Bain Capital-backed Indian chemicals firm eyes US expansion after key acquisition
Novopor Advanced Science Pvt. Ltd, a Bain Capital portfolio company manufacturing specialty chemicals, is looking to expand its footprint in the US after chalking up its first acquisition in the country.
Hyderabad-headquartered Novopor wants to establish itself as a leading global contract development and manufacturing organization (CDMO) in the performance or specialty chemicals and material sciences space, chief executive Radhesh Welling said.
'Now, to be able to do that, we have identified certain unique and relevant capabilities that we need to develop or acquire," Welling said, adding that there was a huge addressable global market for performance chemicals that the company aims to tap. 'We have a huge potential upside here… Unlike agrochem or pharma, it's not a space that is overcrowded."
A CDMO provides various services to pharmaceutical companies for drug development and manufacturing.
The global specialty chemicals market was valued at $640.8 billion in 2023 and is projected to grow to $939.7 billion by 2031, according to Statista. India's overall chemical industry was valued at $250 billion, according to a EY report in December.
On Wednesday, Novopor announced the acquisition of US-based Pressure Chemical Co., an affiliate of the Belgium-headquartered Minafin Group and a leading provider of high-pressure and specialty chemistry services, for an undisclosed amount.
Also read | Why Trump's trade war with China is bad news for Indian chemical exporters
'(Pressure Chemical) has some very unique capabilities with respect to specialized high-end polymerization, organic synthesis, etc… A lot of these capabilities are just completely absent in India," Welling said.
'The main reason was to acquire some of these unique and relevant capabilities. By doing that we can actually strengthen our overall value proposition to the customers we are looking to target in the performance chemical and electronic chemical space," he added.
Novopor does not directly export to the US, although a large number of its clients are based in the US, Welling said. The Pressure Chemical acquisition will help build trust in the US market as Novopor looks to target other global customers, he added.
Pressure Chemical has a mid-sized manufacturing presence in the US, which the company might evaluate for scaling up later, Welling said.
Novopor is also evaluating other strategic acquisitions. 'There are a few in Europe, few in India, but most of them are in the US… There are things in the pipeline in various stages," Welling said.
In 2023, US-based Bain Capital Private Equity acquired a majority stake in Novopor, previously known as Porus Labs, for an undisclosed amount.
Also read | GIC-backed Asia Healthcare Holdings to acquire Dr Dangs Labs
Building partnerships
Some of the challenges to global expansion in the specialty chemicals space include the capabilities companies can offer, Welling said, adding that intellectual properties (IP) are closely held by customers. A majority of performance chemical companies are focused on specific markets.
A majority of performance chemical companies are focused on specific markets, and as a result there is a gap in the capabilities companies can offer, Welling said, adding that intellectual properties (IP) are closely held by customers.
'They are very reluctant to actually give this IP out. They have partnerships with some of the local companies in the US, like the one that we acquired, but typically, they don't like to work with companies outside of the Western hemisphere," Welling said.
'We have identified certain customers who potentially we would like to partner with, and we have identified certain sets of capabilities which are very relevant for these customers," he added.
Novopor aims to grow profitably at an annual growth rate of about 20% over the next few years, Welling said. Crisil Ratings expects Novopor's revenue to have grown to ₹1,100-1,200 crore in 2024-25 from ₹763 crore in 2023-24. 'Operating margins also witnessed an uptick to above 20% backed by scaling up and higher contribution from high margin products," Crisil Ratings said in a February 28 note.
Novopor hasn't yet filed its financial statements for 2024-25.
Some of the largest Indian companies in the specialty chemicals industry include SRF Ltd, which posted a revenue of ₹13,149.7 crore for FY24 (of which 48% came from its chemicals business), Aarti Industries Ltd ( ₹7,012 crore revenue in FY24), and PI Industries Ltd ( ₹7,665.8 crore revenue in FY24).
Welling expects the Indian specialty chemicals industry to see an increase in demand in about a year or two because of the ongoing trade war between the US and China. 'Companies would look at reliable Indian partners as part of a long-term strategy," he said. 'If you also have an Indian company that has a footprint in the US, it's going to be an additional benefit."
Also read | Demand for weight loss drugs is growing. Can wellness companies keep up?
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
32 minutes ago
- Economic Times
How is India benefiting from supply chain diversification away from China? Morgan Stanley's Chetan Ahya explains
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads , Chief Asia Economist,says India is gaining advantage due to tariff differences with China. American companies are considering increased imports from India. Government policies are boosting manufacturing and exports. Electronics manufacturing is expanding beyond mobile phones. Infrastructure development will further strengthen India's manufacturing exports. Optimism in Indian equity markets aligns with positive economic fundamentals. The organization maintains a bullish outlook on think that the government capex has been the key anchor of the capex cycle and to the extent to which India has been embarking on this focus on manufacturing capex, the government's focus on infrastructure would be an important anchor to that private capex eventually improving as now, it is still the government capex and we had seen a bump down or a small slowdown period for government capex post general elections last year. But we have seen that in the last three-four months, there has been a meaningful pick up in government capex. In March, we saw that both central and state government capex growing at a very high pace and that has now taken the 12-month trailing centre plus state combined capital expenditure to close to the peaks that we had seen right before the general have seen this strength in government capex coming back again. As far as private capex is concerned, we were expecting that would have picked up a lot more by this time, but to the extent to which we have seen this trade tensions emerge from early this year that is going to affect the capex outlook not only in the region, but also in India, despite the fact that India has lower exposure to global goods reality is that it still has a meaningful exposure of 12% of GDP being its goods exports to GDP. We are expecting private capex to be going through a bit of an adjustment period in the environment of global trade tensions and then, over the next calendar year, that is, in 2026, we should see a pick up in private capex because by that time, the damage out of this global trade tensions would have been behind is benefiting on account of it. Right now, during a period where tariffs on China, even after having come down, are still at a very high run rate of 30% and from the 2018 period, you also have about 11% weighted average tariff on imports from China that the US has imposed. Cumulatively, we still have a 41% tariff rate for import from China for the US and that does give some sectors an advantage over China in terms of pricing and even sort of thinking about a bit more from a medium-term corporate sector in America is beginning to think about importing more from India. India is probably benefiting on account of that. Then, from a medium-term perspective, we have always argued that look, it is not just about taking away market share from China, but just getting rightful market share for India in the global goods exports and for that India's policies that were important and the government has been taking the right policies to boost that manufacturing sector have seen electronics manufacturing getting a leg up. We are going to see that expand into more and more products within the electronic segment apart from mobile phones and laptops. And at the same time, we think that from a medium-term perspective, this whole push towards infrastructure will really strengthen India's manufacturing exports. It is really a lot of the domestic policies that will be important from the long term apart from the short-term benefit that it may get on account of differential tariff rates between India and our regional and India strategists have been very constructive on India. So, we are aligned up as a house on being bullish on India.
Economic Times
32 minutes ago
- Economic Times
Tariff jitters temporary, long-term upside intact for India Inc.: Deepak Shenoy
Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads "Overall fund flows seem to be more concentrated towards domestic. There is also a lot more action in terms of results and some of these tariff news and all that stuff which is kind of still creating a lot of uncertainty," says Deepak Shenoy , Founder, Capital Mind We saw about 25,000 crores enter the markets as fresh entries into mutual funds in April and given that May was like a 9% plus month for smallcaps and smallcap funds have been the second largest recipient of funds in April, that will kind of bolster more retail investment into domestic funds even that, overall fund flows seem to be more concentrated towards domestic. There is also a lot more action in terms of results and some of these tariff news and all that stuff which is kind of still creating a lot of have come to the realisation that there is a little bit of back and forth and anybody says something about tariffs that is likely to be changed very quickly in whichever direction and mostly in the direction of removing those tariffs in a short period of I feel that in the end we will come down to 10% tariffs by the US to everybody and by and large some countries may receive a little more but I do not think this is going to be a major impact longer we realise this, it is less of an impact overall. The themes that seem to still be working is manufacturing, is financialization , and is maybe defence as themes that hurt perhaps are commodities because a large amount is based on world-wide demand as well, so that theme seems to be constant. I do not think today is any special day in that sense, but we have to be cognisant that as these tariffs come off and as eventually the wars in the world come to some kind of conclusion, the upside for India is definitely strong and I am biased, I am a fund manager, so we have to be positive but some of the positives are going to get more visible in the next six I will be honest. We run a company in this industry and therefore very-very heavily biased. But I still think this is the tip of the iceberg in terms of how much this industry can scale. I would not talk about who the winners will be and who the losers will be, but India is terribly under-financialized. Less than 18% of our GDP is in mutual funds whereas in America that number is more than 100%. So, to a certain extent there is a lot of room for the Indian organised financial industry to move. We are moving away from the real estate, gold, and chit funds kind of products to save into real financial products or financial products of a more regulated sort which has a lot more potential. You are seeing this happening. 25,000 crores a month net new inflows, most of that coming through SIPs This has not slowed down meaningfully even through the fact that the markets have corrected. We have seen more regulatory action that has fortified, so whether it is an RTA, whether it is an AMC, whether it is an exchange, or whether it is a depository all of them are getting more and more prominent in the overall structural framework of now it is becoming more and more easy to transact in them, to deal with them if a person dies transferring a financial product is way easier than trying to transfer say real estate or anything like a lot of these things add up over time and fortify people's minds into saying okay we will do this. You cannot sell half a house, but you could sell half a mutual therefore, people are actually getting more and more into financial products as such and the financial products themselves are investing in different things. You can buy gold through a mutual fund. You can buy stocks through a mutual fund. You can buy bonds and so on. So that way the industry itself has kind of scaled we are also seeing wealth management players, people who manage the money of relatively richer people even those stocks are kind of increasing in value and they are increasing in terms of growth as well, in terms of real profits. So, from that perspective we are yes, maybe we are overpaying for these stocks today, but a structural approach to buy them over a period of time is perhaps necessary for any growth oriented portfolio.
Business Standard
33 minutes ago
- Business Standard
Scoda Tubes is flat on debut
Shares of Scoda Tubes were currently trading at Rs 146.95 at 10:26 IST on the BSE, representing a premium of 4.96% compared with the issue price of Rs 140. The scrip was listed at 140, matching the initial public offer (IPO) price. The stock was currently up 4.96% over its listing price. So far, the stock has hit a high of 146.95 and a low of 136. On the BSE, over 4.34 lakh shares of the company were traded in the counter so far. The initial public offer of Scoda Tubes received was subscribed 53.78 times. The issue opened for bidding on 28 May 2025 and it closed on 30 May 2025. The price band of the IPO is fixed between Rs 130 and 140 per share. The offer comprised a fresh issue of up to 15714286 equity shares at the upper price band of Rs 130 and 16923077 equity shares at the lower price band of Rs 140, aggregating Rs 220 crore. The company proposes to utilize the net proceeds from the issue towards capital expenditure related to expanding production capacity of seamless and welded tubes and pipes amounting to Rs 76.99 crore, funding the part incremental working capital requirements of the company amounting to Rs 110 crore and the balance towards general corporate purposes. The company is expanding capacity of stainless steel seamless products by approximately 10,000 tpa to reach a total capacity of 20,068 tpa and stainless steel welded products by approximately 12,130 tpa to reach a total capacity of 13,150 tpa. The total project cost is Rs 104.984 crore. The seamless manufacturing facility is expected to start commercial production by January 2026 and the welded manufacturing facility is expected to start commercial production by March 2026. As of December 31, 2024, the companys outstanding working capital facility in the form of short-term borrowings is Rs 118.616 crore. Ahead of the IPO, Scoda Tubes on Tuesday, 27 May 2025, raised Rs 65.99 crore from anchor investors. The board allotted 4,714,200 shares at Rs 140 each to 6 anchor investors. Scoda Tubes, incorporated in 2008, is a Gujarat-based manufacturer of stainless steel seamless and welded tubes and pipes. It operates a single manufacturing facility in Mehsana with a strong focus on seamless products, which contribute over 85% of revenue. The company serves both domestic and international markets across industries like oil & gas, chemicals, power, pharma, and transportation, exporting to over 11 countries. Scoda is ISO and PED certified and markets its products under the brand Scoda Tubes. The firm reported a consolidated net profit of Rs 24.91 crore and total income of Rs 361.17 crore for the nine months ended on 31 December 2024.
