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INDIAN SPECIALTY CHEMICALS INDUSTRY BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT

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India’s Chemical and Petrochemical industry plays a pivotal role not only in the economic health of the country but also in meeting the basic needs of the people and improving their quality of life. Driven by the vision of Hon'ble Prime Minister of India, Shri Narendra Modi, of making India a USD 5 trillion economy through ﬂagship initiatives like Make in India, Start-Up India, Skill India and Digital India, the sector is making rapid progress and expected to become a signiﬁcant player in the Global specialty chemicals Industry.

I believe that domestic as well as foreign investments in the specialty chemicals industry would be crucial for supporting the vision of ‘Atmanirbhar Bharat’. As consumers across the globe look to diversify their supply chains, India’s specialty chemicals industry is well positioned to take advantage of this new world order, and cement its position in the Global markets.

FICCI is delighted to present this report “Indian Specialty Chemical Industry – Biggest Beneﬁciary of the Global Paradigm Shift” in partnership with Avendus Capital, with a sincere hope that this report beneﬁts the stakeholders of the Indian specialty chemicals industry. This report outlines the growth outlook for various segments of the Indian specialty chemicals industry, while highlighting some of the most attractive segments. It also underlines the emerging opportunity for India to emerge as a key player in the Global Specialty Chemicals industry.

I am conﬁdent that the report will prove to be insightful for all the stakeholders. Foreword

opportunity, and to strengthen its position in While specialty chemicals industry has been the global specialty chemicals industry. The one of the best performing segments within Indian specialty chemicals industry currently the manufacturing sector, we believe that the stands at USD 32 bn and, driven by these overall impact of COVID-19 would be different macro tailwinds, is expected to grow at 12% across various parts of this industry. In this CAGR over the next five years, reaching USD report, we have also tried to outline the 64 bn by 2025. supply-side disruptions caused by the In this report, we have tried to provide the pandemic - both in the initial period and readers with a comprehensive overview of the subsequently. Also, we have tried to evaluate specialty chemicals industry in India, while the immediate demand-side impact of the Koushik Bhattacharyya Manoj Mehta pandemic, while sharing our thoughts on the Director & Head - Industrials Head - Chemicals & sharing our thoughts on some highly Investment Banking Petrochemicals attractive sub-segments and some emerging long-term outlook for the sub-segments basis Avendus Capital FICCI the degree of benefit that we believe they will [email protected] manoj.mehta@ficci.com business models in India. derive from the supply chain realignment, We have also tried to evaluate India's ability globally. to become self-reliant in the specialty chemicals industry by highlighting the factors We believe that the Government of India will have to play a pro-active role and work in he specialty chemicals industry in that led to China's emergence in the global tandem with the private sector to ensure that India has witnessed a secular growth specialty chemicals industry, the subsequent India is able to leverage this strong growth over the past few years, driven by a disruptions and geo-political events which led T opportunity. We have specified a few strong traction in the end-user markets, and to re-evaluation of the supply chain and recommendations that we believe are crucial emergence of India as the preferred eventually, put out our thoughts on key for ensuring the growth of this industry. manufacturing destination for companies factors that will determine India's ability to across the globe. It has been one of the best leverage this opportunity. We have attempted to cover the above points performing segments in the Indian As we all know, the global outbreak of novel from diverse perspectives, and sincerely hope manufacturing sector. coronavirus (COVID-19) has disrupted that the report proves to be insightful for all the stakeholders of the specialty chemicals We believe that there have been a number of industries across the globe at various levels. industry in India. favorable events in the recent past, which have significantly disrupted the global supply chain, thereby creating an inflection point for the chemicals sector in India. We believe that India is well placed to take advantage of this Foreword

Section 6: China's Role in the Global Supply Chain, and Emerging Opportunity for India ...... 36

China's Emergence as a Powerhouse in the Global Chemical Industry...... 37

Disruptions in China and Geo-Political Events Leading to Section 1: Re-evaluation of the Supply Chain ...... 38 Global Specialty Chemicals Industry...... 2 Unparalleled Opportunity for India to Seize the Whitespace ...... 39 Overview of the Industry ...... 3 Section 7: Trade Flows in Specialty Chemicals ...... 4 Impact of COVID-19 on the Indian Specialty Chemicals Industry ...... 41 Consolidation Activity in Specialty Chemicals ...... 4 Supply Side Impact: Initial Disruptions Followed by a Quick Return to Normalcy ...... 42 Section 2: Demand Side Impact: Varying Levels of Overview of the Indian Specialty Chemicals Industry ...... 6 Impact for Different Segments ...... 42 Market Landscape ...... 7 Financial Performance and Share Price Performance ...... 43 Geographical Spead...... 8 Section 8: Trade Flow...... 9 Policy Recommendations ...... 45 Key Characteristics of the Indian Specialty Chemicals Industry ...... 9 Glossary ...... 49 Section 3: Overview of the Various Segments in the Indian Specialty Chemicals Industry...... 11 Section 4: Attractive Segments in the Indian Specialty Chemicals Industry...... 17 Agrochemicals ...... 18 Ingredients ...... 22 Table of Dyes and Pigments ...... 27 Personal Care Chemicals ...... 30 Contents Section 5: Emerging Themes in the Indian Specialty Chemicals Industry ...... 33

Section 6: China's Role in the Global Supply Chain, and Emerging Opportunity for India ...... 36

China's Emergence as a Powerhouse in the Global Chemical Industry...... 37

he chemical industry is one of the most defined as chemicals which are used in low pervasive industries in manufacturing, with quantities (not bulk) but have a higher value, and Section 1 its products being critical to a wide range of also greatly influence the performance of the Section 1 T end-use applications. It is central to the world end-product. economy given its role of converting raw materials (such as oil, natural gas, metals, Globally, the specialty chemicals industry grew at Global Specialty minerals etc.) into products which are extensively 5.7% CAGR over the last 5 years, reaching USD used in all facets of daily life (agriculture, food 805 billion in 2019. It is estimated to grow at and beverages, health, personal care, 6.4% over the next 5 years to reach ~USD 1.2 automotive, electronics, water etc.). The chemical trillion by 2025, led by the growth in Asian Chemicals Industry markets. The past couple of decades have seen a industry, thus, plays a vital role in the economic development of any country and the quality of life significant shift in the manufacturing of enjoyed by its people. chemicals from EU and North America, to Asia, particularly in the specialty chemicals space. The The global chemicals market was estimated to be specialty chemicals industry is estimated to grow around USD 4.0 trillion in 2019. Commodity faster in emerging markets, such as China and chemicals make up ~80% of the global chemical India, on the back of strong growth in end-user industry, with the balance 20% being constituted industries. by specialty chemicals. Specialty chemicals are different from commodity chemicals in terms of One of the most prominent trends in the global the extensive product R&D and innovation chemicals industry has been the emergence of involved, which often get translated into better China as a dominant player. This is reflected in an margins, profitability and lesser capex intensity. increase in China's share in the global chemicals While commodity chemicals are largely industry from 6% in 2000 to around 36% in characterized by chemicals that are used in bulk 2019. China continues to be a clear leader quantities, specialty chemicals are usually across a wide range of chemicals, with a significantly higher production capacity than its peer countries.

Exhibit 1: Global Specialty Chemicals Industry Size Exhibit 2: Specialty Chemicals Industry- By Segment (USD billion) (2019)

9% Agrochemicals 1,171 9% 12% Food Additives 805 8% Construction Chemicals CAGR 6.4% 610 Electronic Chemicals CAGR 5.7% 6% Water Chemicals Polymer Additives 6% Dyes and Pigments 30% 5% Surfactants Nutra Ingredients 5% 5% F&F Ingredients 2014 2019 2025 4% Others

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 2 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 3 Overview of the Industry

Exhibit 1: Global Specialty Chemicals Industry Size Exhibit 2: Specialty Chemicals Industry- By Segment (USD billion) (2019)

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 2 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 3 Trade Flows in Specialty specialty chemical exports). Rapid Exhibit 3: Select List of marquee M&A transactions in the specialty chemicals industry industrialization, large scale manufacturing Transaction Completion Chemicals capabilities, and low manufacturing costs have Acquirer Target Target Segment Value Rationale (USD mn) Date propelled China to become a prominent supplier As the manufacturing activity and the Streamlining businesses and leveraging for a large number of chemical intermediates, DuPont Dow Diversified 76,971 Aug-17 consumption growth shifted in favor of the Asian significant operational and cost synergies even being the sole supplier for a few of them. markets over the last couple of decades, there Consolidation of market position with International trade, however, is currently Bayer Monsanto Agrochemicals 63,403 Jun-18 significant cost synergies through has been a paradigm shift in the dynamics of integration of operations undergoing significant disruptions on account of international trade. Asia has gone on to become a Enhancing manufacturing and technical geo-political events across the globe, and this has ChemChina Syngenta Agrochemicals 45,860 May-17 competencies and consolidating presence net exporter for a wide range of specialty in pesticides the potential of realigning the supply chain in a chemicals, which were erstwhile being imported Consolidating of market position in Bayer (a part of crop meaningful way in the long run. BASF Agrochemicals 9,047 Aug-18 agrochemicals segment and entry into from EU and North America. Globally, around 25% care division) seeds business of the total specialty chemical production is Consolidation Activity in Broadening product portfolio and exported, amounting to a total of around USD IFF Frutarom F&F ingredients 7,036 Oct-18 strengthening presence in natural solutions 200 billion. Specialty Chemicals Specialty Expanding presence in high growth Solvay Cytec materials and 5,996 Dec-15 advanced materials, composites and additives mining chemicals businesses China has firmly established its position as the The specialty chemicals industry has always been Enhancing R&D capabilities and obtaining leading supplier of specialty chemicals to UPL Arysta Lifescience a hotbed of M&A activity as a robust inorganic Agrochemicals 4,200 Jan-19 access to a host of high-quality patented Corporation Corporation countries across the globe, exporting specialty growth strategy is imperative for sustaining products Surface treatment Broadening of product portfolio by entering chemicals worth USD 35 billion in 2019 (which BASF Chemetall Group 3,200 Dec-16 competitive advantage across segments. Over the chemicals high growth surface treatment segment represents almost 18% of the total specialty past 5 years, there have been a number of Broadening of engineering plastics Firmenich DRT SA F&F ingredients 1,917 May-20 chemical exports and is almost 4x of India's transformative acquisitions undertaken by global capabilities and backward integration Construction Broadening of engineering plastics giants, with 50+ M&A transactions of over BASF Solvay (Polyamide) 1,917 Jan-20 chemicals capabilities and backward integration USD 1 billion in value.1 F&F ingredients Strengthening of capabilities in natural Givaudan NatureX Historically, the transactions in the industry have 1,812 Aug-18 flavors ingredients segment primarily been driven by objectives such as Masterbatches Increasing presence in higher margin Clariant and pigment specialty segments broadening of product portfolio towards high- Avient Corp (Masterbatches) 1,500 Jul-20 additives growth/high-margin products, obtaining access to technological know-how or consolidation of market position. Some of the marquee transactions during this period are highlighted below:

1 Does not include PE, pharma, bulk chemicals, or petroleum transactions

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 4 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 5 Trade Flows in Specialty specialty chemical exports). Rapid Exhibit 3: Select List of marquee M&A transactions in the specialty chemicals industry industrialization, large scale manufacturing Transaction Completion Chemicals capabilities, and low manufacturing costs have Acquirer Target Target Segment Value Rationale (USD mn) Date propelled China to become a prominent supplier As the manufacturing activity and the Streamlining businesses and leveraging for a large number of chemical intermediates, DuPont Dow Diversified 76,971 Aug-17 consumption growth shifted in favor of the Asian significant operational and cost synergies even being the sole supplier for a few of them. markets over the last couple of decades, there Consolidation of market position with International trade, however, is currently Bayer Monsanto Agrochemicals 63,403 Jun-18 significant cost synergies through has been a paradigm shift in the dynamics of integration of operations undergoing significant disruptions on account of international trade. Asia has gone on to become a Enhancing manufacturing and technical geo-political events across the globe, and this has ChemChina Syngenta Agrochemicals 45,860 May-17 competencies and consolidating presence net exporter for a wide range of specialty in pesticides the potential of realigning the supply chain in a chemicals, which were erstwhile being imported Consolidating of market position in Bayer (a part of crop meaningful way in the long run. BASF Agrochemicals 9,047 Aug-18 agrochemicals segment and entry into from EU and North America. Globally, around 25% care division) seeds business of the total specialty chemical production is Consolidation Activity in Broadening product portfolio and exported, amounting to a total of around USD IFF Frutarom F&F ingredients 7,036 Oct-18 strengthening presence in natural solutions 200 billion. Specialty Chemicals Specialty Expanding presence in high growth Solvay Cytec materials and 5,996 Dec-15 advanced materials, composites and additives mining chemicals businesses China has firmly established its position as the The specialty chemicals industry has always been Enhancing R&D capabilities and obtaining leading supplier of specialty chemicals to UPL Arysta Lifescience a hotbed of M&A activity as a robust inorganic Agrochemicals 4,200 Jan-19 access to a host of high-quality patented Corporation Corporation countries across the globe, exporting specialty growth strategy is imperative for sustaining products Surface treatment Broadening of product portfolio by entering chemicals worth USD 35 billion in 2019 (which BASF Chemetall Group 3,200 Dec-16 competitive advantage across segments. Over the chemicals high growth surface treatment segment represents almost 18% of the total specialty past 5 years, there have been a number of Broadening of engineering plastics Firmenich DRT SA F&F ingredients 1,917 May-20 chemical exports and is almost 4x of India's transformative acquisitions undertaken by global capabilities and backward integration Construction Broadening of engineering plastics giants, with 50+ M&A transactions of over BASF Solvay (Polyamide) 1,917 Jan-20 chemicals capabilities and backward integration USD 1 billion in value.1 F&F ingredients Strengthening of capabilities in natural Givaudan NatureX Historically, the transactions in the industry have 1,812 Aug-18 flavors ingredients segment primarily been driven by objectives such as Masterbatches Increasing presence in higher margin Clariant and pigment specialty segments broadening of product portfolio towards high- Avient Corp (Masterbatches) 1,500 Jul-20 additives growth/high-margin products, obtaining access to technological know-how or consolidation of market position. Some of the marquee transactions during this period are highlighted below:

1 Does not include PE, pharma, bulk chemicals, or petroleum transactions

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 4 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 5 Overview of the Industry

ndia's chemicals industry, which stood at USD consistently growing faster than the overall 180 billion in 2019, represents one of the chemicals industry, with a CAGR of 11% from Section 2 bright spots within the Indian manufacturing 2014-2019 period. This growth has been driven Section 2 I sector. The specialty chemicals segment, at USD by a combination of an increase in domestic 32 billion in 2019, constitutes about 18% of the demand from end-user segments and strong Overview of the total chemical industry in India. It has been export growth.

Exhibit 4: Indian Specialty Chemicals Industry Size Exhibit 5: Specialty Chemicals Industry - By Indian Specialty (USD billion) Segment (2019) Agrochemicals 8% 64 3% Dyes and Pigments 3% F&F - Functional Ingredients 3% 29% Surfactants 4% Chemicals Industry GR 12.4% F&F Base Ingredients 32 CA 4% Textiles Polymer 18 1.7% 6% CAGR 1 Construction 7% Personal Care Ing 22% Nutra - Functional Ingredients 6% Water 2015 2019 2025 4% Others

Market Landscape characterised by presence of a large unorganized market, which in some sub-segments such as India's specialty chemicals industry is quite base ingredients, is estimated to be larger than fragmented, with most sub-segments having only the organized market, but is difficult to quantify. a handful of scaled up players, as highlighted in The unorganized players largely cater to Exhibit 6 below. Notably, UPL is the only domestic smaller/unorganized customers in their specialty chemicals manufacturer having revenue respective end-user segments. For instance, in of more than USD 1 billion, and a global flavours & fragrances, the unorganized players manufacturing network. Scale of operations is a largely cater to the tobacco and incense sticks critical differentiating factor across sub- market, whereas in surfactants, these players segments, as that helps in gaining a larger share cater to the local unbranded soap and detergent of customer's wallet, while also helping generate manufacturers. The size of unorganized market in economies of scale. Customers across the globe the specialty chemicals industry is inversely expect their suppliers to adhere to the related to the level of R&D and innovation compliance norms acceptable across the globe, required. As a result, sub-segments such as which serves as a significant entry barrier for agrochemicals, nutraceuticals, functional scaled up companies in the industry. ingredients for flavours & fragrances and construction chemicals, have much smaller share Indian specialty chemicals industry is also of unorganized players

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 6 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 7 Overview of the Industry

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 6 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 7 Exhibit 6: Scaled up players by Sub-segment Exhibit 7: Organized vs. Unorganized share in (Revenue> INR 5 billion) Indian Specialty chemicals market Trade Flow Overall, India is a net importer of chemicals. However, this does not hold true across all of the chemicals Agrochemicals 29 value chain Dyes and Pigments 17 Polymer Additives 8 Exhibit 9: India's trade position across the specialty chemicals value chain 30% F&F Base Ingredients 8 F&F Functional Ingredients 6 Segment Petrochemical Building Petrochemical Bulk Chemicals (Organics Specialty Chemicals Construction Chemicals 5 Blocks Intermediates and Inorganic) 70% Nutraceutical Ingredients 3 India’s Trade Surfactants 2 Self-Sufﬁcient Net Importer Net Importer Net Exporter Water Chemicals 1 Flow Personal Care Ingredients 1 Organized Unorganized

Some key highlights of India's trade balance across the segments (INR billion):

66 Geographical Spread Exhibit 8: Manufacturing Facilities of Top 25 Domestic 50 Specialty Chemical Players

Gujarat and Maharashtra have emerged as the es 17 Dy No. of Top 25 specialty chemical #

Benzene Azo 4 most preferred manufacturing destinations for players present in the state Paraxylene Malathoin

leading chemical manufacturers, with 15 out of Speciality Chemicals 4 Building Blocks Intermediates Bulk Chemicals Top 25 specialty chemical companies2 in India l o

1 y l having their manufacturing units in these states. cid o -19 A P Phenol Some of factors which have contributed to the Styrene 1 cetic -24

A -29 emergence of chemical sector in these states 1

include (a) excellent international connectivity by 3 -65

way of ports, which facilitates better movement of 19 2 1 raw materials and finished goods, (b) abundant India is largely self-sufficient when it comes to Key Characteristics of the availability of skilled manpower (c) business- 15 petrochemical building blocks (such as ethylene, friendly policies and (d) presence of adequate 1 propylene, benzene etc.) with RIL and public Indian Specialty Chemicals infrastructure facilities. However, increased sector majors, such as ONGC, IOCL, HPCL, GAIL Industry impetus provided by the Indian Government having large refining capacities. However, majority through announcement of a PCPIR in Orissa Legend of the petrochemical building blocks 1. Strong export presence: India's low-cost None: No player present manufactured by India are channelized towards manufacturing capabilities, strong process coupled with the region's proximity to export Low: Up to 2 players present bulk polymers, thereby making the other specialty markets, such as SEA, could lead to an increased Moderate: 3-5 players present engineering skills and abundant availability chemical sub-segments dependent upon imports chemical manufacturing activity on the East High: More than 5 Players Present of manpower has made it a preferred for their feedstock requirements. As a result, coast. manufacturing destination for players across India continues to be a net importer of the globe. As a result, Indian specialty petrochemical intermediates and bulk chemicals. chemicals industry is emerging as an export As we move downstream, though, towards value- hub, with the export-oriented businesses added specialty chemicals, India is a net exporter, growing faster than domestic ones. The being a key supplier for a wide array of specialty exports of the country's top 103 specialty chemicals for players across the globe. chemical manufacturers have grown at a

2 Top 25 specialty chemical companies by market capitalization 3 Top 10 domestic specialty chemical companies by market cap

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 8 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 9 Exhibit 6: Scaled up players by Sub-segment Exhibit 7: Organized vs. Unorganized share in (Revenue> INR 5 billion) Indian Specialty chemicals market Trade Flow Overall, India is a net importer of chemicals. However, this does not hold true across all of the chemicals Agrochemicals 29 value chain Dyes and Pigments 17 Polymer Additives 8 Exhibit 9: India's trade position across the specialty chemicals value chain 30% F&F Base Ingredients 8 F&F Functional Ingredients 6 Segment Petrochemical Building Petrochemical Bulk Chemicals (Organics Specialty Chemicals Construction Chemicals 5 Blocks Intermediates and Inorganic) 70% Nutraceutical Ingredients 3 India’s Trade Surfactants 2 Self-Sufﬁcient Net Importer Net Importer Net Exporter Water Chemicals 1 Flow Personal Care Ingredients 1 Organized Unorganized

Some key highlights of India's trade balance across the segments (INR billion):

66 Geographical Spread Exhibit 8: Manufacturing Facilities of Top 25 Domestic 50 Specialty Chemical Players

Gujarat and Maharashtra have emerged as the es 17 Dy No. of Top 25 specialty chemical #

Benzene Azo 4 most preferred manufacturing destinations for players present in the state Paraxylene Malathoin leading chemical manufacturers, with 15 out of Speciality Chemicals 4 Building Blocks Intermediates Bulk Chemicals Top 25 specialty chemical companies2 in India l o

1 y l having their manufacturing units in these states. cid o -19 A P Phenol Some of factors which have contributed to the Styrene 1 cetic -24

A -29 emergence of chemical sector in these states 1 include (a) excellent international connectivity by 3 -65 way of ports, which facilitates better movement of 19 2 1 raw materials and finished goods, (b) abundant India is largely self-sufficient when it comes to Key Characteristics of the availability of skilled manpower (c) business- 15 petrochemical building blocks (such as ethylene, friendly policies and (d) presence of adequate 1 propylene, benzene etc.) with RIL and public Indian Specialty Chemicals infrastructure facilities. However, increased sector majors, such as ONGC, IOCL, HPCL, GAIL Industry impetus provided by the Indian Government having large refining capacities. However, majority through announcement of a PCPIR in Orissa Legend of the petrochemical building blocks 1. Strong export presence: India's low-cost None: No player present manufactured by India are channelized towards manufacturing capabilities, strong process coupled with the region's proximity to export Low: Up to 2 players present bulk polymers, thereby making the other specialty markets, such as SEA, could lead to an increased Moderate: 3-5 players present engineering skills and abundant availability chemical sub-segments dependent upon imports chemical manufacturing activity on the East High: More than 5 Players Present of manpower has made it a preferred for their feedstock requirements. As a result, coast. manufacturing destination for players across India continues to be a net importer of the globe. As a result, Indian specialty petrochemical intermediates and bulk chemicals. chemicals industry is emerging as an export As we move downstream, though, towards value- hub, with the export-oriented businesses added specialty chemicals, India is a net exporter, growing faster than domestic ones. The being a key supplier for a wide array of specialty exports of the country's top 103 specialty chemicals for players across the globe. chemical manufacturers have grown at a

2 Top 25 specialty chemical companies by market capitalization 3 Top 10 domestic specialty chemical companies by market cap

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 8 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 9 CAGR of 20.8% between FY15-FY20 as and specialty chemicals on the basis of R&D compared with revenue growth of 17.1% and innovation, this demarcation in India is during the same period. The leading players not as evident. The domestic specialty in India enjoy a strong reputation amongst chemical industry is largely 'genericized' with the consumers across the globe, which is only a handful of companies developing truly aided by strong standards of environmental innovative and unique products. Even some Section 3 Section 3 compliance and an increased number of of the larger players in India spend less than products meeting the globally acceptable 3% of their revenue towards R&D activities registration requirements, such as REACH. vis-à-vis 6-10% spent by their global Overview of counterparts. 2. Strong growth potential in domestic market: India's per capita specialty chemical 4. Emergence of businesses focusing on various segments in consumption continues to be signiﬁcantly sustainable chemistry: The concept of lower than developed markets. At the same 'green' chemicals or 'sustainable chemistry' time, growing disposable incomes and has been rapidly evolving in India. Increasing the Indian Specialty rapidly increasing urbanization are fuelling awareness about the impact of harmful growth in end-user segments, such as paints, chemical elements on human health and textiles, adhesives, personal and home care environment has led to an increased concern Chemicals Industry products, which in turn bodes well for the about the environmental impact of domestic consumption outlook of the chemicals. This has prompted governing specialty chemicals industry in India. bodies as well as the stakeholders in India to actively consider a shift towards adoption of 3. Lower focus on R&D activities: While globally, sustainable methods of manufacturing there is a clear differentiation between bulk chemicals.

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 10 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 11 CAGR of 20.8% between FY15-FY20 as and specialty chemicals on the basis of R&D compared with revenue growth of 17.1% and innovation, this demarcation in India is during the same period. The leading players not as evident. The domestic specialty in India enjoy a strong reputation amongst chemical industry is largely 'genericized' with the consumers across the globe, which is only a handful of companies developing truly aided by strong standards of environmental innovative and unique products. Even some Section 3 Section 3 compliance and an increased number of of the larger players in India spend less than products meeting the globally acceptable 3% of their revenue towards R&D activities registration requirements, such as REACH. vis-à-vis 6-10% spent by their global Overview of counterparts. 2. Strong growth potential in domestic market: India's per capita specialty chemical 4. Emergence of businesses focusing on various segments in consumption continues to be signiﬁcantly sustainable chemistry: The concept of lower than developed markets. At the same 'green' chemicals or 'sustainable chemistry' time, growing disposable incomes and has been rapidly evolving in India. Increasing the Indian Specialty rapidly increasing urbanization are fuelling awareness about the impact of harmful growth in end-user segments, such as paints, chemical elements on human health and textiles, adhesives, personal and home care environment has led to an increased concern Chemicals Industry products, which in turn bodes well for the about the environmental impact of domestic consumption outlook of the chemicals. This has prompted governing specialty chemicals industry in India. bodies as well as the stakeholders in India to actively consider a shift towards adoption of 3. Lower focus on R&D activities: While globally, sustainable methods of manufacturing there is a clear differentiation between bulk chemicals.

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 10 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 11 Agrochemicals with ~65% market share, with the balance being Key Success Factors: Reliable raw material industry, having registered a 15%+ CAGR during constituted by the domestic players. sourcing, strong R&D capabilities, appropriate the 2014-2019 period. The personal care Market Landscape: Agrochemicals is the largest product selection and strong marketing chemicals industry in India stood at USD 1.0 bn Key Success Factors: Consistent innovation to sub-segment of the Indian specialty chemicals capabilities are some of the critical success as of 2019. Given the strong growth in the Indian develop unique combinations coupled with an market. At USD 9.2 billion, it is the fourth largest factors for this segment. cosmetics and personal care products market, ability to develop and maintain strong customer agrochemical production market globally. The this segment is expected to continue to grow at relationships are critical to succeeding in this segment has historically grown at 10.0% between 15% CAGR over the next 5 years. The personal segment. 2014 and 2019. About 45% of India's Dyes and Pigments care chemicals market in India is characterized agrochemical production is exported. While many Exhibit 11: F&F Industry in India (USD bn) by a healthy mix of MNCs such as BASF, Croda 3.3 large MNCs such as Bayer, BASF and Syngenta Market Landscape: Dyes and Pigments is the and Clariant, and domestic players such as operate in the Indian market, the market is second largest sub-segment of the Indian Kumar Organics and Rossari Biotech among 5.0% 1 dominated by Indian majors. 6 out of the top 10 GR specialty chemicals industry. The segment has others. CA companies in India are domestic players, and 1.4 registered a growth of 7.3% from 2014-2019 Key Success Factors: Product innovation and domestic companies account for 80% of the total 0.7 14.2% CAGR period and stood at USD 7.0 billion as of 2019. relationship with clients are key success factors agrochemical market in India. Given the large volume of demand from end-user in this segment. Product innovation is essential markets such as textiles, a major part of the dyes Key Success Factors: Indian agrochemical 2014 2019 2025 not only for creating differentiation but also to industry is predominantly generic in nature and and pigments production is sold domestically. comply with changing regulations around various hence strong brand equity, distribution network Ingredients: The dyes and pigments market in India is synthetic active ingredients. and product portfolio are key success factors in dominated by domestic players, with only a Exhibit 14: Personal Care Chemicals Industry in India this segment. Nutraceuticals handful of MNCs, such as Heubach and Archroma (USD bn) operating in this segment. 2.4 Exhibit 10: Agrochemical Industry in India (USD bn) Market Landscape: Nutraceutical ingredients 18.1 industry in India is still at a very nascent stage, Key Success Factors: Given the polluting nature 5.0% forming just about 3% of the global nutraceutical of the manufacturing process in this segment, GR 1 CA 12.0% 1.0 GR ingredients industry. Nutraceutical ingredients strong environmental compliance standards and 9.2 CA 0.5 5.5% industry in India has registered strong growth ability of the players to move up the value chain CAGR 1 5.7 10.0% CAGR over the past 5 years and stood at USD 1.0 bn as for offering more value added-high performance of 2019. Majority of the ingredients solutions are critical success factors in this 2014 2019 2025 manufactured in India continue to be exported, segment. 2014 2019 2025 with USA and Europe being the largest Exhibit 13: Dyes & Pigments Industry in India (USD bn) Surfactants consumers for these products. Given the Ingredients: Flavours and 12.3 signiﬁcant amount of R&D and innovation Market Landscape: Surfactants industry n India Fragrances required, the market is dominated by organized 0.0% stood at USD 2.0 bn as of 2019 and is estimated GR 1 players. Only a handful of MNCs operate in this 7.0 CA to grow at 11% CAGR over the next 5 years. Market Landscape: Flavours and Fragrances .3% segment, and the market is largely dominated by 4.9 CAGR 7 Increasing penetration of products, such as industry in India forms a relatively small part of domestic companies. cleaning agents, detergents and is expected to the global F&F industry. Indian F&F industry drive a strong growth in this segment. The stood at USD 1.4 billion as of 2019. The segment Exhibit 12: Nutraceutical Ingredients Industry in India surfactants market is characterized by a large has witnessed a high historical CAGR of 14.2% (USD bn) 3.0 2014 2019 2025 number of unorganized players who cater to the between 2014 and 2019. While the base unbranded soap and detergent manufacturers. ingredient market is unorganized, with a large Personal Care Chemicals The organized market is largely dominated by GR 20.0% number of small players, the functional CA 1.0 domestic companies and only a handful of MNCs ingredients market in India is largely organized. Market Landscape: Personal care chemicals 0.4 9.0% industry has been one of the fastest growing have been able to establish meaningful presence Global giants such as Firmenich, Givaudan, IFF CAGR 1 in India. About 70% of the surfactants are used in and Symrise dominate the Indian F&F market, segments in the Indian specialty chemicals 2014 2019 2025 home and personal care products.

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 12 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 13 Agrochemicals with ~65% market share, with the balance being Key Success Factors: Reliable raw material industry, having registered a 15%+ CAGR during constituted by the domestic players. sourcing, strong R&D capabilities, appropriate the 2014-2019 period. The personal care Market Landscape: Agrochemicals is the largest product selection and strong marketing chemicals industry in India stood at USD 1.0 bn Key Success Factors: Consistent innovation to sub-segment of the Indian specialty chemicals capabilities are some of the critical success as of 2019. Given the strong growth in the Indian develop unique combinations coupled with an market. At USD 9.2 billion, it is the fourth largest factors for this segment. cosmetics and personal care products market, ability to develop and maintain strong customer agrochemical production market globally. The this segment is expected to continue to grow at relationships are critical to succeeding in this segment has historically grown at 10.0% between 15% CAGR over the next 5 years. The personal segment. 2014 and 2019. About 45% of India's Dyes and Pigments care chemicals market in India is characterized agrochemical production is exported. While many Exhibit 11: F&F Industry in India (USD bn) by a healthy mix of MNCs such as BASF, Croda 3.3 large MNCs such as Bayer, BASF and Syngenta Market Landscape: Dyes and Pigments is the and Clariant, and domestic players such as operate in the Indian market, the market is second largest sub-segment of the Indian Kumar Organics and Rossari Biotech among 5.0% 1 dominated by Indian majors. 6 out of the top 10 GR specialty chemicals industry. The segment has others. CA companies in India are domestic players, and 1.4 registered a growth of 7.3% from 2014-2019 Key Success Factors: Product innovation and domestic companies account for 80% of the total 0.7 14.2% CAGR period and stood at USD 7.0 billion as of 2019. relationship with clients are key success factors agrochemical market in India. Given the large volume of demand from end-user in this segment. Product innovation is essential markets such as textiles, a major part of the dyes Key Success Factors: Indian agrochemical 2014 2019 2025 not only for creating differentiation but also to industry is predominantly generic in nature and and pigments production is sold domestically. comply with changing regulations around various hence strong brand equity, distribution network Ingredients: The dyes and pigments market in India is synthetic active ingredients. and product portfolio are key success factors in dominated by domestic players, with only a Exhibit 14: Personal Care Chemicals Industry in India this segment. Nutraceuticals handful of MNCs, such as Heubach and Archroma (USD bn) operating in this segment. 2.4 Exhibit 10: Agrochemical Industry in India (USD bn) Market Landscape: Nutraceutical ingredients 18.1 industry in India is still at a very nascent stage, Key Success Factors: Given the polluting nature 5.0% forming just about 3% of the global nutraceutical of the manufacturing process in this segment, GR 1 CA 12.0% 1.0 GR ingredients industry. Nutraceutical ingredients strong environmental compliance standards and 9.2 CA 0.5 5.5% industry in India has registered strong growth ability of the players to move up the value chain CAGR 1 5.7 10.0% CAGR over the past 5 years and stood at USD 1.0 bn as for offering more value added-high performance of 2019. Majority of the ingredients solutions are critical success factors in this 2014 2019 2025 manufactured in India continue to be exported, segment. 2014 2019 2025 with USA and Europe being the largest Exhibit 13: Dyes & Pigments Industry in India (USD bn) Surfactants consumers for these products. Given the Ingredients: Flavours and 12.3 signiﬁcant amount of R&D and innovation Market Landscape: Surfactants industry n India Fragrances required, the market is dominated by organized 0.0% stood at USD 2.0 bn as of 2019 and is estimated GR 1 players. Only a handful of MNCs operate in this 7.0 CA to grow at 11% CAGR over the next 5 years. Market Landscape: Flavours and Fragrances .3% segment, and the market is largely dominated by 4.9 CAGR 7 Increasing penetration of products, such as industry in India forms a relatively small part of domestic companies. cleaning agents, detergents and is expected to the global F&F industry. Indian F&F industry drive a strong growth in this segment. The stood at USD 1.4 billion as of 2019. The segment Exhibit 12: Nutraceutical Ingredients Industry in India surfactants market is characterized by a large has witnessed a high historical CAGR of 14.2% (USD bn) 3.0 2014 2019 2025 number of unorganized players who cater to the between 2014 and 2019. While the base unbranded soap and detergent manufacturers. ingredient market is unorganized, with a large Personal Care Chemicals The organized market is largely dominated by GR 20.0% number of small players, the functional CA 1.0 domestic companies and only a handful of MNCs ingredients market in India is largely organized. Market Landscape: Personal care chemicals 0.4 9.0% industry has been one of the fastest growing have been able to establish meaningful presence Global giants such as Firmenich, Givaudan, IFF CAGR 1 in India. About 70% of the surfactants are used in and Symrise dominate the Indian F&F market, segments in the Indian specialty chemicals 2014 2019 2025 home and personal care products.

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 12 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 13 Key Success Factors: Scale of operations is Construction Chemicals Polymer Additives Water Chemicals important to stay cost competitive, and ability to tap into niche high-margin product segments is Market Landscape: Indian Government's Market Landscape: Strong growth in end-user Market Landscape: The tightening of an important driver for proﬁtability in this initiatives towards development of infrastructure markets, such as consumer durables, pipes, environmental norms on industrial efﬂuents and wires and cables, and packaging has translated segment. has been a key driving factor for growth in the their strict implementation by the Central into a strong growth for polymer additives Indian Construction chemicals market. The Pollution Control Board has been fueling growth Exhibit 15: Surfactants Industry in India (USD bn) industry in India. Polymer additives market in segment registered 13%+ CAGR from 2014-2019 in the water chemicals segment in India. Indian India registered 12%+ CAGR during the 2014- 3.8 period and stood at USD 1.4 billion as of 2019. 2019 period and stood at USD 1.3 billion as of Water chemicals market registered ~15% CAGR

.0% The construction chemicals market in India is from 2014-2019 period and stood at USD 0.8 1 2019. The Indian market is largely dominated by GR 1 largely organized players with a healthy mix of MNCs such as BASF, Chemtura, and Bayer billion as of 2019. The market is largely organized 2.0 CA domestic players and MNCs. MNCs such as Sika especially in value added segments such as and is usually dominated by domestic players, 1.5 GR 6.4% CA and Fosroc tend to dominate the B2B segment, flame retardants, heat stabilizers and who offer water chemicals as a part of the entire whereas domestic companies, such as Pidilte antioxidants. Indian companies largely dominate water treatment solution. Coagulants and dominate the B2C segment. Concrete admixtures the low margin segments such as plasticizers. flocculants (33%) account for largest share of the 2014 2019 2025 (40%) account for majority of the construction Plasticizers (40%) account for largest share of the market, followed by disinfectants (15%). chemicals market in India followed by adhesives Indian market, followed by heat stabilizers (20%). Key Success Factors: Integrated value chain with Textile Chemicals and sealants (20%) and water proofing chemicals Key Success Factors: Ability to provide high- an ability to provide end-to-end water solutions is margin products, diversification of product Market Landscape: Textile chemicals industry in (15%). portfolio and strong customer base are critical the key success factor for this segment. India registered a growth of 10%+ CAGR from Key Success Factors: Brand is a key success differentiating factors in this segment. 2014-2019 period and stood at USD 1.8 bn as of factor in B2C segment, whereas technical Exhibit 19: Water Chemicals Industry in India (USD bn) 2019. India is amongst the largest producers of capabilities and strong product portfolio are Exhibit 18: Polymer Additives Industry in India textiles and garments in the world, underlining critical in B2B segment. (USD bn) 1.9 the strong domestic demand for textile 2.3 chemicals. The textile chemicals market in India 0.0% 5.0%

GR 1 GR 1 is highly fragmented and is characterized by a Exhibit 17: Construction Chemicals Industry in India CA 1.3 CA large number of unorganized players. Steady (USD bn) 0.8 3.1 0.7 GR 12.8% 0.4 4.9% growth in textile industry and increasing value CA CAGR 1 addition in the textile chemicals segment are expected to drive the growth in this segment. 5.0% 2014 2019 2025 GR 1 2014 2019 2025 CA Key Success Factors: Ability to offer differentiated 1.4 3.5% 0.7 and value-added chemicals can be a key success CAGR 1 factor as the players largely tend to compete on price due to signiﬁcant presence of unorganized 2014 2019 2025 players. Exhibit 16: Textile Chemicals Industry in India (USD bn)

3.8

.5% 1

GR 1 1.8 CA

1.1 0.4% CAGR 1

2014 2019 2025

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 14 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 15 Key Success Factors: Scale of operations is Construction Chemicals Polymer Additives Water Chemicals important to stay cost competitive, and ability to tap into niche high-margin product segments is Market Landscape: Indian Government's Market Landscape: Strong growth in end-user Market Landscape: The tightening of an important driver for proﬁtability in this initiatives towards development of infrastructure markets, such as consumer durables, pipes, environmental norms on industrial efﬂuents and wires and cables, and packaging has translated segment. has been a key driving factor for growth in the their strict implementation by the Central into a strong growth for polymer additives Indian Construction chemicals market. The Pollution Control Board has been fueling growth Exhibit 15: Surfactants Industry in India (USD bn) industry in India. Polymer additives market in segment registered 13%+ CAGR from 2014-2019 in the water chemicals segment in India. Indian India registered 12%+ CAGR during the 2014- 3.8 period and stood at USD 1.4 billion as of 2019. 2019 period and stood at USD 1.3 billion as of Water chemicals market registered ~15% CAGR

3.8

.5% 1

GR 1 1.8 CA

1.1 0.4% CAGR 1

2014 2019 2025

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 14 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 15 Segment Attractiveness: below summarizes the segments on these parameters. Four sub-segments: agrochemicals, While the overall specialty chemicals market in F&F and nutraceutical ingredients, dyes & India is highly attractive, certain segments stand pigments, and personal care chemical are out on account of scale, presence of scaled up particularly attractive and have been elaborated Indian players, and growth potential. Exhibit 20 in detail in next section. Section 4 Section 4 Exhibit 20: Summary of segment-wise attractiveness within specialty chemicals

Segment Market 2014- 2019- Entry Product Presence of End Overall Attractive Segments Size 2019 2025 Barriers Specializ scaled up market Attracti (USD bn) CAGR CAGR ation Indian growth veness players potential in the Indian Specialty Agrochemicals 9.2 10.0% 12.0% H M H M 4 Chemicals Industry F&F and Nutra 2.4 16.1% 17.1% H H H H 4 Ingredients

Dyes and Pigments 7.0 7.3% 10.0% M M H M 4

Personal Care 1.0 15.5% 15.0% H H L H 4 Chemicals

Surfactants 2.0 6.4% 11.0% M M L M 3

Textile Chemicals 1.8 10.4% 11.5% M M L L 2

Construction 1.4 13.5% 15.0% H M L H 3 Chemicals

Polymer Additives 1.3 12.8% 10.0% L M M M 2

Water Chemicals 0.8 14.9% 15.0% H M L H 3

H - High, M - Medium, L - Low

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 16 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 17 Segment Attractiveness: below summarizes the segments on these parameters. Four sub-segments: agrochemicals, While the overall specialty chemicals market in F&F and nutraceutical ingredients, dyes & India is highly attractive, certain segments stand pigments, and personal care chemical are out on account of scale, presence of scaled up particularly attractive and have been elaborated Indian players, and growth potential. Exhibit 20 in detail in next section. Section 4 Section 4 Exhibit 20: Summary of segment-wise attractiveness within specialty chemicals

Dyes and Pigments 7.0 7.3% 10.0% M M H M 4

Personal Care 1.0 15.5% 15.0% H H L H 4 Chemicals

Surfactants 2.0 6.4% 11.0% M M L M 3

Textile Chemicals 1.8 10.4% 11.5% M M L L 2

Construction 1.4 13.5% 15.0% H M L H 3 Chemicals

Polymer Additives 1.3 12.8% 10.0% L M M M 2

Water Chemicals 0.8 14.9% 15.0% H M L H 3

H - High, M - Medium, L - Low

Manufacturing Manufacturing Marketing & R&D Technical Grade Formulation Distribution

Huge research Concentrated bulk Efﬁcacy of ﬁnal Branding Brief Overview of the Market than 65% of the total agrochemical consumption budgets (8 -10% of Chemicals product suiting Strong rural revenue) Play on economies local conditions distribution network in India, led by Maharashtra with 25% share. Rice USP New molecules of scale Awareness initiatives At 16% GDP contribution, 12% share of India's and Cotton are the two largest consumers of exports and a source of livelihood for half the agrochemicals together accounting for about 40%

s UPL, Bayer, Syngenta, DuPont, Rallis, Insecticides India Indian population, agriculture is the backbone of of the total consumption. er Indian economy. Agrochemicals or crop care y Bharat Rasayan Pl Industries, Dhanuka chemicals have played a vital role in improving Indian agrochemical industry is almost entirely a Pla the agricultural productivity in India. As of 2019, branded generics market, and Indian players India is the 4th largest manufacturer and 5th have a low focus on R&D, with majority of the largest exporter of agrochemicals in the word. players focusing on generic or licensed products. Key Market Trends removal of weeds uneconomical, and (b) Despite India being one of the fastest growing R&D spending for even some of the largest strong growth in horticulture cultivation activities, which involve higher adoption of agrochemicals markets globally, the headroom for players in India is lower than 2% of revenue, as 1. Make-in-India and Import substitution: Indian agrochemical companies depend heavily on herbicides and fungicides. further growth is massive. Consumption of compared to global majors, who spend anywhere between 6-10% of their revenues on R&D imports for meeting their raw materials and agrochemicals in India is still very low, on a per intermediate requirements, with China activities. In the absence of significant R&D hectare basis, with USA and UK consuming ~10x, constituting almost 50% of these imports. Growth Drivers and Japan and China consuming ~20x of the activities, strong brand equity, widespread Indian companies are increasingly looking at agrochemicals consumed by India. Indian crop distribution network and a robust product reducing their dependence on China and 1. Need for an improvement in farm productivity to achieve food security: While India is home to yield losses range between 15-20% on account of pipeline are some of the most critical success substituting imports by manufacturing key intermediates locally. Leading agrochemical 18% of the world's population, it has only 11% weeds, pests, dieses and rodents - which can be factors for Indian agrochemical companies. players in India, such as PI Industries and of world's total arable land. At the same time, minimized through usage of agrochemicals. Rallis among others have announced India's farm productivity continues to be greenfield projects for manufacturing of significantly low as reflected in per hectare Agrochemicals industry in India is worth USD 9.2 intermediates. yield of 0.6 kg/hectare in 2016 vis-à-vis 7.0 billion in 2019, with almost 45% of the Value Chain kg/hectare in USA and 13.0 kg/hectare in production being exported. Between 2014 and 2. Increased focus on CRAMS: New molecule China. With a growing population, India's per Exhibit 21 below represents the agrochemicals 2019, the agrochemicals industry in India grew at R&D has become increasingly complex and capita arable land has been declining over the value chain. The process of discovering a new costly, which has warranted global innovators 10% CAGR (in rupee terms) despite slower than years, underlining the need for improved farm molecule involves a significant amount of time to look at outsourcing research and productivity. Agrochemicals play a very vital expected demand in both global as well as (>10 years) and capital investment (>USD 300 manufacturing to strategic partners. India's role in improving farm productivity by domestic markets. The industry is well poised to low-cost manufacturing capabilities, million); and the same has been consistently preventing crop losses arising from weeds, sustain its momentum and grow at 12% to reach established track record in process chemistry insects, fungus etc. increasing over the years. As a result, only a USD 18.1 billion by 2025. and strong IPR protection policies have made handful of global majors predominantly drive India a preferred destination for global 2. Improved farmer awareness and increase in Indian agrochemicals market is dominated by R&D in the agrochemicals value chain. Technical innovators looking to outsource their farm incomes: Initiatives undertaken by pesticides (54% of the market), whereas globally, grade manufacturing involves production of manufacturing operations. government and private sector entities towards farmer education and digitization has led to herbicides enjoy the largest share (40% of the active ingredients, which are then used by 3. Changing product mix: Unlike the rest of the increased awareness among farmers market). The mix, however, is expected to change formulators to manufacture formulations which world, Indian agrochemical market has regarding usage of the right crop care in the future, on account of growing labour are eventually used by the farmers. Dealers and historically been dominated by insecticides. solutions. Additionally, improvement in farmer scarcity and increasing costs of manual weeding, distributors also play a very crucial role in the However, growth in herbicides and fungicides incomes coupled with increased availability of is estimated to outpace the growth in which will translate in herbicides and fungicides agrochemicals value chain and apart from brand credit is likely to translate into additional insecticides on account of (a) rising farm investment in agrochemicals for improvement outpacing the growth in pesticides in the Indian equity, strength of distribution network is a key labour costs, which have made the manual of farm productivity. market. Top 5 states in India account for more differentiator in Indian agrochemicals market.

Manufacturing Manufacturing Marketing & R&D Technical Grade Formulation Distribution

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 18 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 19 3. Policy reforms to accelerate the growth in meeting international quality requirements is Exhibit 23: List of key private equity transactions in the Indian agrochemicals industry agriculture sector: In March 2020, the Indian likely to drive growth of exports in the Year Target PE Fund Target's Segment Stake Deal Value Government announced several reforms for agrochemicals sector. This coupled with a (USD mn)

the Agriculture sector, which is likely to boost strong pipeline of agrochemicals worth USD 8 2016 Parijat Industries Rabo Equity Advisors Mostly formulation N.A 15 sector's growth and, in turn, demand for billion going off-patent, between 2020-2025, agrochemicals. Some of the key reforms is likely to create a huge growth opportunity for 2016 Safex Chemicals Banyan Tree Mostly formulation 23% 10 include - (a) Free trade for agricultural produce the Indian agrochemicals industry. 2015 PI Industries Cartica Capital Formulation + CRAMS 4% 50 across country, as against earlier limitation of 2014 GSP Crop Science Oman India Joint Mostly formulation 12% 15 sale through APMCs, (b) Exclusion of various Key Transactions Investment Fund categories from Essential Commodities Act 2013 Camson Bio Technologies CLSA Capital Mostly formulation 20% 10 which will enable better supply chain Over the years, Indian agrochemical players have 2011 Crystal Crop Protection Everstone Mostly formulation 9% 30 management and (c) Increase in outlay for received a lot of interest from both strategic as 2011 PI Industries Sequoia Capital Formulation + CRAMS 4% 12 previously announced schemes such as crop well as ﬁnancial investors. Some of the key insurance scheme, launch of direct income objectives for strategic investors have been to support by way of PM-Kisan Samman Nidhi. gain access to the distribution network and have a large proportion of formulation in the 4. Strong export outlook driven by a robust registration capabilities of the Indian players, Key Players in the revenue. There are a few players who are more pipeline of molecules going off-patent: India which helps expedite the time-to-market. At the has emerged as a strong exporter of generics same time, acquisitions allow them to establish a Agrochemical Industry: focused on technical products and largely cater to for agrochemicals, with exports constituting meaningful manufacturing presence, which can exports market. Global giants such as Bayer, Agrochemical industry in India has large number 45% of the total production. Ability of Indian also be used for exports to other markets. Exhibit Syngenta, BASF, Dow DuPont, FMC also have a 22 below summarizes key transactions in the of scaled up domestic players. Most of the manufacturers to offer low-cost products while good presence in the domestic market. Indian agrochemicals space over the past decade. players tend to play across the value chain and

Exhibit 22: List of key M&A transactions in the Indian agrochemicals industry Exhibit 24: List of key players in Indian agrochemicals industry Agrochemicals Deal Acquirer, Target's Year Target Stake Value Rationale Country Segment MNC (USD mn) Players PI Industries, Isagro Asia Mostly 100% 48 Manufacturing capacity and hedging 2019 India Agrochemicals formulation the supply chain Domestic Sumitomo, Excel Crop Mostly 65% 135 Distribution network for penetrating Players 2016 Japan Care formulation Indian market

Godrej Astec Only technical 52% 30 Product portfolio expansion & 2015 Agrovet, Lifesciences backward integration (intermediates) Segment Mostly Technical Mostly Formulations India

Valagro, Italy Sri Biotech Mostly 80% 36 Access to high-growth Indian market 2015 Laboratories formulation and potential product synergies

Nihon Hyderabad Mostly 74% 73 Establish a distribution network and 2014 Nohyaku, Chemicals formulation manufacturing base in India Japan

SDS Biotech, Sree Mostly 65% 34 Establish a manufacturing / marketing 2012 Japan Ramicides technical hub in India to service Indian and Chemicals other export markets

Coromandel Sabero Mostly 73% 87 Product portfolio expansion & 2011 International, Organics formulation diversiﬁcation, reduction of dependence India on subsidy-based business

Arysta Devidayal Formulation 100% NA Access to distribution network in a 2011 Lifesciences, Sales high-growth market Japan

Sumitomo New Chemie Mostly 100% NA Strengthen operations & expand 2010 Corp, Japan Industries formulation presence in the Indian market

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 20 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 21 3. Policy reforms to accelerate the growth in meeting international quality requirements is Exhibit 23: List of key private equity transactions in the Indian agrochemicals industry agriculture sector: In March 2020, the Indian likely to drive growth of exports in the Year Target PE Fund Target's Segment Stake Deal Value Government announced several reforms for agrochemicals sector. This coupled with a (USD mn) the Agriculture sector, which is likely to boost strong pipeline of agrochemicals worth USD 8 2016 Parijat Industries Rabo Equity Advisors Mostly formulation N.A 15 sector's growth and, in turn, demand for billion going off-patent, between 2020-2025, agrochemicals. Some of the key reforms is likely to create a huge growth opportunity for 2016 Safex Chemicals Banyan Tree Mostly formulation 23% 10 include - (a) Free trade for agricultural produce the Indian agrochemicals industry. 2015 PI Industries Cartica Capital Formulation + CRAMS 4% 50 across country, as against earlier limitation of 2014 GSP Crop Science Oman India Joint Mostly formulation 12% 15 sale through APMCs, (b) Exclusion of various Key Transactions Investment Fund categories from Essential Commodities Act 2013 Camson Bio Technologies CLSA Capital Mostly formulation 20% 10 which will enable better supply chain Over the years, Indian agrochemical players have 2011 Crystal Crop Protection Everstone Mostly formulation 9% 30 management and (c) Increase in outlay for received a lot of interest from both strategic as 2011 PI Industries Sequoia Capital Formulation + CRAMS 4% 12 previously announced schemes such as crop well as ﬁnancial investors. Some of the key insurance scheme, launch of direct income objectives for strategic investors have been to support by way of PM-Kisan Samman Nidhi. gain access to the distribution network and have a large proportion of formulation in the 4. Strong export outlook driven by a robust registration capabilities of the Indian players, Key Players in the revenue. There are a few players who are more pipeline of molecules going off-patent: India which helps expedite the time-to-market. At the has emerged as a strong exporter of generics same time, acquisitions allow them to establish a Agrochemical Industry: focused on technical products and largely cater to for agrochemicals, with exports constituting meaningful manufacturing presence, which can exports market. Global giants such as Bayer, Agrochemical industry in India has large number 45% of the total production. Ability of Indian also be used for exports to other markets. Exhibit Syngenta, BASF, Dow DuPont, FMC also have a 22 below summarizes key transactions in the of scaled up domestic players. Most of the manufacturers to offer low-cost products while good presence in the domestic market. Indian agrochemicals space over the past decade. players tend to play across the value chain and

Godrej Astec Only technical 52% 30 Product portfolio expansion & 2015 Agrovet, Lifesciences backward integration (intermediates) Segment Mostly Technical Mostly Formulations India

Valagro, Italy Sri Biotech Mostly 80% 36 Access to high-growth Indian market 2015 Laboratories formulation and potential product synergies

Nihon Hyderabad Mostly 74% 73 Establish a distribution network and 2014 Nohyaku, Chemicals formulation manufacturing base in India Japan

SDS Biotech, Sree Mostly 65% 34 Establish a manufacturing / marketing 2012 Japan Ramicides technical hub in India to service Indian and Chemicals other export markets

Coromandel Sabero Mostly 73% 87 Product portfolio expansion & 2011 International, Organics formulation diversiﬁcation, reduction of dependence India on subsidy-based business

Arysta Devidayal Formulation 100% NA Access to distribution network in a 2011 Lifesciences, Sales high-growth market Japan

Sumitomo New Chemie Mostly 100% NA Strengthen operations & expand 2010 Corp, Japan Industries formulation presence in the Indian market

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 20 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 21 Ingredients A. Base Ingredients: manufacturing has rapidly evolved in India and is largely focused on aroma chemicals. Overall, 60% Base ingredients are further divided into (a) of total production of base ingredients in India is Natural base ingredients, which are derived from exported. spices, herbs or other naturally available crops through a process of extraction, either solvent- Base ingredient market in India was estimated to be USD 3.5 billion as of 2019. Mint extracts, Brief Overview of the Market natural extracts player could be supplying based or supercritical, and (b) Synthetic base extracts and essential oils into the F&F industry ingredients which typically start from a which accounted for ~40% of the market Ingredients are typically chemicals that lend as well as extracts and oleoresins to petrochemical derivative or derivatives of other witnessed a challenging environment driven functional properties such as flavours, fragrance nutraceutical ingredients companies. Similarly, a raw materials like pine oil, and the final ingredient largely by softening of prices, resulting in a or nutritional benefits to food, beverages, synthetic ingredient manufacturer could be is arrived at through a series of chemical degrowth reported by the industry leaders. personal care products and pharmaceuticals. supplying aroma chemicals to F&F blenders as reactions (as opposed to extraction in the case of Adjusting for the degrowth in the mint extract Conception of flavours typically happens through well as synthetic vitamins/synthetically derived natural base ingredients) segment, the base ingredient market in India a combination of five basic flavours i.e. sweet, compounds to the nutraceutical value chain. between 2014 and 2019 has grown at a CAGR of sour, salty, butter and savory with simultaneous In India, natural base ingredients form about 70% Broadly, the F&F and nutraceutical value chain 11.3%. The segment is expected to grow at a odor sensations. Fragrances, on the other hand, of the total market, on account of abundant has four key stakeholders - (a) raw material CAGR of 12.0%, to USD 6.9 billion by 2025. are typically used for masking, neutralization and availability of the requisite raw materials, and suppliers (b) base ingredient manufacturers (c) alteration of odor for various products, or even synthetic ingredients (aroma chemicals, Competitive Landscape functional ingredient manufacturers and (d) end- creation of odor for otherwise odorless products. oleoresins etc.) form a relatively smaller part. consumer industries. Base ingredients are Base ingredient market largely consists of natural India is a market leader in natural ingredients While flavours & fragrances (F&F) and chemicals used in the F&F or nutraceutical value ingredient players. Few scaled up companies such as spice oleoresins and mint extracts, and is nutraceutical ingredients have different customer chain, obtained either from a feedstock using a have established strong operations in synthetic mixes and product bases, there is a significant among the top three global suppliers for a synthetic process or from naturally occurring ingredients, especially focused on fragrance overlap in the R&D, the molecules and some number of ingredients. Synthetic ingredient spices, herbs, fruits and flowers using an applications. stages of production, and hence, these three extraction process. These ingredients are then segments are better understood in unison. further processed by F&F blenders or Exhibit 26: List of key players in Indian base ingredients segment F&F and nutraceutical ingredients are often nutraceutical ingredient manufacturers to be manufactured from the same starting blocks supplied to FMCG, F&B, and nutraceutical sectors Domestic which are referred to as base ingredients. A respectively Players

Segment Natural Natural Natural + Synthetic Synthetic Synthetic Exhibit 25: F&F and Nutraceuticals Value Chain

fragrances. However, these ingredients have a Flavours & Fragrances Food and beverages, B. Flavours & Fragrance blends: Chemical Feedstock Synthetic ingredients (e.g.: musk, home and personal care (e.g.: Petrochemicals) (e.g.: aroma chemicals) significant influence on the purchase decision sandalwood) products Flavours and fragrances are very critical and customer satisfaction. components of food & beverages, home and Flavours & fragrances blending is characterized Natural extracts Nutraceutical personal care products as they create a strong Natural Feedstock Nutraceutical ingredients (e.g.: marigold formulations (e.g.: by a wide range of entry barriers, as such high (e.g.: spices, herbs) (e.g.: lutein beadlet) sensorial impact on the customer, contributing to oleoresin) supplements, capsules) a positive or negative brand recall. F&F blends rate of innovation, need for significant R&D investments and an ability to get on the rosters of Natural: Farms Natural: Synthite Global: Givaudan, IFF FMCG: HUL, P&G use a large number of ingredients which can Synthetic: Atul Synthetic: Privi Indian: SH Kelkar, F&B: Nestle, Pepsico either be natural or synthetic, or a combination of large customers. This has resulted in Top 4 global Industries Organics Goldfield the two. players enjoying a market share of more than 70%. Similarly, in India, the F&F market is F&F ingredients typically represent a very small dominated by the MNCs, with the top 4 global portion of end-products cost, less than 2% in players (Givaudan, IFF, Firmenich and Symrise) case of flavours and 4-6% in case of fine constituting over 50% of the market.

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 22 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 23 Ingredients A. Base Ingredients: manufacturing has rapidly evolved in India and is largely focused on aroma chemicals. Overall, 60% Base ingredients are further divided into (a) of total production of base ingredients in India is Natural base ingredients, which are derived from exported. spices, herbs or other naturally available crops through a process of extraction, either solvent- Base ingredient market in India was estimated to be USD 3.5 billion as of 2019. Mint extracts, Brief Overview of the Market natural extracts player could be supplying based or supercritical, and (b) Synthetic base extracts and essential oils into the F&F industry ingredients which typically start from a which accounted for ~40% of the market Ingredients are typically chemicals that lend as well as extracts and oleoresins to petrochemical derivative or derivatives of other witnessed a challenging environment driven functional properties such as flavours, fragrance nutraceutical ingredients companies. Similarly, a raw materials like pine oil, and the final ingredient largely by softening of prices, resulting in a or nutritional benefits to food, beverages, synthetic ingredient manufacturer could be is arrived at through a series of chemical degrowth reported by the industry leaders. personal care products and pharmaceuticals. supplying aroma chemicals to F&F blenders as reactions (as opposed to extraction in the case of Adjusting for the degrowth in the mint extract Conception of flavours typically happens through well as synthetic vitamins/synthetically derived natural base ingredients) segment, the base ingredient market in India a combination of five basic flavours i.e. sweet, compounds to the nutraceutical value chain. between 2014 and 2019 has grown at a CAGR of sour, salty, butter and savory with simultaneous In India, natural base ingredients form about 70% Broadly, the F&F and nutraceutical value chain 11.3%. The segment is expected to grow at a odor sensations. Fragrances, on the other hand, of the total market, on account of abundant has four key stakeholders - (a) raw material CAGR of 12.0%, to USD 6.9 billion by 2025. are typically used for masking, neutralization and availability of the requisite raw materials, and suppliers (b) base ingredient manufacturers (c) alteration of odor for various products, or even synthetic ingredients (aroma chemicals, Competitive Landscape functional ingredient manufacturers and (d) end- creation of odor for otherwise odorless products. oleoresins etc.) form a relatively smaller part. consumer industries. Base ingredients are Base ingredient market largely consists of natural India is a market leader in natural ingredients While flavours & fragrances (F&F) and chemicals used in the F&F or nutraceutical value ingredient players. Few scaled up companies such as spice oleoresins and mint extracts, and is nutraceutical ingredients have different customer chain, obtained either from a feedstock using a have established strong operations in synthetic mixes and product bases, there is a significant among the top three global suppliers for a synthetic process or from naturally occurring ingredients, especially focused on fragrance overlap in the R&D, the molecules and some number of ingredients. Synthetic ingredient spices, herbs, fruits and flowers using an applications. stages of production, and hence, these three extraction process. These ingredients are then segments are better understood in unison. further processed by F&F blenders or Exhibit 26: List of key players in Indian base ingredients segment F&F and nutraceutical ingredients are often nutraceutical ingredient manufacturers to be manufactured from the same starting blocks supplied to FMCG, F&B, and nutraceutical sectors Domestic which are referred to as base ingredients. A respectively Players

Segment Natural Natural Natural + Synthetic Synthetic Synthetic Exhibit 25: F&F and Nutraceuticals Value Chain

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 22 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 23 Indian F&F market was estimated to be USD 1.4 Competitive Landscape ingredients can be extracted from natural bases sourcing, process knowledge and R&D to create billion as of 2019, with exports forming almost (herbs, spices, fruits and ﬂowers) or can be globally acceptable products and scale up rapidly. Indian F&F market is fairly consolidated. Top 5 12% of the total production. The ratio of ﬂavours derived synthetically (synthetic vitamins, However, the domestic market for nutraceutical players account for 65% of the F&F market. The and fragrances in the context of Indian market is glucosamine, etc.). ingredients continues to be very small. roughly 50:50. Between 2014 and 2019 the F&F F&F market in India is dominated by MNC players, India, by virtue of having an abundance of useful Indian nutraceutical ingredients market stood at market registered an annualized growth of with 4 global majors featuring in the Top 5. herbs and spices, as well as owning a rich history USD 1.0 billion in 2019, with majority of the 14.2%, and it is estimated to grow at a CAGR of in Ayurveda and related sciences, has gradually production being exported to markets in US and 15.0% to reach USD 3.3 billion by 2025 become a meaningful player in the natural Europe. The market has grown at an impressive Exhibit 27: List of key players in Indian F&F formulations segment nutraceutical ingredients segment CAGR of 19.0% from 2014-19 and is estimated to The Indian nutraceutical ingredients market is in grow at 20.0% CAGR over the next 5 years to MNC Players relatively early stages of evolution, with most reach USD 3.0 billion by 2025. large companies having emerged over the last two decades. Multiple companies have been able Competitive Landscape: Domestic Players to leverage their strengths around raw material Nutraceutical industry in India has a few scaled up players and a large number of small players.

Segment Flavours and Fragrances Mostly Fragrances Exhibit 28: List of key players in Indian nutraceutical ingredients segment

MNC Players Key Market Trends for FMCG products. While the overall FMCG market in India has been growing at about 13- Domestic 1. Natural flavours & fragrances trending in 14%, rural markets have registered 3-5% Players global markets: Natural-like products that are higher growth as compared to the urban manufactured employing green processes centers. Both SMEs and large FMCG and using a combination of natural & companies are leveraging this growth synthetic feedstock are gaining preference opportunity. This will create an increased Key Market Trends Growth Drivers globally. This represents a strong growth demand for ingredients market. 1. Regulatory framework: Regulatory guidelines 1. Lifestyle changes: Increasingly busy lifestyles opportunity for Indian ingredient 2. Premiumization of personal care products: for nutraceuticals vary widely throughout the are making it difficult for people to adhere to a manufacturers as India has abundant natural With rising income levels consumer appetite world. FSSAI has taken initiatives to reinforce balanced meal plan. Nutraceuticals which are feedstock supply and is the leading for premium experience in rapidly increasing. domestic regulatory framework to comply with easy to carry and consume provide an manufacturer of many floral and spice Segments such as fine fragrances are international standards. Another important effective solution for such consumers to extracts. benefitting from this premiumization trend. issue is counterfeit nutraceutical products in address their nutritional needs. 2. Strong India focus by MNCs: India is a key the domestic market, which needs to be 3. Growing demand for processed food: 2. Consumer awareness and aspirations: destination for global players. India's cost addressed by both companies and regulatory Changing lifestyle is resulting in an increased Consumers are becoming more and more competitiveness, strong supply base for bodies. demand for processed food. There is a concerned about chemicals present in natural ingredients, and an access to a large growing consumer willingness to experiment 2. Increased requirements for clinical trials and medications and their side effects. consumption market has attracted strong with new unconventional flavours. validations: There is a major push by the Nutraceuticals as an enabler of balanced focus from MNCs Indian Government for clinical validation of nutrition, eliminating potential need for II C. Nutraceutical Ingredients: ingredients and formulations. The medication, is gaining consumer attention. Growth Drivers Nutraceutical ingredients are the active Government, for instance, has recently rolled People's aspiration for fitness and appearance 1. Rural penetration of FMCG products: Rural components that impart functional benefits to the out a large-scale study on 80,000 subjects to is driving demand for products catering to India is still a largely underpenetrated market nutraceutical formulation. Nutraceutical study the efficacy of Giloy based extract in categories, such as bone health and hair loss boosting immunity. control.

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 24 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 25 Indian F&F market was estimated to be USD 1.4 Competitive Landscape ingredients can be extracted from natural bases sourcing, process knowledge and R&D to create billion as of 2019, with exports forming almost (herbs, spices, fruits and ﬂowers) or can be globally acceptable products and scale up rapidly. Indian F&F market is fairly consolidated. Top 5 12% of the total production. The ratio of ﬂavours derived synthetically (synthetic vitamins, However, the domestic market for nutraceutical players account for 65% of the F&F market. The and fragrances in the context of Indian market is glucosamine, etc.). ingredients continues to be very small. roughly 50:50. Between 2014 and 2019 the F&F F&F market in India is dominated by MNC players, India, by virtue of having an abundance of useful Indian nutraceutical ingredients market stood at market registered an annualized growth of with 4 global majors featuring in the Top 5. herbs and spices, as well as owning a rich history USD 1.0 billion in 2019, with majority of the 14.2%, and it is estimated to grow at a CAGR of in Ayurveda and related sciences, has gradually production being exported to markets in US and 15.0% to reach USD 3.3 billion by 2025 become a meaningful player in the natural Europe. The market has grown at an impressive Exhibit 27: List of key players in Indian F&F formulations segment nutraceutical ingredients segment CAGR of 19.0% from 2014-19 and is estimated to The Indian nutraceutical ingredients market is in grow at 20.0% CAGR over the next 5 years to MNC Players relatively early stages of evolution, with most reach USD 3.0 billion by 2025. large companies having emerged over the last two decades. Multiple companies have been able Competitive Landscape: Domestic Players to leverage their strengths around raw material Nutraceutical industry in India has a few scaled up players and a large number of small players.

Segment Flavours and Fragrances Mostly Fragrances Exhibit 28: List of key players in Indian nutraceutical ingredients segment

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 24 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 25 Key Transactions in Ingredients demonstrated high interest in Indian market to Dyes and Pigments industry capitalize on cost efficient manufacturing and abundant raw material supply. However, lack of M&A activity in the ingredients space has largely large number of scaled up assets is acting as been driven by players trying to increase their limiting factor for deal making in this space in the presence in value chain and secure raw material India. Private equity funds have also been supply by backward integrating into base attracted to this segment driven by high growth Brief Overview of the Market between 2014 to 2019 period, and is estimated ingredients. Global companies have and margin profiles. to grow at 10% CAGR to reach USD 12.5 billion by Dyes and Pigments form the two key segments of 2025. 35% of Indian production from organized Exhibit 29: List of marquee transactions in the Indian F&F and nutraceuticals market the colorants industry. Dyes are soluble in nature market is exported. Dyes and Dyestuff and are used to pass color to the substrate. They Intermediates account for about 70% of the Year Acquirer, Target Target's Stake Deal Value Rationale Country Segment (USD mn) are commonly used in textiles and leather market, and pigments constitute the balance. industry. Pigments are insoluble in nature and 2015 Frutarome Sonarome Flavours 60% 17 Part of growth by acquisition strategy Classification of Dyes and Pigments Israel Entering India and strengthening form suspension. They are commonly used in presence in flavours paints and coating, plastics and inks. In India, Dyes are organic i.e. they are derived from 2014 V. Mane Fils Kancor Base 100% 21 Control natural ingredients supply chain, about 70% of the dyes are consumed by the hydrocarbons. Dyes are typically classified based France Ingredients Ingredients backward integration textile industry, and paints and printing ink on the way they are applied or held in material. 2014 Firmenich Jasmine Base 40% 5 Acquired 40% stake for securing raw account for almost 50% of the pigment Switzerland Concrete Ingredients material supply and strengthening Pigments can be organic as well as Inorganic. Exports naturals supply chain consumption followed by plastic and textile Exhibit 31 below demonstrates the different types industry. 2008 Oriental Camphor & Base 53% 11 Backward integration into terpene based of Dyes and Pigments that are common in Aromatics Allied Products Ingredients ingredients industry. India Indian Dyes and Pigments market stood at USD 7.0 billion as of 2019. It grew at 7.3% CAGR Exhibit 30: List of key private equity transactions in the Indian F&F and nutraceuticals industry Exhibit 31: Types of Dyes and Pigments Year Target Fund Target's Segment Stake Deal Value (USD mn) Azo Dyes 2016 Privi Organics Fairfax India Base Ingredients 51% 75 Types of Pigments 2016 Anthea Aromatics ICICI Venture Base Ingredients 23% 16 Acid Direct Dyes

2014 Akay Flavours & Asian Development Bank Flavours 17% 6 Disperse Dyes Inorganic Pigments Organic Pigments Aromatics es Ingrain Dyes Titanium Oxide Azo 2012 S H Kelkar Blackstone Flavours and Fragrances 33% 44 Solvent Dyes Carbon Black Phthalocyanine 2011 Privi Organics Standard Chartered PE Base Ingredients 24% 19

ypes of Dy Reactive Dyes Iron Oxide HPP 2010 S H Kelkar Wayzata Investment Partners Flavours and Fragrances 33% 21 T Sulphur Dyes Cadmium

Vat Dyes Chrome

Reactive dyes form majority of the market in other key inorganic pigments. Organic pigments India. Global pigment industry is dominated by can be classiﬁed into Azo pigments, inorganics, whereas, in India organic pigments Phthalocyanine pigments and other high- form majority of the market. The reason being performance pigments. India's import dependency for Titanium Oxide (white) (an inorganic pigment) - which is the Value Chain largest pigment category. Carbon Black, Iron Oxide, Cadmium Pigments, Chromium Oxide are The manufacturing process for dyes and pigments is signiﬁcantly different, and hence the

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 26 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 27 Key Transactions in Ingredients demonstrated high interest in Indian market to Dyes and Pigments industry capitalize on cost efficient manufacturing and abundant raw material supply. However, lack of M&A activity in the ingredients space has largely large number of scaled up assets is acting as been driven by players trying to increase their limiting factor for deal making in this space in the presence in value chain and secure raw material India. Private equity funds have also been supply by backward integrating into base attracted to this segment driven by high growth Brief Overview of the Market between 2014 to 2019 period, and is estimated ingredients. Global companies have and margin profiles. to grow at 10% CAGR to reach USD 12.5 billion by Dyes and Pigments form the two key segments of 2025. 35% of Indian production from organized Exhibit 29: List of marquee transactions in the Indian F&F and nutraceuticals market the colorants industry. Dyes are soluble in nature market is exported. Dyes and Dyestuff and are used to pass color to the substrate. They Intermediates account for about 70% of the Year Acquirer, Target Target's Stake Deal Value Rationale Country Segment (USD mn) are commonly used in textiles and leather market, and pigments constitute the balance. industry. Pigments are insoluble in nature and 2015 Frutarome Sonarome Flavours 60% 17 Part of growth by acquisition strategy Classification of Dyes and Pigments Israel Entering India and strengthening form suspension. They are commonly used in presence in flavours paints and coating, plastics and inks. In India, Dyes are organic i.e. they are derived from 2014 V. Mane Fils Kancor Base 100% 21 Control natural ingredients supply chain, about 70% of the dyes are consumed by the hydrocarbons. Dyes are typically classified based France Ingredients Ingredients backward integration textile industry, and paints and printing ink on the way they are applied or held in material. 2014 Firmenich Jasmine Base 40% 5 Acquired 40% stake for securing raw account for almost 50% of the pigment Switzerland Concrete Ingredients material supply and strengthening Pigments can be organic as well as Inorganic. Exports naturals supply chain consumption followed by plastic and textile Exhibit 31 below demonstrates the different types industry. 2008 Oriental Camphor & Base 53% 11 Backward integration into terpene based of Dyes and Pigments that are common in Aromatics Allied Products Ingredients ingredients industry. India Indian Dyes and Pigments market stood at USD 7.0 billion as of 2019. It grew at 7.3% CAGR Exhibit 30: List of key private equity transactions in the Indian F&F and nutraceuticals industry Exhibit 31: Types of Dyes and Pigments Year Target Fund Target's Segment Stake Deal Value (USD mn) Azo Dyes 2016 Privi Organics Fairfax India Base Ingredients 51% 75 Types of Pigments 2016 Anthea Aromatics ICICI Venture Base Ingredients 23% 16 Acid Direct Dyes

ypes of Dy Reactive Dyes Iron Oxide HPP 2010 S H Kelkar Wayzata Investment Partners Flavours and Fragrances 33% 21 T Sulphur Dyes Cadmium

Vat Dyes Chrome

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 26 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 27 segment is usually characterized by pure-play dye Most of the scaled-up players in the industry pigments in India, the near-term growth for this crackdown initiated by the Chinese manufacturers or pure-play pigment usually have a fully integrated setup i.e. they have segment is likely to be driven by the growth in Government a couple of years ago. This led to manufacturers. Depending upon the type of dye an in-house manufacturing of intermediates, paints (12% CAGR) and plastics (8-10% CAGR) shutting down of a large number of dyestuffs or pigment being manufactured, the feedstock for which are then converted into colorants and industries. With growing consumerism, and and intermediates manufacturers in China. the same can range from petrochemicals or other subsequently sold for ﬁnal end-use, wherein increased demand for sophisticated products This not only resulted in an increase in prices bulk chemicals to even minerals in some cases. these colors are imparted on to a substrate. Quite in India, these sectors are likely to register for these products in the global markets, but There are only a few players who operate as often, paints and coatings are also considered as strong growth; there by the driving demand for also resulted in end-users to reevaluate their standalone intermediate manufactures, and they a part of the dyes and pigments industry; high performance and innovative variants of dependence on China. This has translated into usually export their produce to meet the however, given the nature of the end-product dyes and pigments. signiﬁcant gains for the Indian players, a part of which is likely to sustain even after the dust intermediate requirements of global players. which is directly used by end-consumer, the same 2. Realignment of global supply chain following settles down on the impact of the has not been considered in this report. shutdowns in China: Dyes & Pigments was the environmental crackdowns. hardest hit segment in the environmental Exhibit 32: Dyes and Pigments Value Chain Key Players Feedstock Intermediate Colorants End Application Exhibit 33: List of key players in Indian dyes and pigments segment Petrochemicals Dye Intermediates Dyes Textile, Paper Bulk chemicals Pigment Pigments Paints, Printing Inks Dyes & Pigments such as acids & intermediates etc. Pigment MNC

oduct solvents emulsions Players Pr Minerals

Domestic Reliance, Shell Aarti Industries, Dyes: Kiri Dyes, Various Players

s Mining companies Phthalo Colors Bodal Chemicals manufacturers

er Pigments: y Sudarshan Segment Intermediates Dyes Dyes and Pigments Pla

Key Transactions manufacturing facilities. The interest from financial sponsors, however, has been low Key Market Trends polluting process, which makes it very The transaction interest in the Indian dyes & because of the lack of transactable assets in the difficult for these players to comply with the pigments industry has largely been muted space and the inability of the players to differentiate themselves based on technology 1. Global majors reducing their focus on this local environmental regulations and Historically, strategic interest in this segment was largely driven by the need for access to low cost and innovation. segment: Global majors, such as BASF and policies. Clariant especially outside Asia, have strategically been de-focusing away from the 2. Increased demand for high performance Exhibit 34: List of key M&A transactions in the dyes & pigments industry dyes and pigment segment. This is mainly on pigments: End users are increasingly exploring Year Acquirer Target Target's Stake Deal Value Rationale account of: high performance pigments that offer higher (Country) Segment (USD mn) durability, increased weather resistance and Americhem Prescient Masterbatches 100.0% 17.3 Expansion into a high-growth market 2018 Color a. Lack of technology barrier - There is very better effects (e.g. pearlescent). limited room for technology-led Clariant Plastichemix Masterbatches 100.0% 21.7 Product portfolio expansion 2013 Switzerland differentiation in dyes and pigments V.V. Group Kilburn Pigments 100.0% 20.0 Scale and market consolidation Growth Drivers 2011 segment, which makes it very difficult for India Chemicals global MNCs to compete with low cost 1. Growth of Textile, Paint and Plastic industries: Huntsman Metrochem Intermediates 100.0% 50.0 Market presence, strengthen 2009 US Industries intermediates supply manufacturing destinations Textiles, Paint and Plastics account for majority Rubamin J&K Pigments Pigments N.A N.A To consolidate the acquirer's position as 2007 of dyes & pigments demand in the country. India the leader in Zinc Oxide space b. Adverse environmental impact - Dyes and While textile is the largest consumer for dyes & Huntsman Diamond Dye- Dyes N.A N.A Part of acquisition of Ciba's textile effects Pigments manufacturing is a relatively 2006 US chem and dyes business

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 28 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 29 segment is usually characterized by pure-play dye Most of the scaled-up players in the industry pigments in India, the near-term growth for this crackdown initiated by the Chinese manufacturers or pure-play pigment usually have a fully integrated setup i.e. they have segment is likely to be driven by the growth in Government a couple of years ago. This led to manufacturers. Depending upon the type of dye an in-house manufacturing of intermediates, paints (12% CAGR) and plastics (8-10% CAGR) shutting down of a large number of dyestuffs or pigment being manufactured, the feedstock for which are then converted into colorants and industries. With growing consumerism, and and intermediates manufacturers in China. the same can range from petrochemicals or other subsequently sold for ﬁnal end-use, wherein increased demand for sophisticated products This not only resulted in an increase in prices bulk chemicals to even minerals in some cases. these colors are imparted on to a substrate. Quite in India, these sectors are likely to register for these products in the global markets, but There are only a few players who operate as often, paints and coatings are also considered as strong growth; there by the driving demand for also resulted in end-users to reevaluate their standalone intermediate manufactures, and they a part of the dyes and pigments industry; high performance and innovative variants of dependence on China. This has translated into usually export their produce to meet the however, given the nature of the end-product dyes and pigments. signiﬁcant gains for the Indian players, a part of which is likely to sustain even after the dust intermediate requirements of global players. which is directly used by end-consumer, the same 2. Realignment of global supply chain following settles down on the impact of the has not been considered in this report. shutdowns in China: Dyes & Pigments was the environmental crackdowns. hardest hit segment in the environmental Exhibit 32: Dyes and Pigments Value Chain Key Players Feedstock Intermediate Colorants End Application Exhibit 33: List of key players in Indian dyes and pigments segment Petrochemicals Dye Intermediates Dyes Textile, Paper Bulk chemicals Pigment Pigments Paints, Printing Inks Dyes & Pigments such as acids & intermediates etc. Pigment MNC

oduct solvents emulsions Players Pr Minerals

Domestic Reliance, Shell Aarti Industries, Dyes: Kiri Dyes, Various Players

s Mining companies Phthalo Colors Bodal Chemicals manufacturers

er Pigments: y Sudarshan Segment Intermediates Dyes Dyes and Pigments Pla

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 28 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 29 Competitive Landscape number of Indian companies deal with Inactive Personal Care Chemicals ingredients. Active ingredients demand significant Personal care active ingredient market in India is investment into R&D and that is the primary characterized by dominant presence of global reason why the active ingredient space is companies such as Croda, Clariant and BASF. dominated by MNCs which benefit from their Overview of the Market Key active ingredients include - conditioning Leading Indian companies in this space include global R&D program. The table below agents, UV ingredients, anti-ageing ingredients Atul, Kumar Organics and Rossari Biotech. Large summarizes key players in Indian market Personal care products used in daily life such as and exfoliants. Conditioning agents constitute the Exhibit 36: List of key players in Indian personal care chemical segment skin care, hair care, cosmetics, oral care contain largest part of active ingredients at 21%, followed a wide of chemical ingredients. Roughly 70% of by UV ingredients at 16%. Anti-ageing ingredients MNC Players these chemicals are undifferentiated bulk and exfoliants each account for around 8% of the chemicals such as waxes, solvents etc. but the market, followed by other chemicals. Anti-ageing rest 30% consist of specialty chemicals. These ingredients and exfoliants are estimated to be the fastest growing chemicals in the personal care personal care specialty chemicals can be further Domestic Players divided into active and inactive ingredients. chemicals industry. Inactive ingredients include polymer additives, surfactants, preservatives and colorants. Active Value Chain ingredients are responsible for the core Key Market Trends Growth Drivers functioning of the underlying product and thus, The personal care chemicals value chain starts 1. Focus on natural active ingredients: The 1. Improved access to drive higher penetration in are more critical to the performance of the end with the basic feed stock producer and moves to manufacturers are increasingly focused on rural markets: The advent of newer sales product. This section focuses only on the active the ingredients manufacturer, FMCG ingredients, and inactive ingredients have been manufacturer, retailer and finally the consumer. establishing strong presence in naturally avenues for personal care products, through considered as part of other segments such as The basic feed stock can be petrochemical derived active ingredients in order to reduce general e-commerce websites (Amazon, surfactants, polymer additives etc. derivatives or natural products such as palm oil, the potential side-effects and enhance the Flipkart) and dedicated personal care e-tail palm kernel oil, coconut oil, soy bean oil, acceptability. However, high pricing differential platforms (Nykaa, Purplle) have significantly Personal care chemicals market in India stood at rapeseed oil, etc. Personal care chemicals between natural and synthetic products has increased consumer awareness and improved USD 1.0 billion as of 2019. It grew at 15.5% CAGR manufacturers have to deal with large base resulted in popularity of "natural-like" products access amongst the erstwhile untapped between 2014 to 2019 period, and is estimated chemical companies as suppliers and FMCG that use a combination of natural and population. This is likely to significantly to grow at 15.0% CAGR to reach USD 2.4 billion by giants as customers. As a result, innovation and synthetic ingredients, employing green improve the penetration of personal care 2025. Active ingredients form approximately 40% differentiation are critical factors for ingredient processes / solvents. products in the high potential rural pockets of of the personal care specialty ingredients market, manufacturers to maintain their market position the country. rest 60% is Inactive ingredients. and financial performance. 2. Increased personalization of products: Given the heightened sense of individualism 2. Increased consumption and premiumization: Exhibit 35: Personal Care Chemicals Value Chain amongst consumers, beauty brands across Increasing consumption of discretionary and the world are trying to minimize the gap prestige products, driven by increasing FMCG Basic Chemicals Ingredients Retailer between generic beauty needs and the proportion of young population with higher Manufacturer specific needs of an individual. This has given spending potential, coupled with growth in BASF Croda Unilever Spencer’s rise to brands, such as Vichy and Kiehl's organized retail is driving consumption of DSM Merck P&G Body Shop

ers adopting a customized approach, wherein high-end discretionary products, which in turn

y BASF Godrej Big Bazar

Pla Rossari Biotech they provide online consultations before is driving demand for highly valued added suggesting a suitable product to the customer. specialized active ingredients. Conditioning Triclosan Cosmetics This is translating into an expansion of the polymers Ethylhexyl triazone Shower Gels number of SKUs created for every product. Emulsiﬁers Hexylresrcinol Grooming Products

oduct Antimicrobials Minoxidil Moisturizers

Pr Emollients Aminexil UV absorbers

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 30 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 31 Competitive Landscape number of Indian companies deal with Inactive Personal Care Chemicals ingredients. Active ingredients demand significant Personal care active ingredient market in India is investment into R&D and that is the primary characterized by dominant presence of global reason why the active ingredient space is companies such as Croda, Clariant and BASF. dominated by MNCs which benefit from their Overview of the Market Key active ingredients include - conditioning Leading Indian companies in this space include global R&D program. The table below agents, UV ingredients, anti-ageing ingredients Atul, Kumar Organics and Rossari Biotech. Large summarizes key players in Indian market Personal care products used in daily life such as and exfoliants. Conditioning agents constitute the Exhibit 36: List of key players in Indian personal care chemical segment skin care, hair care, cosmetics, oral care contain largest part of active ingredients at 21%, followed a wide of chemical ingredients. Roughly 70% of by UV ingredients at 16%. Anti-ageing ingredients MNC Players these chemicals are undifferentiated bulk and exfoliants each account for around 8% of the chemicals such as waxes, solvents etc. but the market, followed by other chemicals. Anti-ageing rest 30% consist of specialty chemicals. These ingredients and exfoliants are estimated to be the fastest growing chemicals in the personal care personal care specialty chemicals can be further Domestic Players divided into active and inactive ingredients. chemicals industry. Inactive ingredients include polymer additives, surfactants, preservatives and colorants. Active Value Chain ingredients are responsible for the core Key Market Trends Growth Drivers functioning of the underlying product and thus, The personal care chemicals value chain starts 1. Focus on natural active ingredients: The 1. Improved access to drive higher penetration in are more critical to the performance of the end with the basic feed stock producer and moves to manufacturers are increasingly focused on rural markets: The advent of newer sales product. This section focuses only on the active the ingredients manufacturer, FMCG ingredients, and inactive ingredients have been manufacturer, retailer and finally the consumer. establishing strong presence in naturally avenues for personal care products, through considered as part of other segments such as The basic feed stock can be petrochemical derived active ingredients in order to reduce general e-commerce websites (Amazon, surfactants, polymer additives etc. derivatives or natural products such as palm oil, the potential side-effects and enhance the Flipkart) and dedicated personal care e-tail palm kernel oil, coconut oil, soy bean oil, acceptability. However, high pricing differential platforms (Nykaa, Purplle) have significantly Personal care chemicals market in India stood at rapeseed oil, etc. Personal care chemicals between natural and synthetic products has increased consumer awareness and improved USD 1.0 billion as of 2019. It grew at 15.5% CAGR manufacturers have to deal with large base resulted in popularity of "natural-like" products access amongst the erstwhile untapped between 2014 to 2019 period, and is estimated chemical companies as suppliers and FMCG that use a combination of natural and population. This is likely to significantly to grow at 15.0% CAGR to reach USD 2.4 billion by giants as customers. As a result, innovation and synthetic ingredients, employing green improve the penetration of personal care 2025. Active ingredients form approximately 40% differentiation are critical factors for ingredient processes / solvents. products in the high potential rural pockets of of the personal care specialty ingredients market, manufacturers to maintain their market position the country. rest 60% is Inactive ingredients. and financial performance. 2. Increased personalization of products: Given the heightened sense of individualism 2. Increased consumption and premiumization: Exhibit 35: Personal Care Chemicals Value Chain amongst consumers, beauty brands across Increasing consumption of discretionary and the world are trying to minimize the gap prestige products, driven by increasing FMCG Basic Chemicals Ingredients Retailer between generic beauty needs and the proportion of young population with higher Manufacturer specific needs of an individual. This has given spending potential, coupled with growth in BASF Croda Unilever Spencer’s rise to brands, such as Vichy and Kiehl's organized retail is driving consumption of DSM Merck P&G Body Shop

ers adopting a customized approach, wherein high-end discretionary products, which in turn y BASF Godrej Big Bazar

oduct Antimicrobials Minoxidil Moisturizers

Pr Emollients Aminexil UV absorbers

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 30 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 31 Key Transactions

Transaction activity in India in this space has been limited given the lack of scaled up domestic companies.

Exhibit 37: M&A transactions in the personal care chemicals industry Section 5 Section 5

Year Acquirer Target Target's Stake Deal Value Rationale (Country) Segment (USD mn) Emerging themes in 2015 Clariant Vivimed (PCI Active 100.0% 57 Geographical expansion Switzerland Division) Ingredients the Indian Specialty Exhibit 38: Private Equity transactions in the personal care chemicals industry Chemicals Industry Year Target Fund Target's Segment Stake Deal Value (USD mn) 2011 Vivimed Labs Jacob Ballas, Kitara Capital PCI, API 25.0% 26

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 32 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 33 Key Transactions

Transaction activity in India in this space has been limited given the lack of scaled up domestic companies.

Exhibit 37: M&A transactions in the personal care chemicals industry Section 5 Section 5

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 32 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 33 The most common method for categorizing the players and, thus, attract limited competition B. Contract Research and Strong record of Indian pharmaceutical players from them. While these segments offer significant players in Indian specialty chemicals industry has Manufacturing Services (CRAMS) has cemented India's position as a strong player been on the basis of the end-user industries they headroom for growth in the Indian context, the in the global CRAMS industry. Established track serve. However, the Indian specialty chemicals market size for these segments is not as The time and cost involved in development of new record coupled proven process chemistry skills, industry, over the last few years, has witnessed attractive for these larger global players to molecules has been increasing consistently over low cost manufacturing capabilities and a large operate in, thereby insulating the domestic emergence of business models which cannot be the past few decades. Launch of new molecules base of highly qualified and skilled manpower, incumbents from the threat of new entrants. mapped to a single end-user industry. not only requires extensive investment in R&D make India a preferred destination for CRAMS. These players focused on developing a deep A common thread that can be witnessed in the activities, but also warrants a considerable Also, India's IPR protection policies provide a approach adopted by these players includes: expertise in a particular chemistry and developed amount of engineering resources to be able to significant competitive edge over China as strong products that derive applications across a wide n Focus on 2-3 niche molecules and their commercialize and bring new products to the control over IPR is a critical factor for global spectrum of industries. This was then followed by derivatives market. innovators. a conscious drive to identify newer means of n Continuous effort on distinguishing through monetizing the co-products and by-products in This has necessitated leading global players to Based on growing consolidation in the specialty expertise in process chemistry the same value chain, which has helped them outsource parts of their manufacturing activity to chemicals industry, CRAMS is likely to emerge as create a strong business moat backed by n Building significant capacities in their target strategic partners who can offer stable supplies a cost-effective and capital efficient preference segments superior manufacturing capabilities and a over a long-term period at competitive prices, for development of new products. diversified basket of product offerings. n Investments in complementary legs of the while protecting innovator's control over A. Establishing leadership position in value chain to establish a fully integrated intellectual property rights (IPR). business model select molecules and chemistries: Exhibit 40: Indicative list of players who have successfully adopted this model The underlying idea is to establish a diverse Certain players in the Indian specialty chemicals customer base spanning across end-user Company Indicative Customers Agrochemicals Pharma Other specialty space have focused on expanding into niche industries, which lends itself to a steady and chemicals molecules/segments, which form a relatively PI Industries BASF, Bayer, Syngenta, predictable revenue stream and which is resilient ü ü ü smart part of the business for multi-billion-dollar to cyclical downturns in any specific end-user Kumiai Chemical Deccan Fine BASF, Syngenta market. ü ü ü Chemicals

Exhibit 39: Indicative list of players who have successfully adopted this model Anupam Rasayan BASF, Bayer, Syngenta ü ü ü

Company Key Molecule Global Position Agro F&F Pharma Polymer Dyes and Personal OC Specialities Bayer, Syngenta, DuPont ü ü ü of Focus Chem Additives Pigments Care Metropolitan Huntsman, Clariant, OG ü ü ü Aarti Benzene Among the largest global Eximchem Corporation (Japan) Industries chemistry producers, with 25-40% ü ü ü ü ü market share across various products

Atul Limited Aromatics World's largest manufacturer in its target ü ü ü ü ü products

Vinati ATBS Largest global manufacturer Organics with 65% global market ü ü ü ü ü ü share

Deepak Nitrite Industrial Amongst the top 3 global ü ü ü ü intermediates producers

Laxmi Organic Diketene Amongst the top 5 global derivatives producers, and the only ü ü ü ü producer of Diketene in India Clean Science Hydroxylation, Strong focus on green & Technology acylation and chemistry; leading global alkylation players in most of its ü ü ü ü chemistries products

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 34 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 35 The most common method for categorizing the players and, thus, attract limited competition B. Contract Research and Strong record of Indian pharmaceutical players from them. While these segments offer significant players in Indian specialty chemicals industry has Manufacturing Services (CRAMS) has cemented India's position as a strong player been on the basis of the end-user industries they headroom for growth in the Indian context, the in the global CRAMS industry. Established track serve. However, the Indian specialty chemicals market size for these segments is not as The time and cost involved in development of new record coupled proven process chemistry skills, industry, over the last few years, has witnessed attractive for these larger global players to molecules has been increasing consistently over low cost manufacturing capabilities and a large operate in, thereby insulating the domestic emergence of business models which cannot be the past few decades. Launch of new molecules base of highly qualified and skilled manpower, incumbents from the threat of new entrants. mapped to a single end-user industry. not only requires extensive investment in R&D make India a preferred destination for CRAMS. These players focused on developing a deep A common thread that can be witnessed in the activities, but also warrants a considerable Also, India's IPR protection policies provide a approach adopted by these players includes: expertise in a particular chemistry and developed amount of engineering resources to be able to significant competitive edge over China as strong products that derive applications across a wide n Focus on 2-3 niche molecules and their commercialize and bring new products to the control over IPR is a critical factor for global spectrum of industries. This was then followed by derivatives market. innovators. a conscious drive to identify newer means of n Continuous effort on distinguishing through monetizing the co-products and by-products in This has necessitated leading global players to Based on growing consolidation in the specialty expertise in process chemistry the same value chain, which has helped them outsource parts of their manufacturing activity to chemicals industry, CRAMS is likely to emerge as create a strong business moat backed by n Building significant capacities in their target strategic partners who can offer stable supplies a cost-effective and capital efficient preference segments superior manufacturing capabilities and a over a long-term period at competitive prices, for development of new products. diversified basket of product offerings. n Investments in complementary legs of the while protecting innovator's control over A. Establishing leadership position in value chain to establish a fully integrated intellectual property rights (IPR). business model select molecules and chemistries: Exhibit 40: Indicative list of players who have successfully adopted this model The underlying idea is to establish a diverse Certain players in the Indian specialty chemicals customer base spanning across end-user Company Indicative Customers Agrochemicals Pharma Other specialty space have focused on expanding into niche industries, which lends itself to a steady and chemicals molecules/segments, which form a relatively PI Industries BASF, Bayer, Syngenta, predictable revenue stream and which is resilient ü ü ü smart part of the business for multi-billion-dollar to cyclical downturns in any specific end-user Kumiai Chemical Deccan Fine BASF, Syngenta market. ü ü ü Chemicals

Exhibit 39: Indicative list of players who have successfully adopted this model Anupam Rasayan BASF, Bayer, Syngenta ü ü ü

Atul Limited Aromatics World's largest manufacturer in its target ü ü ü ü ü products

Vinati ATBS Largest global manufacturer Organics with 65% global market ü ü ü ü ü ü share

Deepak Nitrite Industrial Amongst the top 3 global ü ü ü ü intermediates producers

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 34 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 35 China's emergence as a capacity additions over the past few years. During 2018-19, China contributed 55% 4 of powerhouse in the global the total new capacity addition in chemical industry petrochemical building blocks globally; and it is likely to contribute ~70% of the global During the last three decades, China's capacity addition over the next 5 years. Section 6 manufacturing capabilities underwent bigger Section 6 changes than any other economy in the history, b) Furthermore, Chinese Government's decision and its chemical industry was one of the primary to open up the petrochemicals sector to China's Role in the Global beneficiaries of these changes. private investments is spurring investments by the MNCs and private sector in integrated China currently constitutes nearly 36% of the mega-refining and petrochemical complexes. Supply Chain, and global chemical industry revenue, underlining its The share of public sector enterprises in influence on chemicals businesses across the China's ethylene capacity is estimated to globe, and the resulting impact on end-user decline from 80% in 2018 to 62%4 in 2025, Emerging Opportunity markets. There are three key enabling factors and that in paraxylene in estimated to decline that contributed to the massive growth in China's from 67% to 43% during the same period. chemical industry: for India 3. Increased investments towards 1. Government initiatives to attract research and development activities foreign investments into the in the chemical industry: manufacturing sector: a) While historically, China was predominantly a) Prior to 2008, Chinese government policies known for its basic chemical products and had focused on attracting foreign for its ability to successfully absorb investment through a series of favourable technologies developed by companies in EU tax and business incentives that enabled & USA, Chinese companies have now low-cost production for exports, leading to gained parity with their western an influx of foreign investments into China. counterparts in many parts of specialty For example - foreign companies in China chemicals. paid a corporate tax of 15% and were b) China's rapid advancement in the R&D for granted tax breaks that lasted for years, chemical industry has been led by private whereas Chinese companies paid a tax of players, who have augmented their efforts 30% and enjoyed no tax breaks. in collaboration with government b) While these differential tax incentives for universities. This also helped China improve foreign investors were subsequently its self-sufficiency in meeting the specialty abolished to create a level playing field chemical requirements of the domestic between foreign companies and Chinese market. companies, easy availability of credit and c) China's share in global chemical R&D lax environmental norms allowed the spending has increased from 9.5% in industry to flourish, and transformed China 2008 to 27.5%5 in 2018, with China's R&D into world's largest manufacturer for a investment growing at 16.6% CAGR during number of industries, including chemicals. the period vis-à-vis global R&D Investment 2. Significant investments in CAGR of 5.1%. With an R&D investment of ~USD 14 billion, China was the largest petrochemicals to improve self- investor in the R&D for the chemical sufficiency in feedstock: industry in 2018, followed by the European Union. a) China's strong focus on petrochemicals self- sufficiency has translated into substantial

4 Source: International Energy Forum 5 Source: CEFIC INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 36 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 37 China's emergence as a capacity additions over the past few years. During 2018-19, China contributed 55% 4 of powerhouse in the global the total new capacity addition in chemical industry petrochemical building blocks globally; and it is likely to contribute ~70% of the global During the last three decades, China's capacity addition over the next 5 years. Section 6 manufacturing capabilities underwent bigger Section 6 changes than any other economy in the history, b) Furthermore, Chinese Government's decision and its chemical industry was one of the primary to open up the petrochemicals sector to China's Role in the Global beneficiaries of these changes. private investments is spurring investments by the MNCs and private sector in integrated China currently constitutes nearly 36% of the mega-refining and petrochemical complexes. Supply Chain, and global chemical industry revenue, underlining its The share of public sector enterprises in influence on chemicals businesses across the China's ethylene capacity is estimated to globe, and the resulting impact on end-user decline from 80% in 2018 to 62%4 in 2025, Emerging Opportunity markets. There are three key enabling factors and that in paraxylene in estimated to decline that contributed to the massive growth in China's from 67% to 43% during the same period. chemical industry: for India 3. Increased investments towards 1. Government initiatives to attract research and development activities foreign investments into the in the chemical industry: manufacturing sector: a) While historically, China was predominantly a) Prior to 2008, Chinese government policies known for its basic chemical products and had focused on attracting foreign for its ability to successfully absorb investment through a series of favourable technologies developed by companies in EU tax and business incentives that enabled & USA, Chinese companies have now low-cost production for exports, leading to gained parity with their western an influx of foreign investments into China. counterparts in many parts of specialty For example - foreign companies in China chemicals. paid a corporate tax of 15% and were b) China's rapid advancement in the R&D for granted tax breaks that lasted for years, chemical industry has been led by private whereas Chinese companies paid a tax of players, who have augmented their efforts 30% and enjoyed no tax breaks. in collaboration with government b) While these differential tax incentives for universities. This also helped China improve foreign investors were subsequently its self-sufficiency in meeting the specialty abolished to create a level playing field chemical requirements of the domestic between foreign companies and Chinese market. companies, easy availability of credit and c) China's share in global chemical R&D lax environmental norms allowed the spending has increased from 9.5% in industry to flourish, and transformed China 2008 to 27.5%5 in 2018, with China's R&D into world's largest manufacturer for a investment growing at 16.6% CAGR during number of industries, including chemicals. the period vis-à-vis global R&D Investment 2. Significant investments in CAGR of 5.1%. With an R&D investment of ~USD 14 billion, China was the largest petrochemicals to improve self- investor in the R&D for the chemical sufficiency in feedstock: industry in 2018, followed by the European Union. a) China's strong focus on petrochemicals self- sufficiency has translated into substantial

4 Source: International Energy Forum 5 Source: CEFIC INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 36 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 37 Disruptions in China and geo- government initiated an unprecedented 2. COVID outbreak resulting in rethinking of substantial gains if they are able to chip off even crackdown on the chemical industry, as a step supply chains and a move towards a fraction of the orders that were previously being political events leading to re- to battle the rising pollution in Chinese cities. sourced from China. evaluation of the supply chain deglobalization: b) Following several major chemical incidents a) The COVID outbreak in China hit global supply Proven track record of leveraging disruptions China was the fastest growing major chemicals across cities, the authorities introduced a host chains hard and spurred sourcing away from in Pharma and IT sector value chains: market in the world from 2005-2015 period, led of regulatory changes. These included shifting the world's manufacturing hub - a shift that India has a demonstrated track record of mainly by significant capacity additions and of chemical production to chemical parks, the started amid the US-China tariff fight. becoming a strong exporter in various sectors investments by both domestic entities and MNCs. tightening of rules for some substances and b) The shutdowns and supply chain disruptions post major events/disruptions. This, however, took a severe toll on its substance classes, and the introduction of an caused by the coronavirus outbreak globally, environment, with China being home to some of environmental protection tax. Pharmaceuticals: When the enactment of the drew attention to the ways in which the global the most polluted cities in the world in 2015, Hatch-Waxman Act (1984) paved the way for a c) The government agencies carried out a specialty chemical/pharmaceutical thereby prompting the Chinese government to separate FDA approval process for manufacturing number of unannounced inspections and shut manufacturers have been dependent upon implement wide ranging measures for controlling of generic drugs, India was able to successfully down manufacturing units which were not in China (China, for example, constitutes 40% of the environmental impact. establish itself as the leading manufacturer of compliance with the stricter environment the global API manufacturing). generics, establishing strong capabilities in Disruptions in the Chinese chemical industry norms. This impacted 80,000+ factories These global events have prompted players generic drugs, and eventually contributing nearly across the country, with several smaller across the globe to rethink the vulnerability of 40% of generic drug requirement of USA by 2019. 1. Tightening of financing availability for companies being closed down indefinitely. oversupplied industries such as chemicals: their supply chains, stemming from very high It has also established itself as one of the top 3 Geo-political events impacting China's dependence on any single nation. Increasing manufacturers of APIs, taking away significant a) Ease in availability of credit at affordable costs position in the global supply chain: number of companies across the globe are market share from China. aided the manufacturers in the capital- actively looking at de-risking their sourcing intensive chemical industry to undertake huge 1. Uncertainty created by the US-China trade war: IT Services: The Indian IT industry was a major strategy and adopting a "China, plus one" capital investments for setting up mega-scale beneficiary of the global Y2K crisis in early a) In June 2018, USA announced that it would approach to have a better control over their plants, which could provide the desired 2000s, as the IT industry in India was able to impose 25% tariff on USD 50 billion worth of supply chain, even if that translates into higher economies of scale successfully leverage the whitespace created by Chinese imports across two phases. sourcing costs. this crisis. Availability of a highly skilled English- b) In 2014, however, China's main bank Subsequently, China retaliated by announcing speaking work force, lower service delivery costs supervisor announced that the credit outflow a similar levy of tariffs on US imports worth Unparalleled opportunity for and strong process engineering capabilities to oversupplied industries would be restricted, USD 50 billion. Chemicals and plastics cemented India's position in the global IT services and this applied to certain parts of chemical comprised almost 40% of the 106 products India to seize the whitespace industry. Over the years, India has become the industry as well. targeted by China for imposition of tariffs. A combination of favorable events, over the past most favored destination for IT services c) As a result, the eligibility criteria for new credit b) Since then, there have been multiple rounds couple of years, has created a huge whitespace outsourcing, enjoying close to 55% market share to industries, such as chemicals became much of tariff announcements by both the countries for manufacturers in low-cost manufacturing in the global IT services outsourcing industry as stricter with higher than average interest rates followed by talks of a trade deal in the offing, destinations, such as India, who stand to enjoy of 2019. being charged to chemical manufacturers, creating an atmosphere of uncertainty hampering their ability to undertake new amongst the industry players across the globe. projects and enhance capacities. c) These events not only impacted the pricing of 2. Change in stance on environmental goods but also affected the capital spending protection, leading to shutting down of undertaken by chemical majors. Dow, for instance, announced a 9% reduction in its manufacturing facilities: capital expenditure as a step to maintain cost a) Ahead of its 5-yearly Congress Committee discipline in the light of ongoing trade and meet in October 2017, the Chinese geopolitical uncertainties led by events, such as the US-China trade war.

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 38 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 39 Disruptions in China and geo- government initiated an unprecedented 2. COVID outbreak resulting in rethinking of substantial gains if they are able to chip off even crackdown on the chemical industry, as a step supply chains and a move towards a fraction of the orders that were previously being political events leading to re- to battle the rising pollution in Chinese cities. sourced from China. evaluation of the supply chain deglobalization: b) Following several major chemical incidents a) The COVID outbreak in China hit global supply Proven track record of leveraging disruptions China was the fastest growing major chemicals across cities, the authorities introduced a host chains hard and spurred sourcing away from in Pharma and IT sector value chains: market in the world from 2005-2015 period, led of regulatory changes. These included shifting the world's manufacturing hub - a shift that India has a demonstrated track record of mainly by significant capacity additions and of chemical production to chemical parks, the started amid the US-China tariff fight. becoming a strong exporter in various sectors investments by both domestic entities and MNCs. tightening of rules for some substances and b) The shutdowns and supply chain disruptions post major events/disruptions. This, however, took a severe toll on its substance classes, and the introduction of an caused by the coronavirus outbreak globally, environment, with China being home to some of environmental protection tax. Pharmaceuticals: When the enactment of the drew attention to the ways in which the global the most polluted cities in the world in 2015, Hatch-Waxman Act (1984) paved the way for a c) The government agencies carried out a specialty chemical/pharmaceutical thereby prompting the Chinese government to separate FDA approval process for manufacturing number of unannounced inspections and shut manufacturers have been dependent upon implement wide ranging measures for controlling of generic drugs, India was able to successfully down manufacturing units which were not in China (China, for example, constitutes 40% of the environmental impact. establish itself as the leading manufacturer of compliance with the stricter environment the global API manufacturing). generics, establishing strong capabilities in Disruptions in the Chinese chemical industry norms. This impacted 80,000+ factories These global events have prompted players generic drugs, and eventually contributing nearly across the country, with several smaller across the globe to rethink the vulnerability of 40% of generic drug requirement of USA by 2019. 1. Tightening of financing availability for companies being closed down indefinitely. oversupplied industries such as chemicals: their supply chains, stemming from very high It has also established itself as one of the top 3 Geo-political events impacting China's dependence on any single nation. Increasing manufacturers of APIs, taking away significant a) Ease in availability of credit at affordable costs position in the global supply chain: number of companies across the globe are market share from China. aided the manufacturers in the capital- actively looking at de-risking their sourcing intensive chemical industry to undertake huge 1. Uncertainty created by the US-China trade war: IT Services: The Indian IT industry was a major strategy and adopting a "China, plus one" capital investments for setting up mega-scale beneficiary of the global Y2K crisis in early a) In June 2018, USA announced that it would approach to have a better control over their plants, which could provide the desired 2000s, as the IT industry in India was able to impose 25% tariff on USD 50 billion worth of supply chain, even if that translates into higher economies of scale successfully leverage the whitespace created by Chinese imports across two phases. sourcing costs. this crisis. Availability of a highly skilled English- b) In 2014, however, China's main bank Subsequently, China retaliated by announcing speaking work force, lower service delivery costs supervisor announced that the credit outflow a similar levy of tariffs on US imports worth Unparalleled opportunity for and strong process engineering capabilities to oversupplied industries would be restricted, USD 50 billion. Chemicals and plastics cemented India's position in the global IT services and this applied to certain parts of chemical comprised almost 40% of the 106 products India to seize the whitespace industry. Over the years, India has become the industry as well. targeted by China for imposition of tariffs. A combination of favorable events, over the past most favored destination for IT services c) As a result, the eligibility criteria for new credit b) Since then, there have been multiple rounds couple of years, has created a huge whitespace outsourcing, enjoying close to 55% market share to industries, such as chemicals became much of tariff announcements by both the countries for manufacturers in low-cost manufacturing in the global IT services outsourcing industry as stricter with higher than average interest rates followed by talks of a trade deal in the offing, destinations, such as India, who stand to enjoy of 2019. being charged to chemical manufacturers, creating an atmosphere of uncertainty hampering their ability to undertake new amongst the industry players across the globe. projects and enhance capacities. c) These events not only impacted the pricing of 2. Change in stance on environmental goods but also affected the capital spending protection, leading to shutting down of undertaken by chemical majors. Dow, for instance, announced a 9% reduction in its manufacturing facilities: capital expenditure as a step to maintain cost a) Ahead of its 5-yearly Congress Committee discipline in the light of ongoing trade and meet in October 2017, the Chinese geopolitical uncertainties led by events, such as the US-China trade war.

Factors India's capabilities

ü Low costs of manufacturing and India continues to be a preferred manufacturing destination for players across availability of skilled labour the globe given its low cost of manufacturing, cheap labor wage rates and Section 7 abundant availability of skilled manpower Section 7 ors

act ü Strong Intellectual Property Rights Strong IPR protection is a vital criteria for global innovators looking to source (IPR) protection policy materials, and India has established itself as a strong proponent of IPR protection Impact of COVID-19 ü Enabling F Track record of producing world- India's specialty chemical industry enjoys strong global acceptance, with quality output exports constituting more than 50% of the production in sub-segments, such as ﬂavours, fragrances and nutraceuticals on the Indian Specialty ý Shortage of feedstock supply Since majority of India's petrochemical building blocks are channelized towards bulk polymers; the other end-user segments have to predominantly rely upon imports for their feedstock requirements ors Chemicals Industry ý act Majority of the players across Majority of the specialty chemical manufacturers in India operate at a segments are sub-scale signiﬁcantly lower scale, severely impacting their ability to pose a credible threat to their Chinese counterparts

Limiting F ý Gap in enforcement of While environmental regulations (and enforcement) in India have always been environmental regulations stricter than China, the level of enforcement varies depending upon the location and the size of the enterprise

In addition to being a credible sourcing alternate chemical consumption continues to be to China, India represents an extremely attractive signiﬁcantly low, representing a huge headroom opportunity for MNCs to strengthen their for growth. Growing disposable incomes, rapid presence in a high growth market. It represents urbanization, strong growth in demand for one of the fastest growing consumption markets sophisticated products are some of the factors in the world, wherein the per capita specialty that are likely to drive strong growth in the Indian specialty chemicals industry.

Factors India's capabilities

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 40 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 41 Indian Specialty Chemicals industry has been on However, the industry continued to face Exhibit 43: Overall Impact on Indian Specialty Chemical Sub-Segments a solid growth trajectory over the past few years, challenges such as non-availability of labour at Segment COVID Impact Benefit from supply Key Factors consistently being one of the most resilient plant sites, non-availability of manpower for chain realignment segments within the Indian manufacturing sector. handling/loading of products, non-availability of Surge in demand for flavors (packaged foods) as well as The global outbreak of the novel coronavirus transport and stock pile-ups at the ports. Flavours & Fragrance Positive 4 fragrances (sanitizers and soaps) has benefited the segment (COVID-19), however, led to unprecedented On the demand side, some sectors linked to end- Change in behavioral patterns resulting in an increased disruptions in the manufacturing activity on Personal Care use markets such as pharmaceuticals, hygiene Positive 2 demand for hygiene products, such as sanitizers and account of lockdowns imposed across the Chemicals and personal care products were largely soaps country. insulated; whereas other sectors linked to end- Nutraceutical Positive Increased health awareness and strong preference for Ingredients 2 preventive care likely to drive demand for nutraceuticals While the initial few weeks of lockdown were use markets such as automotive, construction characterized by supply chain disruptions, the and textiles experienced a fall in end-user Surfactants Positive Increased demand for disinfectants, cleaning agents and 1 detergents to support demand growth over near term specialty chemicals industry was amongst the demand on account of global slowdown and first few sectors that returned to normalcy. lower economic activity. In this section, we have Largely insulated from COVID impact given limited Agrochemicals Neutral 4 disruption in agricultural activity, and good monsoon Several players, who had linkages to essential tried to outline the near-term and long-term outlook for the year products were able to resume operations, albeit demand impact across various segments of the High demand from packaging segment, which is partially partially, within the first few weeks of lockdown. specialty chemicals industry. Polymer Additives Neutral 2 offset by lower demand from automotive and industrial applications Exhibit 42: Supply Side Impact Initial disruptions followed by a quick return to normalcy Dyes and Pigments Neutral 4 Likely to benefit over the short-term from shutdown of dye Factors March - April May onwards intermediate facilities in China

Players with linkages to essential products continued to Almost all the manufacturers resumed operations; however, Water Chemicals Neutral Adverse impact of decline in industrial activity to be partly Manufacturing activity operate partially, whereas others mostly there have been intermittent disruptions on account of 1 offset by increased demand for water disinfectants resumed operations by mid-April local/regional lockdowns Demand is likely to be muted over the near term given the Players with linkages to essential products reached pre-C OVID Textile Chemicals Negative While most players were operational, they continued to 2 Capacity utilisation levels; whereas others reached capacity utilisation levels of headwinds in end-use market operate at less than 50% capacity uﬁlisation up to April more than 80% by May Construction Negative Decline in construction activity negatively impacted the Certain challenges due fo spread of virus in rural areas; but 1 Players with high dependence on contract labour impacted Chemicals demand over the near term overall labour related challenges were largely under control by Labour signiﬁcantly; especially in Maharashtra & Gujarat belt May

Restricted trade flows and lower production in China led to Restoration of normalcy in China coupled with opening up of Financial Performance and Share Price the manufacturing sector. We believe that this supply shortages for some players; sharp appreciation of dollar Raw materials trade flows eased out the raw material supplies led to higher costs Performance disparity in financial performance is likely to continue over the near term, as the specialty While the supply chain disruptions normalized in Demand Side Impact: Varying levels of As highlighted below, the specialty chemicals in chemicals industry continues to outperform other industry has performed much better during the a couple of months, there were a couple of impact for different segments sectors backed by strong tailwinds in domestic as factors which are likely to affect India's COVID period as compared to the other parts of well as global markets. competitiveness over the near term: Given the diverse end-use applications for specialty chemicals, the demand side impact of Exhibit 44: Impact on Revenue & Profitability in Q4FY20 and Q1FY21 financial performance n Inability to leverage declining crude prices: A COVID will not be same for all the players . From a Q4 FY20 Q1 FY21 country-wide shutdown led to a complete halt short-term perspective, while a few segments got to the international trade activity. So while the Revenue Median Y-o-Y Change Median Y-o-Y Change impacted negatively, there have also been a global crude oil prices declined in April, the couple of outperformers over the past few manufacturers in India couldn't buy at cheaper Top 20 Specialty Chemical Players 3.2% -8.3% months. So, while the revenue and profitability prices, while their global counterparts stocked declined in Q4FY20 and Q1FY21, we believe that Manufacturing Companies in NIFTY50 -5.4% -33.3% up on raw material at competitive prices. the trend will start reversing from Q2FY21 EBITDA Median Y-o-Y Change Median Y-o-Y Change n Export Disruptions: India was the only country onwards. As the global supply chains realign and to have imposed a complete lockdown on customers increasingly look to develop a 'China, 2.9% -6.4% manufacturing services, especially for plus one' strategy; we believe that most of the Top 20 Specialty Chemical Players chemicals sector, which impacted the segments in the specialty chemicals industry are Manufacturing Companies in NIFTY50 -15.3% -42.4% shipments from India for a few weeks; thereby likely to emerge as stronger than before from a impacting India's perception as an all-weather long-term perspective. sourcing destination.

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 42 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 43 Indian Specialty Chemicals industry has been on However, the industry continued to face Exhibit 43: Overall Impact on Indian Specialty Chemical Sub-Segments a solid growth trajectory over the past few years, challenges such as non-availability of labour at Segment COVID Impact Benefit from supply Key Factors consistently being one of the most resilient plant sites, non-availability of manpower for chain realignment segments within the Indian manufacturing sector. handling/loading of products, non-availability of Surge in demand for flavors (packaged foods) as well as The global outbreak of the novel coronavirus transport and stock pile-ups at the ports. Flavours & Fragrance Positive 4 fragrances (sanitizers and soaps) has benefited the segment (COVID-19), however, led to unprecedented On the demand side, some sectors linked to end- Change in behavioral patterns resulting in an increased disruptions in the manufacturing activity on Personal Care use markets such as pharmaceuticals, hygiene Positive 2 demand for hygiene products, such as sanitizers and account of lockdowns imposed across the Chemicals and personal care products were largely soaps country. insulated; whereas other sectors linked to end- Nutraceutical Positive Increased health awareness and strong preference for Ingredients 2 preventive care likely to drive demand for nutraceuticals While the initial few weeks of lockdown were use markets such as automotive, construction characterized by supply chain disruptions, the and textiles experienced a fall in end-user Surfactants Positive Increased demand for disinfectants, cleaning agents and 1 detergents to support demand growth over near term specialty chemicals industry was amongst the demand on account of global slowdown and first few sectors that returned to normalcy. lower economic activity. In this section, we have Largely insulated from COVID impact given limited Agrochemicals Neutral 4 disruption in agricultural activity, and good monsoon Several players, who had linkages to essential tried to outline the near-term and long-term outlook for the year products were able to resume operations, albeit demand impact across various segments of the High demand from packaging segment, which is partially partially, within the first few weeks of lockdown. specialty chemicals industry. Polymer Additives Neutral 2 offset by lower demand from automotive and industrial applications Exhibit 42: Supply Side Impact Initial disruptions followed by a quick return to normalcy Dyes and Pigments Neutral 4 Likely to benefit over the short-term from shutdown of dye Factors March - April May onwards intermediate facilities in China

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 42 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 43 This superior performance of the specialty chemicals industry is India has also been reflected in the shareholder value creation by the leading players in the industry vis-à-vis the overall performance of the index. Exhibit 45: Shareholder returns in specialty chemicals vs. NIFTY Peak Impact Recovery Overall Shareholder Returns (01-Jan to 31-Mar) (01-Apr to 31-Aug) (01-Jan to 31-Aug) Section 8 Section 8 Top 20 Specialty Chemical Players -19.8% 59.2% 27.6% NIFTY50 -32.2% 39.0% -5.8% Policy Investors continue to remain buoyant about the the ease of doing business in India and strong growth outlook for the specialty chemicals provides the adequate policy support by way of Recommendations industry in India. Rossari Biotech, the first IPO to necessary incentives for the sector hit the market post the COVID outbreak received b. Private players step up the investments a stellar response, with a listing premium of towards R&D activities and towards ~58% to its issue price. The stock continued to development of local manufacturing trade at 1.8x the issue price 2 months post- capabilities in order to reduce their listing, underlining the continued confidence of dependence on overseas markets, such as investors on the long-term growth story of the China Indian market. c. All stakeholders join hands to act responsibly As highlighted above, the specialty chemicals and ensure that the industry continues to be industry has demonstrated its resilience over the cognizant of its impact of the environment be it past few months. However, for India to retain its in terms of reduction of carbon footprint, advantage and strengthen its position in the reduction of energy consumption, conservation global supply chain; it is imperative that of natural resources like water or minimisation a. Government continues to focus on improving of effluents and wastes that are discharged

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 44 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 45 This superior performance of the specialty chemicals industry is India has also been reflected in the shareholder value creation by the leading players in the industry vis-à-vis the overall performance of the index. Exhibit 45: Shareholder returns in specialty chemicals vs. NIFTY Peak Impact Recovery Overall Shareholder Returns (01-Jan to 31-Mar) (01-Apr to 31-Aug) (01-Jan to 31-Aug) Section 8 Section 8 Top 20 Specialty Chemical Players -19.8% 59.2% 27.6% NIFTY50 -32.2% 39.0% -5.8% Policy Investors continue to remain buoyant about the the ease of doing business in India and strong growth outlook for the specialty chemicals provides the adequate policy support by way of Recommendations industry in India. Rossari Biotech, the first IPO to necessary incentives for the sector hit the market post the COVID outbreak received b. Private players step up the investments a stellar response, with a listing premium of towards R&D activities and towards ~58% to its issue price. The stock continued to development of local manufacturing trade at 1.8x the issue price 2 months post- capabilities in order to reduce their listing, underlining the continued confidence of dependence on overseas markets, such as investors on the long-term growth story of the China Indian market. c. All stakeholders join hands to act responsibly As highlighted above, the specialty chemicals and ensure that the industry continues to be industry has demonstrated its resilience over the cognizant of its impact of the environment be it past few months. However, for India to retain its in terms of reduction of carbon footprint, advantage and strengthen its position in the reduction of energy consumption, conservation global supply chain; it is imperative that of natural resources like water or minimisation a. Government continues to focus on improving of effluents and wastes that are discharged

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 44 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 45 I. Improving the 'Ease of Doing of an all-India mapping of various linkages deductions, investment allowances, incentives (for a timebound period) in Business (EODB)' in India for impacting the chemical sector. This could subsidies, accelerated depreciation etc. order to attract FDI investments, which include mapping of ports and refineries to can provided on acquisition of plant and could help expedite the development of Chemical Companies pipelines, linkages of factories to the machinery these regions common effluent treatment plants, power, While India's EODB ranking has improved over ii. Additional incentives can be offered b. Setting up Dedicated Chemical Parks for utilities etc., which can serve as a ready the years, with a global logistics performance depending on the scale of investment for Downstream Users: 6 reckoner for any domestic or foreign entity index (LPI) rank of 42 , India's trade and the industry sponsored R&D initiatives and looking to set up a greenfield project i. India should consider development of transport infrastructure continues to rank behind the set-up of dedicated in-house R&D integrated chemicals parks, on the lines of smaller Asian counterparts, such as Malaysia and facility. This would encourage both - new II. Stronger Focus on Research & the ones developed in Belgium, Frankfurt, Thailand. This not only impacts the operational entrants as well as incumbents to Development to Improve India's Singapore and China costs for companies but also impacts India's undertake the necessary capital desirability as an investment destination and an Competitiveness expenditure needed for augmenting India's n A lot of the usual challenges and costs export hub. As per Economic Advisory Council's survey in capacity especially in sectors, which are associated with the transportation and a. Infrastructure Development: 2019, India's Gross Expenditure on Research & heavily reliant on imports disposal of chemicals in the Indian context could be addressed through these Development (GERD) is 0.7% of GDP vis-à-vis that c. Dedicated Skill Development Program: n One of the most critical elements for of USA at 2.8% of GDP and China at 2.1% of GDP. integrated parks, which entail development ensuring growth of the chemicals industry n The specialty chemical industry in India One of the key factors for India being a laggard in of a common petrochemical infrastructure is the provision of adequate power, water struggles with limited local capability to R&D expenditure is the secondary role played by of high-pressure pipelines, water treatment and energy, which can enable develop new products and technologies. It the private sector in the Indian R&D Ecosystem. facilities and effluent treatment plants uninterrupted production, safe could be helpful to introduce sector- Provision of incentives to the private sector can n At the same time, this would help match transportation, proper storage of goods specific skill-development programs (for be one of the ways for boosting R&D investments, feedstock availability with downstream and their exports example, training in process engineering) and following are a couple of ways in which the users, who have to currently rely upon in partnership with institutes, such as IITs n This needs to be further supported same could be addressed. imports for meeting their intermediates and ICT, Mumbai through development and maintenance of requirements a. Tax Incentives for Private Sector Entities waste-water treatment and solid waste III. Improving India's Feedstock Supply c. Encouraging Private Sector Investments in disposal facilities adjacent to key chemical n In order to keep the private sector and Ensuring Self-sufficiency in manufacturing clusters, in order to ensure enthused about investments in R&D, the Petrochemical Intermediates: that environmental impact is not Petrochemical Intermediates: Government should consider n India is heavily dependent on imports for compromised at the cost of growth reinstatement of the weighted tax a. Expediting the implementation of PCPIR: petrochemical intermediates, and b. Reducing the time required for setting up deduction under section 35 (I) (ii), section production of these intermediates entails 35 (2AA) and section 35 (2AB) of the n India's Petroleum, Chemicals and new facilities: significant capital expenditure Income tax Act at the previous levels Petrochemicals Investment Regions n The Government should set up a dedicated n The Government should consider adoption (PCPIR) policy has not taken off as n At the same time, the sunset clause for of faster registration and clearance expected. Of the four PCPIRs announced in technology upgradation fund, to these deductions should be removed at processes for companies that meet Gujarat, Andhra Pradesh, Odisha, Tamil incentivize private sector entities for least for a period of 5 years, as this would globally accepted impact assessment Nadu, only the PCPIR in Dahej, Gujarat has making capital investments in setting up encourage investments into the R&D initiatives as Global Reporting Initiative received meaningful investment from of large-scale plants for manufacturing of activities, which is imperative for India's (GRI), Together for Sustainability (TfS), industry players critical petrochemical intermediates, ability to become self-reliant in the Carbon Disclosure Project (CDP), which are currently being imported chemicals sector n. The Government will need to adopt a more Responsible Care, ISO 14001, and ISO pro-active role in implementation of the d. Production linked Incentive for Critical 45001 among others b. Technology Upgradation Fund (TUF) remaining PCPIRs. This may also entail Intermediates:

n The Government, in partnership with the n provision of a single window clearance for Creation of a TUF for the Specialty n Indian Government should consider all investments in PCPIRs and private sector, should work upon creation Chemicals sector through which tax introduction of a production linked announcement of favorable taxes and

6 World Bank Logistics Performance Index 2018 INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 46 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 47 I. Improving the 'Ease of Doing of an all-India mapping of various linkages deductions, investment allowances, incentives (for a timebound period) in Business (EODB)' in India for impacting the chemical sector. This could subsidies, accelerated depreciation etc. order to attract FDI investments, which include mapping of ports and refineries to can provided on acquisition of plant and could help expedite the development of Chemical Companies pipelines, linkages of factories to the machinery these regions common effluent treatment plants, power, While India's EODB ranking has improved over ii. Additional incentives can be offered b. Setting up Dedicated Chemical Parks for utilities etc., which can serve as a ready the years, with a global logistics performance depending on the scale of investment for Downstream Users: 6 reckoner for any domestic or foreign entity index (LPI) rank of 42 , India's trade and the industry sponsored R&D initiatives and looking to set up a greenfield project i. India should consider development of transport infrastructure continues to rank behind the set-up of dedicated in-house R&D integrated chemicals parks, on the lines of smaller Asian counterparts, such as Malaysia and facility. This would encourage both - new II. Stronger Focus on Research & the ones developed in Belgium, Frankfurt, Thailand. This not only impacts the operational entrants as well as incumbents to Development to Improve India's Singapore and China costs for companies but also impacts India's undertake the necessary capital desirability as an investment destination and an Competitiveness expenditure needed for augmenting India's n A lot of the usual challenges and costs export hub. As per Economic Advisory Council's survey in capacity especially in sectors, which are associated with the transportation and a. Infrastructure Development: 2019, India's Gross Expenditure on Research & heavily reliant on imports disposal of chemicals in the Indian context could be addressed through these Development (GERD) is 0.7% of GDP vis-à-vis that c. Dedicated Skill Development Program: n One of the most critical elements for of USA at 2.8% of GDP and China at 2.1% of GDP. integrated parks, which entail development ensuring growth of the chemicals industry n The specialty chemical industry in India One of the key factors for India being a laggard in of a common petrochemical infrastructure is the provision of adequate power, water struggles with limited local capability to R&D expenditure is the secondary role played by of high-pressure pipelines, water treatment and energy, which can enable develop new products and technologies. It the private sector in the Indian R&D Ecosystem. facilities and effluent treatment plants uninterrupted production, safe could be helpful to introduce sector- Provision of incentives to the private sector can n At the same time, this would help match transportation, proper storage of goods specific skill-development programs (for be one of the ways for boosting R&D investments, feedstock availability with downstream and their exports example, training in process engineering) and following are a couple of ways in which the users, who have to currently rely upon in partnership with institutes, such as IITs n This needs to be further supported same could be addressed. imports for meeting their intermediates and ICT, Mumbai through development and maintenance of requirements a. Tax Incentives for Private Sector Entities waste-water treatment and solid waste III. Improving India's Feedstock Supply c. Encouraging Private Sector Investments in disposal facilities adjacent to key chemical n In order to keep the private sector and Ensuring Self-sufficiency in manufacturing clusters, in order to ensure enthused about investments in R&D, the Petrochemical Intermediates: that environmental impact is not Petrochemical Intermediates: Government should consider n India is heavily dependent on imports for compromised at the cost of growth reinstatement of the weighted tax a. Expediting the implementation of PCPIR: petrochemical intermediates, and b. Reducing the time required for setting up deduction under section 35 (I) (ii), section production of these intermediates entails 35 (2AA) and section 35 (2AB) of the n India's Petroleum, Chemicals and new facilities: significant capital expenditure Income tax Act at the previous levels Petrochemicals Investment Regions n The Government should set up a dedicated n The Government should consider adoption (PCPIR) policy has not taken off as n At the same time, the sunset clause for of faster registration and clearance expected. Of the four PCPIRs announced in technology upgradation fund, to these deductions should be removed at processes for companies that meet Gujarat, Andhra Pradesh, Odisha, Tamil incentivize private sector entities for least for a period of 5 years, as this would globally accepted impact assessment Nadu, only the PCPIR in Dahej, Gujarat has making capital investments in setting up encourage investments into the R&D initiatives as Global Reporting Initiative received meaningful investment from of large-scale plants for manufacturing of activities, which is imperative for India's (GRI), Together for Sustainability (TfS), industry players critical petrochemical intermediates, ability to become self-reliant in the Carbon Disclosure Project (CDP), which are currently being imported chemicals sector n. The Government will need to adopt a more Responsible Care, ISO 14001, and ISO pro-active role in implementation of the d. Production linked Incentive for Critical 45001 among others b. Technology Upgradation Fund (TUF) remaining PCPIRs. This may also entail Intermediates:

6 World Bank Logistics Performance Index 2018 INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 46 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 47 incentive (PLI) scheme speciﬁcally health and the environment impacted by targeted towards manufacturing of the use of chemicals chemical intermediates, which are Glossary n The aim of these rules should not only be currently being imported in large to ensure protection of human health and quantities from countries such as China environment from chemicals, but also to Abbreviations Description n This scheme can provide a signiﬁcant promote innovations in sustainable and API Active Pharmaceutical Ingredients boost for private sector entities to create safer ways of manufacturing, transporting, the required infrastructure in India, usage and disposal of chemicals. This will B2B Business-to-Business thereby reducing their manufacturing also enhance the credibility of the Indian B2C Business-to-Consumer costs as well as their dependency on other specialty chemicals sector in the global BPCL Bharat Petroleum Corporation Limited countries for critical intermediates market landscape CAGR Compounded Annual Growth Rate IV.Adopting a 'Growth with Care' b. Incentives to Promote Environmental CRAMS Contract Research and Manufacturing Services protection: EU European Union approach F&F Flavours & Fragrances n The Government should create the right a. Health and Safety Related Guidelines & incentives for promoting adoption of FMCG Fast Moving Consumer Goods Regulations: environment-friendly manufacturing GAIL Gas Authority of India Limited

n Expediting the formulation and practices. One of the incentives that could GDP Gross Domestic Product implementation of Chemical (Management be effective is fast-track environmental HPCL Hindustan Petroleum Corporation Limited & Safety) Rules with the objective to clearance for brownﬁeld expansion ICT Institute of Chemical Technology, Mumbai projects undertaken by approved ensure a high level of protection of human IFF International Flavours & Fragrances manufacturing units IIT Indian Institute of Technology IOCL Indian Oil Corporation Limited M&A Mergers & Acquisitions MNC Multinational Corporation ONGC Oil and Natural Gas Corporation R&D Research & Development REACH Registration, Evaluation, Authorization and Restriction of Chemicals RIL Reliance Industries Limited UV Ultraviolet

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 48 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 49 incentive (PLI) scheme speciﬁcally health and the environment impacted by targeted towards manufacturing of the use of chemicals chemical intermediates, which are Glossary n The aim of these rules should not only be currently being imported in large to ensure protection of human health and quantities from countries such as China environment from chemicals, but also to Abbreviations Description n This scheme can provide a signiﬁcant promote innovations in sustainable and API Active Pharmaceutical Ingredients boost for private sector entities to create safer ways of manufacturing, transporting, the required infrastructure in India, usage and disposal of chemicals. This will B2B Business-to-Business thereby reducing their manufacturing also enhance the credibility of the Indian B2C Business-to-Consumer costs as well as their dependency on other specialty chemicals sector in the global BPCL Bharat Petroleum Corporation Limited countries for critical intermediates market landscape CAGR Compounded Annual Growth Rate IV.Adopting a 'Growth with Care' b. Incentives to Promote Environmental CRAMS Contract Research and Manufacturing Services protection: EU European Union approach F&F Flavours & Fragrances n The Government should create the right a. Health and Safety Related Guidelines & incentives for promoting adoption of FMCG Fast Moving Consumer Goods Regulations: environment-friendly manufacturing GAIL Gas Authority of India Limited

Established 90 years ago, FICCI is the largest and Avendus Group is a leading financial services firm oldest apex business organization in India. Its with presence in the areas of Investment history is closely interwoven with India's struggle Banking, Wealth Management, Credit Solutions for independence, its industrialization, and its and Asset Management. Established in 1999 in emergence as one of the most rapidly growing Mumbai, India, Avendus is today present in 10 global economies. cities across India, US, UK and Singapore. Avendus partners with the Indian entrepreneur A non-government, not-for-profit organization, ecosystem to provide differentiated solutions that Koushik Bhattacharyya Saumak Mitra FICCI is the voice of India's business and industry. Director & Head - Industrials Assistant Director - enable clients to meet their strategic aspirations. Investment Banking Chemicals & Petrochemicals From influencing policy to encouraging debate, Avendus Capital FICCI [email protected] saumak.mitra@ficci.com engaging with policy makers and civil society, Avendus Capital, the investment banking arm, is FICCI articulates the views and concerns of consistently ranked among the top investment industry, reaching out to over 2,50,000 banks in the country on the back of its in-depth companies. FICCI serves its members from large domain understanding and a best in the class (domestic and global companies) and MSME track record of domestic and cross-border sectors as well as the public sector, drawing its transactions. Avendus's wide range of clients is strength from diverse regional chambers of testimony to its ability to serve its corporates commerce and industry. throughout their life cycle – from growth stage funding to large-sized transactions, and M&A The Chamber with its presence in 14 states and advisory. 10 countries provides a platform for networking Punit Sanganeria Samidha Hasija Vice President Research Associate and consensus-building within and across sectors Avendus Capital's investment banking arm has a Investment Banking Chemicals & Petrochemicals and is the first port of call for Indian industry, prolific track record in the specialty chemicals Avendus Capital FICCI [email protected] samidha.hasija@ficci.com policy makers and the international business industry, having closed 5 M&A and PE community transactions in this space in the last 5 years, and authored multiple reports on this sector in the recent past.

Amol Deorukhakar Associate Investment Banking Avendus Capital [email protected]

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 50 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 51 Authors of the report About FICCI About Avendus

Amol Deorukhakar Associate Investment Banking Avendus Capital [email protected]

INDIAN SPECIALTY CHEMICALS INDUSTRY INDIAN SPECIALTY CHEMICALS INDUSTRY 50 BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT BIGGEST BENEFICIARY OF THE GLOBAL PARADIGM SHIFT 51 Disclaimer

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