Tatva Chintan Pharma Chem Ltd IPO

Competitive Strengths:

Leading manufacturer of structure directing agents and phase transfer catalysts, with consistent quality

With very few players in the Indian and global market, Tatva Chintan is the largest and only commercial manufacturer of SDAs for zeolites in India. It also enjoys the 2 nd largest position globally. Their strategically located manufacturing facilities and robust and technically sound R&D capabilities have enabled them to maintain the quality of their products. Their large manufacturing capacity, consistent growth, experienced management, global footprint, and high-quality products make them a reliable supplier of SDAs and PTCs.

Company’s key chemistries and products are gaining importance in the global market. The global production of tetramethyl ammonium hydroxide was valued at around USD 1.2 billion in 2019. Having multiple applications, to inhibit nanoparticle aggregation, the tetramethyl ammonium hydroxide market is expected to grow at over 7% CAGR through 2020-25F with Korea and China dominating the market. However, with just 2-3 players in the domestic market, Tatva Chintan stands an opportunity to expand and explore the global market. The SDA market remains highly consolidated with a handful of players operating at the global level. Opportunities in the automotive industry continue to grow, as compliance with the regulations regarding the emission control in commercial vehicles becomes a mandate worldwide. The company has managed to build a market for itself in India and across the globe with its in-depth knowledge of the chemistry. On a domestic level, the company is the only manufacturer in India. They have developed their technology to ensure production of high purity SDAs with PPM level of impurities.

Global presence with a wide customer base across various industries having high entry barriers:

Tatva Chintan supply their products to customers in India and export their products to over 25 countries, including the USA, China, Germany, Japan, South Africa and the UK. During the Fiscals ended March 31, 2019, 2020 and 2021, exports of products accounted for 69.57%, 76.74% and 70.58% of their revenue from operations, respectively.

The varied applications for their product portfolio have helped them build a wide customer base across many sectors. Of their entire customer base as of March 31, 2021, 46.86% of these customers have been their customers for less than 5 years and 53.14% of these customers have been their customers for over 5 years.

Diversified specialised product portfolio requiring strong technical know-how:

Tatva Chintan has, over the years, diversified, expanded, and evolved their operations into manufacturing of pharmaceutical and agrochemical intermediates and other specialty chemicals, which have diverse applications across various industries.

As of March 31, 2021, they offered 47 products under their SDA product portfolio, 48 products under the PTC product portfolio, 6 products under the electrolyte salts for super capacitor batteries portfolio and 53 products under their PASC portfolio.

Risk:

• The continuing impact of the outbreak of the COVID-19 could have a significant effect on the company’s operations, and could negatively impact the business, revenues, financial condition and results of operations.
• Increase in the cost of raw materials could have a material adverse effect on company’s results of operations and financial conditions.
• The company derive a significant portion of the revenue from a few customers and the loss of one or more such Customers will affect the financial performance.