Indian Chemical Industry Projects Quarterly Growth Despite Cold Waves of Covid-19

1. Weekend Edition #TheChemAnalystExpress Indian Chemical Industry Projects Quarterly Growth Despite Cold Waves of Covid Weekend Quick Recap •Crude Oil Melted Down to Negative Values Creating History With 300% Crash •India’s State-Owned Oil Refineries Resumed Work as Restrictions Ease on Nationwide Lockdown •Indian Chemical Industry Players Resumed Operation After Ease in Govt Restrictions •India’s Industrial Oxygen Gas Manufacturers All Set to Serve the Medical Demand •Deepak Phenolics Commenced IPA Production at Its New Facility in Dahej •India’s Tiruppur Unit to Grab Investment Opportunity in the PPE Sector India Impose Taxes on Petrochemicals Import to Protect the Domestic Players In order to protect the domestic manufacturers against any surge in imported volumes caused during the pandemic, the government committee involved in the Indian chemicals ministry is proposing a new tax, which would be effective from 1 May 2020 to 31 March 2021. India is imposing a 15% "Covid-19" tax on selected petrochemical imports to protect its domestic petrochemical industry which is hard hit by the demand slump caused due to the pandemic. The government-linked industry group, Basic Chemicals, Cosmetics & Dyes Export Promotion Council (Chemexcil) is recommending applying the 15% tax over the existing import duties and is also thinking to refund all duties and taxes on exports. The recommendation includes chemicals and petrochemicals imported by India with exemptions expected for ethylene, paraxylene (PX),ethylene dichloride (EDC) and vinyl chloride monomer (VCM). The government body believes that the current situation heads towards a strong price depression on account of aggressive dumping of chemicals from China and other countries, which will force domestic producers to suspend operations and ultimately shut down their plants. Exclusive News & Analysis Indian Chemical Industry FY20 Quarter 4 Review The final quarter of FY20 has been the most uncertain for almost all industries as the outbreak of novel coronavirus screwed up almost all the industrial activities thereby pressurizing the country’s overall economic growth. The GDP growth projections say that the virus is expected to leave the Indian economy battered. As per International rating agency Fitch, world’s GDP growth rate is forecasted to slash by 3.9 per cent in FY21 and hence witness an “unprecedented depth” in the post-war period. The company slashed India’s GDP growth rate to 0.8 per cent in Mar- Apr 2020 forecast. Ind ian Chemical Industry Projects Quarterly Growth Despite Cold Waves of Covid- -19 19

2. INDIA GDP GROWTH RATE PRE AND POST COVID-19 Pre Coronavirus Forecast (Jan-Feb) Post Coronavirus Forecast (Mar-Apr) 5.5 4 1.9 2.5 0.8 6 5.8 5.6 5.4 5 IMF WORLD BANK RBI MOODY'S FITCH Specialty Chemicals-Positive: India’s specialty chemical industries are working out loud to become the next great export pillar for the Indian chemical industry. The demand for specialty chemicals is expected to grow at 12% CAGR from FY19-22. The strong sectoral growth can be anticipated as most of the stocks in specialty chemical sectors have outperformed the benchmark Nifty in the last one month. • Agricultural Chemicals: The domestic agrochemicals industry has witnessed a steady growth in the March quarter as the demand outlook seems positive despite logistic constraints and extended shutdowns. This has been backed by a strong demand due to rabi season, which is expected to partly offset the impact of the shutdown. Favorable raw material prices as the government is taking necessary steps to improve availability of fertilizer to farmers and other bulk chemicals required in the sector. However, a prolonged trade halt has made difficult for domestic players who had been sourcing their raw materials like Insecticides, fungicides directly from China. Some Agro-companies reporting gains: ➢PI Industries, a leading player in the agrochemicals space is opportunistic of the situation as falling fertilizer and chemical imports from China give a way to the domestic players. ➢United Phosphorous Limited, an Indian MNC involved in manufacturing and markets agrochemicals, industrial chemicals and also provides crop protection solutions see an opportunity to seize market share when Chinese Fertilizer imports are restricted in India. •Other specialty chemical producing companies such as those involved into dyes, pigments, basic chemicals and PVC have reported significant profit in their quarterly earnings. The key players like Bodal Chemicals Ltd., Kiri Industry Ltd., Sudarshan Chemicals Ltd. and Akshar Chemicals Ltd. have reported strong gains in the March quarter. Pharma Sector- Mixed Loss and Gains: Pharmaceutical sales have reported healthy earnings in the final quarter of FY20 and registered an 8.9 per cent growth in the month of March. In India’s battle against Covid-19, the pharma sector has made the most of the industrial growth primarily on account of panic buying of medicines and healthcare equipment. Some Pharma companies reporting profits: IPCA saw a 20.9 per cent growth in March followed by Torrent and Ajanta Pharma at 16.2 per cent and 15.2 per cent, respectively. Top Drugs Demand Growth Rate in March(%) 22.9 19.8 18.2 10.5 10.2

3. Losses: Pharmaceutical exports have seen a significant drop owing to the ongoing lockdown and export related restrictions. Indian pharmaceutical companies export about 40-50% of generic drugs and have high penetration in the US and European markets. Due to increased demand for the Indian drugs to treat Covid-19 patients, pharma exports were earlier estimated to touch $22 billion, however, the Pharmaceuticals Export Promotion Council (Pharmexcil) has now expects them to settle between $20 billion and $21 billion, which means $1 billion drop in exported value. Chemicals and Petrochemicals (C&PC)-Major losses and Lesser Gains: Although upstream industries have seen revenues negatively impacted due to crude price crash, downstream players are likely to benefit from the lower refining cost. However, demand destruction and lesser exports have hit the Indian Petrochemical sector hard in this quarter. Among refiners, IOC is expected to be hardest hit by inventory losses as refinery operating conditions remained dull in Q4. Although overall performance of Reliance Industries Ltd (RIL) is likely to stay less affected due to continuous expansions in its consumer businesses, telecom and retail, refining performance in Q4 may show a decline due to lower refining margins. It is expected that BPCL may report a net loss of INR 552 Crore in Q4, while Indian Oil may incur higher losses at INR 2380 Crore. HPCL will witness loss of about INR 630 Crore in the final quarter of FY20 due to huge decline in marketing volumes. ➢ Major Industrial Projects •Linde Signs Pact with Indian Oil Corporation Limited Linde’s wholly owned subsidiary, Praxair India Private Limited, will construct an air separation unit (ASU) to supply oxygen and nitrogen gas to IOCL for its Paradip refinery. The project will enable the expansion of IOCL’s existing refinery into an integrated petrochemical complex. The construction of ASU is likely to get completed in October 2021 and the plant will have a combined total gas capacity of 660 TPD. Praxair currently supplies hydrogen and nitrogen to the IOCL refinery at Paradip. The proposal was mutually accepted keeping in mind that Linde is continuously making an effort to penetrate the Indian market and IOCL is eyeing on Linde AG and Praxair’s combined technology. Linde is known for its world class technology and operational capabilities making it win over its competitors. Mergers & Acquisitions •IICT Collaborates with LAXAI Lifesciences To Reduce Import Dependency CSIR’s Hyderabad based laboratory, IICT (Indian /institute of Chemical Technology) has planned to shake hands with LAXAI Lifesciences, an integrated pharma company based in Hyderabad to develop Active Pharmaceutical Ingredients (APIs) and other chemical intermediates to reduce India’s dependency on imports from China. The coronavirus outbreak has brought a moment of self-realization for the Indian Pharmaceutical Industry which is thinking to reduce its over dependency over the Chinese raw materials. Due to delayed delivery and sudden spike in the prices, Indian pharma industry, the third largest in terms of volume is planning to promote drug manufacturing in India. The collaboration is currently focusing on manufacturing Umifenovir, Remdesivir and a key intermediate of Hydroxy Chloroquine (HCQ) towards nations fight against Covid19. Losses and Gains of C&PC Players: •Shut down in manufacturing operations is likely to weigh on domestic Soda ash manufacturers (like Tata Chemicals) as they have reported a drop in YoY volume and lower prices throughout March quarter. •Some Indian companies that source a majority of their revenues through exports have seen sharp decline in their share prices. Shares of Tata Chemicals, Vinati Organics, Gujarat Fluorochemicals and Gujarat Alkalies have dived up to 63 per cent on y-o-y basis. •Pidilite Industries, Aarti Industries, Atul, Navin Fluorine and Fine Organics have gained up to 9 per cent while Sensex has slid 26 per cent in the same period.

4. Latest Technological Advancements Wison Engineering Services Co. Ltd. announced that it has commenced the first phase of Connell Chemical Industry Ltd.’s new plant and successfully produced ethylene and propylene at the new unit. Wison Engineering signed an engineering, procurement and construction (EPC) contract for the successful installation of the methanol-to-olefins (MTO) plant, having production capacity of 600 KTPA. This project is the first giant chemical project brought on-stream when all the economies are fighting against the Covid-19 crisis. The plant has installed Honeywell UOP’s advanced MTO/OCP reaction technologies and Wison Engineering’s olefin recovery and separation technology –“Pre-cutting + Oil Absorption” process. The integrated process is the most advanced MTO process in the world, featured by advantages of high feedstock yield and low catalyst consumption. Get the Chemical and Petrochemical Industry News on Daily Basis, Weekly-Trend & Forecast and Monthly-Analyst Views Subscribe Today! News on WhatsApp/WeChat/Mail First 15 days free news! WhatsApp No. +91-9914868686 For sales related query, dial +91-9958299626 or +91-8882336899 or email at sales@chemanalyst.com About ChemAnalyst About ChemAnalyst ChemAnalyst is ‘one stop’ online portal that offers comprehensive market intelligence data and in-depth analysis on the Indian chemical and petrochemical industry. Our aim is to provide competitive advantage to the industry stakeholders by offering ‘cutting edge’ information and analysis that help our customers leverage on the emerging opportunities in their businesses. ChemAnalyst’s team of 100+ analysts are engaged in tracking Chemical Prices daily, production capacity, demand and supply outlook, manufacturing plant locations, foreign trade data and news/deals for more than 400 major chemicals produced in India. ChemAnalyst’s Interactive subscription platform provides the most comprehensive data and analysis in your industry to help you decide the future. ChemAnalyst is promoted by TechSci Research (TSR). TSR is an award winning research based management consulting firm providing market research and advisory solutions to the customers worldwide, spanning a range of industries including Chemicals & Material, Automotive, Consumer & Retail, ICT, Energy & Power, Aerospace & Defense, Water and Waste Management, BFSI and more. For more information, please visit us at www.chemanalyst.com