Exports offer hope for specialty chemicals units: CRISIL SME Tracker
Specialty chemicals manufacturers have been left
bleeding, as demand from most end-user industries has dried up in the wake of
the Covid-19 pandemic.
Small
and medium enterprises (SMEs), which make up as much as 30-35 per cent of the
industry, have been hit particularly hard.
Many
SMEs have reduced capacity utilisation as downstream demand fell, and are
expected to see realisation decline amid lower crude oil prices. Additionally,
SMEs are having difficulties in accessing working capital, and may face a
liquidity crunch. While the world is slowly opening up, there has been no major
recovery in demand from key end-user industries such as automobiles,
electronics and textiles. We expect demand from the food-packaging and health
care segments to sustain, though.
In
this milieu, exports offer a ray of hope. India’s chemical exports logged a
compound annual growth rate (CAGR) of about 13 per cent between 2015 and 2019,
compared with about 7 per cent for China. The key sub-segments likely to
benefit from higher exports would be colourants and agrochemicals, with export
shares of 45-50 per cent and 50-55 per cent, respectively.
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