Indian Emulsifiers Limited
Company
| Website 🔗 |  |
| Business Activity | Manufacture |
| Division | Chemical |
| Sub-class | Speciality Chemicals |
| Location | Lote Parshuram, Maharashtra |
| Establishment Year | 2020 |
Management
| Managing Director | Yash Tikekar |
| Educational Qualifications | PGDM in Financial Management Bachelor of Arts (Economics major) |
| Experience | Over 10 years of experience in the specialty chemicals field |
| Annual Salary | ₹ 36 Lakhs |
| Total Number of Employees | 34 |
About
Indian Emulsifiers Limited (IEML) is a speciality chemicals manufacturer established in 2020 with a vision to provide tailor-made chemical solutions to various industries.
The company’s product portfolio includes Esters, Amphoterics, Phosphate Esters, Imidazolines, Wax Emulsions, and SMO & PIBSA Emulsifiers, catering to industries such as Mining, Textile, Cleaning, PVC/Rubber, Personal Care, Food, and others.
Products and Services:
IEML specializes in manufacturing a wide array of speciality chemicals, each serving distinct functions in various industries:
- Esters:
Used in fragrances, flavours, solvents, plastics, pharmaceuticals, and lubricants. - Amphoterics:
Utilized in personal care products, cleaning agents, and industrial applications. - Phosphate Esters:
Applied as flame retardants, lubricants, and in detergents and cleaners. - Imidazolines:
Primarily used as corrosion inhibitors in the oil and gas industry, and also in cleaning products and agricultural applications. - Wax Emulsions:
Find applications in construction, paper coatings, personal care, and agriculture. - SMO & PIBSA Emulsifiers:
Used in mining for emulsion explosives and in the lubricants and automotive industries.
Clients:
IEML primarily operates in the business-to-business (B2B) segment, key client industries include
Mining:
Speciality emulsifiers like SMO and PIBSA are crucial in formulating emulsion explosives, ensuring optimal performance and safety in mining operations.
Textile:
Imidazolines and wax emulsions serve as softeners and lubricants, enhancing the quality and processability of textiles.
Cleaning:
Amphoterics and phosphate esters contribute to the effectiveness of cleaning agents, providing superior cleaning and foaming properties.
PVC/Rubber:
Speciality chemicals aid in processing and enhancing the properties of PVC and rubber products.
Personal Care:
Esters and amphoterics are used in cosmetics and personal care formulations, ensuring mildness and compatibility with skin and hair.
Food:
Emulsifiers and other speciality chemicals improve the texture, stability, and shelf life of various food products
Raw Materials:
IEML sources 100% of its raw materials domestically, ensuring cost competitiveness and reliable supply chains. The raw materials are categorized based on their origin:
- Petroleum/Synthetic Sources:
Ethanolamine, ethyl, carbolic acid, phenolic acid, oleic acid, sodium, zinc, phosphorus, etc. - Agricultural/Fatty Oil Sources:
Fatty acids, lauric acid, glycerin, refined soybean oil, sorbitol, etc. - Agrochemical Sources:
Methanol, phenolic acid, maleic acid, alkyl alcohol, etc. - Petroleum Sources:
Polyether, isobutene, etc.
Suppliers:
- Competitive Bidding:
IEML actively engages in competitive bidding processes to identify suppliers offering the most favourable prices for raw materials. - Quality Assurance:
The company places a strong emphasis on quality control, ensuring that all procured raw materials meet stringent quality standards. - Flexible Procurement:
IEML typically does not enter into long-term supply contracts, allowing it to adapt to market fluctuations and capitalize on opportunities for cost savings. - Established Supplier Relationships:
While not bound by long-term contracts, IEML has cultivated strong relationships with its key suppliers, ensuring a consistent and reliable source of raw materials.
Other Key Aspects:
IEML’s manufacturing facility, situated in Lote Parshuram, Maharashtra, boasts a production capacity of 4,800 metric tons per annum.
IEML’s commitment to quality and innovation is recognized by its ISO 9001:2015 certification.
Business Process Flowchart
Revenue – Category
Audit and Legal
Auditor’s Remarks:
The auditors in their report, stated that there were no qualifications in the audit reports for the financial periods ending December 31, 2023, FY 2023, and 2022.
Non-Compliances and Other Issues:
Delayed Filings and Payments: Indian Emulsifiers Limited has experienced delays in filing annual returns and making payments towards its Employees’ Provident Fund (EPF) dues.
Contingent Liabilities:
Indian Emulsifiers Limited (IEML) has no contingent liabilities as of December 31, 2023, and for FY 2023, 2022, and 2021.
Legal Cases:
Tax Matters:
Outstanding TDS Liability: ₹1.8 Lakhs
Demand Notice for A.Y. 2023-24: ₹10.7 Lakhs
Chemical Brothers Enterprise Pvt. Ltd. Vs. Brijendra Kumar Mishra:
This case involves an Interlocutory Application filed by the Resolution Professional of Lakeland Chemicals (India) Pvt. Ltd. against Chemical Brothers Enterprise Pvt. Ltd. (a group company of IEML) alleging undervalued preferential transactions with the Corporate Debtor. Chemical Brothers Enterprise has filed a counter-application challenging the maintainability of this application.
SWOT Analysis
Strengths
| Strong Growth in Emerging Markets: The company has demonstrated robust growth in emerging markets, indicating its ability to capitalize on opportunities in these rapidly expanding regions. |
| Diverse Product Portfolio: IEML offers a wide range of speciality chemicals catering to various industries, providing a diversified revenue stream and reducing dependence on any single product or sector. |
| Expertise in Speciality Chemicals: The company’s in-house R&D capabilities and focus on innovation enable it to develop tailor-made solutions and cater to the evolving needs of its clients. |
| Flexible Manufacturing: IEML’s manufacturing facility is capable of both small-scale and bulk-scale production, providing flexibility to meet varying customer demands. |
Weaknesses
| Fluctuations in Pricing: The company’s reliance on crude oil-based raw materials exposes it to price volatility, potentially impacting its profitability. |
| Low Market Penetration in New Markets: Entering new international markets may require significant investments in promotional and marketing efforts, posing a challenge for expansion. |
Opportunities
| Increase in Market Value: The speciality chemicals industry is poised for growth, presenting opportunities for IEML to increase its market share and enhance its valuation. |
| Untapped Export Market: Expanding into international markets offers significant growth potential for IEML. |
| Capacity Utilization: The company can leverage its existing manufacturing capacity to increase production and sales, leading to improved profitability. |
Threats
| High Prices: Rising raw material costs or inflationary pressures could impact IEML’s profitability if it is unable to pass on these costs to customers. |
| Global Competition: The speciality chemicals industry is highly competitive, with both domestic and multinational players vying for market share. IEML needs to continuously innovate and improve its offerings to stay ahead of the competition. |
| Regulatory Challenges: Changes in government policies, tax regulations, or environmental norms could pose challenges and increase compliance costs for the company. |
Porter’s Five Forces1
| Threat of New Entrants | MODERATE |
| The speciality chemicals industry has high barriers to entry due to the need for significant R&D, technical expertise, and regulatory compliance. However, IEML acknowledges competition from both domestic and multinational players. |
| Bargaining Power of Suppliers | MODERATE |
| IEML sources 100% of its raw materials domestically and does not have long-term contracts with suppliers. This suggests that the bargaining power of suppliers could be moderate, as the company relies on them for a timely and cost-effective supply of raw materials. |
| Bargaining Power of Buyers | MODERATE |
| Indian Emulsifiers Limited operates in a B2B model; most of its revenue comes from a few major customers. This indicates that buyers could have moderate bargaining power, potentially demanding price concessions or favourable terms. |
| Threat of Substitute Products or Services | LOW – MODERATE |
| The threat of substitute products is likely low-moderate in the speciality chemicals industry. While some substitutes may exist, IEML’s focus on customized solutions and innovation could mitigate this threat to some extent. |
| Rivalry Among Existing Competitors | HIGH |
| The speciality chemicals industry is highly competitive, with both domestic and international players. IEML faces competition based on pricing, product quality, innovation, and customer relationships. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to its peers for FY 2024 is as follows:
| Metric | Indian Emulsifiers Limited | Fine Organic Industries Limited | Fineotex Chemical Limited |
| Revenue from Operations (₹ in Crores) | 66.7 | 1951 | 569 |
| Operating Profit Margin (%) | 22.18% | 25% | 26% |
| Return on Equity (ROE) (%) | 46.0 % | 21.7 % | 30.1 % |
| Return on Capital Employed (ROCE) (%) | 31.1% | 29.0 % | 38.7 % |
| Debt to Equity Ratio | 0.83 | 0.0 | 0.01 |
Green Box
IPO Funds:
Funding Capital Expenditure:
A significant portion of the proceeds will be allocated towards acquiring new plant and machinery, undertaking necessary civil works, and covering installation costs. This investment is intended to enhance the company’s manufacturing capabilities and support its growth plans.
Indian Emulsifiers Limited plans to continue its capacity expansion in a phased and strategic manner.
Funding Working Capital Requirements:
IEML operates in a working capital-intensive industry, and a portion of the IPO proceeds will be used to bolster its working capital. This will enable the company to manage its inventory, trade receivables, and payables more effectively, ensuring smooth operations and supporting its expansion plans.
Scalable Business Model:
IEML’s business model is inherently scalable, allowing the company to expand its operations and production capacity efficiently to meet growing demand. This scalability positions IEML for future growth and increased market share.
Success of R&D Efforts:
Diverse Product Portfolio:
IEML offers over 40 speciality chemicals and intermediates, catering to a wide range of industries. This extensive product range is likely a result of successful R&D initiatives.
Customized Solutions:
The company’s ability to provide tailor-made products to meet specific customer needs underscores its R&D capabilities and responsiveness to market demands.
Contract Manufacturing and Innovation:
The company plans to strengthen its customer relationships by offering contract manufacturing services for new molecules and focusing on early-stage process innovation. This will enable IEML to capitalize on the complete lifecycle of these products and establish itself as a preferred supplier for customized speciality chemicals.
Industry Outlook:
The global market for speciality chemicals is projected to reach $866.9 billion by 2030, exhibiting a Compound Annual Growth Rate (CAGR) of 4.4% from 2022 to 2030.
The Indian speciality chemicals market is projected to witness even faster growth than the global market, growing at a CAGR of 12%, reaching $64 billion by 2025.
This growth is fueled by factors such as a shift in the global supply chain away from China, a resurgence in domestic end-user demand, and supportive government policies.
Amber Box
Underutilization of Plant Capacity:
IEML’s manufacturing plants have not been operating at full capacity, potentially impacting its profitability and efficiency. For the period ending December 31, 2023, Indian Emulsifiers Limited had a capacity utilization rate of 68%.
Notably, the company’s aggregate manufacturing capacity doubled from 2,400 MT per annum in FY 2022 to 4,800 MT per annum in FY 2023.
Environmental, Health, and Safety Regulations:
IEML’s manufacturing processes involve the use of hazardous and flammable chemicals, subjecting it to stringent regulations. Non-compliance or any adverse changes in these regulations could lead to penalties, legal actions, operational disruptions, and damage to the company’s reputation.
Licensing and Permit Requirements:
Indian Emulsifiers Limited requires various licenses, permits, and approvals from government agencies to operate its business. Any delays or failures in obtaining or renewing these authorizations could disrupt operations and impact the company’s growth plans.
Dependence on Key Customers and Suppliers:
A significant portion of IEML’s revenue is generated from a few major customers, and its raw material procurement is concentrated among a limited number of suppliers.
Red Box
Uncertain Demand:
The demand for speciality chemicals can fluctuate depending on various factors, including economic conditions and industry-specific trends. This uncertainty can lead to challenges in inventory management and production planning.
Negative Cash Flows:
Indian Emulsifiers Limited experienced negative cash flows from operating activities in FY 2024 and FY 2022, which could raise concerns about its ability to generate sufficient cash to sustain operations and fund growth.
Relatively Smaller Scale:
Compared to some of its larger competitors, Indian Emulsifiers Limited operates on a smaller scale. This could limit its ability to achieve economies of scale and compete on price in certain market segments.
Limited Operating History:
IEML was incorporated in 2020 and has a relatively short operational track record. This makes it challenging for investors to assess the company’s long-term sustainability and its ability to navigate economic cycles and industry challenges.
Images
- The force value of “LOW” is considered good Click Porter’s Five Forces article for more information. ↩︎
Disclaimer: The above information/document is based on publicly available sources and has been issued solely for educational and informational purposes and should not be considered as investment advice or as a Buy/Sell recommendation, or as a research report. Although due diligence has been done to ensure the accuracy of the data presented, the website or authors are not responsible for any decision arising out of an inadvertent mistake or error in the data presented on the website. The authors may also have equity shares in the companies mentioned in this report adhering to provisions of regulation 16 of the Securities and Exchange Board of India (Research Analysts) Regulations, 2014. The investor is advised to consult his/her investment advisor and undertake further due diligence before making any investment decision in the companies mentioned. Authors are not liable for any financial gains or losses due to investments made as per the information provided on this website (StocKernel.com).