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.

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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