Fairchem Spe­cial­ity Ltd: An as­pir­ing chem­i­cal gi­ant

Money Times - - Stock Buzz - By Subra­ma­nian Ma­hade­van

(BSE Code: 530117) (CMP: Rs.374.05) (FV: Rs.10)

Fairchem Spe­cial­ity Ltd (Fairchem), for­merly Adi Finechem Ltd, is an emerg­ing re­new­able spe­cial­ity chem­i­cals com­pany con­trolled by Canada-based pri­vate eq­uity gi­ant Fair­fax Hold­ing led by Mr. Prem Watsa (also known as the War­ren Buf­fet of Canada). Fairchem was formed as a re­sult of the merger be­tween Adi Finechem Ltd (a man­u­fac­turer of oleo chem­i­cals and nu­traceu­ti­cals) and Privi Or­gan­ics Ltd (a man­u­fac­turer of aroma chem­i­cals). The com­bined en­tity rep­re­sents sig­nif­i­cant fi­nan­cial, re­search & de­vel­op­ment, mar­ket­ing and global sourc­ing ca­pa­bil­i­ties with the req­ui­site man­age­ment band­width.

Fairchem serves as a plat­form for or­ganic as well as in­or­ganic growth in the area of spe­cial­ity chem­i­cals. Its prod­uct port­fo­lio in­cludes aroma chem­i­cals, oleo chem­i­cals and nu­traceu­ti­cals. Its aroma chem­i­cal prod­ucts find ap­pli­ca­tion in var­i­ous con­sumer goods like soaps, de­odor­ants, per­fumes, de­ter­gent, hair oil, etc.

The spe­cial­ity chem­i­cals in­dus­try in In­dia is thriv­ing and In­dia is fast be­com­ing an im­por­tant des­ti­na­tion for most global MNCs. The In­dian spe­cial­ity chem­i­cals space is grow­ing sig­nif­i­cantly, with de­mand be­ing driven by both do­mes­tic con­sump­tion and ex­ports. At $23 bil­lion, spe­cial­ity chem­i­cals con­sti­tute ~20% of the over­all In­dian chem­i­cals in­dus­try and this seg­ment is poised to grow at 11% to reach $39 bil­lion by 2021. In­dia is be­com­ing a global man­u­fac­tur­ing hub for mul­ti­ple sub-seg­ments within spe­cial­ity chem­i­cals. A case in point is the or­ganic pig­ments in­dus­try where most

man­u­fac­tur­ing bases are mov­ing to Asia (par­tic­u­larly to In­dia) from west­ern coun­tries. Sim­i­larly, in the nat­u­ral fla­vor, fra­grances and nu­traceu­ti­cal in­gre­di­ents space, In­dia has an in­her­ent sourc­ing ad­van­tage and most global play­ers rely on sup­plies from In­dian man­u­fac­tur­ers.

Fair­fax Hold­ing has in­vested in In­dian listed com­pa­nies like IIFL and Thomas Cook apart from some niche un­listed com­pa­nies, which have the po­ten­tial to grow multi-fold. In­vestors are ad­vised to keep an eye on this stock and ac­cu­mu­late on ev­ery de­cline. Fairchem could be­come a large-cap niche spe­cial­ity chem­i­cal gi­ant in the next 3-5 years.

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