About Citichem India Limited

Business Overview

Citichem India Limited is a trading company that specialises in the procurement and supply of organic and inorganic chemicals, bulk drugs, and food chemicals, primarily serving the pharmaceutical industry. The company also provides food preventives and chemicals under its own brand name. Citichem's products cater to various industries including aluminium, steel, textiles, paper, dairy, paints, dyes & intermediates, soap making, pharma, food, and adhesives.

The company was founded on March 18, 1992, as 'Citichem Alkalies (Bombay) Private Limited' and later converted to a public limited company on March 23, 1999. Citichem India Limited operates from its leased Registered Office in Mumbai, Maharashtra.

Key Milestones:

• Incorporated as 'Citichem Alkalies (Bombay) Private Limited' on March 18, 1992.
• Converted to a public limited company on March 23, 1999.
• Name changed to 'Citichem India Ltd' on April 17, 1999.
• Launching an Initial Public Offering (IPO) on December 27, 2024.

Industry Analysis

The Indian chemical industry is a diverse and significant contributor to the nation's economy, encompassing over 80,000 commercial products across sectors such as bulk chemicals, specialty chemicals, agrochemicals, petrochemicals, polymers, and fertilisers.

Key Highlights:

• Globally, India ranks as the fourth-largest producer of agrochemicals, following the United States, Japan, and China.
• India contributes approximately 16% to the global production of dyestuffs and dye intermediates.
• The Indian colorants industry has become a prominent player in the global market.
• As of February 2024, India's chemical industry exports reached US$29 billion.

Growth Trends and Drivers:

• Rising demand for chemicals from various end-user industries.
• Government initiatives and policies supporting the growth of the chemical industry.
• Increasing investments in research and development, driving innovation in the sector.

Competitive Landscape: The Indian chemical industry is highly competitive, characterized by the presence of both domestic and international players.

Business Strengths

• Experienced Management: Citichem India Limited benefits from the extensive experience of its promoters, who have over two decades of expertise in the chemical industry. This experience provides the company with valuable market insights and established relationships with suppliers and clients.
• Customer Satisfaction Focus: The company prioritises cultivating robust customer relationships and ensuring satisfaction, which is crucial for sustained growth in a competitive market.
• Strategic Location: Citichem's base in Mumbai provides advantageous access to well-developed infrastructure, proximity to major markets, and convenient access to ports for import and export activities.

Business Strategies

• Expanding Product Portfolio: Citichem plans to expand its product range by introducing new chemical compositions to meet evolving market demands and cater to a wider customer base.
• Enhancing Operational Efficiency: The company seeks to improve operational processes through technology adoption and strategic initiatives, aiming for greater efficiency and cost optimisation.
• Strengthening Supply Chain: Citichem aims to diversify its procurement sources and expand its supply chain network to ensure consistent product availability and mitigate risks associated with supplier dependence.

Risk Factors and Concerns

• Customer Concentration: Citichem derives a significant portion of its revenue from a limited number of customers. In the stub period (three months ended June 30, 2024), the top customer accounted for 88.98% of total revenue, while the top 5 customers contributed 100%. This concentration poses a risk as the loss of even a single major customer could significantly impact the company's financial performance.
• Intense Competition: The highly competitive nature of the chemical industry, with the presence of numerous domestic and international players, could impact pricing strategies and profitability.
• Dependence on Suppliers: Citichem relies heavily on its suppliers for product availability and pricing, which exposes the company to potential disruptions in supply chains or fluctuations in raw material costs.
• Working Capital Requirements: The trading business model inherently demands substantial working capital investments to manage inventory and credit cycles, which could strain the company's financial resources.
• Family Business Structure: Citichem operates as a family business. While this can offer certain advantages, it may also raise concerns about corporate governance practices, potential conflicts of interest, and succession planning.

As on June 30, 2024, Citichem India have the total 9 Whole-time Employees. The Bankers of the Company is Kotak Mahindra Bank Limited.