Published on May 6, 2014
The Indian specialty chemicals industry is one of the fastest growing sectors in the country and for most of the MNCs, specialty chemicals have become an attractive target. Due to rising demand for top consumer goods the Indian Chemical Industry in this segment has been registering robust growth, which obliges specific properties to be distinguished in the highly crowded retail shelf.
Over next decade, the Indian specialty chemicals industry has been poised to rise at 15% per year, which is mainly driven by expectations of rising in per-capita consumption allied to augmented disposable income and higher intensification among the end-use industries. In the fiscal year 2012, there were nearly 24 deals in specialty chemicals with an estimated value of USD 800 million. According to the researched report, by the year 2020 the specialty chemical industry of India has been projected to rise by 4 to 5 times to USD 80-100 billion from the current market size of USD 22 billion.
This industry is decidedly fragmented with large number of smaller players in the unorganized sector. High product demarcation and value addition, smaller production units with more flexibility and low capital investment levels are the major characteristics of the specialty chemicals industry. A large number of big players like MNCs also have a major presence in the organized sector and have a very burly links with their parent organizations. Significant players such as HOC and Balmer Lawrie are of Indian origin, moreover Ciba, Nalco Chemicals, Hoechst, Foseco, Clariant, etc are the major MNC players.
In the world Specialty Chemicals forms an increasingly important part of the overall chemicals industry and by the global specialty chemical companies there is an augmented interest to expand their pedestal in India. Most of the industries are investing in green and brown field expansion, whereas to widen the reach most of them have adopted the Merger and Acquisition (M&A) route. Few months back, Switzerland based specialty chemicals manufacturing company Clariant chemicals had completed the process of acquiring masterbatches manufacturer Plastichemix Industries in a Rs. 135 crore deal. However with this deal the Swiss company has now become one of the leading masterbatches producers in India.
According to the industry experts, in the last five years the growth potential of Indian specialty chemicals industry has been eminent globally as there has been a growth of around 11-13% and in the next five year it has been projected that it might continue to rise above 14%. For Merger and Acquisition (M&A) activities, specialty chemicals industry of India has been well positioned to become an attractive market and most of the MNCs are eyeing these companies for mergers & acquisitions as a strategic and long term investment.
In the Indian market, the major global chemicals are awaiting to significantly expand from two cleft strategy. One of the strategies is to cater to the growing domestic market and use to low cost R&D of the country, another strategy is to develop and export manufacturing infrastructure to the global markets.
