Rubber Industry

Is Apcotex Industries Ltd a Monopoly in Synthetic Rubber ?

Transformed itself into a niche synthetic latex manufacturer.

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(A) About

Apcotex Industries Ltd (AIL) is one of the leading manufacturers of Synthetic Rubber (NBR & HSR) and Synthetic Latex (Nitrile, VP Latex, XSB & Acrylic Latex) in India. Started as a division of Asia Paint in 1980 to produce vinylpyridine latex and carboxylated styrene butadiene latex in India.

It has transformed itself into a niche synthetic latex & rubber producer and as of today the company is one of the few companies to produce broadest range of emulsion polymers.

Apcotex also has a strong global presence in South East Asia, Middle East & Africa and intends to tap the Asian Markets.

(B) Journey

Apcotex Industries Ltd - Journey

(C) Board Members of Apcotex Industries Ltd

(i) Mr. Atul C. Choksey - Chairman

Mr. Atul C. Choksey is currently the Chairman of the company. He is a Chemical Engineer from the Illinois Institute of Technology, Chicago, USA.

Moreover he served as the Managing Director of Asian Paints Limited from April 1984 to August 1997. Over the years he has served on the Boards of Marico Limited, Finolex Cables Limited, Blue Star India Ltd. and the Asian Board of the Wharton Business School.

He is currently an Independent Director on the Board of Ceat Ltd.

For FY22Remuneration received Rs 1.13 Cr which is 0.13% of Net Sales and 1.32% of Net Profit.

(ii) Mr. Amit C. Choksey - Director

Mr. Amit C. Choksey is the director of the company. He is currently 67 years old.

Moreover, he is a Commerce Graduate from Bombay University and has over 30 years of experience in managing industries manufacturing various types of construction chemicals, specialty water proofing compounds and inorganic pigments. He is also the Chairman of Mazda Colours Ltd.

For FY22, he received Setting Fee of Rs 1.5 lakh which is 0.00% of Net Sales and 0.01% of Net Profit.

(iii) Mr. Abhiraj A. Choksey - Managing Director

Mr. Abhiraj A. Choksey is presently the managing director of the company. He is 44 years old.

Moreover, he is a Bachelor of Science in Economics from Wharton Business School and also Bachelor of Science in Engineering from University of Pennsylvania USA.

He has worked for the company since 2005 in a variety of capacities, and as of May 2010, he has held the position of managing director. Further, he is on the Executive Committee of the Indian Chemical Council (ICC), and an active member of Young Presidents’ Organization (YPO) and Entrepreneurs’ Organization (EO).

For FY22Remuneration received Rs 1.13 Cr which is 0.11% of Net Sales and 1.14% of Net Profit.

(iv) Mr. Ravishankar Sharma - Director

Mr. Ravishankar Sharma is the Director of the company.

He is a Chemical Engineer from Laxminarayan Institute of Technology, Nagpur, and PGDBM from Goa Institute of Management, Goa (Executive MBA) in 2009 and has more than 30 years of rich experience in the field of Production, Projects, Specialty Chemicals, operations and Manufacturing.

For FY22Remuneration received Rs 0.69 Cr which is 0.07% of Net Sales and 0.69% of Net Profit.

(D) Shareholding Pattern of Apcotex Industries Ltd

Apcotex Industries Ltd - Shareholding Pattern
Apcotex Industries Ltd - Promoters shareholding
Apcotex Industries Ltd - Public shareholding

(E) Product Segment of Apcotex Industries Ltd

Apcotex Industries Ltd - Product Segment

(i) Synthetic Latex

Synthetic latex is made from downstream petrochemicals, while natural latex is made from rubber plantation.

Company's latexes which include Styrene Butadiene latex, VP latex, Styrene Acrylic latex and Nitrile latex cater to various industries like Paper/ Paperboard, Carpet, Tyre and Construction. The performance of each synthetic latex differ from industry to industry based on their characteristic, application, and polymer type.

The industries where synthetic latex are used in paper, carpet, construction, tyre cord, gloves and also in specialty applications.

(ii) Synthetic Rubber

Synthetic Rubber is an artificial elastometer which are mainly polymers synthesized from petroleum by-products. Its produces various kinds of Synthetic rubber from cold NBR to hot NBR.

The company's products include Nitrile Rubber (NBR), which is used in the automotive industry, NBR Polyblend is used for general-purpose automotive and industrial moulding, High Styrene Rubber offers a range of hardness levels and excellent processibility for Hawaii slippers and Micro-cellular sheets, and NBR Powder is used to join sheets, modify PVC, make brake pads, friction materials, adhesives, and other rubber applications.

Aiming to build its own Brand

Apcotex Industries Ltd - Apcobuild

Apcotex Industries Limited under the umbrella brand “ApcoBuild” is servicing the construction chemical space in the western region of India so far with a significant presence in Mumbai with large waterproofing contractors and through a network of distributors. Its core strength is in the waterproofing range of products.

(F) Revenue Mix of Apcotex Industries Ltd

(i) Segment wise Revenue of Apcotex Industries Ltd

Apcotex Industries Ltd - Revenue Mix

The acquisition of OMNOVA solutions gave Apcotex a dominant position in Synthetic Rubber and access to proprietary Nitril Latex manufacturing technology. Apcotex's experience with Styrene and Butadiene, as well as its technique to emulsify oil with water, places a considerable barrier to entrance for competitors.

Significant client stickiness is a result of leading market share across end-user industrial segments and a service-driven approach. Emulsion Polymer also has a wide range of applications, and its leadership position in Nitrile Rubber indicates that it will have a large scale in the medium to long term.

(ii) Industry wise Revenue of Apcotex Industries Ltd

Apcotex Industries Ltd - Industry wise revenue

The Company’s Synthetic Latex products are also use for tyre cord dipping, paper and paperboard coating, carpet backing, concrete modification/ water proofing, non-wovens, textile finishing, paints, gloves and for other specialty applications. Synthetic Rubber finds application in products such as footwear, Automotive components, rice rolls, moulded items, v-belts, conveyor belts, hoses, etc.

Moreover no single industry contribute more then 20% to its revenue.

(iii) Geographical Revenue Segmentation

Apcotex Industries Ltd - Geographical Revenue

(G) Manufacturing Capacity

Apcotex Industries Ltd - Manufacturing Capacity

The firm plans to increase its capacity for synthetic latex from 65,000 MT in FY22 to 1,30,000 MT by FY24. This includes a brownfield expansion plant for nitrile latex at its Taloja facility, which will have an additional 60,000 MT of capacity when fully operational by the beginning of FY24. The company also plans to increase capacities for Nitrile Rubber to cater to domestic and export market.

(H) Cost Structure

Apcotex Industries Ltd - Cost structure

Company is capital intensive where raw material contribute 67.29%, employee cost contribute 4.45%, finance cost 0.43% meanwhile other expenses account to 14.25%.

Apcotex Industries Ltd- Cost of Raw material

Raw material contributes the most i.e. more then 60% so any change in prices of raw material can impact the most to the margins.

(I) Peer Comparison of Apcotex Industries Ltd

Apcotex Industries Ltd - Peers Revenue

When we compare Apcotex Industries with its global peers like Synthomer, Trinseo, Celanese Corp and Nantex Ind there seems to be a huge gap in terms of revenues and penetration levels in the domestic market.

Emulsion Polymers contain 50% water, which results in high transportation cost. Therefore, Apcotex has its plants in close proximity to the markets, which in turn has protected it from import competition and enabling it to establish a formidable presence in its core competency.

(J) Financials

(i) Financial Trend

The company's revenue grew at a CAGR of 13.48% and PAT at a CAGR of 54.44%.

Moreover, the company archived total revenue of Rs 964.78 Cr in FY22 compared to Rs 545.82 Cr. The company exported its product worth Rs 202.78 Cr during the year (~21% of the revenue). In which 35% of revenue growth comes in value terms and 77% in volume terms.

(ii) Du Pont Analysis

Apcotex Industries Ltd - Du pont analysis

Company is continuously improving its PAT margins in last 10 years. Meanwhile the Assets to equity increase from 1.48 to 1.53 as it has increase its debt to equity from 0.05 to 0.13 from FY21 to FY22.

(K) Management Discussion & Concalls


  • Company has developed Nitrile latex for gloves which was successfully scaled up in FY2020-21 and is currently only manufactured by the company in India.
  • Moreover, Asia Pacific leads production of the global synthetic rubber industry with the automobile sector leading the growth.
  • Meanwhile, with increasing R&D investments backed by strong infrastructure, the country is poise to become a leader in rubber product manufacturing.
  • Since 70% of Nitrile Butadiene Rubber (NBR) in India is imported, there is considerable potential for Indian Nitrile Rubber manufacturers.

Concall Highlights - Q1 FY23

  • Apcobuild has grown quite well in high double digits.
  • Meanwhile, company was able to pass on all the price increase which helped them to maintain margins.
  • Moreover, EBITDA per ton grew by 25% YoY.
  • In the long run medical gloves industry is going to grow at double digits.
  • Meanwhile, in Q1 export contributed to 18-19% a growth of 27% YoY.
  • Due to uncertain levels now, going forward the next 6-9 months with lot of issues in the world it thinks margins may effect from time to time.
  • Meanwhile, to deal with this situation company is diversified in various industries.

Expansion Plan

Apcotex is aiming to double its Synthetic Latex capacity from 65,000 MT in FY22 to 1,30,000 Mt by FY24 which includes a brownfield expansion plant for Nitrile latex.

And also an additional capacity of 60,000 MT at its Taloja facility which will commissioned in Q1 FY23. The company also plans to increase capacities for Nitrile Rubber to cater to domestic and export market.

(L) Strengths & Weaknesses


(i) Experienced promoters and strong position in domestic synthetic rubber and synthetic latex market:

The business began as a division of Asian Paints (India) Limited in 1980. In 1991, it was separated from the business, headed by Mr. Atul Choksey who was also the former Managing Director of Asian Paints Limited. Mr. Choksey has more than four decades of experience in the paints and chemicals industry.

Moreover, management of the company are technocrats who are experts in the field of chemicals, bring valuable experience to the company.

(ii) Diversified clientele across various end-user industries:

The company's clientele has remained diversified with the top 10 customers contributing ~30-35% of the revenues in the last two years. The products find application in various industries such as paper and paperboards, gloves, textiles, carpet, construction, tyre cord, footwear, automobile, and rice roll. In addition, the company has developed strong relationships with reputed players across these industries.

(iii) Expansion in latex division has helped company diversify product profile:

Synthetic latex used in industries like paper/paper board, carpet, construction, tyre cord, specialty etc. The company is also the only Indian manufacturer of XNB Latex used in gloves. Moreover there are only five to six international companies with the same technology as Apcotex.


(i) Vulnerability of profitability to volatility in raw material prices and forex fluctuations:

Raw material consumption accounts for ~70% of the sales, exposing AIL’s profitability to price fluctuation risks. Moreover, its key raw materials - styrene, butadiene and acrylonitrile – have witnessed high price volatility in he past. Further, the company is exposed to forex fluctuation risk owing to significant exports and imports; though the same is mitigated by a natural hedge and appropriate forward cover contracts.

(ii) Intense competition from domestic players and overseas suppliers:

The company faces competition from domestic players in the synthetic latex segment as well as from imports across all its segments. The company's profitability suffered in FY2020 as a result of aggressive NBR dumping by foreign suppliers.

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

Disclaimer: The report only represents the personal opinions and views of the author. No part of the report should be considered a 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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