Diversified Business Model:
Atul Ltd. has a well-diversified product portfolio, serving wide range of customers
in sectors like Aerospace, Agriculture, Automobile, Construction, Flavour & Fragrance,
Paint & Coatings, Paper, Personal Care, Pharmaceutical, Textile, etc. The diversified
revenue stream ensures that down-turn in one particular sector doesn’t affect its
Its color division it is the largest supplier of dyestuffs in India and exports
nearly 42% of its production to more than 40 countries worldwide, while its aromatic
division is one of the world’s largest producer of p-cresol , p –anisic aldehyde,
p –anisic alcohol , which are used mainly by flavor & fragrance , personal care
and pharma industries. In crop protection division it is among the world’s five
leading manufacturers of 2.4 D range of chlorophenoxy derivatives with close tp
9 % market share, while in bulk chemicals & intermediates division, the company
has a leadership position in India like resorcinol with 36% market share & Chlorosulphonic
acid with 16% market share.
Constant Value Addition:
Atul started out as a dyestuffs manufacturer and as such has a long history in commodity
chemicals; however, over the years, the company has steadily added newer, higher-margin
products leading to improved profitability. It now produces almost 1000 products
and sells to more than 4000 customers worldwide, opening up cross selling opportunities
for newer products. In several of its products, it occupies strong positions globally
due to its low-cost manufacturing advantage and long experience. Hence company is
in continuous process of adding its value to its products.
Strong Outlook for coming years:
Management is targeting a 15%+ revenue CAGR in coming years with improving profitability
due to continuous efforts to launch higher-margin products, improve internal efficiencies
(via automation, etc), as well as due to operating leverage. Over the long term,
management has an aspiration of nearing the profitability levels of best-in-class
peers, which make 19-22% operating margins.
China is imposing strict regulation for chemical companies so as to protect environment
and which is providing benefit not only to Atul Ltd but also entire chemical industries.
Sooner or Later Indian government will also impose restriction to protect environment.
Company has taken measure to make it zero discharge units.
Company has plans for capex in FY 15 of Rs. 100 crores, which will help management
to focus on improvement in margin and working capital. Hence company in on right
track for taking initiatives for improving its business efficiency.
Atul Ltd. has a well-established Global presence, with dominant positioning in many
of its product-offerings. The Company is the largest manufacturer of p-Cresol &
perfumery grade p-Anisic aldehyde in the world. Apart from this, it is also the
largest manufacturer of p-Cresidine and one of the leading manufacturers of p-Methoxy
phenyl acetic acid, p-Anisyl nitrile and other compounds. Steadily increasing global
presence enabling efficient geographical diversification in revenue and strategic
positioning in emerging markets is a key positive for the company.
The Chemicals industry is one of the steadily growing sectors in the Indian economy.
The current low per capita consumption (7 kgs for polymers in India as compared
to world average of 25 kgs) suggests that the demand potential is yet to be realized.
Moreover India has an improving outlook for the key end user industries. Hence,
going ahead the demand of chemical products is expected to surge steadily at 10-11