In conversation with Siddartha Cherukuri, Joint Managing Director of Vishnu Chemicals Ltd

By offering differentiated products that address evolving customer needs, we aim to secure a strong market position and maintain a competitive edge, states Siddartha Cherukuri, Joint Managing Director of Vishnu Chemicals Ltd

In Q1FY24, the company witnessed a notable 16 per cent drop in both its revenue and net profit. What were the key challenges that contributed to this decline? 

In the initial quarter, a decrease in both revenue and profit occurred primarily due to two key factors: plant maintenance and the introduction of a new product. During the first quarter, we carried out necessary maintenance on our plant to ensure its long-term efficiency in production. While this maintenance was crucial for our operations' sustainability, it temporarily reduced our production capacity, resulting in lower output and, consequently, reduced revenue. Simultaneously, we initiated the launch of a new product, Precipitated Barium Sulphate, within our Barium chemistry division. This project required substantial resources as it was the first time such a product was being undertaken and the first time this chemical was being manufactured in India. Integrating this new product into our existing operations involved a learning curve and incurred increased costs as we refined our production processes and marketing strategies for this unique offering.

It's important to emphasize that these decisions were strategic, with a focus on long-term benefits. The plant maintenance was necessary to maintain product quality and production efficiency, while the new product launch aimed to diversify our product range and tap into new market opportunities. Although the first quarter showed a decline in revenue and profit, we expect these measures to positively impact our financial performance in the upcoming quarters. The plant maintenance will lead to enhanced production efficiency, and the new product launch is anticipated to gain traction in the market, ultimately driving revenue and profit growth. Rather than a long-term trend, this decline should be seen as a short-term adjustment period, as we remain confident in our overall business strategy and growth prospects.

Notably, the company managed to enhance its consolidated gross margin by 3.7 per cent and EBITDA margin by 0.8 per cent compared to the previous year. This underscores the company's capability to retain its leading position in profitability within the performance-enhancing chemistry sector it operates within. 

The company achieved its highest-ever quarterly production (in tonnage) accompanied by the highest EBITDA margin for Barium chemicals seen in the past six quarters. What were the driving factors behind this growth? 

At Vishnu Chemicals, we manufacture industry-grade barium carbonate and precipitated barium sulphate (also known as Blanc Fixe), which find applications in the manufacturing of a plethora of ceramics and tiles, paints, powder coating applications, paper, FMCG, batteries, glass, and enamel products.

To meet this rising demand, we have expanded our Barium Chemicals capacity from ~40,000 tonnes per annum in January 2022 to ~100,000 tonnes per annum now. The scale and technology adopted by our company is hard to replicate, underpinned by our company’s strong commitment to research and chemistry. With dedicated efforts and continuous improvement, our wholly owned subsidiary Vishnu Barium Private Limited has cemented its position nationally and globally in Barium chemicals production.

What are the anticipated demand prospects for Chromium and Barium chemicals? 

Unparalleled attributes of our chemistry make it exceedingly difficult to substitute it with any other chemical, highlighting its indispensability in various manufacturing processes. Also, economic development, a thriving middle-class, and a surge in consumerism are poised to generate greater demand for products, and enhance the standard of living in emerging economies. This will lead to a demand for longer lasting and aesthetically appealing products; products that make hygience easier to maintain with feel-good characteristics. Chromium Chemicals is an essential component for certain applications due to its corrosion resistance, colour and uniformity, among other beneficial properties. The demand for barium chemicals has also experienced robust growth due to various factors, including infrastructural development, urbanisation and evolving lifestyle preferences.

How does the company intend to utilize the Rs 200 crore raised through the QIP? 

The first-ever QIP of the Company witnessed a strong response from marquee domestic and foreign institutional investors. As per the objects of the issue, we intend to utilise the proceeds towards reduction of leverage of the company and in improving the overall strength of the group’s balance sheet.

What are the top three strategic priorities currently being focused by the company? 

Our first strategic priority is Product Innovation and Differentiation: We recognize the importance of staying ahead in a highly competitive market. Our first strategic priority is to invest significantly in research and development to drive product innovation. We are committed to developing new, advanced chemical solutions that not only meet but exceed customer expectations. By offering differentiated products that address evolving customer needs, we aim to secure a strong market position and maintain a competitive edge.

Secondly we’d like to focus on Sustainability and Environmental Responsibility. Sustainability is a core focus for our company which revolves around adopting sustainable practices across our operations. This includes reducing our carbon footprint, minimizing waste and adoption of renewable energy. Last but not the least we remain committed to Market Diversification and Global Expansion we aim to diversify our market presence and expand globally. We recognize that growth opportunities exist beyond our current geographic reach. Therefore, we are actively exploring new markets and regions where our products can make a significant impact.

Disclaimer: The article is for informational purposes only and not investment advice.