India’s Specialty Chemicals Boom Creates A New Billionaire

Vasudeo Goenka, patriarch of the family behind Mumbai speciality chemicals maker Laxmi Organic Industries is India’s newest billionaire. His wealth crossed the $1 billion mark this week thanks to a nearly 200% surge in the company’s shares since its March IPO.

Goenka, 81, is chairman emeritus of the $242 (revenue) million company, which is run by his elder son Ravi Goenka as chairman and managing director. His younger son Rajeev Goenka is a non-executive director. The Goenkas took the 32-year-old company public in an IPO that was oversubscribed 107 times.

Laxmi Organic makes specialty chemicals like acetyl intermediates that are used in an array of industries from pharma to agrochemicals to printing to adhesives. It is the largest manufacturer of ethyl acetate in India and the seventh largest in the world. It supplies this chemical to companies in the pharma, pigments and paint sectors.

It is also a bulk supplier of fuel-grade ethanol which is used for blending with fuels to reduce fossil fuel emissions. Laxmi Organic is one of the largest suppliers of this product for the Indian government’s oil blending program. In addition to this, it also has a 55% share in diketene derivatives like esters, acetic anhydride, amides and arylides which have applications in flavours, fragrances and dyes among other things.

In 2020, the Mumbai company ventured into specialty fluorochemicals after it acquired the assets of Italian chemical company Miteni. These chemicals are used in fumigants and pest control products.

Laxmi Organic started as a bulk chemicals manufacturer in 1989 and now has offices across the Middle East, Europe and China and supplies to 30 countries around the world. It has a basket of more than 50 products–34 of which were developed in the last eight years.

New products contributed to nearly half of the revenues in fiscal 2021. A third of the company’s revenues comes from pharma and geographically about 40% of the revenue from exports to Europe.

It has seen a significant surge in the past week thanks to stellar first-quarter results when revenue almost doubled due to higher volumes, better pricing and better realizations. Laxmi Organic is also benefiting from a sectoral lift as global clients move to India in a bid to reduce their dependence on China.

A June report from Mumbai financial services firm Motilal Oswal says that “India’s share in specialty chemicals is expected to double over the next five years–at a compounded annual growth rate of 12% to $64 billion by calendar year 2025.”

An August report from Motilal Oswal adds that domestic petrochemical expansions are also fueling growth in the sector. “A slew of petrochemical expansions are also underway by major players like Indian Oil, Hindustan Petroleum, GAIL, Nayara Energy, Haldia Petrochemicals, and HMEL, which would drive demand for chemicals and specialty chemicals in the country,” the note said. The boom has benefitted many others in the sector which has spawned many billionaires including Chandrakant and Rajendra Gogri of Aarti Industries and Vinod Saraf of Vinati Organics.

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