Introduction
Business segment contribution
Geographical Mix
Clientele
The company serves a number of clients including Alkyl Amines, IPCA, Apcotex, Aurobindo, Dow, Deepak Nitrite, Pidilite etc.
Manufacturing Facilities
Focus on R&D
The company has an in-house R&D centre at its manufacturing facility in Roha, with key focus on process improvement (for existing products) and new process development (for product additions). The R&D team is strongly supported by the in-house engineering services team to ensure timely implementation of new products on a commercial scale. DMCC’s R&D is a team of 12 members as of FY21.
Products under pipeline
The sulfones category is currently put on hold. The company had earlier decided to expand capacities in Sulfones. However with a downturn in the international markets for the product category, the plan has been put on hold.
R&D as % of Sales
Borax Morarji – Misallocation ?
Bulk chemical products
DMCC is India’s first manufacturer of sulphuric acid. The product is sold within a limited radius from the manufacturing site. Almost 50% of the bulk chemicals that they manufacture is sold in the market while the remainder is used for captive consumption.
Products: Sulphuric acid, Sulphuric anhydride, Oleum, Chloro sulphonic acid
High global market share products in speciality chemicals segment
Value chain for DMCC
Availability of sulfur as a raw material
The BS6 norms which have come into effect will affect the availability of sulfur. Compared to the BS4, the BS6 fuel has less sulfur and NOx. While the content of sulfur in BS4 fuel is 50ppm, it is five times lower in the BS6 fuel, which is at 10ppm. So basically the availability of sulfur will increase in India because of these new norms as they had to remove sulfur from the fuel and that should lead to increased availability and therefore lower prices or at least reduced imports
Closure of the sterlite copper smelter
Sterlite operated the largest copper smelter plant in India, in Thoothukudi from 1998 to 2018. The copper smelter plant was long-opposed by the local residents for polluting their environment as well as causing a range of health problems in the area. It has the capacity to produce 400,000 tonnes of copper cathode a year. In March-April 2018, there were several mass protests against the company’s plans of a proposed expansion. Then the copper smelter plant at Thoothukudi was shut down in 2018 by the Tamil Nadu Pollution Control Board over environmental violations. Due to this the demand for sulfuric acid increased which is reflected in the improved EBITDA margins of DMCC in FY19.
Update on Capex
New Products
The company is working on a couple of new products including amides, thio compounds etc. They introduced Lasamide in 2019. The volumes have not been as good as they should have been but the company expects good volumes of lasamide in the coming years because it is again Pharma related so there are audits and approvals and it is a time consuming process. Thiols is still in a bit of a development phase and they are working on a relatively new range of products. R&D is continuing to work on an alternative process for Thiols.DMCC would also be launching new products in which the EBITDA margin target would be greater than 30%
Amide Products
Thiol Products
COVID-19 impact on the business
COVID-19 impact on the sulfone business: Due to covid there was a decline in the demand for a couple of sulfones. Mainly because it’s used in thermal paper coating and those coatings are primarily used for example, in airline tickets, in stadium tickets, in baggage tags and things like that. In 2020 there was a substantial reduction in the demand for such things due to the outbreak of COVID-19.