India Glycols bets on liquor, value-added chemicals as it weans of commoditised products

India Glycols Ltd. is looking to leverage its value-added chemicals businesses and wean away from its commoditised productsportfolio in a bid to shore up its margins and reduce the impact of commodity cycles.
The chemicals maker is betting big on its liquor and nutraceuticals businesses, as well as other value-added specialty chemicals.

“The strategy, going forward, is to obviously become less commodity-based and to get into segments which are less cyclical and bring more differentiation for us,” Rupark Sarswat, chief executive officer of India Glycols, told ET.

For India Glycols, the revenue share of commoditised products, such as glycol ethers and acetates, has declined to 19% in FY21 from 34% two years ago. Meanwhile, the share of potable alcohol, or liquor, increased to 27% from 12% over the same period, Sarswat said.

Subsequently, the company’s EBITDA margins, which were between 10% and 12% traditionally, went up to about 16%.

The company makes affordable Indian-made foreign liquor (IMFL) under brands like Bunty Vodka and Salute Premium Whisky which are mostly sold in Uttar Pradesh, Uttarakhand, Delhi and Himachal Pradesh. These products are made from molasses, rather than grain.

“Alcohol is an intermediate product for us, which we used to make to create value-added speciality chemicals or bio-based chemicals,” Sarswat said. “And because we produce quality alcohol, it was kind of a good bolt on for us to start looking at selective liquor segments as well.”

The company plans to later expand into more premium liquor segments and use feedstock other than molasses.

India Glycols also sees opportunity in alcohol blending in fuel by leveraging on its expertise of making high-purity ethanol.

The company is also bullish on the nutraceuticals segment, which currently accounts for a small share of revenue but accrues high margins. It is readying products such as high-purity nicotine, which can be used in downstream products like nicotine patches or gums or for vaping.

It recently entered into a joint venture with Switzerland’s Clariant to manufacture renewable ethylene oxide derivatives. Called Clariant IGL Specialty Chemicals Private Limited, the joint venture will be owned 49% by IGL and its subsidiary and 51% by Clariant.

The company reported consolidated profit of Rs 132 crore on revenue of Rs 5,428 crore for FY21.

On Monday, shares of India Glycols Ltd closed 0.75% lower on the BSE at Rs 702.5.