Privi specialty chemicals - Waste to wealth story

Overview of the company

  • Privi Specialty chemicals is formerly known as Fairchem specialty chemicals is India’s leading manufacturer, supplier, and exporter of aroma and fragrance chemicals and a globally trusted partner and supplier of bulk aroma chemicals.

  • Privi specialty chemical is a waste to wealth story that means company is going to create by-product from this waste.
    For example: If company produces 5k tons of camphor then there will be 3k tons of waste. Company is going to make menthol from this waste. By-products will be more valuable than the product itself

  • Company has in-house, fully equipped synthetic R&D center facilitates production of customized products as per customer requirements

  • History of the company: Started aroma manufacturing in 1992 with only two products and they have expanded 50 products till date with capacity of 32,500 tons per annum

  • Manufacturing: Company has two manufacturing facilitiesat Mahad in Maharashtra and Jhagadia in Gujarat

  • A Total Production Capacity of - 32,500 TPA spread across Amber fleur, Acetates, Dihydromyrcenol, Ionones, Nitriles, Sandal wood derivatives and Specialty chemicals and a CST/GTO capacity of - 30,000 TPA (Backward integration for captive α & β Pinenes).

  • Customers: Has been a partner of choice for customers like Givaudan, Firmenich, Symrise, IFF, Takasago, Mane, P & G, Henkel, Reckitt Benckiser, among others. We cater to the world’s 10 largest and leading fragrance companies and have a significant presence in Europe and the United States (US).

  • Certifications: 23 products under EU REACH regulation, 24 products under KKDIK, GHS complaint, IFRA standard and ISO complaint

  • Leadership position in the synthetic aroma chemical segment and continues to consolidate its preferred supplier status amongst leading F&F houses and FMCG companies.

  • Company continues to be a leading producer globally in three flagship products: Dihydromyrcenol, Amber Fleur and Pine Oil.

  • Qualify amongst the top two global manufacturers by size for our leading products like Dihydromyrcenol, Amber Fleur, and Pine Oil.

  • Subsidiary companies: Privi Biotechnologies Private Limited and Privi Organics USA Corporation.

  • New customer: Introduction of IFF as a key customer with increased volumes specifically in the product DHMOL

  • Company took 7 years to produce Bio menthol. This tells us it takes long time to setup and capture market of the market

Revenue distribution of the company

Top 10 products of the company

Risks in the company·

  • Floods are happening consistently in Mahad, Maharashtra where Privi specialty chemical is situated and it can affect the revenues
  • Availability of raw materials risk - Company depends on over 70% of the raw materials by imports

Entry barriers to entry

  • In-house expertise and knowledge
  • Company has applied backward integration to use waste generated from pulp mills – CST as it has significant visibility of pricing and availability of raw materials.

What I like in the Privi specialty chemicals?

  • Waste to wealth story
  • Products produced with unique process which no other company is doing
  • Privi is the only company which have CST technology in the entire Asia
  • Revenues are going to grow at 18 to 20% for the next 4 to 5 years (Management guidance)
  • There will be minimal raw material volatility

Please find the overview of industry structure below:
Privi’s Industry structure.pdf (435.8 KB)


Privi’s management Webinar Nov 2021 notes

  • Company completed the 100 days of Zero liquid discharge

  • Reducing the carbon footprint of the company

  • 10 products constitute for the 80% of the revenue and it has more than 20% market share. In this 8 out of 10 products are manufactured through pinene (CST technology)

  • Terpinene 4 0l is the product used for the herbicide

  • Management claiming that Benzyl salicylate and Bio menthol product are a unique products and launching first time in the world with unique process

  • High margins will be made by bi-products and it will take time for the company

  • Management said, two Research and development lab in Bombay and it is unique R & D lab, the first time in the world - 10 PHD’s, 20 Post graduates and 20 graduates

  • Price difference between GTO and CST products: GTO raw material prices are fluctuating, but CST raw material have high visibility of prices and less volatility. Price difference is like plus or minus 15% to 20%

  • Size of camphor market and rate of growth: 25000 tons and 6 to 7% growth rate. They are producing camphor to pharmaceutical grade company and it has USFDA certification. 3k to 4k tons. 5k tons of camphor we will 3k tons of waste and company is going to make menthol from this waste. Co products will be more valuable than the product itself

  • Loss of 1 month or revenue due to the Mahad flood

  • Availability of raw material - Company has Right to refuse first offer (2 years) for 30000 tons with the supplier. That means if supplier goes through contract with other company then privi can refuse and supplier lose the contract

  • Can company pass the price to customers? - Prices are fixed annually and cannot be passed to the customers.

  • Sales growth is majorly from the volume not on the price growth

  • Going forward raw material import will be 55 to 60%

  • Future capex on menthol and turnover - Management will be coming back with the details and menthol margins will be higher

Management Guidance

  • Management guided to maintain 18 to 20% CAGR revenue for the next years

  • Company has invested 337 crores in the last 18 months and 5 products are launching in April 2022 and 100% ramp up in FY22-23.

  • Management guided that, Privi will go to dominant position in the chemical industry

  • Management guided for 2500 to 3000 crores revenue in next 4 to 5 years

  • EBITDA margins guided for 17.5% to 20% for the future


Thanks for such a detailed information.

1 Like

Link of the webinar Nov 2021


DIIs have increased the stake from 2.86 to 3.40 in the December quarter, whereas FIIs have reduced from 0.27 to 0.24

Please find the financial results of Privi for Q2FY22 here:

Disclosure: I’m not invested in the company as I’m waiting for the better entry point.

FY22 (Q3) Earnings

Result :

Presentation :

Concall :


In the concall management was super bullish for the next quarter and also indicated that they always post bumper results in Q4, so Q4 is going to be huge.


Seems like the new capacities have a delay in coming online . The sales are impacted a bit due to omicron and mostly from the shipment available and freight high costs .Input costs(especially energy) are also playing spoil sport.

  • The management is guiding for overall volume growth of 15 to 20 %. Seems like the major benefits of new capex has been moved to the next financial year .

  • The input costs the company is not able to pass on with vigor expected.

  • A slight cooling of demand is also seen from the europe due to war in ukraine leading to qurter on quarter decline in volume by a few percentages.Volume should come back to normal from the next quarter

  • Long term revenue targets of FY 24-25 remains intact of 3400 cr to 3500 cr .

  • Guided growth for this year will come from Q4 .

  • The Q2 and Q3 there will be flattish to a small decline in EBITA, due to higher depreciation of the new capex.

  • Next year the board has provided an enabling resolution to sell equity to finance their menthol capex .This will also help in reducing the debt of the company.

concall link:- Privi Speciality Chemicals Ltd Q4 FY22 Earnings Concall - YouTube


Management statement in Q3 FY22 Concall:
There has been definitely an increase on a quarter-onquarter numbers as you would also appreciate the efforts that the company has been able to put in around and give a decent I can say sort of a performance and I hope most of the investors have not found many surprises in the results because there is an increase in the turnover by almost about 30% as you compare to the immediate September quarter and the December quarter, but I will say that a better comparison will be the December 2020 and December 2021 quarter where our sales has increased by almost about another 30% odd.The profit has increased from about Rs.25.5 Crores on December 2020 we have come up to about close to 35%, which once again signifies a 40% increase in the profitability numbers.

we are confident that now with the increase in the selling prices our margins definitely will go up starting from this quarter itself and as all of you investors know that Privi always is like an MS Dhoni the first three quarters could be slow, but the fourth quarter always is a big bang for us and we expect this quarter also to be a big bang in fact.

Management was patting on the back in Q3 and making all tall claims ( that too on 28.01.2022 Concall) and in next 2 months war broke out between Russia and Ukraine. At the end of January 2022 a prudent managenent would be sure about escalation of raw material, logistic cost etc. as it was already there and there were no sign of abating. How war can only be reason for subdue performance. Moreover, the delay in commissioning is majorly attributed to hampering oxygen supply. I could not see any news article about such ban , however, management could have informed under disclosure to exchanges about this material event and flood at Mahed plant, so as to take investors a reasoned decision. Predicting a bumper Q4 in advance ( that too on 28.01.2022 when many issues except was were clear and war was also on the verge) raises issue on credibitity of the management. One more thing, why only CFO is attending the conference calls, who should be limited to Financial Matters.

It also appears that company is capitalizing the interest cost and as per company from next year there will be Rs. 55 Cr. annual ( against 24 Cr.) in P/L account. Working Capital cycle is getting stretched and company is planning to raise money through equity. The utmost question is of confidence of investors in management and proper disclosure. It appears due to these reasons market has punished the stock very hard in 2 days.

Disclosure: Invested.


On issue of Maharasrta Pollution Board Notice ,management in concall tried to subside the matter:

Chintan Patel: So can you throw some light on so-called notice from the pollution board, Maharashtra pollution board.

Narayan Iyer: That is a normal routine matter which is happening I do not know how this media people made it into a big issue honestly speaking. So we have already addressed it and we have responded to the said notice that we have received so it is absolutely a day-to-day routine affair. So it is not as serious as made by the media channels.

It appears management did not clarify on merit of the issue . This is an inherent risk in many of Chemical Companies and more severe in API companies. Any one in knowledge of issue may further throw light on it.

Disclosure: Invested


Agreed. I just checked the recent concall after almost 30% fall in 2 days, to see what has triggered this fall.

The way management answered the queries, it seemed that all the issues started happening in the very last quarter.

Management said that they faced the issues like freight cost increase, RM cost increase, Coal prices going up and delay in CAPEX because of ban on oxygen for commercial use. But all of these issues happened in last quarter? Has management spoken about these issues in earlier calls/results?

Also on RM company said that it takes 3 months for RM to reach to them and also said that because of this delay, there could be some dent in coming quarters. This raises 2 questions

  1. The RM used in last quarter might have been procured min 3 months before that. Then why company didnt say anything about these high costs in Q3 call?

  2. Else if RM cost is going to have impact in coming quarters, then management claim about high RM in Q4 doesnt stand ground.

Disc: Not invested. Recent fall has triggered some interest so studying


17528e9d-08da-4392-adb9-6e28c6c9db43.pdf (372.0 KB)
Management reply on regulation 30

Invested in tracking position.

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Don’t track this company, not comfortable with it’s cyclical industry. But while casually browsing saw it’s cash flows back at pre covid levels and found this. Inventory from 7 to 246

Privi is in the process of installing two new plants to manufacture Galaxmusk (Galaxoalide) and Camphor at an overall investment of 375 Crores. Both these plants shall commence commercial production by the end of September 2022 and will increase theoverall revenue. Along with this, Privi has started after putting in almost 6 years and has eventually started the commercial production of Prionyl (Evernyl), which is the first solid product produced by Company.

Privi now serve to 40 countries

Disclosure: Invested and biased


Commercial production of both Galax-musk and Camphor project begin in Jan23. Company just announced it before quarter 3 results.


I was going through Financial statements of Privi’s subsidiaries. March 22 financial are currently their on website:

  1. Prigiv is JV between Privi and Givaudan, project was yet to be operational as per separate financial of FY21-22
  2. Privi Biotechnology is WoS of Privi. Total revenue of this subsidiary flows from Privi Sepciality (Holding co)
  3. Privi USA is trading arm of Privi Speciality. High inventory at USA location is big risk, needs to understand why co is not able to liquidate the inventory and facing challenge from getting money against receivable. Even Co has to borrow working capital facilities from bank (As per separate FS available on Co website for year ended March-2022)

Privi speciality chemical
• Privi is India’s largest manufacturer and exporter of aroma chemicals. Almost one third of the aroma chemicals produced globally are made from chemicals obtained from a Pine tree. Company started with only 2 products in 1992 and today have expanded their portfolio to over more than 74 products. And expects to keep trend going forward with three to four new products launch each year. Company has two manufacturing facilities at Mahad in Maharashtra and Jhagadia in Gujarat.
• Privi speciality operates in aroma chemical which are used in fragrance and flavour industry used in soaps, shampoo, detergents, cosmetics and toiletries and the most importantly in perfumes. The company cater to the worlds 10 largest fragrance companies and have a significant presence in Europe and USA. 70% of production of Privi comes from pine tree.
Pinene based products- Dihydromycrenol(dhmol) and Amber fleur accounts for sizeable revenue. Both these chemicals are used in fragrances

  • Dhmol is also called as God’s molecule as it is used in 99% of the perfumes, and Privi controls around 30% of market share of dhmol in the world.
  • Amber fleur is a royal molecule of F&F(Flavour and fragrance) industry because of its velvety nature. Expected growth of this product is around 5-6% pa.
    Waste to wealth story depicts how this company makes revenue through by products of different raw waste materials using technology and with guidance of good R&D team.
    Both crude sulphate turpentine and gum turpentine oil are natural products derived from pine trees, but they differ in their extraction methods, composition, uses, and quality. Gum turpentine oil is obtained through the distillation of pine oleoresin and is commonly used in various industries, while crude sulphate turpentine is a byproduct of the pulp and paper industry.
    Difference between GTO and CST
    GTO Method
    • Gum turpentine oil is obtained directly from pine trees. When the bark of pine trees is cut or wounded, a sticky resin is exuded, known as oleoresin. This oleoresin contains gum turpentine oil and rosin. Gum turpentine oil is obtained through the distillation of this oleoresin.
    • Gum turpentine oil is a more refined product compared to crude sulphate
    turpentine. It mainly consists of alpha-pinene and beta-pinene, along with smaller amounts of other terpenes. The distillation process results in a purer and more standardized product.
    • GTO process is the most common way is being adapted by most companies
    • Major raw material supplier of GTO is China accounts for around 70% of worlds production.
    • Crude sulphate turpentine is obtained as a byproduct of the Kraft pulping process used in the paper and pulp industry. When pine wood is processed to produce paper pulp, chemicals are used to break down the lignin in the wood. As a result, crude sulfate turpentine is released as a byproduct.
    • Sulphur content in CST is too much which has very foul smell which needs to go through refinery process to make it suitable for aroma chemical
    In Asia only PRIVI is the company which has refinery to refine CST
    Privi has long term tie up with the world largest mills for raw material supply. Privi has Right to first refusal to this raw material
    Some key advantage of CST over GTO
    • Pricing: Price of CST is more stable than GTO in world market above in the picture depicts the price volatility between CST and GTO.

    • Privi with a cost advantage through its backward integration as CST can be sourced much more easily and cheaply than GTO. As we know China is the largest producer of GTO in the world, so indirectly companies are dependant on supply chain with China
    • As the price range of CST remains stable Privi is being able to procure higher margins and better valuations over the time.
    Privi is one of the few companies in the world which is able to understand the chemistry of CST and showing magnificent results out of it.
    This is how adapting to CST brought in great results for the company here is the above chart showing the 10 years growth of the company.

    From by-product to value added product by Privi
  1. Dipentene is a by-product generated through terpineol and camphene, with further processing of dipentene a product is formed called second generation herbicide which is used in agriculture purpose.
  2. The Dream project of PRIVI
    Privi has USFDA approved plant to manufacture pharma- grade camphor. To obtain camphor, the oleoresin is harvested from the pine tree. The oleoresin is then subjected to a purification process to separate the camphor crystals from the other components of the resin. The camphor is typically further processed and refined to obtain pure camphor crystals, which can be used for various purposes.
  3. The Bio Renewable Laevo Menthol Equivalent to natural Menthol, company have worked around 7 years into this project. The process of making l- menthol is hard to make as involves complex reactions and difficult separations. Menthol margin will be higher, minor details given by management.
    Other cost effecient methods by company
    • Sulphur content which is left over while going through CST process is also being extracted which is also a source of revenue for the company.
    • Harmful gases are being trapped while production of aroma chemical are being used as heating of water to create steam for further production of various other chemical.
    • Company has setup various filtering processor to reuse contaminated water left out during processing the same filtered water .

Givaudan is a global industry leader creating game changing innovations in food and beverage as well as inspiring creations in the world of scent and beauty, Givaudan operates in the expanded market space of flavour & taste, functional & nutrition ingredients, fragrance & beauty.
“We are excited with this opportunity to be partnering with Givaudan to support and expand their production of speciality fragrance ingredients. We look forward to showcase our knowhow and manufacturing expertise as a trusted partner through this strategic joint venture.” by management
Privi has signed a 5 years agreement with Givaudan in which Privi will supply 40 highly specialised molecules which will be low in volume but high in value (high margins).
The other key customer which has recently connected to Privi is RECKITT BENCKISER who is manufacturer and distributor of personal care, household, specialty products, nutrition, toiletry and health care products. The company sells its products with brand name DETTOL.

Aroma chemical companies in India will be benefited from ‘China-plus-one’ strategy and the government’s campaigns ‘Make in India’ and ‘Self-reliant India’ to boost domestic manufacturing and promote Indian products in the global markets. Global players are evaluating viable alternative manufacturing countries like India to reduce their reliance on China and diversify supply risk. Furthermore, the Indian aroma chemical industry benefits from less-stringent environmental norms as compared to China.
Mr. Mahesh P Babani

Chairman & Managing Director

Over the past 2 decades, he has travelled extensively across the globe and has deep knowledge of the entire value chain of Aroma Chemical Business. His knowledge extends from sourcing of raw materials to their processing and to the final consumers of Aroma Chemicals. He has strong relationships across the management level of PRIVI’s customers, suppliers and other stake holders. Mr. Mahesh Babani is a Commerce Graduate and has operational and managerial experience of over 30 years.
Mr. Anurag Surana

Non-Executive, Independent Director

Mr. Anurag Surana has over 2 decades of experience in Chemical Industry is a known and reputed name in the industry and has brought immense value to the Board by providing inputs on manufacturing operations and management controls. Mr. Surana was associated with PI Industries as a Whole-time Director till September 2012. Presently, he is the Managing Director of KAGASHIN Global Network Private Limited. He is undergraduate and has completed his education from University of Delhi. He is a Director on the Board of IFFCO-MC Corp Science Pvt Ltd, Nichino India Pvt Ltd, Nichino Chemical India Pvt Ltd, Kagashin Global Network Pvt Ltd, Esco Agencies Pvt Ltd and Neogen Chemicals Limited.

Mr Anurag Surana has brought in lots of clients for the company he has worked with and for Privi as well.

Entry barrier
• There are no significant technology barriers in the space. However, established players have a critical advantage in terms of client relationships.
• Global Flavours& Fragrances houses derive most of their revenue from mature FMCG players.
• Competition among the larger players is often price based, which is the consequence of limited product differentiation.
• Companies that are able to create product differentiation would be in a position to build better margins and protect themselves. Company need to approve their products from the customer which is a big challenge for the company as it usually takes years for the products to be accepted.

  • Compliance with strict pollution control norms regulations regarding water discharge.
  • 70% of raw material is being imported from various other countries. Any change in import rules and duties may effect company operations.
  • Side effects related to synthetic aroma chemicals may constrain industry growth . The use of synthetic fragrances can cause issues such as skin irritation and rashes due to chemical composition of various harsh chemicals which may not suit every person**.**
  • The key market players are focussing on producing natural fragrances, due to the consumer preference for natural fragrances and concerns regarding synthetic fragrances due to health risks. India has become a prominent global supplier of natural fragrant raw materials such as essential oils of menthol mint, sandalwood, jasmine and spices.
  • The chemical substance used in fine fragrances, cosmetics and toiletries, food and beverages provide user with distinct fragrances and experience
  • The Company has high inventory days which have gotten larger due to supply disruptions recently. This means that a significant amount of the Company’s capital remains always stuck in inventory
  • Mahad is a flood-prone area in Maharashtra which saw water levels rise to 25 feet in the Maharashtra flood last year. This risk from floods forms a significant threat to Privi’s operations in its Mahad plant.

The global fragrance and flavour market is largely oligopolistic with a few aroma formulators, India’s largest aroma chemicals company SH Kelkar is also a formulator. Privi Speciality Chemicals and Oriental Aromatics Ltd. are suppliers of raw materials that go into making these chemicals. Eternis Fine Chemicals Ltd. and Anthea Aromatics Pvt. are their unlisted peers.

Oriental aromatic
The company uses gum turpentine oil to manufacture aroma chemicals. In the earnings call, the company’s Chief Executive Officer Parag Satoskar said it expects capex investment to contribute 1.7 times to the top line. The management expects to renegotiate/pass on/work out prices with customers to absorb the increase in raw material costs.
Company is one of the largest manufacturers of variety of specialty based aroma chemicals, and camphor, with a vast product range including Synthetic Camphor, Terpineols, Pine Oils, Astromusk. Company started its camphor production since 1964 using technology from DUPONT of USA. Major chunk of revenue for OAL comes from camphor as we now company extracts chemical through gto process making of camphor is bit easy through this process. The company currently has a market share of nearly 33% and intends to scale up the same to 35-40%. But
The Bodani family have extensive experience in the chemical industry from last 6 decades
As per the latest commentary by the management all the plants are running at almost full capacity, which invites the need for further capacity addition to cater to the increasing demand from the customers. Thus, the management has planned a capex of approximately Rs3500-4000 million for next 3-5 years, as per Crisil report.

Eternis fine chemical (2nd competitor)

Eternis is an pvt ltd company which deals in all kind of aroma chemicals and major business is through export.

with only 12 popular formulas in the portfolio and a few specialty chemicals for specific clients, Eternis has created a strong foothold in the global market and caters to nearly 45 clients across 20 countries. Their molecules are primarily used in soaps, detergents, household products, fragrances and fine fragrances.
Mariwala believes that in India, Eternis’ primary competitor is Privi Organics(now Privi speciality) which makes 33 aroma chemicals and beats Eternis in terms of revenue, at ₹13.4 billion in FY19. One of the products that Eternis added in 2016 is coumarin, the chemical that boosted its revenue growth in FY18. An extremely popular ingredient in perfumes, coumarin smells like fresh hay and is used to support odours such as lavender and rosemary. Due to the versatility of the product, Eternis sought to expand its coumarin business and acquired the market leader in this formula — AIMS Impex last year. The deal was reportedly worth ₹500-600 million and it consolidated the company’s position in this chemical. This gave a boost to their existing capacity of 1,500 tonne. Eternis is now its only manufacturer in India.

Privi caters their products worldwide, the most used aroma chemicals in the perfumes and scents are Dhmol and amber fleur. Privi holds 30% market share worldwide for these chemicals. Privi is one the most preferred company by 10 largest f&f players in providing aroma chemicals molecules. Recently they came into JV with the Givaudan (Swiss multinational manufacturer of flavours, fragrances and active cosmetic ingredients). Talking about the process of extracting pinene based products is through CST which is bit complex but provides competitive advantage as raw material is very cheap and they have connection with largest paper mills companies in the world to provide pulp to Privi. Coming forward company is now extending their products portfolio, recent capex in galaxmusk chemical and camphor. Privi hold USFDA approved pharma industrial grade camphene manufacturing. The camphene is hydrogenated to make isoborneol which is used in commercial manufacturing of camphor Limonene is used to manufacture citrus based aroma chemicals.
Overall, the growth in FMCG will drive the growth for the F&F industry. The demand is expected to be robust in near future Companies like HUL, PepsiCo, P&G, Coca-Cola, Colgate, The Kraft Heinz Company and other players are in constant requirement of the F&F raw materials for meeting consumer demand.
Aroma chemicals are synthetic aromas. Virtually all perfumes on the market are composed of aroma chemicals. 75-90% composition of a perfume fragrance is aroma chemicals.

DISC- The report constitutes facts and is being collected through reliable sources. Report is made only for Educational purpose and does not constitute any kind of Buy/Sell recommendation.