Vinati Organics infuses ₹800 crores to boost its top line

The speciality chemicals and organic intermediaries’ manufacturer Vinati Organics Ltd, is in the process of completing ₹800 crore investments to boost its top line. It has recently completed expansion of acrylamide tertiary-butyl sulfonic acid (ATBS) manufacturing and started a butyl-phenol factory. In addition, it has started the merger process with Veeral Additives Pvt. Ltd (VAPL) for achieving a revenue target of ₹2,000 crore in 2022-23.

“An antioxidants plant should start in January 2022 after completion of the merger. Combining all this, we are aiming for ₹1,500 crore of revenue in FY 2022 and ₹2,000 crore in FY 2023,” says Vinati Saraf Mutreja, managing director and CEO. The manufacturer posted ₹269 crore profit on a revenue of ₹954 crore revenue. In the previous year, the profit was higher at ₹333 crore and revenue at ₹1,028 crore.

Vinati has outperformed the benchmark indexes in the last 10 years and reached a market value of ₹20,000 crore. The share price has increased by around 58 times in the last 10 years to ₹1,925. “We were generating around ₹60 crore revenue and ₹2 crore profit until 2006. The growth has been consistent in the years after that,” she adds.

The company needs SEBI and NCLT approvals to complete the merger and it is expected to take 8-10 months. It is essential for the forward integration of butyl-phenols to antioxidants conversion, says Vinati. “The investment has been made for reaching ₹2,000 crore-revenue target. We have invested ₹300 crore in butyl-phenol, ₹150 crore in ATBS expansion and around ₹200 crore for VAPL merger. Apart from these, we have a few products in the research and development state. We are commercialising a few and have announced an additional capital expenditure of ₹150 crore,” adds Vinati.

Vinati—the world’s largest manufacturer of Isobutyl Benzene (IBB) and ATBS—exports about 75% of the production and has around 300 customers. Global chemical manufacturers like Dow Chemical, BASF and Ecolab are major clients of the chemical manufacturer. It procures raw materials from Reliance Industries, BPCL and GAIL. They import raw materials like acrylonitrile and buy phenol from Deepak Nitrite.

“Since we have niche products and there are only two or three manufacturers in the world, the customers get into long-term contracts with us. So our margin remains fixed at around 30%. The customers place the orders in advance which give us visibility of orders for the next six months. Since it is not much of a spot sale, we already have 50 per cent of orders in place for reaching ₹1,500 crore revenue in 2021-22,” says Mutreja.

According to Mutreja, the demand has picked up across sectors and geographies like oil and gas, water treatment, and agrochemical. “The next growth is going to be from butyl-phenols which are used in antioxidant and fragrance industries. ATBS will continue as the main product, which has applications in mining, water treatment, oil and gas, and personal care. IBB is used largely in pharmaceuticals,” she adds.

Vinod Banwarilal Saraf, chairman of Vinati Organics, had started the company in 1991 with one product, isobutyl benzene that is used in ibuprofen. Vinati Saraf Mutreja—his eldest daughter—joined the company in 2006. The company started making ATBS around the time and 95% of the production is now exported.