PRIVI SPECIALITY CHEMICALS LIMITED Annual Report 2020-21

45 Annual Report 2020-21 CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS Company Overview Privi has state-of- the-art integrated manufacturing facilities both at Mahad in Maharashtra and at Jhagadia in Gujarat with knowledge, expertise and capacity to perform critical reactions like; Hydrogenation, Condensation, Grignard reactions, as well as unit operations like Pyrolysis, Reactive Distillation, High Vacuum Distillation, Continuous Distillation to deliver consistency in odor and prescribed key parameters in an industry driven by stringent olfaction standards.Privi enjoys a dominant position and economies of scale in its product categories. Privi started manufacturing aroma chemicals in the year 1992 with only two products, which it gradually expanded to a range of over 50 products today, having a capacity of over 32,500 tons per annum. Privi also develops and produces custom-made aroma chemicals as per specific requirement of the customer. The research specialists at in-house R&D center continuously thrive to develop new products and processes. 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). Privi Speciality Chemicals Limited (Formerly known as Fairchem Speciality Limited) is ISO 9001:2015 certified and also ISO 14001:2015 certified for its Environmental Management System (EMS) and has a ISO 45001:2018 standard Certification Accredited by Bureau Veritas (Occupational Health & Safety Management System (OHSMS) for all Manufacturing Units in Mahad from Bureau Veritas. Building barriers to entry/ Competition risk Your Company has been in the business of supplying Aroma chemicals to global companies for about two decades and therefore has considerable in-house expertise and knowledge of the olfactive requirements of various global and regional customers. Further, your 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. These factors provide distinct competitive advantages to your Company, against a new entrant or existing aroma chemical manufacturers. Your company has done research on various components of the CST & is working on making value added products from these inputs which can be supplied to the Flavour & Fragrance industry. Risk management Foreign exchange rate risk Owing to multiple global factors, exchange rates have been very volatile, including the exchange rate between the Indian Rupee and the U.S. Dollar. While your Company depends on over 70% of the raw materials by imports, it also exports over 70% of the finished goods. Thus, your Company has a natural hedge against the depreciation of the Indian Rupee against the US dollar, after accounting for some of the borrowings which are denominated in dollars. Pricing and availability of raw materials: The pricing of key raw materials also varies considerably during the year, and the recent uncertainties add to further risks. Your Company, as a strategy, continues to enter into a half yearly or annual contracts for raw materials and finished products to mitigate the risks. Market Risk Further, your Company has increased capacities of key products as well as installed new capacities for certain niche specialty aroma chemicals to stay ahead of its competition. Your Company continues to be a leading producer globally in three flagship products: Dihydromyrcenol, Amber Fleur and Pine Oil. All these products are made in the fully integrated manufacturing facilities of the Company, starting from the CST to the finished products and are essential ingredients in the manufacture of fragrances. Your Company continues to be the largest single CST processing site in Asia, which has enabled it to progress under the current volatile situation with respect to raw materials. CST also allows it to be self-sufficient in key raw materials.