Industry Overview

MACROECONOMIC OVERVIEW
The global economy is projected to grow 6.0% in 2021 and 4.4% in 2022. The revision of growth rate on upward trajectory is due to rapid vaccine rollout in a few large economies led by the U.S. and China and an increase in global trade in merchandise and manufactured goods that has already reached its pre-pandemic level. The improvement in growth forecast is reflecting expectations of a vaccine-powered strengthening of activity in 2021-2022 and additional policy support in a few large economies.

Macroeconomic Overview of India
India’s growth forecast has been revised to 12.5% for calendar year 2021, but the country’s outlook for the year remains highly fragile. The surging COVID-19 infections and inadequate vaccination progress threaten a broad-based recovery of the economy. India has been particularly affected by a brutal second wave which is overwhelming the public health system in large parts of the country. India’s economy rebounded quickly from a steep contraction in 2020, but a severe second wave of the coronavirus has increased risks to the outlook with potential longer-term credit implications. Although recent vaccine approvals have raised hopes of a turnaround in the pandemic in 2021, renewed waves and new variants of the virus pose concerns for the outlook.

GLOBAL SPECIALTY CHEMICALS MARKET
Specialty chemicals are low-volume and high-value products which are sold on the basis of their quality or utility, rather than composition. Thus, they may be used primarily as additives or to provide a specific attribute to the end product. Specialty chemicals are more likely to be prepared and processed in batches. The focus is on value addition to the end-product and the properties or technical specifications of the chemical. Global Specialty Chemicals Market by Geography, 2015, 2019 and 2025 – Value.
Set forth below is an illustration of the value of the market of global specialty chemicals, categorized based on geography (in USD billion):

The Growing Consumption of Green Chemicals
With an increase in awareness of the ill-effects of certain chemicals on humans and the environment, there is a growing trend in the chemicals industry to shift towards what is known as “green chemicals” or more accurately “sustainable chemistry” (environmentally friendly products). The evolution of green chemistry in the chemical industry will be a critical trend fuelling the growth of the green chemicals market. The global green chemicals market is expected to grow by USD 45 billion by 2025 at a CAGR of 10.5% between 2019 and 2025.

Evolution of Green Chemistry
Green chemistry is an emerging focus among manufacturing industries that minimizes pollution at a molecular level. The idea is that companies can adopt new scientific processes to minimize the toll their products take on the environment. Green chemistry is the design of chemical products and processes that reduce or eliminate the use or generation of hazardous substances. Companies are actively designing novel concept to reduce emission of hazardous substances. Companies are actively switching their production process to green chemistry.

Company Overview

Clean Science and Technology Ltd is a global leader in chemical manufacturing. It is a fine and specialty chemical manufacturing company founded in 2003, with innovative chemical processes developed in-house. In 2006, the name of the company was changed to ‘Clean Science and Technology Private Limited’ to reflect its vision of focusing on sustainable chemistry led by innovative technology and lower effluents.

The company manufacture functionally critical specialty chemicals such as Performance Chemicals (i.e. MEHQ, BHA and AP), Pharmaceutical Intermediates (i.e. Guaiacol and DCC), and FMCG Chemicals (i.e. 4-MAP and Anisole). Over the course of 17 years the company has grown to become the world’s largest manufacturer of MEHQ, BHA, Anisole, and 4-MAP in terms of installed manufacturing capacity as of March 31, 2021 (Source: F&S Reports).

Its specialty chemicals have a wide range of applications and serve a diverse range of customers from a variety of industries. Manufacturers and distributors in India, as well as other regulated international markets such as China, Europe, the United States of America, Taiwan, Korea, and Japan, are the customers. The table below contains specific information about the key products, their applications, and the industries in which they are used:

Customers use the products as key starting materials, inhibitors, or additives in products sold in regulated markets. Bayer AG, SRF Limited, Gennex Laboratories Limited, Nutriad International NV, and Vinati Organics Limited are among the company’s key customers. The customer relationships have grown over time as a result of the ability to consistently deliver high-quality products at reasonable prices.

The Company has grown organically, and its revenues and profitability have consistently increased, to emerge as one of the most profitable specialty chemical companies globally (Source: F&S Reports). The total revenue from operations have grown at a CAGR of 14.15% between Fiscal 2019 and Fiscal 2021. In Fiscals 2019, 2020 and 2021, the PAT Margin was 24.83%, 33.30% and 38.71%, respectively, EBITDA Margin was 37.53%, 46.78% and 55.54% respectively, and Adjusted EBITDA Margin was 34.66%, 44.19% and 50.53%, respectively. As of March 31, 2019, 2020 and 2021, ROCE was 50.75%, 58.48% and 73.89%, respectively, and ROE was 35.90%, 40.82% and 36.76%, respectively. Net cash from operating activities was ₹ 847.38 million, ₹ 1,601.03 million and ₹ 1,928.45 million, respectively, in Fiscals 2019, 2020 and 2021. In Fiscal 2021, revenue from operations for sales outside India accounted for 67.86% of total revenue from operations.

Competitive Advantage

  • Globally leading supplier of certain chemicals; Ansole, 4-MAP, MEHQ, BHA, DCC, etc.
  • Strategically located manufacturing facility with close proximity to JNPT port to export products.
  • Strong long-term relationship with key customers.
  • Consistent track record of financial performance.
  • International presence with export to several countries i.e. China, USA, Korea, Japan, Taiwan, etc.

Promoters and Financials

The Promoters Ashok Ramnarayan Boob, Siddhartha Ashok Sikchi, both alumni of the Institute of Chemical Technology, Krishnakumar Ramnarayan Boob, and Parth Ashok Maheshwari, are all career-technocrats with a combined experience of over 60 years in the chemicals industry, and we benefit from their collective vision, experience and technical understanding.

IPO Details

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