriate measures.

Risk management process

Identification: Anticipation of risks

Evaluation/Assessment: Estimation of the likely probability of occurrence, severity, category and rating of risk

Prevention and control: Articulating measures to avoid occurrence of risk, limit its severity and reduce its consequences. Selecting the risk management technique by category and individual risk.

Reviewing and reporting: Reporting on the Risk Management process at appropriate intervals (at least once in a year)

Measure and monitor: Inspecting effectiveness of controls responding to the results and improving the programme

Financial control: Determining the cost of risk. Ensuring that adequate financial resources are available, implementing the selected technique

Our Identified Risks
Identified risks Mitigation measures
Financial risks
Credit risks, or the risk of financial loss to the Company if customers or counterparties fail to meet their contractual obligations Credit profiling
Regular monitoring of important developments, namely, payment history, change in credit rating, regulatory changes and industry outlook
Commodity price risk, or the risk that results from changes in market prices for raw materials (mainly carbon black feedstock, which forms the largest portion of the Companys cost of sales) Foreign currency risk, or the risk arising from foreign currency transactions that the Company deals in due to operations in international markets Maintaining inventory at optimum level through a highly probable sales quarterly forecast, as well as worldwide purchasing activities, diversifying the sources of raw material
Hedging of net foreign currency exposure at all points in time through foreign exchange forward contracts, vanilla option contracts and cross currency interest rate swaps
Supply-chain risks
Increased dependence on limited number of raw material suppliers Scouting for alternative raw material sources Building long-term partnerships with diverse suppliers Linking price of raw material with the price of product Searching for alternative feedstock, taking trial and validating the product
Fluctuations in crude oil prices
Emergence of alternate types of Carbon Black Feed Stock (CBFS)
Dependency on mode of transport Alternative sources of mode of transport
R&D risks
Gap in identifying future needs of customers Proactive visit of technical representatives and interaction with
customers to capture new requirements Quality Function Deployment Encouraging joint project with customer to develop new product
Technology risk Hiring and retaining people having the experience of working in benchmark industries in the field Attending conferences / exhibitions to scan the changes in the technology landscape and to adopt newer technologies


Manufacturing Risk
Generation of off-spec product (defect) Implementation of Statistical Process Control to identify the cause of process variation and taking action before the generation of off-spec
Equipment breakdown Adherence to Preventive / Predictive / Conditional monitoring programme and taking preventive action
Marketing risks
Competition risk Strengthening market intelligence and product differentiation
Availability of grades and quantities for respective customers Detailed forecasting, inventory management
Customer support risks
Reduced customer base on account of improper customer feedback analysis and poor assessment Ensuring customer satisfaction through feedback collection at various levels at regular intervals and taking action to address the issue, if any
Non-availability of material Maintaining safety stock, factoring in obsolescence Getting approval of different Upgrading plan using Optimiser
Human resource risk
Employee disengagement Conducting focussed group discussions to understand employee perspective at the workplace Organising workplace surveys at regular intervals to gauge employee satisfaction through Amber and Live Sampark Ensuring safety of employees by strict adherence to safety rules as per OHSAS18001:2007 and use of personal protective equipment at plant
Conducting programmes like ‘Fun at Work to create an exciting workplace for employees
Compliance risk
Fast changing laws and regulations Capturing regulatory requirements of different countries and complying with international regulations and norms Engaging an expert agency as ‘ONLY REPRESENTATIVE to help in REACH registration and meeting regulatory requirements for export of carbon black to European countries Emphasising continuously on updating domain knowledge, analysing and highlighting implications
Environment risk
Environment pollution Using the process emission (off-gas) for power generation Preventive measures to arrest leakage Adherence to ISO14001:2015 (Environment Management System standard)


The financial statements appearing above are in conformity with the accounting principles generally accepted in India. The statements in the Management Discussion and Analysis Report, which may be considered ‘forward-looking statements, within the meaning of applicable laws and regulations, have been based upon the current expectations and projection about future events. The actual results could differ from those expressed or implied. Important factors that could influence the Companys operations include Global Geopolitical Shifts, economic developments within the country, demand and supply conditions in the industry, input prices, changes in Government regulations, tax laws and other factors such as industrial relations. The management cannot, however, guarantee that these forward-looking statements will be realised or achieved.