Rising input costs and dampened demand due to surplus availability of imported petrochemical products are challenges to the business, according to a senior official of Manali Petrochemicals Ltd (MPL).
“Imports have reached pre-pandemic levels, and product prices have nosedived compared to the previous two years,” said Ashwin Muthiah, Chairman, MPL, adding that dampened demand for products, coupled with larger foreign supplies, have created a considerable gap in demand-supply.
He was addressing the shareholders at the company’s 37th Annual General Meeting. Muthiah said MPL’s overall sales and profitability in FY23 was lower than the previous two years, which were historically the best years.
“Our margins are continuously impacted by escalating global commodity prices triggered by persistent geopolitical complexities,” said Muthiah.
Chennai-based MPL is into manufacture of Propylene Glycol, Polyether Polyol and related substances, which are used as raw materials in several industries — automotive, appliances, building and construction, energy, defence, and soft furniture.
In the previous fiscal, MPL posted a standalone net profit of ₹51 crore as against ₹377 crore in FY22. Revenue from operations also fell to ₹1,033 crore (₹1,444 crore) during the comparable periods.
Global oversupply
Muthiah said the global oversupply of petrochemicals is expected to hit a record 218 million tonnes in 2023.
“With the Chinese economy facing uncertainty, Indian markets have become an easy target for exporters. Imports have reached the pre-pandemic levels, and product prices have nosedived compared to the previous two years,” he added.
He, however, added that the company is confident of sailing through the challenging conditions through operational efficiency, product innovations, and ESG-driven manufacturing strategy.
Muthiah further said as pollution control and other environmental regulations become stringent in India, chemical manufacturers are looking to diversify their production capabilities into other segments, mainly ‘speciality’.
The specialty chemicals industry in India is projected to grow at a CAGR of more than 12 per cent from 2020 to 2025.