Kothari Petrochem AGM Notes~
- Sole manufacturer of PIB in India
- Domestic demand grew by 10-12% owing to changes in formulations & new applications of PIB
- Lubricant Industry is expected to grow despite EV
- Established presence in china,UAE among others
- Planning to establish stock points
- Newer chemicals in PIB side & forward integration plans
- Captive power plant operated 311 days with additional demand met by state power
- Solar panels of 244 KWH
- New facilities are being created
- Significant changes are going to be present in lube additives market ~ EV, synthetic lubes etc- PIB finds new applications in Battery coolants
- Conventional PIB is expected to be replaced by highly reactive in next 10 years in lube additives market
- Industry to grow at 4-6%
- Rohit Balakrishnan & keshav Garg is also present in the AGM
- TOtal market is 2Mn MTPA , Indian is 28,000 MTPA (1-2% )
- Low cost manufacturing, end market growth (from south east asia solely) & make in India initiatives is leading to value migration towards company’s product from lubes
- Local supplier preference + proximity will help snatching mkt share from western players in SOuth east
- Conventional PIB applications will continue even after transition to HR PIB happens
- Company has developed HR PIB- at a semi-commercial plant (3MTPA per day), primarily to understand issues before scaled up to a larger plants
- Will take approvals from customers before doing any capex
- HR PIB demand growth will be higher than C PIB (conventional)- customers will be same+market is highly consolidated with 2-3 players
- Auto-lubricants & fuels hold only 45% of portfolio, sealants & adhesives contributed 45% & remaining from rubber etc
- Expects application from Rubber market to increase significantly
- “Unwise to expand without access to feedstock”~ feedstock is scare either on quality or quantity
- Company uses high quality feedstock leading to an edge
- Capex plans in ideation stage at the moment
- Legal etc costs saw abnormal increase to hire people for research work
- R&D front focus- new applications of PIB & new molecule discovery (HR-PIB)
- PIB is a carrier to carry engine oil in vehicle-which includes adhesives, etc & work on applications & work backwards
- Principal on Capex- full benefit within 3 years
- Tax rates will reduce in the coming year
- PCPB is asking for change in fuel from existing fuel to natural gas which will potentially decrease margins (trying to pass on to some extent)
- Working on optimization to reduce packing & transportation
- Doesn’t see a drop in the market in next 15-20 years
- Consultants work with the company to foresee demand going forward
- Looking at debottlenecking exercise in existing plants (already done the activity in FY24)
- Problem towards expansion is the scarcity of raw material
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