Pidilite to exit specialty chemicals business

Mumbai, Nov 16 | Updated: Nov 17 2005, 06:24am hrs
The Rs 770-crore Pidilite Industries Ltd (PIL), makers of the popular Fevicol brand of adhesives is planning to exit their specialty chemicals business.

According to sources, the company is looking for a buyer for the specialty chemicals business as a step towards focusing on their consume-oriented businesses, where they are leaders, as opposed to industrial businesses dominated by MNCs like DuPont and BASF. PIL is promoted by BK Parekh and family, who own 72% of the company's equity.

Institutional investors hold 15% and public hold 11% in the company. The specialty industrial division of Pidilite, estimated at around Rs 100 crore, comprises industrial adhesives, industrial pigments, industrial and textile resins and leather chemicals.

The consumer category, on the other hand, comprises the adhesive Fevicol, a household name in the country, and other Fevicol brands, which together constitute more than 50% of the company's revenues.

When contacted, a company spokesperson declined to comment on the proposed sell-off.

Sources said that the move signals the upcoming intense competition in the specialty industrial segment in the country, which is witnessing a growing presence of MNCs like DuPont, BASF and Rohm & Haas.

Specialty chemicals is an R&D driven business and new MNCs who are entering the fray are offering value-based pricing and innovative products. MNCs who have been around longer, on the other hand, are regrouping their businesses and bringing in newer technologies. "MNCs are now willing to be patient in India and see the market grow," sources added. This competitive landscape will witness many Indian companies exiting from specialty chemicals and focusing on areas like fine chemicals and pharmaceuticals.