About Shiv Texchem Limited

Shiv Texchem is primarily engaged in the business of importing and distribution of hydrocarbon-based chemicals of the product family viz. Acetyls, Alcohol, Aromatics, Nitriles, Monomers, Glycols Phenolic, Ketones, and Isocyanates, which are critical raw materials and inputs and have application across wide spectrum of industries like paints and coatings, printing inks, agro-chemical products, specialty polymers, pharmaceuticals products and specialty industrial chemicals.

In the petrochemical industry, there is a wide array of base chemicals that serve as the foundation for various derivative chemicals. These chemicals serve as secondary and tertiary chemicals for application in various industries. The business focuses on the import and redistribution of these secondary and tertiary chemicals, which are essential raw materials for multiple industries. They manage the supply chain of these secondary and tertiary chemicals derived from base chemicals. For example, benzene serves as a fundamental building block for producing essential secondary and tertiary chemicals such as phenol, styrene and aniline. These secondary and tertiary chemicals are indispensable base raw material inputs in various industries including paints, coatings, printing inks, agrochemicals, pharmaceuticals, specialty polymers, and industrial chemicals.

They have strategically sourced a wide variety of products from global producers and suppliers and have successfully delivered to a diverse range of customers such as Apcotex Industries Limited, Hemani Industries Limited, Gujarat Fluorochemicals Limited amongst others. Their sourcing efforts have spanned multiple countries including China, Taiwan, South Korea, Kuwait, Qatar, USA, Netherlands, Belgium and Italy amongst others.

Petrochemical Consumption in India
India has been one of the largest consumers of chemicals & petrochemical products in Asia Pacific region for the bulk of the last 10 – 15 years. The rapid growth in India’s manufacturing infrastructure during this time period have created strong demand for a wide range of chemical & petrochemical input materials and intermediates. As India became one of the fastest growing economies in the world, the annual growth in demand for chemical & petrochemical input materials and intermediates too increased at a fast clip. 

The spread of Covid-19 pandemic impacted the petrochemical demand in India in FY 2021 – like it did across the globe. Subsequently the annual consumption of petrochemicals dropped to 43 million tons per annum (MTPA) in FY 2021, as against 48.3 MTPA in the previous year. However, the resumption in economic activity in FY 2022 and subsequent years – as the impact of Covid pandemic wore off – have helped the industry recoup its growth. 

Annual consumption volume rose to 48.2 MTPA in FY 2022 and further to approximately 57 MTPA in FY 20243.

A wide range of chemicals & petrochemicals are used in paint manufacturing where it serves the purpose of binders, solvents, additives to name a few. Some of the commonly used binders in paint manufacturing include acrylic polymers, alkyd polymers, epoxy polymers, latex, and phenolic resins. Meanwhile petrochemical compounds like Xylene, Toluene, Alcohols (n-butanol, isopropanol), and ketones are used as solvents in paint manufacturing. In addition, a wide range of chemicals & petrochemicals are used as additives and pigments in paints. 

The demand for these petrochemicals from paint industry is tied to the production of paints & coatings. India has emerged as one of the leading manufacturers of paints, producing nearly 779 thousand tons of paints & varnishes in FY 2024. The strong growth in real estate construction in the country points to continued strong demand for paints in India. As a result, the domestic production volume of paints & varnishes is expected to cross 1000 thousand tons per annum by FY 2030. This strong growth in domestic paint production would in turn create a strong demand for all the chemicals & petrochemical input materials and intermediates used by the paint industry.

Demand from Printing Ink Industry
Globally, the printing ink industry is estimated to be worth USD 15 Bn while Indian printing ink market is estimated to be around USD 1 Bn6 . Meanwhile the domestic consumption of printing ink is estimated to be over 400,000 tons and has been increasing steadily. The demand for printing ink is fuelled by strong demand coming from packaging industry. Going ahead, the Indian printing ink market is expected to grow by a CAGR of nearly 8% over the next few years7 . Assuming this growth rate, the turnover in Indian printing ink industry would hit nearly USD 1.7 Bn by the end of this decade.

Expansion of the Packaging Industry
One of the primary drivers of the printing ink industry in India is the rapid expansion of the packaging industry. Packaging is the fifth largest economic sector in the country, and India is one of the fastest growing packaging markets in the world. According to Indian Institute of Packaging (IIP), the per capita consumption of packaging products in India has increased by nearly 200% during 2010 -2020 period, increasing from nearly 4.3 kg per person per annum in FY 2010 to nearly 8.6 per person per annum in FY 2020. 

The Indian market for packaging products was worth nearly USD 50 Bn in 2019 and is expected to reach USD 204 Bn in 2025. According to Packaging Industry Association of India (PIAI), the industry is growing by a CAGR of 22 – 25%. Considering this growth forecast, the Indian market for packaging products is expected to reach approximately USD 552 Bn by the end of this decade.

With increasing urbanization and changes in consumer lifestyles, there is a heightened demand for packaged goods. This surge necessitates the use of high-quality printing inks for various packaging materials such as flexible packaging, labels, and corrugated boxes. These materials require specialized inks to meet aesthetic and functional needs, thereby driving the growth of the printing ink market. This growth is significantly supported by the printed packaging segment, which accounts for about 27% of the total demand for printing inks. Newspapers contribute 20%, while commercial printing, promotional materials, and printed advertising together make up around 19%. The packaging industry’s growth is expected to continue, given the rising demand for consumer goods, thus sustaining the demand for printing inks.

Petrochemical feedstock used by printing ink industry.
The printing ink industry in India is a significant consumer of petrochemical feedstocks, crucial for producing the various pigments and resins used in inks. This demand is driven by several key factors that interlink the growth of the printing ink sector with the consumption of petrochemicals. Firstly, the need for pigments, essential inputs for printing inks, is on the rise. Petrochemical-based pigments such as carbon black, Victoria blue, and phthalocyanine blue are extensively used. 

As the printing industry expands, particularly in sectors like packaging, newsprint, publishing, and commercial printing, the demand for these pigments grows correspondingly. The vibrant and varied colors required in modern printing processes depend heavily on these specialized pigments, making petrochemicals a backbone of the industry. In addition to pigments, resins like phenolic resins, which provide the necessary adhesive properties for inks, are in high demand. These resins are also derived from petrochemicals and are indispensable for producing high-quality printing inks. As the printing ink industry continues to grow, the requirement for these resins increases, further driving the demand for petrochemical feedstocks.

The ongoing trend towards high-performance and eco-friendly inks also stimulates demand for advanced petrochemical feedstocks. As the industry seeks to develop inks with lower environmental impact and better performance characteristics, the requirement for specialized petrochemical products, including high-purity solvents and advanced polymer resins, increases. This, in turn, drives innovation and demand in the petrochemical industry, highlighting the interconnected nature of these sectors. 

In conclusion, the expansion of the printing ink industry significantly boosts the demand for petrochemical feedstocks. As the industry grows and evolves towards more advanced and sustainable products, the need for specialized petrochemical inputs will continue to rise, fostering further development and innovation within the petrochemical sector.

Demand from Agrochemical Industry
India is the fourth-largest producer of agrochemicals globally, following the United States, Japan, and China, and is also the fourth net exporter of agrochemicals and the thirteenth-largest exporter of pesticides and disinfectants. Indian agrochemical industry is estimated to be worth INR 1,255 Bn in FY 2024, and it is expected to reach a turnover of INR 1,680 Bn by FY 2030. The rising demand in the agricultural segment is driving the growth of agrochemicals in India.

Agrochemicals, which include insecticides, herbicides, fungicides, and other plant-protection chemicals, rely heavily on petrochemical feedstocks for their production. Organic chemicals derived from petrochemicals are crucial in synthesizing these agrochemicals. According to the Ministry of Chemicals’ India's installed capacity for insecticide and pesticide manufacturing stands at approximately 324 thousand MT, with annual production reaching 138 thousand MT in FY 2023 (up to September 2022). The industry encompasses around 280 molecules and 800 agrochemical formulations registered in India, underscoring the significant dependency on petrochemical-derived raw materials.

Impact of Agrochemical Industry on petrochemical feedstock
Agrochemicals play a pivotal role in driving agricultural productivity and ensuring food security for India’s population. The government's fast-tracking of agrochemical projects suggests a positive trajectory for the industry, with export revenues projected to reach USD10 billion in the coming years. The future of India’s agrochemical industry looks promising, with revenues expected to grow significantly, driven by favourable government initiatives, increased exports, and stable domestic and global demand. 

The growth of the agrochemical industry in India is set to significantly impact the market for petrochemical feedstocks. As the demand for agrochemicals, including insecticides, herbicides, and fungicides, continues to rise domestically, there is also a notable increase in exports. Annual exports of agrochemicals reached INR 432 billion in FY 2023, with a CAGR of 18% between FY 2019 and FY 2023. This export growth is driven by competitive costing, superior product quality, and favourable export promotion measures. The increasing domestic demand combined with robust export performance underscores a rising need for petrochemical-derived raw materials. 

Organic chemicals such as methanol, acetic acid, phenol, and acetone, essential for synthesizing agrochemicals, will see heightened demand. Additionally, polymers and synthetic fibers used in packaging agrochemical products will further drive the need for petrochemical feedstocks. This surge in demand is likely to prompt the petrochemical industry to expand production capacities, optimize operations, and invest in new technologies to meet the growing requirements of the agrochemical sector. Overall, the robust growth of the agrochemical industry, both in terms of domestic consumption and exports, will be a crucial factor in shaping the future dynamics of the petrochemical feedstock market in India.

Demand from Pharmaceutical Industry
India's robust position in generic drug manufacturing has been a significant driver of growth for the pharmaceutical industry, which in turn boosts demand for the petrochemical sector. With numerous blockbuster drug patents expiring globally, Indian pharmaceutical companies have seized the opportunity to produce and export cost-effective generic alternatives, bolstering their turnover. This surge has a cascading effect on the petrochemical industry, as the production of these drugs requires substantial quantities of petrochemical-derived raw materials. 

From FY 2019 to FY 2024, the annual turnover of the Indian Pharmaceutical Industry increased at a CAGR of 9.9%, rising from INR 2,585 billion in FY 2019 to an estimated INR 4,142 billion in FY 2024. Additionally, Indian pharma companies have been expanding their global footprint through strategic acquisitions, partnerships, and compliance with international quality standards, enhancing their exports and revenue streams. Increased investment in research and development (R&D), innovation in drug formulations, and the development of new therapeutic segments have also driven industry growth. The focus on biopharmaceuticals, vaccines, and biosimilars has opened new revenue channels, further increasing the demand for petrochemical inputs.

The domestic demand for drugs & pharmaceuticals is driven by increasing number of old populations, higher spending on healthcare, penetration of health insurance products, as well as rise in incidence of diseases. Exports also plays a large part in shaping the demand scenario in the industry, as India is the largest exporter of generic medicines in the world.

Impact of pharmaceutical Industry on petrochemical feedstock
The growth of the pharmaceutical industry is expected to significantly impact the petrochemical feedstock market. Pharmaceuticals rely heavily on petrochemical-derived intermediates and raw materials for the production of various drugs and medical products. As the pharmaceutical sector expands, driven by increasing healthcare demands, advancements in medical research, and rising investments, the demand for these petrochemical feedstocks will also increase. This heightened demand will likely necessitate an increase in the production capacity of essential feedstocks such as ethylene, propylene, benzene, and toluene, which are crucial in the production of pharmaceutical intermediates and active pharmaceutical ingredients (APIs). 

Furthermore, the increasing demand from the pharmaceutical industry will likely drive greater investment in refining and petrochemical infrastructure to ensure a steady and reliable supply of high-quality feedstocks. This could lead to technological advancements and enhanced efficiency within the petrochemical sector. However, the growing demand may also strain existing supply chains, potentially driving up the prices of feedstocks and impacting the cost structure of both the pharmaceutical and petrochemical industries. Overall, the symbiotic relationship between the pharmaceutical industry's growth and the petrochemical feedstock market will play a crucial role in shaping the future dynamics of both sectors.

Demand from Specialty Polymer Industry
The demand for specialty polymers significantly influences the petrochemical feedstock market. Specialty polymers, with their unique and advanced properties, require specific feedstocks derived from petrochemicals to achieve their performance characteristics. As the market for specialty polymers grows, driven by sectors such as automotive, electronics, and healthcare, the demand for these specific petrochemical feedstocks will increase. This shift emphasizes the need for high-quality raw materials, pushing petrochemical industries to innovate and enhance their production capabilities to meet the stringent requirements of specialty polymer manufacturing. 

India's polymer demand, which stagnated at around 14.7 million tonnes during the pandemic years (2019-20 and 2020-21), is expected to rise as industries recover and expand. The Indian polymer industry, with a production capacity of 14.2 million tonnes, has seen its production remain flat at around 12.4 million tonnes during FY 2019- 20 and FY 2020-21. The significant demand-supply gap, with domestic production meeting only 50% of the demand, highlights the potential for growth and the opportunities for foreign manufacturers and technology providers. 

The specialty polymer market is a niche polymer additives segment in the polymer industry and is witnessing robust growth due to advancements in technology and increased application across various industries. Innovations in polymer chemistry have led to the development of materials with enhanced properties, such as higher heat resistance, greater tensile strength, and improved chemical inertness. These advancements are fuelling the adoption of specialty polymers in sectors requiring high-performance materials. For instance, the automotive industry's move towards electric vehicles and the need for lightweight materials is significantly boosting the specialty polymers market. Similarly, the growing electronics industry, with its demand for high-performance components, further propels market growth.

Impact of specialty polymer Industry on petrochemical feedstock
The rising demand for specialty polymers has a profound impact on the petrochemical industry. As specialty polymers require specific and often higher-grade petrochemical feedstocks, the demand for these raw materials is expected to rise. This shift is likely to lead to increased investment in the production of high-quality petrochemical feedstocks. Additionally, the petrochemical industry might see a transformation with a greater focus on sustainability and efficiency, driven by the need to support the production of eco-friendly and high-performance specialty polymers. The move towards bio-based specialty polymers also indicates a potential shift in feedstock sources, further impacting the petrochemical industry.

In summary, the growth of the specialty polymers market directly influences the petrochemical feedstock demand, driven by advancements in automotive, electronics, and healthcare industries. As specialty polymers become integral to various high-performance applications, the petrochemical industry will adapt to meet the evolving requirements, focusing on producing higher-quality and potentially bio-based feedstocks.

Demand from Industrial Chemicals
The country’s utilization of chemicals encompasses a broad spectrum of products, including fertilizers, pesticides, industrial chemicals, pharmaceuticals, and consumer goods. This consumption is influenced by population growth, urbanization, industrial development, and agricultural practices. The industry's growth trajectory is notable, with projections suggesting that by 2025, the sector will reach a value of USD 304 billion, from USD 220 billion in FY 2022. This growth is underpinned by the government's strategic initiatives to transform India into a global manufacturing hub for chemicals and petrochemicals, aligning with the vision of making India a USD 5 trillion economy. 

In the chemical industry, Industrial chemicals are essential to various sectors, ranging from manufacturing to agriculture. They encompass a vast array of substances such as acids, bases, salts, solvents, and more specialized compounds like polymers, resins, and surfactants. These chemicals are fundamental in creating products and materials used daily, including plastics, fertilizers, pharmaceuticals, and consumer goods. One of the critical dependencies in the production of industrial chemicals is on petrochemical feedstocks. Petrochemical feedstocks, derived from petroleum and natural gas, serve as the raw materials for producing a wide range of industrial chemicals. For instance, ethylene is a key feedstock for producing polyethylene, ethylene oxide, and ethylene glycol. The transformation of several feedstocks into valuable industrial chemicals is facilitated by processes such as cracking, reforming, and polymerization. As the demand for industrial chemicals grows, so does the demand for these critical petrochemical feedstocks.

While the historical performance of Indian chemical industry has been exemplary, the future holds even better growth opportunities. Domestic chemical consumption is rising steadily, and the country is expected to account for more than 20% of the incremental global consumption of chemicals that would happen globally in near future. The steady growth in industrial production is a key demand enabler. 

The annual consumption of petrochemicals in India is estimated to be 57 million tons in FY 2024, and it is expected to reach nearly 61 million tons per annum by the next year (FY 2025). Petrochemical demand is closely linked to the overall economic growth, due to the widespread usage across various industry. With Indian economy poised to maintain its strong growth, the demand for petrochemicals too is expected to remain strong. Going ahead, assuming the strong economic growth in Indian continues, the annual consumption of petrochemicals in India has the potential to reach nearly 82 million tons per annum by the end of this decade.

SHIV TEXCHEM LIMITED COMPETITIVE STRENGTHS
1. Differentiated business model offering comprehensive and integrated commercial and supply chain solutions
2. Well diversified product portfolio, customer base with extensive suppliers’ network
3. Long standing and active relationships with customers
4. Experienced, committed and qualified professional management team with deep understanding of hydrocarbon-based chemical industry
5. Focus on providing storage solution
6. Consistent financial performance

SHIV TEXCHEM LIMITED STRATEGIES
1. Further penetrate hydrocarbon and petrochemical market in India
2. Strengthening existing customer relationships and build new customer relationship through their product portfolio
3. Further optimising their working capital cycle
4. Expand their Product Portfolio and diversify into additional business segments

SHIV TEXCHEM LIMITED RISK FACTORS & CONCERNS
1. Their operations are heavily dependent on industries where products are supplied, which includes paints and coatings, printing inks, agro-chemical products, specialty polymers, pharmaceuticals products, specialty industrial chemicals, etc.
2. The business operates on a high volume, low margin model, which may impact their profit margins and affect their cashflows.
3. They are dependent on credit facilities from banks, to fund their business operations.
4. They derive a significant part of the revenue from a group of select products.