Chemicals play a significant role in every individual’s life; this includes food, clothing, automobiles and others. Sustainability of any sector is not possible without the contribution of the chemical industry. The industry can be classified into three segments- basic chemicals, specialty chemicals and knowledge chemicals. The India colorant industry is estimated at $4.1 billion and has clocked a CAGR of 15% over 2011-16. The industry is expected to attain more than 20% of the global market share by the end of 2021, from 14% in 2016. There is a gradual shift happening in the industry and the Indian players who are adopting an integrated business model, strong R&D, better effluent treatment plant and a focus on less or nontoxic products are expected to gain significantly in the coming years. Pigments and dyes are coloring materials which are used as a critical input in the industry. Pigments are sourced from the derivatives of coal tar, metal oxides and petroleum.

With regard to specialty chemicals, colorants is one of the fastest growing industry in the country and is expected to grow at 15% per annum and gain more than 20% of the global market share by 2021. Currently it has a market share of 14%. Recent developments in the colourant industry in the country and globally show that there is a gradual shift taking place in the industry. Indian companies which follow an integrated business model who focus on less and nontoxic products are expected to significantly gain in the coming period.

Courtesy: World of Chemicals
There is also a strong growth in the key user industries in the world which is led by textile and plastics globally. While in India it is expected to be led by paint and coating, plastics and cosmetic industry. The paint and coating industry is expected to get a boost from an increase in the demand for high quality paints while the demand in plastics will grow on the back of increasing importance of the packaging and printing as well as the faster conversion to flexible from rigid packaging.

Courtesy: Chemexcil.in
Further, the pigment industry is expected to grow faster than the paint industry due to the increasing demand for high grade paints and coating which contain a larger amount of pigments. The colourant industry in India is very fragmented with more than 900 manufacturers and top five players who account for less than 30% of the industry’s production. Out of the 900 players, about 15-20 are large and medium size organizations and the rest are small and unorganized. Majority manufacturing units which account for almost 80% are located in Gujarat and Maharashtra due to the dominance of the textile industry and the easy availability of the raw materials. China dominates the global market of colourants with more than 40% of the market share.

China is a world leader in DS, DI and commodity pigments with more than 500 colourant units and a capacity exceeding 25 lakh tpa. The Chinese colourants market is estimated at USD 12 billion with a 40% market share and an in-house consumption of 60% and exports of 40%. On the other hand, Indian market has a domestic consumption of 55% and an export of 45%, the exports reached USD 1.9 bn in 2016. Bodal Chemicals is a Gujarat based player with a presence in the country and globally. It is one of the world’s largest manufacturers of DS, DI, Specialty chemicals and bulk chemicals. The company has a significant market share and its products are used in textile, leather and paper industry as raw materials. It has three new business verticals in order to drive growth and keep the margins healthy. It also focuses heavily on dyestuff to make the business more stable and scalable. The company is planning to expand the DS capacity and the first phase of expansion has already started off. With better operational facilities, Bodal can generate a strong operating cash flow in the first few years. Bodal’s revenue has significantly grown in the last five years and has a healthy return ratio due to high realization as well as better utilization of resources. In the last three years, Bodal has generated robust cash balance and has used it to efficiently repay the debt and diversified into higher margin businesses.

With an attractive business economic and a significant presence worldwide, Bodal is here to stay for many years to come. It has new business verticals coming up and has a revenue generation capacity of INR 5.8 billion over the next 3-4 years. Management of Bodal is focusing on the dyestuffs in order to make the business stable and profitable. It believes that selling dyestuff in the global market will not be a difficult task with the increasing demand across the countries. Bodal has a 5% market share globally and a 20% share in India which makes it an ideal contender to lead the industry.