Capex commitment likely to be in the range of Rs. 200-300 Cr: Dr. R. Ananthanarayanan, CEO, Sajjan India

Sajjan India Limited is looking for expansion, both organically and through acquisitions, to achieve the planned growth

  • June 20, 2023

2023 global trends in agrochemicals, pharmaceuticals, specialty chemicals, and intermediates?

Global trends in 2023 are: Increasing demand for generics specially for pharmaceuticals leading to need for cost effective APIs and intermediates production; Growing importance of sustainability is becoming an essential factor for companies across the industry to reduce environmental footprint; Emphasis on R&D and innovation leading to Indian CDMOs investing heavily in technology and capability building; Increased outsourcing activities by global giants to remain cost competitive and focus on complex steps; and supply chain diversification - China +1 strategy adopted by most global giants to diversify risk and reduce dependency on China due to the geopolitical risks, rising labor costs, and trade wars. 

Financial performance of Sajjan India Limited in FY 2022-23? Plans for FY 2023-24?  

Sajjan India Limited (SIL) has performed reasonably well in FY 2022-23 despite a tough external environment. Our revenues are likely to be in the range of Rs. 1,450 - 1,500 crore and shown a growth of 10% for FY 2022-23 with a strong EBITDA and PAT margin. We continue to remain focused on building product pipelines and deepening our relationships with the customers. This gives us confidence for consistent revenue growth and sustained profitability in coming years. We are looking for at least 20% growth in FY 2023-24. For the future, the company will grow both organically and through acquisitions. We are looking at all divisions and consolidating our relationship with the non-GMP pharmaceutical space.

Has Sajjan India streamlined its operations in FY 2022-23?

It is ten months since we acquired Sajjan India and the first task that we took was stabilising the business delivery of products on time for customers. After acquisition, we created a new management structure in 4-5 months. We got new leaders from outside and retained existing manpower by focusing on career growth. We have created an organization geared for FY24 and beyond. Significant focus was on EHS (Environment, Health & Safety) and sustainability.

How have different divisions - Agrochemicals, pharmaceuticals, specialty chemicals; Contract development and manufacturing; and intermediates performed in FY2022-23? Plans for FY 2023-24?

We have become efficient and optimized our manufacturing by focusing on better asset availability, reliability, planning and scheduling, improved batch cycles, focusing on turnarounds without compromising on safety, compliance, and environment sustainability.

How has the company performed internationally? Are you focusing on any new geography/product for the international market?

Our entire business model is based on offering Contract Development & Manufacturing (CDMO) services. Our customers are international large scale innovators who supply products in global markets. Our customer base is spread across the US, Europe, and Japan. 

Capex investment made in FY 2022-23 and projects where the company has invested? Capex plans for FY 2023-24? How will these investments help the company?

The company has been investing significantly for the past few quarters in upgrading its infrastructure, plant and machineries, capacity augmentation, safety, health & environment, and towards development of various new chemistries. Research & Technology (R&T) has always been the backbone of the company and in this direction, the company is setting up a large R&T centre in Navi Mumbai.

This new R&T centre is likely to be operational in 2023. Besides this, the company has recently inaugurated its state-of-the-art R&D lab at its Ankleshwar plant. Investment plans are afoot for setting up a pilot plant and multi-purpose plant at the company’s manufacturing facilities located at Ankleshwar and these are likely to be operational in 2024.

Overall, the company has made capital investments in the range of Rs. 100-125 crores in FY 2022-23 and for the next financial year, the Capex commitment is likely to be in the range of Rs. 200-300 crores. The company is open for growth and has invested in the future for downtimes to decrease and reliability to increase. Our investments are increasingly shifting towards better engineering controls and gearing towards manufacturing 4.0. We are equally committed to the safety of our people and partners by digitization and better analytics to focus on our aspiration to be a Zero Harm enterprise. As a Responsible Care signatory, we are also committed to make our products the right way by investment in renewable energy portfolios.

On the R&D front, what are the new innovations that the company is working on? How will these innovations help the company in the long run?

We are a process and technology driven company, so our focus is on process innovations for developing cost effective and safe manufacturing processes. We are developing new technologies like Photochemistry, Bio catalysis, Fluorination, Flow Chemistry, Green Chemistry, etc. New technologies development will widen our offerings to our partners. 

The company is planning a new R&T Centre at Navi Mumbai. When are you planning to make it operational and what all activities will be driven from this facility?

The company is in-process of setting up a state of art new R&T Centre at Navi Mumbai which will be in operation by October 2023. All technology development activities will be done at the new R&T Centre. We will have a pool of scientists from all fields, like Chemistry, Chemical Engineering, Analytical Development, Knowledge Management, Process Safety, Process Simulation, etc. for developing cost effective, scalable, and safe processes. We are confident with the new R&T Centre, technology offerings to our partners will increase by many-fold. The investments in R&T Centre are fully backed-up with investments in new pilot plant and multipurpose plant facilities at our manufacturing site to accommodate quick realization of new technologies developed at commercial scale.

Plans related to automation and digitalization across manufacturing facilities be it greenfield or brownfield? How are you planning to leverage it?

Sajjan has already pivoted towards Manufacturing 4.0 and automated operations. We believe it will not only be safer but make us nimble and agile in our operations. Therefore, we have started digitizing our utilities, production, and E2E supply chain. 40 percent of our manufacturing is on digital. We have plans coupled with investments over the next 3 years in this critical and forward-looking space.

How are you balancing growth and sustainability at the same time?

At Sajjan sustainability, ESG, and growth go hand in hand. We strongly believe as a responsible enterprise that both should happen symbiotically. Climate change is real, and we are going to play our part to ensure that our operations have minimal or no impact in the future. We have invested in renewable energies, better water reuse and recycle technologies, and better waste recycling initiatives. We have digitized our entire footprint in the past quarter to know the real time footprint and its impact on environment sustainability projects which are yielding. By the end 2023, 1/4th of our operations shall be renewable, 1/3rd of operations will be water recycled, and half of our waste would be recycled. We have strong 2030 aspirations which we shall be firming through our OESG Committee that is a Board level Committee to monitor ESG progress.

When are you planning to achieve Net Carbon Zero? Landmarks that you have set up for achieving it? 

We have tied up with various partners and are currently undergoing Science Based Targets Initiative (SBTi) exercise to ascertain the timelines for achieving Net Carbon Zero and beyond. Request you to hold tight on that, as by mid-2023 we shall be coming out with our detailed plan based on talk with our Top 5 partners and in alignment with partners. We are already ahead with our investments on renewable energy, switching to cleaner energy, reducing water usage, reuse/recycling water, and being a zero waste to landfill enterprise by investing, reimagining, and adjusting our processes and systems.

CSR initiatives being undertaken by the company with respect to education, health & sanitation, environment sustainability, and rural development in FY 2022-23? Plans for FY 2023-24?

We at Sajjan have our CSR program in line with Sustainable Development Goals (SDGs). We are committed to this because a better, healthier, and cleaner community has a direct impact in achieving growth ambitions where we operate. In health, we have arranged health check camps in which 650 people participated. We sponsor community events such as Ankleshwar Marathon to encourage better health and lifestyle of our communities. Education and upskilling is vital to prepare a resilient future workforce that helps in the development of the nation. In October 2022, we inaugurated AEPS Institute of Science at Ankleshwar College which would annually cater to 300 students on better education and upskilling.

On the environment sustainability, we are committed to planting 2,000 trees in a green redevelopment of a land parcel by the state government in Ankleshwar, equally we have committed that our new expansion at Ankleshwar shall be carbon neutral operations.

How do you see the future of Sajjan India?

We are excited with Sajjan 2.0 which will help in the transformation of the organisation and also leveraging growth opportunities