Company Overview
Platinum Industries Ltd. is engaged in manufacturing stabilizers across various segments such as PVC stabilizers, CPVC additives, and lubricants. Operating in the specialty chemicals industry, the company is the third largest player in PVC stabilizers in terms of sales, with a 13% market share in the domestic market for FY23. The company’s product portfolio has various applications in PVC pipes, PVC profiles, PVC fittings, electrical wires and cables, SPC floor tiles, rigid PVC foam boards, packaging materials, etc. The company has one manufacturing facility in Palghar, Maharashtra which is strategically situated near JNPT (Nhava Sheva) Port, Maharashtra (JNPT) from where the company receives its supply of imported raw materials as well as exports its finished goods to the international market. Traditionally, lead-based PVC stabilizers were commonly utilized for their stabilizing properties. However, during recent times, there has been a noticeable shift in the trends and preferences within the PVC stabilizer industry, particularly in sectors such as potable water distribution, agriculture, construction, medical consumables, wires, and cables. Recognizing the significance of this trend shift, the company has responded by gradually transitioning from lead-based PVC stabilizers to calcium zinc-based and calcium organic-based stabilizers which has allowed the company to align with current market demands and adhere to evolving safety and environmental norms. By offering calcium zinc-based stabilizers and calcium organic-based stabilizers, the company provides customers with products that meet their performance requirements while prioritizing health and sustainability. The company also undertakes trading activities of associated commodity chemicals such as titanium dioxide and PVC/CPVC resin. The company’s business model is aimed at consistently expanding its product portfolio by introducing new products to cater to multiple end-use applications. With a strict focus on product quality and a good track record in the distributor network, the company has established a brand image that helps the company penetrate new product categories. The company also intends to establish multiple projects in and outside India, where it shall venture into manufacturing PVC stabilizers (both lead-based and non-lead-based).
Objects of the issue:
The net proceeds from the fresh issue will be used towards the following purposes:
- Investment in the subsidiary, Platinum Stabilizers Egypt LLC (“PSEL”), for financing its capital expenditure requirements for setting up of a manufacturing facility for PVC stabilizers at SC Zone ‘Governorate of Suez Egypt’;
- Funding of capital expenditure requirements of the company towards setting up of a manufacturing facility for PVC stabilizers at Palghar, Maharashtra, India;
- Funding working capital requirements of the company; and
- General corporate purposes.
Investment Rationale:
High entry barriers in the specialty chemical industry
Barriers to entry in the specialty chemical industry are typically high and the specialized nature of products leads to significant differentiation. Various other factors such as R&D requirements, technical know-how, capital intensive service capabilities, customer relationships, and engineered or regulated specifications also create important barriers to entry. Due to the nature of the application of the company’s products and the processes involved, the company’s products are subject to, and measured against, high-quality standards and rigorous product approval systems with stringent technical specifications. Further, with end products manufactured by the company typically subject to regulatory and industry standards, any change in the vendor of the products may require significant time and expense for customers, thereby acting as an entry barrier. Thus, customer acquisition is difficult and limits the number of competitors involved in the manufacturing of the company’s products. According to CRISIL, the specialty chemicals industry presents significant entry barriers, including customer validation and approvals, expectations from customers for process innovation and cost reduction, high-quality standards and stringent specifications, as well as various client and regulatory approvals that are required to be obtained.
Varied product portfolio catering to diversified industries
The company has varied products for the PVC industry and multiple product categories such as low lead-based stabilizers, calcium zinc-based stabilizers, and organic-based stabilizers. Within each product category, there are multiple grades depending on application and customer requirements.The company’s efforts are focused on continuously identifying market demands and introducing relevant products with high quality. In PVC applications, the company has developed more than 400 grades, which has helped the company to cover a majority of its customers as well as different applications. The company diversifies its product portfolio in such a way that its products are customized for the customers and scale for each of the geographies the company serves. The company’s diversified product portfolio helps it to retain customers and strengthen its cross-selling efforts across product portfolios.
Valuation and Outlook:
The company has varied products for the PVC industry and multiple product categories such as low lead-based stabilizers, calcium zinc-based stabilizers, and organic-based stabilizers. Within each product category, there are multiple grades depending on application and customer requirements.The company’s efforts are focused on continuously identifying market demands and introducing relevant products with high quality. In PVC applications, the company has developed more than 400 grades, which has helped the company to cover a majority of its customers as well as different applications. The company diversifies its product portfolio in such a way that its products are customized for the customers and scale for each of the geographies the company serves. The company’s diversified product portfolio helps it to retain customers and strengthen its cross-selling efforts across product portfolios.
