Specialty chemical companies capex to jump 70% by 2020 on healthy domestic demand, improving operating rates: Report

Mumbai: With a healthy domestic demand and improving operating rates, the capital expenditure of specialty chemical manufacturers is expected to jump 70 percent to almost Rs 13,000 crore combined in fiscals 2018 and 2020, the report said.

The capital expenditure of specialty chemical manufacturers stood at Rs 7,500 crore in fiscals 2017 and 2018, rating agency Crisil said in a note.

 Specialty chemical companies capex to jump 70% by 2020 on healthy domestic demand, improving operating rates: Report

Representational image. Agencies

Domestic demand for specialty chemicals grew at 8-10 percent between fiscals 2017 and 2019, on steady demand from end-user industries such as textiles, automobiles, paints, plywood, and personal care, it said.

The capacity utilisation surged to over 85 percent in fiscal 2019, compared with 75 percent in fiscal 2017, it noted. "Utilisation rates of new capacities coming up will remain high over the medium term because of improving environmental compliance and cost competitiveness. As a result, the share of Indian specialty chemicals in global supply chain is seen rising 100 basis points to 5.2 percent in fiscal 2022, from 4.2 percent last fiscal," Crisil Ratings Senior Director Anuj Sethi said.

The agency noted that Indian players are also benefiting because of the closure or shifting of capacities in 50 chemicals manufacturing clusters in China, which has an about 20 percent share of global specialty chemicals revenue.

Updated Date: Jun 19, 2019 09:56:04 IST