Jubilant Ingrevia - Life Science Ingredients (LSI)

Capacity utilization of all the manufacturing units. the average capacity utilization of all units is around 70%. growth opportunity is open if CU increases gradually


Key competitors globally and in India for these businesses


Jubilant Ingrevia is out of ASM effective today. Thanks!


There are few key M&A activities in the main peers of Ingrevia which I want to highlight.

Lonza will complete the sale of its entire specialty business (LSI) to Bain Capital and Cinven in q2 CY22. Going forward from CY22 they will only focus on main businesses i:e Lonza Pharma Biotech & Nutrition (LPBN)

Vertellus LLC is one of the oldest specialty chemicals companies in the world, which also was acquired by another Family office few months back. Vertellus is the oldest diketene producing company.

The impact of these ownership transition should be minimal on supply and demand of their products but these events highlight the future potential of the sector given the increased M&A activities in recent past.

DSM on the other hand is better at research and launch of innovative products in the past , which could inspire newer products in companies like Ingrevia. Their latest company presentation gives a good view on quite a few futuristic products which Ingrevia also produces and are wanting to expand into. (like plant based meat)

The future potential of the market landscape is pretty big for most products of Ingrevia and if they can focus on even few of them & expand them profitably, the growth over a decade can be unprecedented for this company, given the current fair valuations, after the recent run up.

Disc:- Invested & Biased


Some insights from the CRISIL ratings report:

  • Operating profit margins have varied between 13-17% over the past 5 years
  • Jubilant maintains inventory of ~2 months (raw material + finished goods) and had receivables of 35 days in FY21
  • Cyclicality is sales and margins come largely from the life science chemicals division (48% of sales)
  • Annual cash accruals are expected to be 350-400 cr. which should adequately cover medium term debt repayment obligations (90-120 cr.) along with capex requirements
  • Working capital requirements are not very high as the average utilisation of working capital limits was 30% over past twelve months


Disclosure: Invested (position size here)


Building on this post, I wanted to know the community’s thoughts on the outstanding litigation, detailed in Page 120 of the Memorandum, reproduced below for convenience, emphasis is mine.

1) Criminal prosecution by Maharashtra Excise Department:

The commissioner of state excise, Maharashtra vide an order of March 2018 questioned the export by Company’s distillery at Nira of absolute alcohol to a party
in Telangana. The excise department also filed a FIR # 107 of 2018 in March 2018 u/s. 65(b), 80(2), 81, 82 & 83 of Bombay Prohibition Act, and arrested Nishikant Natu, an officer of the Company.

In March 2018, the said officer was released on bail by the Saswad court. Since Directors of the Company were also named in the FIR, anticipatory bails were obtained for all the directors in March 2018 from the Sessions Court, Pune. The excise department is yet to file the charge sheet in the case. In 2018 itself the Company filed a Quash Petition # 1180 of 2018 before Hon’ble Bombay High Court, and the matter is pending.

2) Criminal Complaint by villager:

A villager, Kamlesh Devi filed a Criminal complaint # 653/9 of 2010 406,
452 & 506 of Indian Penal Code against the officials of Company’s Gajraula plant alleging that on July 11, 2010 the named officials of the Company had assaulted her with filthy language and threatened to kill her if she demands for the INR 3,000 per month as promised for for discharging water in to her fields and further threatened
to implicate her and her sons in false cases if she takes any legal action and that they would get her murdered and grab her fields. A quash petition # 35002 of 2010 was filed before Hon’ble Allahabad High Court challenging the summons, and Hon’ble High Court granted a stay of further proceedings before trial court, which is continuing.

3) Criminal Complaint by ex-employee:

An ex-employee, Jugnu Singh Jatav at Company’s Gajraula Plant, whose
probation was not extended due to poor performance, filed complaint # 2097 of 2012 323, 504, 506 of Indian Penal Code and u/s. 3(1) (10) of SC and ST (Prevention of Atrocities) Act, 1989, against the Company official alleging that he assaulted the complainant and snatched money from him and also abused him by caste.
The complaint was rejected by the trial court, which order was set aside by the Sessions Court upon challenge by the ex-employee. Company official challenged the order before Hon’ble Allahabad High Court (# 288 of 2013) and Hon’ble High Court stayed operation of the Sessions Court order, which is continuing.

4) Criminal Complaint by ex-employee:

An ex-employee, Santosh Kumar at Company’s Gajraula Plant filed
criminal complaint[…], alleging that Company employees hated him because he belonged to a lower caste and during his employment they discriminated him on the basis of his caste and also assaulted him.

The Company challenged the case before the Sessions Court (case # 64 of 2015) which accepted our prayer and remanded the matter to trial court for fresh consideration. Meanwhile, the police also registered a case against
the complainant, Santosh Kumar as he created ruckus in Superintendent of Police (“SP”) office. Santosh Kumar filed a petition before the Hon’ble Allahabad High Court (case # 12167 of 2015) challenging the remand order passed by Sessions Court and well as the action by SP against him in a related matter. In view of the pendency
of the petition before the High Court, the matter before trial court is kept pending by the trial court.

5) Criminal Complaint by villager in Nira:

A villager, Rajendra B Dhumal filed a criminal complaint # 529 of
2015 u/s. 269, 270 & 278 of Indian Penal Code, against Company alleging that the factory at Nira is discharging pollutants in River Nira and in the atmosphere thereby leading to infectious diseases. Company challenged the summons before the Additional Sessions Court, Baramati (case # 40 of 2017), and both matters are pending.

6) Criminal Complaints by Zila Panchayat, JP Nagar:

J.P Nagar Zila panchayat filed 5 criminal complaints filed in 2002 (cases # 332, 341, 349, 354 and 359, new numbers alloted in 2017) u/s. 240 & 107A Uttar Pradesh
Chhetriya Panchayats and Zila Panchayats Adhiniyam, 1961 against officials of Company alleging that the factory is running without obtaining the license from panchayat and also alleged that the factory is degrading the environment.

Company officials have challenged the proceedings before Hon’ble Allahabad High Court wherein stay is continuing in 3 cases (case # 341, 349 and 354) and pending. The remaining 2 cases (case # 332 and 359) are pending at trial court. Zila Panchayat filed 29 similar complaints earlier, which were all dismissed. Zila Panchayat had also issued proceedings for recovery of INR 3,000 Lakhs in the year 2002, which has been set aside by the Hon’ble Allahabad High Court (WP 44611 of 2002) in 2019 and remanded the issue to Zila Panchayat.

7) A public interest litigation (“PIL”) was filed by Janardhan Pharande & other villagers:

(2009) alleging that Company is responsible for polluting the air and water in the
villages adjoining the banks of the river Nira. PIL for cancellation certificate issued by the Ministry of Environment and Forests for expansion of its molasses-based distillery unit. NEERI appointed by the High Court carried out sampling of water and air and gave its recommendations for improvement. Subsequently, case has been transferred to NGT, Pune and numbered as No.7/2014 which approved an Action Plan for remediation. INR5500 Lakhs has been spent on the remediation work being carried out by the Company. The progress of the implementation is monitored by the Maharashtra Pollution Control Board (“MPCB”) and reviewed by the Hon’ble National Green Tribunal (“NGT”).

In February 2020 the Hon’ble NGT directed Company to deposit compensation of INR 547 Lakhs with Central Pollution Control Board
(“CPCB”), which has been contested by the Company in an application for review filed in March 2020 which was rejected on erroneous calculation of limitation, and another review application was filed by Company and is pending. The Company has deposited INR 20 Lakhs with the MPCB, and the case pending.

8) Complaint from a villager:

A complaint was filed by a villager, Shah Alam alleging that due to the air pollution from Company factory in Gajruala and also discharge of chemicals due to tubewell the health of villagers is being affected and his mangrove is adversely affected. The Hon’ble NGT, Delhi took cognizance in March 2019 (No.107/2019)
& directed District Magistrate, Amroha and Uttar Pradesh Pollution Control Board (“UPPCB”) to conduct enquiry, take appropriate action and file a status report which report stated that the mangrove was not effected due to Company operations. A subsequent Committee appointed by the Hon’ble NGT assessed environment compensation of INR984 Lakhs (for extracting ground water without renewal of Non
Objection Certificate (“NOC”) from Central Ground Water Authority (“CGWA”) and INR 619 Lakhs (for other alleged non-compliances).

The Company has filed detailed representations to the CPCB, UPPCB, Monitoring Committee and the Oversight Committee (for Uttar Pradesh) for violation of natural justice, wrong calculations etc. In December 2019 the Company deposited INR 30 Lakhs with UPPCB under protest. The Hon’ble NGT in August 2020 has directed UPPCB to take steps to recover assessed compensation. In June 2020, the UPPCB issued a closure notice and directed company to pay environment
compensation. The Company has deposited INR 70 Lakhs in September 2020 with the UPPCB in protest.

The non-issuance of the NOC by CGWA and the closure notice of UPCCB was challenged by the Company
before Hon’ble Allahabad High Court (# 9908 of 2020) which granted a conditional stay of coercive action in November 2020 and the case is pending.

The amounts mentioned as compensation don’t bother me as much as the allegations. The Gajraula plant looks like a timebomb (or was, around the time of these allegations), and the allegations around the Nira river are recurring. Complaint 8) was as recent as 2019. If any boarders have studied these before, please share your conclusions. I’ll try to understand this a lot better and post again after I do.



Okay, this is definitely serious and deserves the attention of investors. Legal affairs are often opaque and not well covered by the news, so it’s easy for us to think that our companies have lawyers and we don’t need to follow all the pending litigation.

But what if your company is guilty?

There are three pertinent cases for the pollution of river Nira. It isn’t an allegation anymore but a fact, and it hasn’t stopped. Here’s the timeline.

  • A company called VAM Organics set up the Nira plant in the 1960s. VAM Organics discharged industrial effluents into the river between the 1960s-1990s indiscriminately.
  • Jubilant group took over the plant between 1999-2001. They were cognizant of the pollution and took up impact assessment to find ways to end the pollution.
  • They set up anti pollution measures such as lined lagoons meant for effluent water treatment, reverse osmosis chambers, but these measures were grossly inadequate and pollution continued until the first case was filed in 2014.

[…] the occurrence of coloured water, high alkalinity, heavy metals such as Manganese, Lead, Nickel and Iron in ground water over a period of time. Thus, it is more than clear that Jubilant Industry caused contamination of the water of river Nira.

The extent of this pollution is quite disheartening:

The report shows that downstream water of Nira river is unfit for agricultural use. It is further explicit that the downstream water of Nimbut reservoir may cause infertility of the agricultural land and is totally unfit for agricultural use.

So also, report of Joint Director of Animal Husbandry […] shows that near Saloba Doh of Nira river, the water sample was found unfit for consumption of animals. Similarly, at Panwatha (common drinking water storage tank meant for animals) of Nira river, the sample was found unfit for consumption of animals.

There is sufficient evidence on record to show that certain agricultural lands of the villagers are damaged due to the environmental loss caused on account of pollution of river water of Nira. The claim of the Jubilant Industry that H.R.T.S. is effective and the waste water/spent wash are used for plantation after recycling is untenable. The growth of small plants cannot be equated with afforestation and rearing of trees within the premises of Industrial Unit. The negligible activity of plantation cannot be treated as afforestation.

  • The judgement in 2014 was that they’d carry out a complete environmental assessment, and the Jubilant group must pay the damages and take certain well defined measures to change their waste treatment methods.

  • Seven years later in March 2021, the environmental impact damages are set to the tune of 5.5 Crores. The first thought is that this is small change for a company of Jubilant’s size, but I urge everyone to read the following paragraph in full, taken from the judgement from March 2021:

From the above, it is seen that violation of environmental norms is still continuing. The unit has been found to be a chronic defaulter and inspite of heinous violations being continuing as found by various orders in the last seven years, the State PCB has failed to perform its responsibility of taking stringent measures for compliance, including collection of assessed compensation. We are unable to discern any valid reason for such attitude of the State PCB against chronic law violator damaging the environment. It is a matter of regret that the unit is indulging in such tactics as dilution to avoid to mislead the real picture of performance of its ETP. Such behaviour of a corporate entity shows that its management has scant respect for law.

The Jubilant group hasn’t paid up the compensation yet, and the court recommended the pollution control board to step up all measures in ensuring compliance, including a potential closure of the plant.

You can read the judgements in detail at the below links.
and the judgement from 2021:


Edit: There’s more:


One of them was drinking tea nearby and inhaled the fumes.

We haven’t even discussed the Gajraula plant’s allegations yet, but this is enough for me to plan an exit. They’re lucky that the state PCB is nothing like the USFDA. Can you imagine if these harsh words were said by a regulatory body about a pharma company and inadequate safety measures subsequently lead to plant closure? You’d see your investment disappear overnight.

Edit II: I have a feeling Gajraula is no different. Here’s an article from 2017.

The company didn’t disclose the extent of impact of NGT’s order on the revenues.

“The company operates its manufacturing facilities in Gajraula with zero discharge and in compliance with all applicable laws and it is confident of meeting any requirements that the NGT may prescribe and resuming operations of its industrial units at Gajraula at the earliest,” Jubilant added.

Jubilant said it is environmentally conscious and a good corporate citizen

I laughed at the last one.

Okay, lets say we keep obvious morality issues separate, and view the company through the lens of an investment. Environmental regulation will only get stricter with time, not weaker. Should there be a crackdown on pollution with the same vigor seen in China, or a change in the pollution control boards in UP and around Nagpur, these plants would be the first to go. It’s also clear that we can’t trust the management’s talk of environmental responsibility in the future.

Disclosure: invested, not for long.


Okay, let’s briefly look at Gajraula. Here’s a report from the National Green Tribunal from 2019.

To no surprise, there are violations. I quote

  1. None of the units of Jubilant group of Industries in Gajraula Industrial Complex has requisite permission for ground water extraction but such extraction is continuing in violation of law. Further, Environmental compensation (EC) due for illegal disposal of spent wash causing potential threat to ground water where ground water of the area is already deteriorated to “over exploited” category.

  2. Captive power plant is not complying with respect to NO2 standards. The plant failed to meet the emission norms with a measured NO2 level of 459.9 mg/Nm3 against the norm of 300mg/Nm3.

  3. The distillery plant as per the adequacy report of the Joint Committee indicates that the Reverse Osmosis and Multi Effect Evaporator plants are not installed as per the requirements.

  4. As per the analysis result of stack at Sulphuric Acid plant, it was found non-complying w.r.t S02: 2572 mg/Nm3 measured against prescribed standard limit of 1370 mg/Nm3, which indicates violation of norms.

  5. Rain water harvesting system at biocomposting site may not be advisable to avoid contamination of the ground water with colored effluent (due to a damaged/improper roof).

  6. As per the analysis result, CPU RO Permeate has pH 9.48, COD-2083 mg/I and BOD-1078 mg/I is being utilized in cooling tower which may not be appropriate for having such high pH.

  7. Reject of CTRO is used for spray on coal stock and ash for dust suppression. This effluent cannot be used for ash quenching which should be stopped immediately.

It really reads like they haven’t done a single thing right. After the 4 page recommendation on fixing every mistake they’ve made, and steps to properly deal with their discharge, I saw this recommendation which annoyed me:

The unit shall install automatic water sprinkling arrangements, fire alarming systems, flame arresters, smoke/heat detectors, fire extinguishers and other necessary provisions which are required in the hazardous waste storage area as stipulated under the guidelines for storage of incinerable hazardous wastes.

Does this sound like a state of the art CDMO company? Smoke/heat detectors are now commonplace in residential buildings, and there’s definitely a need for them while storing hazardous waste. If they’re this lax on fire safety, no wonder the chemical leak happened at Nira, and I can guarantee we’re going to see more of this in the future.

The report ended by saying that they’re reviewing the permissions for Jubilant group to draw from the groundwater, and a follow up report will be published in the next few years outlining the amount Jubilant group will have to pay to repair the damage caused. Again, they highlight how the PCB has failed in its duty to stop companies like these from polluting, and the company’s blatant disregard for compliance.

So that’s 2/5 plants covered. We’ve got Bharuch, Samlaya and Ambernath plants to go.


@Chins thank you for highlighting all the regulatory risks with the company. Curious, if you have searched conference calls where anyone has asked questions pertaining to these risks at all?
If not, I can help search them from my end and post here.

I would also compare these open issues with other chemical names like maybe a Deepak Nitrite or Vinati to check the difference between the two to judge if these issues are out of ordinary for Jubilant or a norm in the chemical business.


Hi Tar, I’m thinking along those lines and planned on looking through concalls / annual reports after understanding the landscape of what’s happened.

The first thing I did after finding these was to run a search across Deepak Nitrite to see if this was a sectoral risk. Deepak Nitrite has one litigation from 2004 which condemned pollution, but no court proceedings since (to my knowledge). In 2016 they had a plant that was shut down by the Hyderabad pollution board, but this was revoked after some time. There hasn’t been an order from the National Green Tribunal, or anything to this scale. I’ll write here after a more thorough search.

Edit: Link from 2016

Perhaps someone who’s looked for this before can also comment :slight_smile:

Edit 2: No hits for Vinati Organics, litigation history looks to be regarding rent and excise duty based on a cursory glance.

Edit 3: No hits for Navin Fluorine, discussion in court involves tax and subsidies.


Thank you.

Based on my limited search, the company does have a higher than ordinary pending litigation cases. Their 2020 annual report itself lists some 25+ legal cases pending related to pollution norms.

Started going through conference calls, there are no direct questions so far but indirectly there are many cases where either plant opening was delayed etc. as they didn’t meet pollution control standards.

Here is one, where their Nira plant was delayed. This is from June 2019 conference calls.

Will keep posting more evidence as I find more.

From what I have read so far and compared for peer companies of same stature, two things are evident

a. Jubilant has significantly higher pollution related cases than its peers
b. The quantum of these cases is not limited to a single plant but spread across the business, so seems like a culture issue to me

Peers like Vinati and Deepak do not enter markets unless they can enhance processes via green chemistry where as Jubilant seems to have a culture of growth at all costs.

Edit: More evidence of growth at all costs kind of culture. One of their US subsidiary was fined by USEPA for breaking pollution norms. Taken from March 2019 exchange filings.


D: Invested, sadly its 3rd highest allocation in my PF. May bring it down as regulatory risks seem high


Thanks, @Tar. If the earnings call was in June 2019, surely they would address what happened with the chemicals leak from two months ago (April 2019)…

From my reading of the responses from the company, the repeated emphasis was always that they didn’t do anything wrong. Knowing the landscape of their various breaches, one would want detailed answers on regulations, and the specifics of what they’ve changed.

A second question to ask is how reliant Jubilant Ingrevia is on these plants at Gajraula and Nira. If they’ve commisioned new plants elsewhere, perhaps modern facilities won’t have the same archaic waste management policies and these stories may be behind us. However:

The Acetic Anhydride unit at Nira was responsible for the chemicals leak, and we now know that Gajraula is at high risk of not having their groundwater permissions extended.

I’ll help look through the other earnings calls / annual reports.

I’ve also noticed that good companies like Valiant Organics, Vinati, Deepak are very transparent with their environmental clearance reports. Currently, the government site is down, but I’ll share the reports here to compare once it’s up.

Edit: the Thesis/Concall Search Engine is a fantastic tool, and a search across the years has returned many hits.


Well, there is no straight forward answer or an end to such issues. We all know how pollution control norms work across various industries not just specific to chemical industries. If the non-compliance issues are so chronic in chemical sector, then I really wonder why it has not made any difference in expediting environmental clearances for new capacity projects in India ?? If we look at last 3-4 years, almost all big to small chemical companies in India have applied and got EC clearance for their new plants.

Speaking on Deepak Nitrite, I have this one.

Not looked at other names, as I see no point in digging deep.


All special resolution items catering to employee stock option plans have been passed, however majority of the institutional shareholders voted against these.


I spent some time looking for the answer to this. It’s found in the environmental clearance report obtained for the Nira plant, here in full: http://environmentclearance.nic.in/writereaddata/modification/Amendment/Attach_file/0201201841WJWRWYAnnexure-PFRandECCompliance.pdf

Relevant section:

So the timelines are:

  • 2013: Jubilant Life Sciences gets the environment clearance for the Nira plant, previous history irrelevant.

  • 2014: The Janardhan Pharande court case - establishes environmental violations between 2001 - 2013, says there will be an impact assessment for the damages and this will be addressed in the future.

  • 2017: Environmental clearance runs out, and Jubilant group applies for a renewal and it’s granted(without prejudice has a legal definition, I’m not going to pretend to understand the nuances). At this point it isn’t established that the pollution is continuing post 2014, and the Maharashtra Pollution Control Board makes them sign agreements to keep emissions within check:

  • 2021: NGT assesses the damages and realises that the pollution is continuing from 2014 - 2021, slaps a fine, remedial measures, and asks what the MPCB has been smoking.

  • 2022: Environmental clearance from 2017 expires on 31st August, 2022.
    Source: Page 17 of the report, snippet below

Key Takeaways

  1. The fundamental problem for the Government / NGT is that the pollution control boards are not centralised and don’t share information. There is a CPCB, but it looks like permissions fall under the state mandates. The Maharashtra PCB doesn’t have any clue about the happenings at Gajraula, and vice versa. They don’t look at the Jubilant group and its record, they only look at the specific plant. This is great from the company’s perspective, and also means that if there aren’t any prior infringements at the other plants, it’ll take years before any action.

  2. There appears to be a nearing point of concern at Nira. The NGT has asked the PCB to review what happened, and to take measures to stop the infringements. This happened in March 2021, we’re in May. Jubilant group has a year until the environmental clearance needs to be renewed in August 2022. Best case: they fix things and the clearance goes through. Worst case: they have to shut down the plant.

On a more positive note, the entire list of chemicals produced at Nira may explain the current stock momentum.

They make 16,500 TPA of VAM:

Sourced from the incredibly useful Tijori Finance

They make 37,595 TPA of Acetic Acid:

They make 90,000 TPA of Ethyl Acetate:

I’m not going to post the entire list, but one can look it up.

Disclosure: Same as above.


Thanks. Once again valuepickr investors helped highlight something which a novice investor like me would have missed and ended up with significant wealth erosion. From my knowledge, CDMO companies have to highlight high levels of sincerity and clean slates to attract global clients. These incidents certainly look muddy, forget about clean slate.


Q4 & Fy21 result on Monday 7th June & Investor conf call @ 5 PM.


Company incorporates wholly owned subsidiary in crop protection with focus on selling pesticides and plant protection chemicals. This is a forward integration for Jubilant.

Disclosure: Invested (position size here)


Sneak peek from todays Jubilant Pharmova results

We may have a bumper Q4 results on Monday if Jubilant Ingrevia can maintain the same run rate for remaining two months. However tax rate seems to be high. Fingers crossed :crossed_fingers: