Jubilant Ingrevia Ltd:Annual Report 2023-24 Analysis

Jubilant Ingrevia Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

• Formerly Jubilant Life Sciences, the demerger led to the formation of Jubilant Ingrevia in 2021. The original company, Jubilant Organosys Ltd., was established in 1978.

Headquarters Location and Global Presence:

• Headquarters: Noida, Uttar Pradesh, India
• Global Presence: Operates in global markets, serving customers across various geographies. Specific details on country-wise presence require more data.

Company Vision and Mission:

• Vision: To be a globally admired, integrated Life Science Company, offering a comprehensive range of innovative products and solutions. (This is the vision of the larger Jubilant Bhartia Group, but aligns with Ingrevia’s focus)
• Mission: To create value for stakeholders through Science, Technology & Innovation, while improving the quality of life. (Again, a broader group mission, but relevant)

Key Milestones in Their Growth Journey:

• 1978: Jubilant Organosys Ltd. established.
• 2021: Demerger of Jubilant Life Sciences leading to the creation of Jubilant Ingrevia focusing on Specialty Chemicals, Nutrition & Health Solutions, and Life Science Chemicals.
• Continuous expansion of manufacturing capacities and product portfolio over the years.

Stock Exchange Listing Details and Market Capitalization:

• Listed on the National Stock Exchange of India (NSE) and the Bombay Stock Exchange (BSE)
• Market Capitalization: Varies dynamically; check real-time stock data.

Recent Financial Performance Highlights:

• Information on recent financial performance would need to be obtained from their quarterly and annual reports, along with investor presentations. Look for revenue growth, profitability metrics, and key financial ratios.

Management Team and Leadership Structure:

• Information about specific individuals in the management team is dynamic. Consult the company’s website or annual reports.

Notable Awards or Recognitions:

• Information on awards or recognition requires accessing recent company releases or publications.

Their Products #

Complete Product Portfolio with Categories:

• Specialty Chemicals: Focusing on pyridine and picolines, diketene derivatives, and acetic anhydride. Used in agrochemicals, pharmaceuticals, and other industries.
• Nutrition & Health Solutions: Includes Vitamin B3 (Niacinamide and Niacin), animal nutrition products, and other nutraceutical ingredients.
• Life Science Chemicals: This segment caters to various applications, providing products and intermediates for the pharmaceutical and agrochemical industries.

Flagship or Signature Product Lines:

• Pyridine and Picolines are a strong offering.
• Vitamin B3 (Niacinamide and Niacin).

Key Technological Innovations or Patents:

• Access to internal R&D and Intellectual Property information would be needed.

Manufacturing Facilities and Production Capacity:

• Operates multiple manufacturing facilities in India. Specific details on capacity figures for each product line are needed.

Quality Certifications and Standards:

• Likely holds certifications such as ISO 9001, ISO 14001, and relevant industry-specific certifications.

Recent Product Launches or R&D Initiatives:

• Consult the company’s recent annual reports, press releases, and investor presentations for details on product launches and R&D activity.

Primary Customers #

Target Industries and Sectors:

• Pharmaceuticals
• Agrochemicals
• Animal Nutrition
• Human Nutrition
• Specialty Chemicals
• Industrial Applications

Geographic Markets (Domestic vs. International):

• Presence in both domestic and international markets. The split between domestic and export revenue varies.

Distribution Network and Sales Channels:

• Uses a mix of direct sales and distribution networks.

Major Competitors #

Direct Competitors in India and Globally:

• Identified competitors for each product segment (Specialty Chemicals, Nutrition & Health Solutions, Life Science Chemicals) would require specialized industry knowledge and market research.

Competitive Advantages and Disadvantages:

• Advantages: Integrated operations, strong R&D capabilities, established customer relationships.
• Disadvantages: Dependence on raw material prices, competition from global players.

How They Differentiate From Competitors:

• Focus on integrated value chains.
• Investments in R&D for differentiated products.
• Strong relationships with customers.

Market Positioning Strategy:

• Aims to be a leading player in chosen segments through product innovation, manufacturing excellence, and customer focus.

Future Outlook #

Expansion Plans or Growth Strategy:

• Focus on expanding capacity in key product lines.
• Investing in R&D for new products and applications.
• Exploring strategic partnerships and acquisitions.

Sustainability Initiatives or ESG Commitments:

• Information on ESG (Environmental, Social, and Governance) initiatives requires access to the company’s sustainability reports or related public disclosures.

Industry Trends Affecting Their Business:

• Increasing demand for specialty chemicals and nutraceuticals.
• Growing focus on sustainability and green chemistry.
• Geopolitical factors impacting supply chains.

Long-Term Vision and Strategic Goals:

• To be a globally recognized, integrated leader in the specialty chemicals and nutrition space.
• Focus on innovation and sustainable growth.

Financial Performance Analysis #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue from Operations: FY24: ₹41,358 million, FY23: ₹47,727 million, FY22 data not available. A decline of 13% YoY in FY24.
• EBITDA: FY24: ₹4,564 million, FY23: ₹5,805 million, FY22 data not available. A decline of 21% YoY in FY24.
• EBITDA Margin: FY24: 11%, FY23: 12.2%, FY22 data not available. A decrease in margin YoY.
• Profit After Tax (PAT): FY24: ₹1,829 million, FY23: ₹3,075 million, FY22 data not available. A decline of 41% YoY.
• Earnings Per Share (EPS) - Basic: FY24: ₹11.6, FY23: ₹19.3, FY22 data not available, 40% decrease.
• Earnings Per Share (EPS) - Diluted: FY24: ₹11.5, FY23: ₹19.3, FY22 data not available.
• Export Earnings: FY24: ₹ 16,933 million, FY23 and FY22 data are not provided.

Business Segment Performance #

• Speciality Chemicals:
  • Revenue: FY24: ₹15,855 million, FY23: ₹17,983 million, A decline of 12% YoY.
  • EBITDA: FY24: ₹2,476 million, FY23: ₹2,841 million, Decline of 13% YoY.
  • EBITDA Margin: FY24: 15.6%, FY23: 15.8%. The margin remained range between 15.5-16%
  • Contributed 38% of total revenue and 49% of total EBITDA in FY24.
• Nutrition & Health Solutions:
  • Revenue: FY24: ₹6,800 million, FY23: ₹5,512 million, An increase of 23% YoY.
  • EBITDA: FY24:₹617 million, FY23: ₹458 million, An increase of 35% YoY.
  • EBITDA Margin: FY24: 9.1%, FY23: 8.3%.
  • Contributed 16% of total revenue and 12% of total EBITDA in FY24.
• Chemical Intermediates:
  • Revenue: FY24: ₹18,703 million, FY23: ₹24,232 million, A decline of 23% YoY.
  • EBITDA: FY24: ₹2,015 million, FY23: ₹2,827 million, A decline of 29% YoY.
  • EBITDA Margin: FY24: 10.8%, FY23: 11.7%.
  • Contributed 45% of total revenue and 39% of total EBITDA in FY24.

Major Strategic Initiatives and Their Progress #

• Capex Execution: Commissioned six projects at Bharuch and Gajraula sites to enhance Speciality Chemicals and Nutrition & Health verticals. Focused on high-value, high-margin products.
• Acetic Anhydride Capacity Expansion: New plant at Bharuch stabilized, adding 60,000 MT capacity, increasing total capacity to 210,000 MT.
• cGMP Multipurpose Plant: Bharuch facility is operational, for producing agro intermediates.
• Diketene Derivatives Plant: A new facility was added to produce high-value derivatives, contributing ~2,000 TPA. Post being commisioned in Q4 FY 2024, the plant is now runing at 80+%.
• Cost and Efficiency Initiatives: “Project Lean” implemented to control costs and optimize working capital, project “Surge” to bring eficiency.
• Renewable Energy: Agreement with M/s O2 Renewables for captive renewable energy sourcing.

Risk Landscape Changes #

• Geopolitical and Macroeconomic Instability: Ongoing con/flicts and Red Sea crisis impacted freight costs and supply chains.
• Agrochemical Sector Volatility: Destocking and oversupply from China affected demand and pricing.
• Nutrition Sector Pricing Pressure: Oversupply from China impacted pricing.
• Cyber Threats: Increased focus on information security and cyber resilience.

ESG Initiatives and Metrics #

• Sustainability Rankings: Achieved 93 percentile in Global Chemical Industry in S&P DJSI Assessment, among top 2 Indian chemical companies. Received a Gold Rating from EcoVadis (95 percentile). Responsible Business Ranking by ET-Futurescape climbed from 23rd to 6th position.
• Renewable Energy: Increased renewable energy share to 30%+ in the next 12-15 months. Targeting 4x increase by FY 2028.
• Biogenic Content: Received +99% Biogenic Content Rating for Green Acetic Acid.
• Environmental: 20% Reduction in overall energy consumption, 6% reduction in specific water consumption.

Management Outlook #

• Cautious optimism for FY25, acknowledging that FY24 challenges have not fully dissipated.
• Expects normalization in the agrochemicals sector in the second half of FY25.
• Anticipates stable demand in the pharmaceutical sector, with potential improvement.
• Sees potential in key regions like Europe and the U.S.
• Plans to commission a GMP-compliant facility for Food and Cosmetic grade Niacinamide by Q3 FY25.
• Remains commited to invest about C 20,000 million by the end of FY 25.

Detailed Analysis #

Financial Position Analysis: Jubilant Ingrevia Limited #

3-Year Comparative Analysis of Assets, Liabilities, and Equity (Consolidated) #

(₹ in million)

Significant Changes in Major Line Items (>10% YoY) #

• Non-current Assets: Increased by 20% from FY23 to FY24, primarily due to increases in Property, plant and equipment, and capital work in progress.
• Total Equity: Increased by 4% due to increase in other equity.
• Non-current Liabilities: Increased by 73% from FY23 to FY24, primarily due to an increase in borrowings.
• Current Assets: Decreased by 2% from FY23 to FY24.
• Current Liabilities: Increased by 5% from FY23 to FY24.

Working Capital Trends #

(₹ in million)

• Working Capital: Decreased from FY23 to FY24, which could be attributed to decreased current assets and increased current liabilities.

Asset Quality Metrics #

• Property, Plant, and Equipment: Significant additions were made, demonstrating ongoing investment in operational capacity.
• Intangible Assets Under Development: Remained at zero, suggesting no significant capitalized development projects.
• No impairment reported on non-financial asset.

Debt Structure and Maturity Profile #

(₹ in million)

• Debt Structure: Increased significantly, particularly in non-current borrowings.
• Maturity schedule for non-current borrowings were given at the end of reporting period.

Off-Balance Sheet Items #

• Contingent liabilities are present in the report.

(₹ in million)

Jubilant Ingrevia Limited Financial Analysis - FY2024 #

Revenue Breakdown #

Segment Revenue #

• Specialty Chemicals: FY2024 revenue ₹15,855 million, a 12% decrease YoY. Q4 FY2024 revenue showed a 30% increase over the preceding quarter.
• Nutrition & Health Solutions: FY2024 revenue ₹6,800 million, a 23% increase YoY.
• Chemical Intermediates: FY2024 revenue ₹18,703 million, a 23% decrease YoY.

Geographical Revenue (FY2024) #

• India: ₹24,338 million
• Americas and Europe: ₹12,008 million
• China: ₹1990 million
• Rest of World: ₹3022 million

Export Revenue #

• 41% of total revenue, amounting to ₹16,933 million.
• Sales in North American markets increased by 19% in FY2024.

Cost Structure Analysis #

• Total Expenditure (FY2024): ₹37,147 million, a 12% decrease YoY.
• Material Cost: Decreased to ₹21,426 million in FY2024 from ₹25,816 million in FY2023.
• Employee Benefit Expenses: Increased to ₹3,840 million in FY2024 from ₹3,435 million in FY2023.
• Other Expenses: Decreased to ₹11,882 million in FY2024 from ₹13,005 million in FY2023.
• Cost Savings Initiatives: Estimated at ₹1200-1400 million on an annualized basis.

Margin Analysis #

EBITDA Margin #

• FY2024: 11%, a decrease from 12.2% in FY2023.
• Specialty Chemicals: 15.6% in FY2024, a slight decrease from 15.8% in FY2023.
• Nutrition & Health Solutions: 9.1% in FY2024, an increase from 8.3% in FY2023.
• Chemical Intermediates: 10.8% in FY2024, a decrease from 11.7% in FY2023.

Net Margin #

• 4.4% in FY2024, down from 6.4% in FY2023.

Non-Recurring Items #

• One-time transitional write-off of brought forward minimum alternate tax credit: ₹125.60 million.

EPS Analysis #

• Basic EPS: ₹11.6 for FY2024, down from ₹19.3 in FY2023.
• Diluted EPS: ₹11.55 for FY2024, down from ₹19.33 in FY2023.

Quarterly Trends #

• Speciality Chemicals segment Q4 revenue improved by 30% over the previous quarter, volume-driven.

Cash Management: Financial Analysis #

Cash Flow and Liquidity Analysis #

Operating Cash Flow (OCF) #

• The Group saw an OCF decrease from ₹5,897 million in FY23 to ₹4,861 million in FY24.
• Standalone company saw an OCF decrease from 5,255 to 4,384.

Investing Cash Flow (ICF) #

• The Group’s ICF was negative, with outflows increasing from ₹(4,531) million in FY23 to ₹(5,358) million in FY24.
• Standalone company saw a negative ICF, with the outflows widening from (4,531) to (5,358).

Financing Cash Flow (FCF) #

• The Group’s FCF increased from ₹1,328 million in FY23 to ₹1,906 million in FY24.

Working Capital Management Efficiency #

• The Group’s reported working capital days of sales decreased from 71 to 65.
• The Standalone company’s working capital days of sales reduced to 18% from 22% of sales through focused inventory optimisation.

Capex Analysis by Segment (Standalone) #

• Speciality Chemicals: Capex of ₹2,399.52 million in FY24 and ₹2,944.57 million in FY23.
• Nutrition & Health Solutions: Capex of ₹176.37 million in FY24 and ₹142.31 million in FY23.
• Chemical Intermediates: Capex of ₹985.62 million in FY24 and ₹1,718.28 million in FY23.
• Total capex across all segments was ₹ 3,561.51 million in FY24 and ₹4,805.16 million in FY23.

Dividend and Share Buyback Trends #

• The company declared a 500% dividend (interim and proposed /final) per equity share for FY24.
• Total dividend for FY24 equates to ₹796 million.
• No share buybacks were conducted during FY24 or FY23.

Debt Service Coverage #

• Consolidated debt service coverage ratio decreased from 12.06x in FY23 to 4.07x in FY24.
• Standalone, Debt service coverage ratio decreased 7.37% to 2.49%

Liquidity Position #

• The Group’s cash and cash equivalents decreased from ₹577 million in FY23 to ₹119 million in FY24.
• The current ratio of the Group increased to 1.45.

Financial Analysis: Jubilant Ingrevia Limited #

Profitability Ratios (3-Year Trends) #

• Return on Equity (ROE): FY24: 6.77%, FY23: 12.06%, FY22: 13.80%. A declining trend indicates lower profitability relative to shareholders’ equity. FY24 figure is significantly below other segments’ profitability.
• Return on Assets (ROA): FY24: 4.07%, FY23: 7.37%, FY22: 8.41%. Declining, representing reduced profitability relative to total assets.
  • Segment ROA:
    • Speciality Chemicals FY24: 10%, FY23: 15%
    • Nutrition and Health: FY24: 10%, FY23: 8%
    • Chemical Intermediates: FY24: 10%, FY23: 12%
• Return on Invested Capital (ROIC): ROCE is used as a proxy. FY24: 9.32%, FY23: 14.19%. Declining, indicating lower efficiency in generating profits from invested capital.
• EBITDA Margin: FY24: 11%, FY23: 12.2%. A slight decrease year-on-year, reflecting reduced operating profitability before accounting for non-cash expenses.
• Net Profit Margin: FY24: 4.4%, FY23: 6.4%. Showing declining profitability.
  • Segment-wise EBITDA margins:
    • Speciality Chemicals: FY24: 15.6%, FY23: 15.8%
    • Nutrition and health Solutions: FY24: 9.1%, FY23: 8.3%
    • Chemical Intermediates: FY24: 10.8%, FY23: 11.7%
  • Segment-wise revenue share to total revenue:
    • Speciality Chemicals: FY24: 38%, FY23: 38%
    • Nutrition and Health: FY24: 16%, FY23: 12%
    • Chemical Intermediates: FY24: 45%, FY23: 45%

Liquidity Metrics #

• Current Ratio: FY24: 1.42, FY23: 1.56. A slight decrease, but indicates the Group can still cover its current liabilities with current assets.

Efficiency Ratios #

• Inventory Turnover Ratio: FY24: 4.54, FY23: 5.56. A decrease suggests potential issues with inventory management or a slowdown in sales.
• Receivables Turnover Ratio: FY24: 7.17, FY23: 9.32. A decrease indicates a longer time taken to collect receivables, potentially impacting cash flow.

Leverage Metrics #

• Debt/Equity Ratio: FY24: 0.27, FY23: 0.13. An increase, signaling higher reliance on debt financing, which increases financial risk.
• Interest Coverage Ratio: FY24: 5.62, FY23: 12.72. Significantly decreased, reflecting a reduced ability to cover interest expenses with operating profits.

Segment-wise ROCE #

• Speciality Chemicals: FY24: 10.55%, FY23: 12.46%
• Nutrition & Health: FY24: 12.53%, FY23: 11.30%
• Chemical Intermediates: FY24: 8.95%, FY23: 11.62%
  • Indicates that Speciality Chemicals and Chemical Intermediates segments have decreased returns, whereas the Nutrition and Health segment has improved.

Working Capital Ratios #

• Net Capital Turnover Ratio: FY24: 2.30, FY23: 3.36
  • Net capital turnover ratio has decreased, with FY24 seeing 2.30 as compared to 3.36 last year.

Industry Comparisons and Deviations #

• The decline in ROE, ROA, and ROCE are areas of concern, particularly if industry averages are stable or increasing.
• The increase in the Debt/Equity ratio and reduction in Interest Coverage Ratio suggest increased financial leverage and risk, which would deviate negatively if the industry is deleveraging.
• Reduced turnover ratios for inventory and receivables indicate potential operational inefficiencies compared to optimal industry practices.

Business Segment Performance Analysis #

Revenue and Profitability Metrics #

• Specialty Chemicals: FY24 revenue was ₹15,855 million, a 12% decrease YoY. Q4 FY24 revenue showed a 30% increase over the preceding quarter. EBITDA margin remained relatively stable at around 15.6-16%. EBITDA decreased 13% YoY.
• Nutrition & Health Solutions: FY24 revenue was ₹6,800 million, a 23% increase YoY. EBITDA was ₹617 million, a 35% increase YoY. EBITDA margin was 9.1%.
• Chemical Intermediates: FY24 revenue was ₹18,703 million, a 23% decrease YoY. EBITDA was ₹2,015 million, a 29% decrease YoY. EBITDA margin was 10.8%.

Market Share and Competitive Position #

• Speciality Chemicals: Jubilant Ingrevia is #1 globally in 18 pyridine derivatives and in Pyridine + Beta Picolines and is the only non-Chinese player with substantial scale in Pyridine. The company serves 15 of the top 20 global pharmaceutical companies and 7 of the top 10 global agrochemical companies.
• Nutrition & Health Solutions: The segment is among the top two global players in Vitamin B3 and a domestic leader in Vitamin B4.
• Chemical Intermediates: The company states it is the Global leader in Acetic Anhydride and holds substantial market share in India and Europe. Globally #2 in Acetic Anhydride Merchant Market.

Key Products/Services Performance #

• Speciality Chemicals: Pyridine-based products and Diketene derivatives showed volume growth. The CDMO segment demonstrated high traction.
• Nutrition & Health Solutions: Niacinamide volumes increased, driven by market demand, particularly in cosmetics and food-grade segments. Food & cosmetics grade products registered significant volume growth. New products, including food-grade Choline Chloride and Choline Bitartrate, were introduced.
• Chemical Intermediates: Acetic Anhydride volumes were stable, although pricing was soft. Market share for Acetic Anhydride and Propionic Anhydride improved in Europe.

Geographic Distribution and Market Penetration #

• Specialty Chemicals: Approximately 38% of revenue comes from exports in regulated markets.
• Nutrition & Health Solutions: Approximately 46% of revenue comes from exports in North American and European markets.
• Chemical Intermediates: Approximately 23% of revenue is from exports in regulated markets.
• Overall: The company serves customers in 60+ nations. Sales in North American markets saw a substantial increase. 41% of the total revenue is from exports.
• New oilfield chemicals market were developed in Middle East and North America.

Segment-wise CAPEX #

• Total CAPEX of ₹13,800 million was spent, out of an announced ₹20,000 million, with the remainder to be spent by FY2025. Two-thirds of the investments were in Specialty and Nutrition business. Commissioned six projects related to Specialty Chemicals and Nutrition & Health.

Operational Efficiency Metrics #

• Project Lean: Helped control costs and reduce working capital to 18% of sales through inventory optimization.
• Project Surge: Digital initiatives aimed to enable transformation of business processes across manufacturing, supply chain, and sales.
• Energy Efficiencies : Focus is put on energy efficiency to reduce the dependency of fossil fuels.
• Cost Savings Initiatives: Aiming for cost savings of ₹1,200-1,400 million annually.

Growth Initiatives and Challenges #

• Growth Initiatives:

  • “Pinnacle 3.4.5” strategy aims for 3x revenue growth and 4x EBITDA growth in the next 5 years.
  • Focus on expanding the Speciality Chemicals segment, particularly CDMO, fine chemicals, and Diketene derivatives.
  • Expansion in Nutrition & Health Solutions, with a focus on human nutrition and higher-grade products.
  • Continued investment in CAPEX to support growth in high-potential categories.
  • Geographic Expansion: Expanding Market Reach by expansion in new geographies for Pyridine and Picoline & Their Derivatives.

• Challenges:

  • Global economic slowdown and permacrisis conditions, including geopolitical instability and supply chain volatility.
  • Pricing pressure in the agrochemical and nutrition sectors due to oversupply from China.
  • Increased freight costs due to the Red Sea crisis.
  • Destocking in Agrochemicals.

Risk Assessment: Jubilant Ingrevia Limited #

Speciality Chemicals Segment #

Strategic Risks #

• Severity: High
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Diversifying product portfolio, geographic expansion, and vertical integration.
• Control Effectiveness: Partially effective
• Potential Financial Impact: Revenue decreased by 12% YoY (FY2024 vs FY2023), but Q4 FY2024 showed a 30% increase over the preceding quarter.

Operational Risks #

• Severity: Medium
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Project Lean, Project Surge, Business Excellence programs, Energy Efficiency initiatives, Safety improvement programs.
• Control Effectiveness: Effective
• Potential Financial Impact: Cost-saving initiatives projected to yield ₹ 1,200-1,400 million annually.

Financial Risks #

• Severity: Medium
• Likelihood: Medium
• Trend: Stable with some increase
• Mitigation Strategies: Capex execution is on track.
• Control Effectiveness: Partially effective.
• Potential Financial Impact: EBITDA margin remained relatively stable at 15.6%-16%.

Compliance/Regulatory Risks #

• Severity: High
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Maintaining certifications (RC 14001:2015, ISO standards), compliance management system with real-time monitoring.
• Control Effectiveness: Effective
• Potential Financial Impact: Not quantified in the report.

Emerging Risks #

• Severity: Medium.
• Likelihood: Medium.
• Trend: Increasing.
• Mitigation Strategies: Investment in R&D.
• Control Effectiveness: To be determined.
• Potential Financial Impact: Currently unquantified.

Nutrition & Health Solutions Segment #

Strategic Risks #

• Severity: Medium
• Likelihood: Medium
• Trend: Increasing
• Mitigation Strategies: Focus on higher-grade Niacinamide, expansion in human nutrition, and targeting regulated markets.
• Control Effectiveness: Positive
• Potential Financial Impact: Revenue increased by 23% YoY, EBITDA increased by 35% YoY.

Operational Risks #

• Severity: Medium
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Backward integration with the Speciality Chemicals segment, leveraging established manufacturing facilities.
• Control Effectiveness: Effective
• Potential Financial Impact: Addressed through segment growth and margin improvement.

Financial Risks #

• Severity: Medium
• Likelihood: Medium
• Trend: Decreasing
• Mitigation Strategies: Focus on higher-value grades.
• Control Effectiveness: High.
• Potential Financial Impact: EBITDA margin improved to 9.1% (from 8.3% in FY2023).

Compliance/Regulatory Risks #

• Severity: High
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Obtaining and maintaining relevant certifications (USFDA, FSSC 22000, GMP, etc.).
• Control Effectiveness: Effective
• Potential Financial Impact: Not quantified in the report.

Emerging Risks #

• Severity: Medium.
• Likelihood: Medium.
• Trend: Increasing.
• Mitigation Strategies: Investment in R&D.
• Control Effectiveness: To be determined.
• Potential Financial Impact: Not Quantified.

Chemical Intermediates Segment #

Strategic Risks #

• Severity: High
• Likelihood: High
• Trend: Stable
• Mitigation Strategies: Focus on cost structure strengthening through digital and analytics initiatives.
• Control Effectiveness: Partially effective
• Potential Financial Impact: Revenue decreased by 23% YoY, EBITDA decreased by 29% YoY.

Operational Risks #

• Severity: Medium
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Digital and analytics initiatives across manufacturing facilities, Project Lean, Project Surge.
• Control Effectiveness: Effective
• Potential Financial Impact: Partially mitigated by cost optimization and manufacturing efficiency improvement plans.

Financial Risks #

• Severity: High
• Likelihood: High
• Trend: Increasing
• Mitigation Strategies: Stabilize new plant.
• Control Effectiveness: Medium.
• Potential Financial Impact: EBITDA margin decreased to 10.8% (from 11.7% in FY2023) due to lower pricing.

Compliance/Regulatory Risks #

• Severity: Medium
• Likelihood: Low
• Trend: Stable
• Mitigation Strategies: Maintaining required certifications and ensuring compliance with environmental regulations.
• Control Effectiveness: Effective
• Potential Financial Impact: Not quantified in the report.

Emerging Risks #

• Severity: Medium.
• Likelihood: Medium.
• Trend: Stable.
• Mitigation Strategies: Not stated.
• Control Effectiveness: To be determined.
• Potential Financial Impact: Not Quantified.

Strategic Analysis of Jubilant Ingrevia Limited #

Long-Term Strategic Goals and Progress #

• Specialty Chemicals: Shifting towards higher-value, higher-margin products. Commissioning new plants for agro intermediates, Diketene derivatives, and a cGMP facility. Aims to be a ‘Partner of Choice’ for global pharmaceutical and agrochemical clients.
• Nutrition & Health Solutions: Expanding beyond animal nutrition into pharma and food-grade ingredients for human consumption. USFDA inspection of Bharuch Facility supports this. New product launches include food-grade Choline Chloride and Choline Bitartrate.
• Chemical Intermediates: Maintaining global leadership in Acetic Anhydride, particularly in the merchant market. Capacity enhancements in Bharuch.
• Overall: Executing a capex plan of ₹20,000 million (₹13,800 million spent to date) to enable 3x revenue and 4x EBITDA within five years.

Competitive Advantages and Market Positioning #

• Specialty Chemicals: Global leadership position in 18 pyridine derivatives. World’s largest non-Chinese player in Pyridine and Beta Picolines. Backward integration with Pyridine and Picoline production provides a cost advantage.
• Nutrition & Health Solutions: Among the top two global players in Vitamin B3 and a domestic leader in Vitamin B4.
• Chemical Intermediates: Global leadership in the Acetic Anhydride merchant market.
• Overall: Vertical integration protects margins.

Innovation Initiatives and R&D Effectiveness #

• All Segments: 3 R&D centers with 131 scientists and 35 chemistry capabilities. 40+ projects in the pipeline and new derivatives are being launched.
• Specialty Chemicals: Focus on new verticals such as semiconductor chemicals. R&D efforts are focused on building and launching new derivatives from Pyridine and Diketene building blocks.
• Nutrition & Health Solutions: R&D is driving expansion into higher-grade Niacinamide (cosmetics, food) and new Choline products.

Management’s Track Record in Execution #

• All segments: Successfully commissioned six new projects during FY2024.
• Speciality Chemicals: Commissioning of a multi-purpose Agro Actives & Intermediate plant and a Diketene Derivatives plant.
• Chemical Intermediates: Stabilization of the new Acetic Anhydride plant in Bharuch, operating with excellent efficiencies.

Capital Allocation Strategy #

• All Segments: Structured approach, focusing on high-potential product categories. Significant capex plan (₹20,000 million) primarily directed towards value-added products in Speciality Chemicals and Nutrition & Health, indicating a shift away from commodity chemicals.

Organizational Changes and Their Impact #

• All segments: Appointment of Deepak Jain as CEO and Managing Director and Chandan Singh Sengar as Co-CEO and Whole-Time Director are strategic moves.
• Cost saving projects initiated: Lean, Surge, Energy Efficiency, Business Excellence, Project Insight.

ESG Framework and Sustainability Analysis #

Environmental Metrics and Targets #

• Overall energy consumption decreased by approximately 20% year-over-year.
• Specific water consumption decreased by approximately 6% year-over-year.
• Renewable energy constituted 30% of total energy consumption, with plans, through signed agreement with M/S 02 Renewables, to reach 4x by 2028.
• Waste Heat Recovery programs are implemented.
• Three of five manufacturing sites achieved zero-liquid discharge.
• Received a +99% Biogenic Content Rating for Carbon C-14 natural content tests for Green Acetic Acid.

Social Responsibility Programs #

• Jubilant Bhartia Foundation (JBF) implements CSR initiatives, focusing on healthcare, education, and livelihood programs.
• Healthcare initiatives reach a population of 480,000 in 186 villages.
• Education support initiatives reach 70,000+ students.
• Aarogya project provides affordable basic and preventative healthcare.
• The “Muskaan” project supports rural education.
• The “Nayee Disha” skill development program targets youth and women.
• The “JubiFarm” initiative promotes agri-business.
• A ‘women buddy Program’ exists.

Governance Structure and Effectiveness #

• The Board of Directors includes a mix of Executive, Non-Executive, and Independent Directors.
• Board committees include Audit, Nomination, Remuneration and Compensation, Stakeholders Relationship, Sustainability & CSR, Risk Management, and Finance.
• A Whistle Blower Policy and Ombudsperson Process are in place.
• An Appointment and Remuneration Policy exists for Directors, KMPs, and employees.
• Annual performance evaluations of the Board, its Committees, and individual Directors are conducted.
• A Code of Conduct for Directors and Senior Management, along with a Code for Prevention of Insider Trading, is established.
• Compliance with relevant Secretarial Standards is maintained.

Sustainability Investments and ROI #

• The Company allocated approximately INR 1,500 million towards environmental, health, and safety initiatives over the past three financial years.
• CAPEX of INR 13,800 million was spent out of an announced INR 20,000 million, with the rest to be spent by FY2025, with new facilities, and plant commissioning, demonstrating investments in growth and expansion, particularly in Speciality Chemicals and Nutrition & Health Solution segments.
• Cost savings up to INR1,200-1,400 million are estimated on an annualized basis from cost and efficiency initiatives.

ESG Ratings and Peer Comparison #

• Achieved 93rd percentile in the Global Chemical Industry in the S&P DJSI Assessment (Score 57/100).
• Ranked among the top 5% of companies globally and top 2 Indian Chemical companies in ESG score.
• Received a Gold Rating from EcoVadis, achieving 95th percentile (Score 73/100).
• Climbed from 23rd to 6th position in Responsible Business Ranking by the joint ET-Future scape 8th Sustainability Index Report.

Regulatory Compliance and Future Preparations #

• The Company is Responsible Care certified.
• Manufacturing facilities are certified under various ISO standards (ISO 9001, ISO 14001, ISO 45001, RC 14001, ISO/FSSC 22000, ISO 50001, ISO/IEC 17025, ISO/IEC 27001), FAMI-QS, FSSAI, GMP, Halal, and Kosher.
• The Company is actively engaging with the Government, industry forums and academia to contribute to developing responsible regulations.
• The company has implemented digital data analytics and visualization projects (Project insight, Project Lean, Project Surge) for increased efficiencies and data backed decision making.
• The Company’s Unit-1 at Bharuch facility underwent a maiden USFDA inspection.

Financial Outlook by Segment #

Specialty Chemicals Segment #

Management Guidance and Assumptions #

• Maintain global leadership in Pyridine and Picolines.
• Achieve a top 3 global position in Diketene derivatives.
• Rapidly scale up CDMO across Europe, US, and Japan, focusing on semi-conductor/electronics opportunities.

Market Growth Forecasts #

• Agrochemical sector: 8-10% CAGR (global).
• Semiconductor chemicals market: Robust growth (specific figures not specified).

Planned Strategic Initiatives #

• Maintain cost leadership in Pyridine and Picolines.
• Attain a top 3 global position in Diketene derivatives through increased capacity utilization (new plant at 80%+).
• Continue rapid scale-up of Pharma & Agro CDMO, exploring new opportunities in Semi-con/Electronics sector.
• Pursue global partnerships to scale Pyrithiones & Piroctone Olamine in Microbial Control Solutions.
• Commissioned a multi-purpose agro actives and intermediate plant.
• New cGMP unit capable and flexible for manufacturing different chemistries.

Capital Expenditure Plans #

• Six projects commissioned.
• cGMP-compliant multipurpose production plant added in Bharuch, Gujarat.
• New Diketene Derivatives plant in Gajraula commissioned (~2,000 TPA capacity).
• Agro-intermediates plant commissioned to cater to global demand.
• ₹13,800 million spent out of ₹20,000 million capex; remainder to be spent by FY 2025.

Efficiency Improvement Targets #

• Project Lean: Optimizing manufacturing costs.
• Project Surge: Digital interventions to improve manufacturing, supply chain, and sales processes.

Potential Challenges and Opportunities #

• Challenges: Agrochemical sector destocking and oversupply from China. Geopolitical risks (Red Sea crisis) increased freight costs.
• Opportunities: World’s largest non-Chinese scaled player in Pyridine. High traction in CDMO (entry into Semiconductor/electronics). New product launches and derivatives in Diketene are driving growth. Aiming to gain market share due to competitor closing in the US.

Sensitivity to Key Assumptions #

• Financial results are sensitive to fluctuations in end-use sectors and supply chain disruptions.

Nutrition & Health Solutions Segment #

Management Guidance and Assumptions #

• Maintain global leadership in feed-grade Vitamin B3.
• Drive for leadership in India and key export markets for Choline Chloride and pre-mixes.
• Build scale in Human Nutrition through focused portfolio, including Choline salts and food-grade vitamins/minerals.

Market Growth Forecasts #

• Indian health and wellness market: 5.5% CAGR (2023-2028).
• Indian animal health market: 9.52% CAGR (2022-2027).
• Choline Chloride market: Over 7.6% CAGR (2024-2032).
• Global cosmetic and personal care product market: 7.9% CAGR (2018-2030).

Planned Strategic Initiatives #

• Rapid scale-up of non-feed B3 products (cosmetic and food grade Niacinamide).
• Build scale in Human Nutrition with focused portfolio (Choline salts, food grade vitamins/minerals).
• Launch new products in Animal Nutrition, including a new line of Vitamin B4.

Capital Expenditure Plans #

• New cGMP-compliant facility for Food and Cosmetic grade Niacinamide planned for commissioning by Q3 FY 2025.
• Development work ongoing for new cGMP-compliant capacity for food-grade Vitamin B4 (Choline Chloride and Choline Bitartrate).

Efficiency Improvement Targets #

• Continuous focus on building platforms and launching new products.

Potential Challenges and Opportunities #

• Challenges: Muted pricing due to excess supply from China.
• Opportunities: Volume growth in Niacinamide, driven by strong market demand and focus on niche segments (cosmetics, food-grade). Expansion of product range with value-added products like food-grade Choline Chloride and Choline Bitartrate. USFDA inspection of Bharuch Unit 1.

Sensitivity Analysis #

• Segment performance is sensitive to pricing pressure from Chinese supply.

Chemical Intermediates Segment #

Management Guidance and Assumptions #

• Maintain global leadership in the Acetic Anhydride merchant market.
• Continue to gain scale/share in focused markets/customers for other products (Ethyl Acetate, Propionic Anhydride, Bio Acetic Acid).

Market Growth Forecasts #

• Global industrial market for Ethyl Acetate: 7.5% CAGR (until 2030).
• Indian market for Ethyl Acetate: 6.7% CAGR (2022-2031).
• Demand for Propionic Anhydride: Robust growth.

Planned Strategic Initiatives #

• Maintain domestic market share for Acetic Anhydride.
• Increase global presence through the new Acetic Anhydride plant in Bharuch.
• Grow market share in Europe for Acetic Anhydride and Propionic Anhydride.

Capital Expenditure Plans #

• New Acetic Anhydride plant in Bharuch operational, adding 60,000 MT of capacity.

Efficiency Improvement Targets #

• Implementation of world-class digital and analytics initiatives to strengthen the cost structure.

Potential Challenges and Opportunities #

• Challenges: Soft prices for Acetic Anhydride, primarily driven by lower demand from Paracetamol and Agro Chemical end-use segments.
• Opportunities: Increased global presence and leadership position in the global merchant market of Acetic Anhydride due to enhanced capacity.

Scenario analysis #

• Financial results are sensitive to price fluctuations of Acetic acid.

Audit and Compliance Analysis #

Auditor’s Opinion #

• Overall: The auditors issued an unmodified opinion on the standalone and consolidated financial statements, indicating a true and fair view in conformity with Ind AS. No qualifications, reservations, or adverse remarks were reported.
• Standalone and Consolidated: The auditors issued an unmodified opinion on the internal financial controls.

Key Accounting Policies and Changes #

• Overall: Accounting policies were applied consistently with those of the previous financial year, to the extent applicable.
• Revenue Recognition: Revenue from the sale of products is recognized upon the transfer of control to customers. Service income is recognized as and when the underlying services are performed.
• Property, Plant, and Equipment (PPE) & Intangible Assets: Freehold land is carried at cost. Other PPE and intangible assets are stated at cost less accumulated depreciation/amortization and impairment. Depreciation is provided on a straight-line basis.
• Impairment of Non-Financial Assets: Assets are reviewed for impairment whenever there is any indication that the assets are impaired.
• Financial Instruments: These are recognized initially at fair value, adjusted for transaction costs, except for those carried at fair value through profit or loss. Subsequent measurements are categorized into amortized cost, FVOCI, or FVPL.
• Employee Stock Option Plan: The Company determined option value, using the Black-Scholes-Merton model.
• Changes: The Company adopted amendments to Ind AS 1, 8, and 12, effective April 1, 2023, related to disclosure of accounting policies, definition of accounting estimates, and deferred tax. These amendments did not have a material impact.

Internal Control Effectiveness #

• Overall: The auditors expressed an unmodified opinion on the adequacy and operating effectiveness of the internal financial controls over financial reporting.
• Specific mention: During the year ended 31 March 2024, the audit trail feature was not enabled at the database level for accounting software used for maintenance of accounting and payroll records, by the Holding Company and its two subsidiaries for the period 1 April 2023 to 30 November 2023.

Regulatory Compliance Status #

• Overall: The Company complied with the provisions of the Companies Act, 2013, SEBI Regulations, and applicable Secretarial Standards.
• Specific mention: the requirement of having at least half of the board of directors as independent directors was not complied with for a period of 4 days i.e., May 16, 2023 to May 19, 2023.
• Tax Compliance: The Company is regular in depositing undisputed statutory dues.

Legal Proceedings and Their Potential Impact #

• Overall: The Company disclosed the impact of pending litigations on its financial position, including contingent liabilities related to excise, customs, sales tax, income tax, service tax, state excise, and other matters.
• Management Assessment: The Company believes that none of these matters, individually or in aggregate, are expected to materially impact its financial statements. Future cash outflows are determinable only upon receipt of judgments.

Related Party Transactions #

• Overall: All related party transactions during FY 2024 were in the ordinary course of business and on an arm’s length basis.
• Disclosure: Details of related party transactions and outstanding balances are provided in Note 37 to the standalone financial statements and Note 36 to the consolidated financial statements.

Subsequent Events #

• The Board of Directors recommended a final dividend of H 2.50 per equity share.