Tatva Chintan Pharma Chem IPO: Anti-China sentiment across the globe maybe a boon for this speciality chemical company

Tatva Chintan Pharma Chem IPO: Anti-China sentiment across the globe maybe a boon for this speciality chemical company
  • The speciality chemical manufacturing company is looking to raise ₹500 crore through the public issue.
  • The company earns 30% of revenue from pharmaceutical and agrochemical intermediates and other specialty chemicals (PASC), which are basically export orders shifted from China to India.
  • Tatva Chintan Pharma Chem manufactures a range of products in speciality chemicals that serves various industries including the automotive, petroleum, pharmaceutical, agro chemicals and so on.
The Gujarat-based speciality chemical company, Tatva Chintan Pharma Chem, is coming up with an initial public offering (IPO) on July 16. While the company earns a large portion of revenue from exporting, the whole anti China product sentiment has proved to be a boon for the company.

In an interview with Business Insider ahead of the IPO, Mahesh Tanna, chief financial officer (CFO) at Tatva Chintan Pharma Chem shared that pharmaceutical and agrochemical intermediates and other specialty chemicals (PASC) segment is getting almost 30% of revenues from countries that have been looking for alternatives other than Chinese products.

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This particular PASC category includes specialty chemicals which are used as intermediates, disinfectants, catalysts and solvents.

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“China Plus one policy is what is actually the reason why we have this whole segment of pharmaceutical and agrochemical intermediates and other specialty chemicals (PASC)... our existing customers are largely pharmaceutical and agrochemical companies who are heavily dependent upon supplies from China. Post this environmental issue that happened in China and China Plus One policy, we were given this opportunity if interested we can look into developing pharma and agrochemical intermediates what they were looking for...Today, this PASC segment is contributing almost 25-30% of our revenues. This segment did not exist before 2006,” said Tanna.

China Plus One is the business strategy to avoid investing only in China and diversify business into other countries.

Tatva Chintan Pharma Chem receives 70% of the revenue from exports to over 25 countries including the USA, China, Germany, Japan, South Africa, and the UK, whereas the rest 30% comes from domestic markets.

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PASC segment delivered 30.37% revenue in FY21, 29.06% in FY20 and 42.39% in FY19.

Further, the company’s exports dropped in FY21 leading to lockdown restrictions.

Tatva Chintan Pharma Chem IPO: Anti-China sentiment across the globe maybe a boon for this speciality chemical company


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During the first two months of COVID-19, it was a big challenge in terms of logistics although the factory was permitted to work. Sales in exports were definitely impacted from April to September 2020 primarily because of logistics. However, from October end everything came back to normalcy, said Tanna.

Commenting on the impact of another complete lockdown, Tanna said in the second lockdown there was zero impact on industrial activities. So, if any lockdown happens pertaining to COVID-19 probably in 2021, it should not create any problem for them.

He showed optimism about the chemical sector overall and believes the growth trend will continue like the last three years.

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Financials of Tatva Chintan Pharma Chem in last three financial years

ParticularsFY21FY20FY19
Total Revenue300264206
Profit After Tax523720
(in rupees crores)

The company will utilise the proceeds from the IPO towards expansion of its Dahej manufacturing unit and for upgradation of research and development (R&D) facility in Vadodara.

Moreover, it is looking at opportunities in greener technologies which is more sustainable and environment friendly chemistry.
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Here are the lot size for application of the IPO

ApplicationLotsSharesAmount (cut off)
Minimum11314,079
Maximum141821,97,106

The speciality chemical manufacturing company is looking to raise ₹500 crore with a price band of ₹1,073-1,083 through the public issue.

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Here are the important dates related to the IPO
IPO open dateJuly 16
IPO close dateJuly 20
Allotment dateJuly 26
Initiation of refundsJuly 27
Credit of shares to demat accountJuly 28
IPO listing dateJuly 29

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