“In order to meet the domestic demand, MDIL started OBA manufacturing in the year 2002, when the majority of domestic requirements were fulfilled by imports… The entry of MDIL had substituted the imports in India to a large extent and has enabled the domestic industry to be self-reliant with regard to the OBA segment.”
In an exclusive conversation with Paper Mart, Mr. Ramesh Patel, Managing Director, Meghmani Dyes & Intermediates LLP, sheds light on the overview of the company- how Meghmani Dyes & Intermediates has built its standing in the paper industry, the product range for the paper industry, the manufacturing capabilities of the company, and their market reach. Furthermore, he also speaks on the various measures the company follows to maintain quality and the challenges with regard to the procurement of raw materials.
Paper Mart: To start with, tell us briefly about Meghmani Dyes and Intermediates, its business journey and important milestones? What makes Meghmani different from its competitors? How do you add value to the paper industry in India?
Ramesh Patel: Meghmani Dyes and Intermediates LLP (MDIL), which was formed in the year of 1979, is part of USD 550 million Ahmedabad-based – Meghmani Group. It started its operations with the manufacturing and export of textile dyes and thereafter added to its product basket other categories of dyes such as vat dyes, acid dyes, direct dyes, petroleum dyes, optical brightening agents (OBA), dyes intermediates such as H-Acid, VS, etc. For FY 20-21, the Dyes and OBA business contributed more than Rs. 1000-cr revenue to the group. This has made MDIL one of the leading players in the Dyes and OBA segment.
“MDIL offers various chemical products used in the paper industry like Optical Brightening agents used for whitening the paper, dyes and pigment emulsion for the colouring and decoration of papers and other auxiliary chemicals such a binders and thickening agents.”
During the journey of the past four decades, Meghmani Group has evolved into a leading manufacturer of chemical products in various verticals like – dyes, pigments, OBA, agrochemicals and established itself as a leading brand globally, with a strong customer base in more than 60 countries. Beginning from a small unit of 750 sq m, Meghmani Group now has a network of 27 manufacturing units across Gujarat and MP, spread over more than a million sq m of industrial space, in addition to a wide supply chain network and sales offices in all the states of the country and in UAE, China, USA, Turkey and Spain.
In order to meet the domestic demand, MDIL started OBA manufacturing in the year 2002, when the majority of domestic requirements were fulfilled by imports and the market was dominated by MNCs which used to import and offer the same to the Indian industries and end users. Thus, the entry of MDIL had substituted the imports in India to a large extent and has enabled the domestic industry to be self-reliant with regard to the OBA segment. It had also encouraged other entrepreneurs to enter into this segment and thus, adding to the export kitty of the country. MDIL operates in all the segments of OBA i.e. for textile, paper, detergent and plastics. The company also offers direct dyes and pigment emulsion used in the paper industry and is planning to offer other paper auxiliary as well in the coming years.
MDIL’s consistent approach to quality, innovative offering and customer satisfaction differentiates it from its competitors. Further, the company also has the strength of backward integration of Di-stilbene, 2FBS, BCMB, certain raw material used in manufacturing OBA. In fact, MDIL is the only company in India to offer dyes in agglomerate form and the only manufacturer to offer OBA in granule form. It also offers various customized product which are fit and ready-to-use products for the customers. Such innovative offerings and sound manufacturing base have helped MDIL to add all the big names of the OBA consumers to its customer list.
“MDIL is also planning to add other products used in the paper industry like auxiliaries, thus, the customers will have the option and facility to source all of their colour and chemical requirements from one reputed source.“
PM: Tell us about the product range for the paper industry and shed some light on the various benefits and unique features offered by your products. What are the key strategies catalyzing your niche in the paper segment?
RP: MDIL offers various chemical products used in the paper industry like Optical Brightening agents used for whitening the paper, dyes and pigment emulsion for the colouring and decoration of papers and other auxiliary chemicals such as binders and thickening agents. In OBA, MDIL offers various types of OBAs like Di-Sulpho for wet end application, Tetra-Sulpho for wet end, coating and size press application, and Hexa Sulpho for size press application.
In the dyes and pigment segment, MDIL offers various direct dyes used in the paper industry and pigment emulsion of violet and blue for tinting purposes. These pigments find wide applications in writing & printing paper, tissue paper for various uses such as facial tissues, paper napkins and more, decorative papers, labels, tags, posters, visiting cards and all types of invitation cards and so is the paper auxiliary chemicals.
The product which we offer is in ready-to-use form like liquids, emulsion, customized colours combination etc. This offers unique advantages to the customers such as they won’t have to manufacture solutions, emulsion or blends at their end, thus, saving them the loss of any material, dusting and spoiling of other products. This also avoids quality issues, as being a manufacturer; we have the expertise to offer homogenous and specification-based products, which can be used instantly unless the user requires any further modification at their end. MDIL also offers pre and post-sales services pertaining to educating about the suitability of the products, SOP for usage etc.
MDIL is also planning to add other products used in the paper industry like auxiliaries, thus, the customers will have the option and facility to source all of their colour and chemical requirements from one reputed source. While colour and chemical is a small fraction of cost in the paper industry, it plays a vital role in maintaining the quality, consistency and reliability and saves time and effort in managing the supply chain.
PM: Tell us about the manufacturing facilities at Meghmani Dyes and Intermediates — specifically units catering to develop products for the paper industry. Could you tell us about your production capacity, recent development and any expansion plans?
RP: MDIL is the only other backwardly integrated OBA manufacturer in India having its own manufacturing facility to make di-stilbene, one of the key raw materials. MDIL have five manufacturing facilities, two at Vatva, Ahmedabad, two at Nandesari, Baroda and one at Padra, Baroda. Out of these facilities, three units manufacture and supply the product related to the paper industry. Further to support the exports demand of the paper industry, MDIL has the support of its group company having its unit in Dahej SEZ. To sum up, MDIL has the capacity to manufacture 15,000 MTPA of active ingredient for OBA (4800 MTPA for the paper industry), 2400 MTPA of direct dyes and 6000 MTPA of pigment emulsion and other auxiliary chemicals.
At present, there has been huge demand destruction due to the COVID 19 pandemic and therefore, the company is not being able to use its 25% capacity for the products used in the paper industry. The writing & printing segment has been the worst-affected sector in the paper industry due to its huge reliance on the education sector as around 60% of the demand of the segment comes from the education and commercial printing segment. As we know that the corporate has cut down on the commercial printings, and also, schools and colleges have not opened and are unlikely to open for this academic year. Further, globally, it is expected that the demand will go down by 4% per annum till 2024 and therefore, we do not have any plans for expansion in the near future specifically for the paper industry product segments. Since we have sufficient capacity, we will wait for one more year to see how things unfold and to what extent the present capacity is being used.
MDIL holds several accreditation and certifications to its name, REACH, Blue Sign, GOTS, ETAD, to name a few. Recently, the company has joined the esteemed club of ZDHC aligning its vision to promote cleaner production.
PM: What is the current market share of Meghmani Dyes and Intermediates — paper segment? What kind of growth do you expect to see in future?
RP: Presently, MDIL has about 5% share in the domestic market for OBA, dyes and pigment emulsion. Going forward, we expect a growth of 10% for us from FY 22-23, though we expect the domestic market for this segment would expand by about 4% every year. The expectation and confidence to outgrow the industry in this segment comes from our efforts and the acceptance of product in the market in the last two years. Further, by the next year, the COVID situation would also improve resulting in the education and corporate sector returning to normalcy, giving rise to an improved market-demand.
PM: How do you maintain the quality of your products? Could you tell us a little bit about the work being done by your R&D team?
RP: We have our own dedicated R&D and Q&C laboratory, which is the biggest amongst the Dyes & OBA manufacturers in Ahmedabad. We have a team of about 20 technically qualified people headed by a senior person of the industry, who remains diligently involved in process improvements and the handling of pre- and post-sales queries and ensures that these are taken care of in the future as well. Our R&D team continuously works on the quality of the product, how it can be made better and offer customized solutions to the customer.
“MDIL has the capacity to manufacture 15,000 MTPA of active ingredient for OBA (4800 MTPA for the paper industry), 2400 MTPA of direct dyes and 6000 MTPA of pigment emulsion and other auxiliary chemicals.“
PM: We all want our papers to be as white as possible. Well, that’s where optical brightening agents come in. Considering the demand for OBA in the paper industry — what challenges do you face when procuring raw material to produce optical brightening agents?
RP: As far as the procurement of raw material for OBA is concerned, we do not face any significant issues or challenges. As I’ve mentioned, we are one of the two backwardly integrated manufacturers for di-stilbene which is one of the two major raw materials that is being manufactured by us. With respect to another raw material – cyanuric chloride, we are the biggest importer in India and since it has applications in agrochemical and other dyes products as well, thus, we have established long term supply contract with major manufacturers. Moreover, other raw materials are also easily available in the country except for some short term hiccups. However, the dumping of the Chinese material or any environmental issue may impact the supply.
Further, as explained above, OBA and dyes constitute a small fraction of cost in the paper industry and India has a huge capacity for OBA, dyes and pigments for papers, therefore, it is quite competitive and is a very low margin business which is impending further investment. Another issue is logistics, as the majority of the OBA and emulsion is transported in liquid form and has higher water content in it and thus, the transportation cost in supply is proportionally higher as we are situated far from the user industry. Aggravating the situation, the pandemic has hit this segment hard and the demand has contracted by about 33%.