Fertilizers, Healthcare

Atul Ltd – A Chemical Company

A Flagship company of Lalbhai Group and India's first Private Chemical company

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(A) About the company

Atul Ltd is one of the largest integrated chemical companies of India found by Kasturbhai Lalbhai in 1947. Atul ltd is in the business of manufacturing dyes and dye intermediates agro-chemicals aromatic like para-Anisaldehyde epoxy resins and pharma intermediates.

Further, The Company's serving its products to more than 4000 customers belonging to 30 industries across the world. It has been manufacturing more than 900 products and 400 Formulations.

Although, Atul Ltd is owning nearly 140 Brands, through which it use to cater different categories of products such as for Crop Production, Pharmaceuticals, Aromatics and many more.

Some of the key products are APIs, Dyestuff, Pigments, Dye intermediates, Resins, Greying agents etc.

-About Lalbhai Group

The Lalbhai Group is one of the oldest business houses found in Ahmedabad in the State of Gujarat. It is the first textile mill of the Group established by Lalbhai Dalpatbhai in 1896.

Sanjaybhai Lalbhai is the current chairman of Lalbhai Group.

Moreover, The group has manufacturing facilities to produce textiles, chemicals, dyes and intermediates, pharmaceuticals, electronics, engineering, real estate and a finance company.

The Lalbhai Group owns some of India's Popular clothing brands like Flying machine, Newport, and some licensed brands like Arrow, Gant.

(B) Journey Since Inception

(C) Shareholding Pattern of the company

Atul Ltd - Shareholding Pattern
Atul Ltd - Shareholding more than 1% Promoters and Public

(D) Key Members of the Management of Atul Ltd

(i) Mr Sunil Lalbhai - Chairman

Mr Sunil Lalbhai is Managing Director since June 1984 and the Chairman of the Board of the Company since August 2007.

Moreover, Mr Sunil Lalbhai holds a postgraduate degree in Chemistry from the University of Massachusetts and a postgraduate degree in Economic Policy and Planning from Northeastern University.

further, He is a Trustee or a Member of some of the other social institutions established by the Lalbhai Group.

Mr Sunil Lalbhai received Rs 6.93 Crores as remuneration for FY 21 i.e. 0.24% of Net Sales and 1.51% of Net Profit.

Atul Ltd - Sunil Lal Bhai Directorship in other companies

(ii) Mr Samveg Lalbhai - Managing Director

Mr Samveg Lalbhai is Director of the Company since January 2000 and Managing Director of the Company since December 2000.

Apart from that, He associates with various companies like Ahmedabad Textile Mills Association, Textile Industry’s Research Association, Chamber of Commerce and Industry, and many more.

Mr Lalbhai holds a graduate degree in Commerce from Gujarat University.

Mr Samveg Lalbhai received Rs 6.93 Crores as remuneration for FY 21 i.e. 0.24% of Net Sales and 1.51% of Net Profit.

Atul Ltd - Samveg Lalbhai Directorship in other companies

(E) Business Portfolio of the company

Atul Ltd business Classified into two major segments (a) Life Science Chemicals and (b) Performance and Other Chemicals.

Atul Ltd - Segments

The Company is in manufacturing of more than 900 types of chemicals formulation and supplying it to more than 4000 customers across 90 Countries of various industry users.

(i) Life Science Chemicals segment

Life Science Chemicals segment consists of three sub-segments namely :

(a) Crop Protection

The products falling under these product groups are use by customers belonging to the Agriculture and Crop Protection Chemicals industries.

The product groups comprise 20 products and 70 formulations. 2,4-D, Indoxacarb and Isoprothiolane are some of the key products.

(b) Pharmaceuticals and Aromatics - I

The products falling under these product groups are used by customers belonging to the Pharmaceutical industry for various therapeutic categories such as antidepressant, antidiabetic, anti-infective, antifungal, antiretroviral and cardiovascular.

Moreover, The product groups comprise 76 products.  Dapsone, fluconazole and metoprolol salts are some of the active pharmaceutical ingredients (API) and carbonates, chloroformates and amino acid derivatives are some of the key intermediates.

(ii) Performance and Other chemicals segment

Performance and Other Chemicals segment consists of four sub-segments, namely, Aromatics - II, Bulk Chemicals and Intermediates, Colors, and Polymers.

(a) Aromatics - II

The products falling under Aromatics-II are mainly used by customers belonging to the Fragrance and Personal Care industries.

further, The product groups comprise 31 products. para-Cresol, para-Anisicaldehyde and para-Cresidine are some of the key products.

(b) Bulk Chemicals and Intermediates

Products falling under the bulk chemicals product groups are mainly used for internal consumption. while the products in the intermediate product groups are used by customers belonging to the Cosmetic, Dyestuff, Pharmaceutical and Tyre industries.

The product groups comprise 23 products. Resorcinol, Resorcinol–formaldehyde resin and 1, 3–Cyclohexanedione are some of the key products.

(c) Colors

Under Colors, The product groups comprise 587 products. The products are used by customers belonging to the diverse industries such as Textile, Leather, Paper, Plastic, Paint and Coatings and Food. Vat Green 1, Sulphur Black 1 and Pigment Red 168 are some of the key products.

(d) Polymers

The products under the polymers are used by customers belonging to the Aerospace, Automobile, Composites, Construction, Defence, Electrical and Electronics, Footwear, Paint and Coatings, Paper, Sport and Leisure, and Wind Energy industries.

The product groups comprise 96 synthetic products and 300 formulations. B11, P62 and P101 are some of the key products.

-New launches in FY21

  • Company launched 3 APIs Valacyclovir, Venlafaxine and Desvenlafaxine under Pharmaceuticals Business
  • Launched an insecticide mixture under the brand name, Orax Gold in Crop Protection – Retail Business
  • Crop Protection Business received patent approval for a fungicide mixture – Synergistic Ternary Seed Treatment Composition.
  • Launched Customized Vat Dyes for textiles NOVATIC Classic Dark Green Pdr and NOVATIC Classic Dark Navy Pdr under Color Business.

(F) Revenue Breakup

(i) Revenue-Breakup segment wise FY22

Atul Ltd - Revenue Breakup Segments wise

As of FY22, Nearly 70% of The revenue has been generating from the "Performance & other chemicals Segment" from the pas 10 Years.

Apart from that, Life science segment contributing 28% of Sales and mere 1-2% form other segment.

The company is market leader in some of key products such as para Cresol in the world with almost 55% of total global capacity at a single location.

Furthermore, Atul has expanded its production capacity of para Cresol from 28,000 to 36,000 tonnes per annum.

~68% from Performance segment accounts especially for pharmaceuticals industries.

Further, 30% of revenue accounts for Life science segment which covers APIs, API Intermediates, Fungicides, etc.

(iii) Geographical wise revenue

Atul Ltd - Trend of geographical Revenue

Over the years, Atul's contribution in revenue is almost similar to India as well as outside india.

In FY21, sales from India comprised 54% and from outside india comprised 46%.

-Country wise Revenue breakup

Atul Ltd - Geographical revenue countries wise

During the Year 2019-20, Company generated 54% of revenue from india, 21% from Asia region (Excluding India), 11% from European region.

On the other hand, South American and African Countries accounted mere 2-3% for revenue.

(G) Manufacturing Facilities

Atul Ltd - Manufacturing Facilities

In the state of Gujarat, Atul Ltd has 3 manufacturing sites and in Maharashtra It has 1 Mfg Site.

  • Atul spread across 1,250 acres, is amongst the greenest chemical complexes of its kind in the world established in 1947.
  • Additionally, Ankleshwar site Acquired by Atul in 1988, It is the only zero liquid discharge manufacturing facility of para Cresol
  • However, Ankleshwar site is dedicated facilities for continuous sulphonation, high temperature fusion, catalytic hydrogenation, and many more chemicals.
  • Moreover, The Panoli Site is engaged in the production of tissue culture raised plants of crops such as banana, date palm, etc.

During FY21, Performance Materials Business completed capacity expansion of specialty plant, which will produce value added products like specialty resins and specialty reactive diluents.

Additionally, Company has build new ware house at Atul with the 2,58,000 square feet space and G+7 level of vertical racking system equipped with advance security, safety and spillage handling features.

(H) Distribution channels

Company has robust distribution channel for supplying of different products to different customers across the world.

As of FY21, Atul has been working with 2,250 distributors and retailers across India which is helping them to strengthen its Market presence.

Additionally, its owing salesforce of 484 professionals and some subsidiary companies in Brazil, China, the UAE, the UK and the USA. Further, Atul Ltd is empowering and boosting its network through social media and website.

(I) Cost structure of the company

(i) As % of Net Sales

Atul Ltd - Cost structure of the company

In FY21, Company has spent on Raw Material covering proportion of 47.05% as a % of net sales.

Whereas, Power & Fuel cost expense stood at 8.29% and Other Manufacturing Expense stood at 9.74%

(ii) Salaries Expense

Atul Ltd - Salaries Expense

Atul limited is investing further in people and equipment so as to strengthen its R&D and thereby enhance capability.

Moreover, Company increased its focus towards developing team members from within the Company.

In FY21, the Salaries and wages expense increased by 1% against previous year due to pandemic related conditions.

(J) Group Structure

Atul Ltd - Group Structure

During FY21, Atul Lifescience Ltd, Atul Natural Dyes Ltd, Atul Natural Foods Ltd, Atul Products Ltd and Atul Renewable Energy Ltd were incorporated as wholly-owned subsidiary companies of the Company.

Moreover, Amal Speciality Chemicals Ltd incorporated as its wholly-owned subsidiary by Amal Ltd, an associate company of the Company.

(K) Financial Parameters

Revenue grew at CAGR 8% p.a. over FY12 to FY21. However, the PAT grew at CAGR 24% p.a. from FY12 to FY21. Moreover, The Company has almost Debt free since past 10 FYs.

Over the Years, PAT Margin Increased sharply and strongly. In FY21 company recorded 17.49% of PAT margin compare to 4.96% in FY12.

During FY21, Life science segment witnessed de-growth in sales by 4%, while POC segment witnessed de-growth in sales by 12% on y-o-y basis mainly due to adverse impact of Covid-19 pandemic.

(i) Performance in last 4 Quarters

Atul Ltd - Performance in last 4 Quarters

(ii) YOY performance

Atul Ltd - Performance in last 4 Quarters

(L) Management Discussion and Concall Highlights

Management Discussion Highlights

  • During 2020-21, the Company's Board approved Rs 50 cr for buy-back of 74,682 equity shares through the open market.
  • Infact, Atul Ltd and along with other subsidiaries acquired 72.94% stakes of Osia Infrastructures Limited amounting Rs 2.68 crore.
  • Company is more focused on targeting retail sales where profitability margins are comparatively better and contribution of retail sales to net sales marginally increased to 9% in FY21 from 6% in FY20.
  • During FY21, Atul and Nouryon joined hand each another for the production of Monochloroacetic acid (MCA). MCA is used as an essential raw material for a variety of products, such as adhesives, pharmaceuticals and crop protection chemical.
  • Moreover, recently company has expanded the Manufacturing capacity of Sulphur Black from 9,800 tonnes per annum to 26,000 tonnes per annum.
  • The state-of-the-art integrated plant will produce both, liquid as well as powder formulations. The automated packing and stacking system with zero manual intervention will increase the production efficiency.

Further company launched two new products :

  • (a) NOVATIC Classic Dark Green Pdr and NOVATIC Classic Dark Navy Pdr under the umbrealla of Color Business to offer customised colours for small scale textile clusters.
  • (b) RUCO-THICKENER REAC and RUCO-THICKENER PPET: thickeners for textile printing.

-Concall Highlights - Q3FY22

  • In Q3FY22, the Revenue came at Rs 1380 Cr against Rs 1250cr in Q2FY22, witnessing a Strong growth of 10% QoQ.
  • EBITDA for the quarter was at Rs 257 crore, with margins coming at 19% (Decline 1% from Q2FY22). Margins reduced mainly due to higher input prices and freight cost.
  • The Profit for the quarter was at Rs 157 Cr, witnessing a growth of 7% QoQ.
  • During Q3FY22, A CapEx of Rs 200+ Crore has been incured.
  • Although, Company witnessed strong growth in Colors and Polymers – Performance Materials Businesses lead to 50% growth in Performance and Other Chemicals segment.
  • Company recorded Low demand in Pharmaceuticals Business but good demand in Crop Protection – Bulk Actives Business has helped to achieve 21% growth in Life Science Chemicals segment.

(M) Strength and Weakness


(i) Promoters' experience in Chemicals Industry

Currently, Atul Ltd is headed by third-generation entrepreneur Mr Sunil Lalbhai, Chairman and Managing Director, who is a technocrat and supported by a well-qualified and experienced senior management.

The Board of Atul has a very rich experience in the field of chemicals, petrochemicals, banking & finance, taxation, law, etc.

(ii) Diversified product portfolio and wide user industries

Atul’s operations are classified into two broad segments, Performance and other Chemicals and Life Science Chemicals catering to diversified industries.

However, Company caters its products to textile, paints & coatings, adhesives, dyestuff, agriculture, fragrance & flavours, cosmetic, personal care, tyre, paper, plastic, pharmaceutical, aerospace, composites, construction, glass, etc.

(iii) Diversified clientele Geography

Atul enjoys geographically diversified clientele with its presence through various marketing subsidiaries in Asia, Europe, North America, South America and Africa wherein it serves about 4,000 customers across 92 countries.

Its top 10 customers contributed only 11% of its total net sales during FY21 (PY:15%).

(iv) Shift in product-mix from commodity grade to R&D specialty chemical

Atul has expanded its product portfolio significantly over last few years in the areas of aromatics, crop protection, polymers and pharma intermediates which are speciality chemicals as compared to conventional dyestuff products.

This shift in product-mix has led to better profitability which has also shown greater degree of resilience compared to the scenario of around a decade back.


(i) Volatility in Raw material prices

Majority of raw materials of the company are derivatives of crude oil; hence, the prices of its raw materials vary with the fluctuation in international crude oil prices. For few products, where Atul has large market share, the increase in raw material price can be largely passed on to its customers although with some time lag.

However, Company's profitability is susceptible to fluctuation in international crude oil prices on many of its product segments; although, over a period of time, with greater product diversification, Company has demonstrated relatively good resilience against crude oil price volatility.

Additionally, Atul faces competition from China in its aromatics sub-segment, however, it has fairly good market presence in two key products of this segment, i.e., para-Cresol and para-Anisic Aldehyde. Furthermore, Atul is also dependent on China for certain key intermediates required by its crop protection and dyestuff sub-segments.

(ii) Fluctuations in Foreign Exchange Rate

46% of revenue accounts from exports which raise the question of fluctuation in foreign exchange market However, it enjoys benefit of partial natural hedge with imports of around 33% of its raw material requirement.

(iii) Capital Intensive

Atul has set up a wholly-owned subsidiary company in the name of Atul Products Limited for establishing caustic soda plant and captive coal-based power plant wherein investment of Rs.700 crore is expected by FY23.

Additionally, Company has envisaged to incur large-size capex of around Rs.400-550 crore pa in the next three years-ending FY24 towards increasing manufacturing capacity.

(iv) Categorized under producing harmful products

In May 2020, The Ministry of Agriculture and Farmers ‘Welfare issued a notification for the placing of 27 insecticides into banned category.

From the list of these 27 insecticides, Atul is engaged in the manufacturing and sales of 2,4 D herbicide which comprises around 50% of the total sales of its crop protection segment, i.e., around Rs.310 crore.

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References:  Annual Reports, News Publications, Investor Presentations, Corporate Announcements, Management Discussions, Analyst Meets & Management Interviews, Industry’s Publications.

Disclaimer: The report only represents personal opinions and views of the author. No part of the report should be considered as recommendation for buying/selling any stock. Thus, the report & references mentioned are only for the information of the readers about the industry stated.

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