Interview with Anurag Choudhary, CMD & CEO of Himadri Speciality Chemical Ltd

Himadri Speciality Chemical is not merely adapting to the evolving landscape of sustainable mobility and energy storage; we are shaping it, propelled by innovation, accountability, and an unwavering commitment to a greener future, voices Anurag Choudhary, CMD & CEO of Himadri Speciality Chemical Ltd.

What factors led to the remarkable performance of the company, which recorded its highest-ever sales volume and witnessed a 97 per cent year-on-year growth in net profit to Rs 411 crore for FY24?

Our strategy focused on consistently increasing volumes for existing businesses while introducing new speciality products. This dual approach proved instrumental in achieving impressive volume growth. Due to the reduction in raw material prices, which was reflected in finished product pricing, revenues were muted. However, this allowed us to maintain competitive pricing in the market. Changes in product mix and operating efficiency were the primary drivers behind the remarkable EBITDA growth. By optimising our product offerings and improving operational efficiency, we were able to achieve this substantial increase. Our consistent move towards value-added products played a significant role in increasing profitability. By focusing on products with higher margins, we were able to enhance our bottom line significantly.

We remain committed to capital-disciplined growth, ensuring that every investment is strategic and aimed at improving shareholder returns. By continuing to innovate and diversify our product portfolio, we aim to sustain our growth momentum while maximizing returns for our shareholders.

What strategic efforts did the company undertake to achieve a debt-free status and positive net cash balance?

We are a debt-free company with a positive net Cash balance of Rs 142 crore as of March 2024. We focused on enhancing revenue streams through targeted growth strategies and diversification efforts. By expanding into new markets, launching innovative products, and capitalising on emerging opportunities, we bolstered our bottom line and strengthened our financial position. Overall, our journey to debt-free status was characterized by a combination of disciplined financial management, strategic decision-making, and a steadfast commitment to long-term sustainability and growth.

Could you elaborate on the acquisition of a 40 per cent stake in Invati Creations Pvt Ltd and its potential long-term benefits for the company?

Our partnership with Invati is built on a shared vision to transform the Lithium-ion battery industry by significantly enhancing its storage efficiency, charging speed, and battery lifespan. Together, we aim to make a substantial impact on meeting the world's growing energy demands.

What are the company's top three strategic priorities at present, and are there any forthcoming plans for capital expenditure?

Transitioning from Carbon Chemical to Sustainable Mobility and Energy Storage Solutions: Himadri Speciality Chemical Ltd. is embarking on a pioneering journey towards sustainable mobility and energy storage solutions, positioning ourselves at the forefront of industry evolution towards eco-friendly practices. This strategic shift reflects our steadfast commitment to sustainability and catalyzes transformative change. Our approach is anchored by three fundamental pillars:

· Innovative Products for a Greener Future: Our dedication lies in developing products that drive environmental sustainability, ensuring our offerings lead the charge in the green revolution. To actualize this vision, we are embarking on a journey of indigenization, aimed at securing the raw materials essential for LiB production, both globally and within India's burgeoning electric vehicle (EV) and energy storage system (ESS) market. This endeavour includes the establishment of a state-of-the-art manufacturing facility, slated for phased implementation for 5 to 6 years, with an estimated project cost of Rs 4,800 crore, dedicated to the production of LiB components, with a robust annual capacity of 2,00,000 tonnes.

· Relentless ESG Focus: We are proud recipients of the Silver Medal from EcoVadis - one of the world’s largest and most trusted providers of business sustainability ratings, based on international standards, placing us among the top 23 per cent of rated companies globally for Environmental, Social, and Governance (ESG) standards. Additionally, we have joined the United Nations Global Compact (UNGC) as a direct signatory, underscoring our alignment with global sustainability principles and ethical business practices on a significant scale.

· Circular Economy and Recycling: We are positioned to meet the global demand for LiB raw materials by reducing dependency on mined minerals and promoting a circular economy structure. This includes designing and creating circular products, encouraging innovation and sustainability in customer solutions, developing materials with a reduced carbon footprint, and minimizing material disposal in landfills. Our targets towards achieving carbon neutrality in FY 2024-25 include introducing recycled or bio-sourced materials into our products to reduce our customers' carbon footprint. This aligns with our goal of reducing Scope 3 emissions by 40 per cent as we work towards achieving net zero by 2050.

Creating Growth Drivers:

1. LFP Cathode: We announced a capex of building the first commercial plant of 40,000 MTPA of LFP Cathode Active Material which will be operational in the next 27-36 months. We are the Pioneers in Innovation and Sustainable Growth in the

Cathode Material Landscape and have a vision to scale up the capacity to produce 200,000 MTPA in phases in the next 5-6 years.

2. Sicona Acquisition: Our 12.79 per cent stake in Sicona—an Australian start-up specializing in high-capacity silicon anode technology for lithium-ion batteries—demonstrates our commitment to battery material innovation. This strategic move bolsters our position in pioneering cutting-edge technologies.

3. Birla Tyres Limited Acquisition: This major acquisition is part of Himadri’s forward integration strategy, enabling us to engage closely with end customers of the carbon value chain while leveraging the strong brand of Birla Tyres. Our goal is to offer high-margin niche products that maximize returns for stakeholders.

4. Speciality Carbon Black Line 5 Expansion: To support growth and meet increasing market demand, we are expanding with a new speciality carbon black line (Line 5) of 70,000 MTPA, increasing our total capacity to 1,30,000 MTPA and solidifying our position as the world's largest speciality carbon black producer at a single site. With an estimated capex of Rs 220 crore, this expansion is scheduled to commence operations within 18 months.

In summary, Himadri Speciality Chemical Ltd. is not merely adapting to the evolving landscape of sustainable mobility and energy storage; we are shaping it, propelled by innovation, accountability, and an unwavering commitment to a greener future.