Himadri plans forward integration

The Rs 252-crore ($54 million) investment by US private equity firm Bain Capital in Kolkata-based Himadri Chemicals will allow the coal-tar pitch major to drive forward its expansion plans both in India and abroad. Within a year of operations post-expansion, the company is expecting to quadruple its turnover.

The company — which manufactures coal-tar pitch, creosote oils, naphthalene and advanced carbon materials that are used in the aluminum, graphite, carbon black and battery industries, respectively — currently has a capital outlay of $175 million for forward integration. This consists infusions by Bain Capital, International Financial Corporation (IFC), which invested about $14 million into the firm last year, as well as internal accruals.

“We aim to increase our coal-tar pitch production from 169,000 MTPA to 250,000 MTPA. Our clean power generation capacity is slated to rise from 12Mw to 40Mw, while our carbon black production will increase from 50,000 MTPA to 90,000 MTPA. Our SNF (Sulphonated Napthalene Formaldehyde) capacity will increase from 8,000 MTPA to 48,000 MTPA. The entire expansion process will be completed within the next 18 months,” the company's CEO, Anurag Choudhary, said.

Internationally, Himadri has already set up a 94:06 joint venture firm in China, where it has sourced its raw material for over a decade, and work is underway for a facility near Longkou Port in Shandong province.

“We will invest $32 million for this project, part of the $175-million expansion plan, for first phase with a capacity of 100,000 MTPA of coal-tar pitch. The land as well as statutory clearances have been procured and this, too, will be completed within 18 months,” Choudhary said.

“We registered a turnover of Rs 450 crore last fiscal and in another 30 months, we are expecting to increase this to Rs 2,000 crore once the expansions are complete,” he added.

From a chemical firm focused on the coal-tar pitch business, Himadri has tweaked its model to move into different verticals through forward integration as its products come from the same raw material — coal-tar. It is converting a facility at Hooghly into a fully integrated complex with an investment of about Rs 450 crore.

“Here, we will be able to convert creosote oils into carbon black, and from the gas that is released from the conversion, we will be able to generate up to 12Mw of clean power. We have also undertaken forward integration for Napthalene, to be converted into SNF (Sulphonated Napthalene Formaldehyde) for mixing with ready-mix concrete, at our plant in Gujarat and are setting up a greenfield facility at our Hooghly site,” he said.