Specialty Chemicals Newsletter

Indian CRAMS Sector

June 2021
Contents

From the Team

Hello Readers,

Cover Story – Sector in focus – Contract Hope you all are keeping safe and healthy. It gives us immense
04 Research and Manufacturing Services pleasure to share with you the June edition of our Specialty Chemicals
Newsletter.

This time around, we took a “contract” to cover Custom Synthesis &

18 Key Industry Transactions Manufacturing - CRAMS industry for our newsletter. Since our Life
Sciences team has covered CRAMS for the Pharma sector in their first
newsletter edition, we will focus exclusively on Agrochemicals and
other Specialty Chemicals in this newsletter to give a complete

24 Listed Market Multiples and Latest News picture. With India emerging as one of the most preferred destinations
for outsourcing, CRAMS industry is posed to grow rapidly and witness
significant activity going ahead.

Deccan Fine Chemicals, a leading custom synthesis and contract

31 o3 Capital - Overview manufacturer of agro, pharma and specialty chemicals, has executed
an outbound transaction acquiring Escientia from Flex Ltd. In this
newsletter, we have attempted to highlight the key aspects of this
transaction in detail.

We have also listed some of the other significant M&A and PE

transactions over last 12 months along with an overall market analysis
to bring you deeper insights into the industry.

Hope you enjoy reading the Newsletter.

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Specialty Chemicals Newsletter – June 2021
 Cover Story

Sector in focus – CRAMS

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

CRAMS is emerging as an Important Link in the Spec chem value chain

Custom Synthesis, Research and Contract Manufacturing (CRAMS)

Value
chain

Discovery Development Scale-up Manufacturing

Library synthesis Large scale

Process development Analytical development
manufacturing

Molecule design Multiple chemical

Kilo lab studies Pilot plant trials
reactions
Service offerings

Lead optimization High pressure to low

Basic engineering Process optimization
temperature

Route synthesis Detailed engineering Plant design Formulations

Biological testing Small scale manufacturing

HAZOP
for trials

Green house testing Formulation development

Dominated by West
West players are restricting product lines and expanding presence in APAC countries
players
Market

APAC seeing increased

APAC players are emerging strong with established facilities and low cost advantage
activity lately

CRAMS play a key role in the value chain of global innovators by optimizing product development and manufacturing operations

Source: Company reports; o3 Capital Analysis

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Global Specialty Chemicals CRAMS Market Overview

CRAMS market is expected to outpace the growth of broad segments

Global CRAMS Market (USD bn) 2019-24E Growth Rates Outsourcing drivers
Optimization of capital
322.1 allocation by global innovators
10%
Pricing and competitive
200.0 7% pressures
6%
142.6 5%
Rising complexity in molecule
synthesis

Stable access to active

2014 2019 2024E CRAMS Pharma Agrochem Spec chem ingredients

CRAMS Geography Mix – FY19 CRAMS Sector Mix – FY19

Developed countries currently carry out
Others c.70% of total CRAMS activity
India 4%
6% Agro and
other spec
APAC chem Pharma companies have been very
12% North America 35% active in outsourcing research and
37%
manufacturing activities

China
15% Pharma
Outsourcing activity of agrochemicals
65% has increased lately, while other
Europe speciality chemicals is picking up
26%

CRAMS is one of the fastest emerging segments in specialty chemicals space as global innovators are increasingly outsourcing
various activities to focus on core business
- Area of focus going ahead for this newsletter
Source: Industry reports; o3 Capital Analysis
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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Specialty Chemicals CRAMS Market is Dominated by West but…

UK
Austria

Japan

Germany
US
Luxembourg
Mexico
France China

Switzerland India

Story so-far Road Ahead

▪ West players, with their technology access, are leading in

AI* and advanced intermediates for patent molecules ▪ Asian players will move up towards high value segments
like CRO, AI and advanced intermediates synthesis
▪ Asian players slowly transitioned from simple generic
molecules and intermediate suppliers to strategic partners ▪ Set relationships with innovators and established
manufacturing facilities will pave way for dominant
▪ Asian peers have gained scale with constant capacity CRAMS position of Asian players
expansion and have improved their technology capabilities

Industry is set to witness a tectonic shift across the landscape with Asian players emerging strong
Source: Company reports; o3 Capital Analysis
Note: * Active Ingredients
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 Cover Story Key Transactions Market Information o3 Capital Overview

…Asian Economies are Evolving and are Set to Capture CRAMS Market…
Gaining on technology know-how

Asian players have slowly improved their technological

know-how with constant R&D and vertically integrating
through acquisitions in developed countries. Increasing
base of engineers and scientists has helped further Low cost manufacturing

Outsourcing to low cost Asian countries is helping

innovators to get the job done at much lower expense and
to avoid additional stress on their balance sheets with no
Mounting pressure on EHS / little new capacity expansion

Given the high cost of EHS compliance, North American &

European companies are keen to shift the manufacturing
operations to Asian countries
Improving IPR protection laws

Asian countries that had poor IPR protection policies

historically are implementing stricter laws with time and
ensuring protection to innovators
Impressive track record

Asian players that started out with simple intermediates

have been reliable partners to innovators, which is evident
from the growth of their business over years

Asian players established themselves to dominate CRAMS space with reliable service and improving product mix with complex
technology services, all offered at a low cost

Source: o3 Capital Analysis

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

…With India Leading the Pack - CRAMS Market Overview

Indian CRAMS Market (USD bn) Indian CRAMS Market Mix – FY19

Other
20.3 Specialty
Chemicals
20%

11.5 Pharmaceutical
45%
7.2

Agrochemicals
35%
2014 2019 2024E

India had outpaced global growth historically and will continue to CRAMS market is characterized by dominant pharma followed by
grow at faster pace (1.2x) compared to global market emerging agrochemical space

Patented Generic Single molecule

Molecule Molecule Others compounds
4 China
25% 75% 20% 80%
South
5
Korea

2 1
Indonesia
India
3 Vietnam

Indian CRAMS market is dominated Being 2nd in low cost manufacturing has helped CRAMS market is dominated by single
by generic molecules synthesis Indian CRAMS players to capture MNCs attention molecule compounds

India is among the preferred destinations for outsourcing manufacturing as well as research activities
x - Rankings of Low cost manufacturing countries

- Area of focus going ahead for this newsletter

Source: Industry reports; o3 Capital Analysis
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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Indian CRAMS Players Landscape

Major Indian CRAMS players with footprint in Specialty chemicals

Noida

Vadodara
Gurgaon

Surat

Vapi
Mumbai

Hyderabad

Raighad Chennai

Bangalore

Agro focused Agro + Pharma focused Other specialty chem focused

Indian CRAMS industry is currently fragmented and players are developing expertise in and around their niche

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Competitive Landscape – Custom Synthesis and Manufacturing (1)

40%

119
35%
28
29
low
30%
222 75
502
25%
123 490
28
EBITDA Margin

20%
21
low
low
15%
236

10% 69
low

5%

0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

3Y CAGR
Agro focused Agro + Pharma focused Other specialty chem focused

Agro players with low growth and margin profiles Pure CRAMS players like Deccan Fine chem, PI Diversified players like Navin Fluorine, SRF,
like Rallis and Punjab Chem are strengthening Industries, Sajjan and Anupam Rasayan have Aarti Industries have found CRAMS as their
CRAMS segment to capture growth shown strong growth and better margin profiles growth engine

Source: Company reports; o3 Capital Analysis

Note: Bubble size is indicative of CRAMS business size in USD mn, growth and margins are for total business
INR values are converted to USD using 1 USD = 73 INR
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 Cover Story Key Transactions Market Information o3 Capital Overview

Competitive Landscape – Custom Synthesis and Manufacturing (2)

Major Presence in
Total CRAMS
CRAMS operations EBITDA
Player Name Brief overview Revenue revenue
since Margin2 (%)
Other spec (USD mn) mix
Pharma Agro
Chem

CSM of active ingredients to 20+ MNCs in

1996
the agrochemical sector ✓ 6441 76% 24%

CSM of active ingredients and advanced

2008
intermediates ✓ ✓ 502 100% 22%

Custom manufacturing of multi-synthesis

2003
molecules ✓ ✓ 74 100% 27%

Large scale production of active ingredients

2003
(Agro) and others ✓ ✓ 119 100% 36%

CSM of key intermediates and active

1988
substances ✓ ✓ 2361 100% 18%

CSM to agro, pharma and fine chemical

2005
industries ✓ ✓ 69 100% 12%

CSM of advanced intermediates and active

2013
ingredients ✓ ✓ 42 100% 24%

Custom development of organic synthesis

1994
intermediates ✓ 9 100% 24%
Specialty Chemicals Ltd.

Supplier of various protected nucleosides &

2002
process research ✓ ✓ ✓ 21 100% 17%

Provides contract services across specialty

1996
chemicals to global majors ✓ 28 100% 22%

Source: Company reports; o3 Capital Analysis

Note 1: Revenue for FY21, others represent revenue for FY20
Note 2: Overall business margin
INR values are converted to USD using 1 USD = 73 INR
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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Competitive Landscape – Custom Synthesis and Manufacturing (3)

Major Presence in
Total CRAMS
CRAMS operations EBITDA
Player Name Brief overview Revenue revenue
since Margin2 (%)
Other spec (USD mn) mix
Pharma Agro
Chem

Contract manufacturing of intermediates &

2007
active ingredients ✓ ✓ 6171 ~20% 22%

Custom chemical synthesis of fluorinated

2009
compounds ✓ ✓ 1721 17% 31%

Contract manufacturing of intermediates &

2004
active ingredients ✓ ✓ 1,1581 23% 26%

Contract manufacturing of intermediates &

2006
active ingredients ✓ ✓ 4781 ~25% 18%

2013 Contract manufacturing of intermediates ✓ ✓ 3381 Low 15%

Synthesis in phytochemistry, cosmetic and

2006
nutraceuticals ✓ 150 Low 30%

Contract manufacturing of phosphorous

2016
derivatives ✓ 931 Low 14%

Advanced API Intermediates combining

2017
bromination ✓ ✓ 461 Low 19%

Expertise in aroma, personal care

1990
ingredients and herbal extracts ✓ ✓ NA 100% NA

Comprehensive non clinical GLP research

1977
services ✓ NA 100% NA

Source: Company reports; o3 Capital Analysis

Note 1: Revenue for FY21, others represent revenue for FY20
Note 2: Overall business margin;
INR values are converted to USD using 1 USD = 73 INR
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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Growth in Indian CRAMS space will be driven by Industry Tailwinds and…

Agrochemical products going off-patent

✓ Contract synthesis of generic molecules contributes (USD bn)
75% of total Indian CRAMS market
1.9 2.0
Opportunity ✓ Agrochemicals generic molecules synthesis ranks #2
1
1.6
in Generic in terms of total value
1.0
space 0.8 0.8
✓ ~USD 8bn products that are expected to go off-
patent from 2020-25, presents a great opportunity
to generic agrochemical CRAMS players
2020 2021E 2022E 2023E 2024E 2025E

✓ Innovators developing new active ingredients are

shifting focus to core competencies
Outsourcing ~85% of production Outsourcing majority production
Outsourcing ✓ Huge investments followed by low productivity in
2 trend of
Global
R&D is driving innovators to cut on capital expansion

Innovators ✓ Indian players with established bases and proven

track record in process chemistry will be perfect
Outsourcing ~50% of production Outsourcing ~50% of production
strategic partners to these innovators

India featured among top 4 for relocation by US comps

from China1
13%
✓ The spread of Covid-19 had MNCs to reduce single 10%
country dependence and look for alternatives in 8%

3 China plus
one strategy
order to avoid supply chain issues

✓ Low cost operations and better IPR protection

5%
6%
5%
6%
4%

policies over China will fit into the category for

MNCs outsourcing needs
Southeast Asia Mexico India US

2019 2020
Source 1: China business report article

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

…structural factors that include sub-continent’s competitive advantages

✓ India, being a low cost manufacturing destination

Low cost has an inherent advantage over western economies Manufacturing Infrastructure
Labour costs

4
to attract MNCs for outsourcing operations costs costs
mfg. and
skilled ✓ Increasing base of qualified and skilled labour will
labour further strengthen India’s position as a preferred 33% lower than US and 50% lower than Western 40% low setup costs than
half of Europe countries Western countries
destination for CRAMS

Company Capacity expansion

✓ Indian CRAMS players have been allocating capital to
expand capacity and serve global players. Commissioned 2 new units at Dahej for agrochemical
Capacity intermediate outsourcing

5
✓ With these capacities in place, they are custom
expansion Commissioned 2 new plants for CSM activity and few more in
ready to attract future outsourcing opportunities line for FY21-22
and PLI
scheme ✓ PLI scheme that is supposed to be announced for Investing USD 52mn for a dedicated facility to outsource
HPP* in flouro chem space to a global player
agro-chemicals production will further support
capacity expansion plans to increase scale Commissioned new plant in Mahad for global crop protection
company and expanding capacities with USD 41mn capex

✓ Indian CRAMS players are incrementally focusing on

Exports dominated by
Developing the custom synthesis and manufacturing of patented 90% CSM revenues from Two on-patent products
patented molecules of
molecules and niche chemistry the patent molecules for Japanese innovator
expertise in
6
innovator companies
niche ✓ As the manufacturing process and infrastructure is
chemical quite unique, this will attract better growth with
synthesis higher margins and establish long relationship with Carved a niche for itself Expertise in the custom Expertise in the custom
with multi-step synthesis of fluorine synthesis of Pyridine
innovators derivatives
synthesis derivatives

Note: * High Performance product

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Key Drivers for M&A and PE activities

Scale Corporate divestitures Diversification Growth capital

Players need to achieve certain Large companies divest mfg. Pharma and agro have similar Setting up CSM operations need
scale for being considered by assets to focus on streamlining dev. and reg. process and leads significant capex and PEs could
large agrochemical innovators operations, which provides a often overlap – This provides an step in with the necessary
and to effectively capture opportunity for other players to easy entry into other sector to capital to scale-up and build on
export opportunities quickly expand capacity capture growth & synergies strong industry tailwinds

Scaling up activities witnessed in the last few years concluded by strategic players and PE funds

Strategic / PE
funds

Target
Goa mfg. facility

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Selected transactions in CRAMS space

Date Target Acquiror / Investor Transaction drivers Target description

Enhance existing services with Syntor’s Custom manufacturing and toll manufacturing
Aug-20
synthesis and formulation capabilities for specialty chemicals

Expand service portfolio in the cosmetic and US based CRO serving cosmetic and personal
Jan-20
personal care products in US market care industry

Increase global presence and offer complete Europe based agrochemical contract research
Dec-19
range of services organization
M&A Deals

To harness Daito Chemical’s organic Undertakes contract synthesis of organic

Oct-19
synthesis capabilities and seek synergies chemical solutions across pharma and agro

Add premium chemistry lab service Germany based custom synthesis and R&D
Oct-17
capabilities to service offering services organization

Provides the capability and expertise UK based agro and pharma chemical
Mar-17
needed to develop new product manufacturer

Expand manufacturing capacity and gain Manufacturing facility of a global agrochemical

Sep-13
Gujarat mfg. plant scale innovator

Accelerate growth through investment in Swiss based personal ingredients manufacturer

Feb-21
Specialty Ingredients R&D and innovation and CDMO for specialty chemicals
PE Deals

Austria based contract manufacturer of

May-18 Favorable industry dynamics
agrochemical intermediates and AI

Viakem’s unique position in LATAM and Latin America based custom manufacturer of
Apr-16
favorable outsourcing trend agrochemicals

- Indian deals
Source: S&P Capital IQ and company websites
Note: These deals are in addition to those covered on the previous slide
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Specialty Chemicals Newsletter – June 2021
Key Industry Transactions

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Deal in focus – Escientia Acquisition by Deccan Fine Chemicals

Business Value Chain

Discovery Development
Acquired ▪ Process development
Controlling ▪ Medicinal chemistry
▪ Value creation through IP
India’s leading CSM player in stake Fast growing pharmaceutical ▪ Support drug discovery
▪ Technology transfer
specialty chemicals CDMO ▪ Prepare library
▪ Analytical services
molecules
▪ Route screening

Deal rationale
▪ Acquisition is aimed to leverage on the opportunities being created in the pharma
supply chains across US and India HPAPI Manufacture
▪ Reg. starting materials
▪ Escientia enables Deccan fine chem to significantly increase its offerings and to ▪ High potent API
▪ Advanced intermediates
become a notable player in pharma contract development and manufacturing services ▪ Containment systems
▪ APIs
with OEL limit of
▪ Deccan will bring in synergies to Escientia with the supply of key starting ▪ Flow chemistry
0.1µg/m3
intermediates, and joint R&D & sourcing ▪ Safety and compliance

Target business overview

GS Raju, Managing Director, Deccan Fine Chem
▪
▪
Established in 2007 by industry veterans and senior executives of US pharma companies
Escientia is an integrated end-to-end provider of complex APIs for human and animal
health applications
“ We’re excited to be partnering with Escientia and believe
that our combined offering of cGMP and Pre-GMP
▪ Been a key partner in 120 drug manufacturing projects, most of which have now been manufacturing coupled with our process development
commercialized
competence and technology toolbox, will establish us as a
▪ Manufacturing facility in Vizag, R&D labs in Hyderabad and South Windsor, and
leading partner for the pharma industry.
operations across US and India
▪ Flex Ltd., a global supply chain and manufacturing solutions provider has been the Deccan has been actively looking at participating in the
majority stake holder of the company till acquisition pharma CMO space. We’re very happy that we found

Deccan Fine chem aims to build on the favorable opportunities in the Escientia, whose focus on innovator customers and ultra-
modern manufacturing matches our business model.
“
pharma CDMO space and realize synergies with combined operations

Source: S&P Capital IQ, EMIS and company website

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Key Global M&A Deals in the Last 12 Months

Deal value
Date Target Acquiror Sector Target description
(USD mn)

Supplier of technology-based functional coatings

May-21 Dyes & Pigments 2,161
and color solutions

Elastomers business of a global diversified

May-21 Specialty polymers 1,058
Elastomers biz. chemical group

Global manufacturer of catalyst and material

Apr-21 Specialty catalysts 6,436
technologies

Manufacturer of Heavy 16, a line of premium

Apr-21 Field 16 LLC Agrochemcials 80
plant nutrients

Manufactures bio-based flavour and fragrance

Mar-21 Flavour & Fragrances 300
F&F intermediates intermediates

Compass Minerals South American plant nutrition business of

Mar-21 Agrochemicals 528
América do Sul S.A Compass Minerals

Fine chemistry services of Albemarle,

Feb-21 Life sciences 570
FCS manufacturing RSMs and APIs

Global manufacturer of bonding products and

Jan-21 Specialty adhesives 616
adhesive components

Develops and produces flavors for food and

Dec-20 Flavours & Fragrances 710
beverages

Spanish based flavour and fragrance

Nov-20 Flavours & Fragrances 973
manufacturer

Source: S&P Capital IQ and company websites

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Key Global PE Deals in the Last 12 Months

Deal value
Date Target Investor Sector Target description
(USD mn)

Biotech company that processes residues from

Apr-21 Agrochemicals 409
leather tanning

Manufacturer of sodium silicates, specialty

Apr-21 HPCC 1,100
Performance Chem silicas, and zeolites

Creates agro products for growers, turf

Feb-21 Agrochemicals 103
managers and homeowners

Swiss based personal functional ingredient

Feb-21 HPCC 4,666
manufacturer

Additive manufacturing parts, printing and metal

Jan-21 Specialty additives 38
feedstock producer

Pipeline performance products business of

Jan-21 Construction chemicals 92
Pipeline products Canadian oilfield company

Manufacturer of titanium dioxide pigment and

Aug-20 Dyes & Pigments 100
performance additives

Develops plant-derived shelf life extension

May-20 Specialty additives 250
technology

Source: S&P Capital IQ and company websites

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Key M&A Deals in India over the Last 12 Months

Deal value
Date Target Acquiror Sector Target description
(USD mn)

Manufacturer of active ingredients for home

May-21 HPCC NA
care technicals

Polyurethane flooring and epoxy flooring

Apr-21 Construction chemicals 8
manufacturer

Manufacturer of pharmaceutical excipients and

Apr-21 Life sciences NA
solvents

Spectrum Chem & Distribution assets of companies that has

Apr-21 Chemical distribution NA
Norton Exim dist. biz. specialty chemical portfolio

IGL Green Manufacturer of ethanol based ethylene oxide

Mar-21 Diversified chemicals 81
Chemicals derivatives

Supplier of liquid chemicals used in primary

Feb-21 Flavour & Fragrances NA
production process

Mexican based manufacturer of shelf life

Feb-21 Specialty additives 13
extension solutions

Indo Gulf
Nov-20 Agrochemicals 356 Fertilizer business of Grasim Industries Ltd
Fertilizers

Manufactures and sells adhesives, sealants and

Oct-20 Construction chemicals 285
Advanced Materials Sols. other products

Convergence Manufacturer of hexa-fluoro isopropanol &

Nov-20 chemicals Life sciences 9
sodium fluoride

Manufacturer and distributor of agricultural crop

Sep-20 Agrochemicals NA
protection inputs

Source: S&P Capital IQ and company websites

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Key PE Deals in India over the Last 12 Months

Deal value
Date Target Investor Sector Target description
(USD mn)

Manufacturer and supplier of aroma and

Apr-21 Flavour & Fragrances 163
fragrance chemicals

Manufacturer of organic and fully bio-degradable

Apr-21 Agrochemicals 0.4
absorbent polymers

Mar-21 Agrochemicals 50 Sells branded agrochemicals for crop protection

Flint Management Manufacturer of pharma desiccant and oxygen

Mar-21 Life sciences NA
Consultants LLP absorber

Manufacturer of specialty chemicals for life

Mar-21 Diversified chemicals 27
sciences

Feb-21 Specialty carbon 27 Manufacturer of carbon materials and chemicals

Manufacturer of nutraceutical ingredients for

Jan-21 Nutraceuticals 150
health and wellness

Manufacturer of mineral derivatives and per-

Dec-20 Diversified chemicals 136
oxygens

Jaya Chandrakant and Producer of ionic and non-ionic and specialty

Apr-20 Nikhil Holdings HPCC 8
surfactants

Producer of antioxidants, aroma and

Jun-20 Specialty additives 24
performance chemicals

- PE exits - o3 Capital led transaction

Source: S&P Capital IQ and company websites

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Specialty Chemicals Newsletter – June 2021
Listed Market Multiples and Latest News

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Listed Market Multiples — Segment Snapshot

EV / Revenue EV / EBITDA EBITDA Margin ROCE
LTM NTM LTM NTM LTM LTM

6.7x 6.2x 25.8x 27.2x

CRAMS 23.8% 10.2%
7.7x 6.3x 35.3x 27.1x

3.1x 2.6x 19.5x 14.7x

Agrochemicals 16.9% 13.9%
2.8x 2.3x 17.4x 13.4x

12.9x 4.7x 21.0x 22.0x

Diversified Chemicals 24.6% 13.7%
10.9x 4.9x 24.2x 21.5x

11.0x 5.2x 39.2x 26.9x

Life Sciences 33.9% 13.7%
11.6x 5.1x 41.2x 26.5x

2.3x 1.7x 13.6x 12.9x

Dyes & Pigments 11.6% 6.2%
1.9x 1.7x 11.8x 12.8x

3.1x 5.2x 23.5x 31.4x

HPC & Textile Chemicals 16.1% 11.0%
3.5x 5.6x 19.0x 32.4x

3.7x 1.7x 17.8x 9.4x

Flavours & Fragrances 17.8% 8.2%
2.5x 1.6x 16.1x 8.6x

Construction and Water 2.0x 11.4x 25.3x 40.8x

9.1% 10.5%
Chemicals 2.2x 6.7x 34.9x 38.7x

3.8x 4.5x 22.6x 16.5x

Specialty Additives 16.7% 11.6%
2.5x 2.1x 25.8x 16.9x

May 2021 April 2021

Source: S&P Capital IQ

All multiples are based as on 31st May, 2021

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 Cover Story Key Transactions Market Information o3 Capital Overview

Listed Market Multiples — Specialty Chemicals

CRAMS
Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
PI Industries 39,724 37,611 4,577 1,012 22.1% 11.9% 37.0x 8.2x 52.5x 30.5x 6.9x 44.0x
SRF Industries 38,566 40,654 8,400 2,133 25.4% 10.0% 19.1x 4.8x 31.7x 16.5x 4.1x 27.6x
Aarti Industries 29,210 31,861 4,506 982 21.8% 8.0% 32.5x 7.1x 55.8x 23.9x 5.5x 43.5x
Navin Fluorine 15,966 15,352 1,258 388 30.9% 14.0% 38.5x 12.2x - 40.6x 11.0x 58.3x
Jubilant Ingrevia 7,732 7,732 - - - - -
Anupam Rasayan 7,552 8,417 651 166 25.5% - 50.1x 12.9x 102.3x 38.6x 9.6x 59.2x
Hikal Ltd 4,856 5,334 1,720 323 18.8% 10.2% 16.5x 3.1x 36.5x 14.2x 2.7x 26.1x
Mean 24.1% 10.8% 32.3x 8.1x 55.8x 27.4x 6.6x 43.1x
Median 23.8% 10.2% 25.8x 6.7x 36.5x 27.2x 6.2x 43.7x

Agrochemicals
Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
UPL 62,247 84,890 38,694 8,559 22.1% 7.9% 9.9x 2.2x 22.4x 8.9x 2.0x 15.5x
Bayer CropScience 26,553 25,298 4,261 812 19.0% 17.8% 31.2x 5.9x 48.3x - - -
Sumitomo Chemical 16,147 15,489 2,663 505 19.0% 20.3% 30.6x 5.8x 46.7x 29.4x 5.3x 42.1x
Rallis India 6,084 5,814 2,470 363 14.7% 11.8% 16.0x 2.4x 26.6x 14.7x 2.1x 22.7x
Bharat Rasayan 5,563 5,523 1,093 222 20.3% 18.0% 24.9x 5.1x 37.1x - - -
Dhanuka Agritech 4,387 4,206 1,387 269 19.4% 20.8% 15.6x 3.0x 21.1x 14.0x 2.7x 18.9x
Heranba Industries 2,921 2,961 951 129 13.6% 23.6% 22.9x 3.1x 29.2x 17.8x 2.6x 23.4x
Sharda Cropchem 3,183 2,891 2,396 417 3.3% 9.9% 6.9x 1.2x 13.9x 6.1x 1.1x 13.3x
Astec LifeSciences 2,694 2,878 563 119 21.2% 13.9% 24.1x 5.1x 41.4x 22.2x 4.5x 36.3x
Punjab Chemicals 1,375 1,417 678 96 14.1% 24.1% 14.8x 2.1x 28.0x - - -
Insecticides (India) 1,032 1,008 1,403 125 8.9% 6.7% 7.9x 0.7x 16.6x - - -
Shivalik Rasayan 986 1,004 192 25 12.9% 6.2% 40.4x 5.2x 65.6x - - -
Mean 15.7% 15.1% 20.4x 3.5x 33.1x 16.1x 2.9x 24.6x
Median 16.9% 15.9% 19.5x 3.1x 28.6x 14.7x 2.6x 22.7x

Source: S&P Capital IQ

All figures in INR cr, wherever applicable
All multiples are based as on 31st May, 2021
Note: The list is illustrative and since the companies have presence in various sub-segments, the classification is as per their focus area and their major revenue source
CRAMS covers companies which have >20% of total revenue contributed by CRAMS division

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Specialty Chemicals Newsletter – June 2021
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Listed Market Multiples — Specialty Chemicals

Diversified Chemicals
Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
Deepak Nitrite 24,343 24,659 4,360 1,247 28.6% 24.6% 19.8x 5.7x 31.4x 17.1x 4.7x 26.4x
Atul Ltd 25,413 24,442 3,731 917 24.6% 13.5% 26.4x 6.6x 38.8x 22.0x 5.3x 32.4x
BASF India 10,477 10,398 9,575 649 6.8% 13.8% 16.0x 1.1x 19.0x - - -
Laxmi Organic Industries 5,998 5,527 1,768 217 12.3% 12.3% 25.5x 3.1x 40.8x 26.8x 3.0x 52.3x
Valiant Organics 4,148 4,306 755 205 27.2% 18.9% 21.0x 5.7x 37.3x - - -
Mean 19.9% 16.6% 21.7x 4.4x 33.5x 22.0x 4.4x 37.0x
Median 24.6% 13.8% 21.0x 5.7x 37.3x 22.0x 4.7x 32.4x

Life Sciences
Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
Vinati Organics 18,063 17,877 954 353 36.9% 13.7% 50.7x 18.7x 67.1x - - -
Alkyl Amines Chemicals 18,705 18,567 1,242 429 34.5% 34.8% 43.3x 14.9x 63.5x - - -
Balaji Amines 9,086 9,212 1,318 377 28.6% 21.9% 24.5x 7.0x 38.1x - - -
Paushak 2,143 2,099 141 50 35.8% 11.4% 41.6x 14.9x 57.5x - - -
Neogen Chemicals 2,164 2,373 337 65 19.2% 10.4% 36.8x 7.0x 69.0x 26.9x 5.2x 47.8x
Chemcon Speciality 1,640 1,350 224 74 33.2% - 18.1x 6.0x 29.2x - - -
Mean 31.4% 18.4% 35.8x 11.4x 54.1x 26.9x 5.2x 47.8x
Median 33.9% 13.7% 39.2x 11.0x 60.5x 26.9x 5.2x 47.8x

Source: S&P Capital IQ

All figures in INR cr, wherever applicable
All multiples are based as on 31st May, 2021
Note: The list is illustrative and since the companies have presence in various sub-segments, the classification is as per their focus area and their major revenue source

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Listed Market Multiples — Specialty Chemicals

Dyes and Pigments

Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
Sudarshan Chemical 4,643 5,072 1,864 280 15.0% 10.4% 18.1x 2.7x 32.9x 15.0x 2.5x 29.6x
Meghmani Organics 3,510 4,408 1,661 376 22.6% 8.9% 11.7x 2.7x 18.8x - - -
Kiri Industries 1,566 1,693 892 72 8.1% 0.7% 5.3x 1.9x 6.3x - - -
Bodal Chemicals 1,277 1,458 1,162 95 8.1% 3.4% 15.4x 1.3x 30.6x 10.7x 1.0x 17.0x
Mean 13.5% 5.9% 12.6x 2.2x 22.2x 12.9x 1.7x 23.3x
Median 11.6% 6.2% 13.6x 2.3x 24.7x 12.9x 1.7x 23.3x

HPC and Textile Chemicals

Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
Galaxy Surfactant 10,432 10,615 2,657 429 16.1% 16.6% 24.5x 4.0x 36.4x 22.9x 3.5x 35.0x
Rossari Biotech 6,746 6,656 709 123 17.3% 16.4% 53.9x 9.4x 79.4x 40.0x 7.0x 62.3x
Ultramarine & Pigments 1,020 968 308 75 24.4% 10.0% 12.9x 3.1x 18.3x - - -
Aarti Surfactants 1,086 1,225 466 46 8.2% 8.3% 26.9x 2.6x 50.2x - - -
Clariant Chemicals India* 1,130 1,088 731 97 13.2% 6.9% 11.3x 1.5x 5.2x - - -
Fineotex Chemical 980 954 219 41 18.6% 12.3% 23.5x 4.4x 23.0x - - -
Sunshield Chemicals 206 297 192 27 14.3% 11.0% 10.9x 1.5x 17.5x - - -
Mean 16.0% 11.6% 23.4x 3.8x 32.9x 31.4x 5.2x 48.7x
Median 16.1% 11.0% 23.5x 3.1x 23.0x 31.4x 5.2x 48.7x

Source: S&P Capital IQ

All figures in INR cr, wherever applicable
All multiples are based as on 31st May, 2021
* Clariant Chemicals India has significant presence in Dyes and Pigments as well
Note: The list is illustrative and since the companies have presence in various sub-segments, the classification is as per their focus area and their major revenue source

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Specialty Chemicals Newsletter – June 2021
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Listed Market Multiples — Specialty Chemicals

Flavours and Fragrances

Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
Privi Speciality 4,240 4,714 1,277 205 16.1% 6.7% 22.7x 3.7x 36.3x - - -
Oriental Aromatics 2,711 2,768 709 155 21.9% 14.9% 17.8x 3.9x 26.6x - - -
S H Kelkar and Company 2,237 2,594 1,322 236 17.8% 8.2% 11.0x 2.0x 15.5x 9.4x 1.7x 15.2x
Mean 18.6% 9.9% 17.2x 3.2x 26.1x 9.4x 1.7x 15.2x
Median 17.8% 8.2% 17.8x 3.7x 26.6x 9.4x 1.7x 15.2x

Construction and Water Chemicals

Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
Pidilite Industries 106,161 106,010 7,293 1,681 23.0% 16.6% 62.9x 14.5x 93.9x 53.8x 20.3x 79.0x
Thermax 16,036 13,915 4,791 355 7.4% 4.4% 39.2x 2.9x 77.6x 27.9x 2.4x 46.9x
Ion Exchange India 1,747 1,405 1,355 145 10.7% 18.5% 9.3x 1.0x - - - -
Chembound 268 208 274 18 6.6% 3.0% 11.4x 0.8x 13.2x - - -
Mean 11.9% 10.6% 30.7x 4.8x 61.6x 40.8x 11.4x 63.0x
Median 9.1% 10.5% 25.3x 2.0x 77.6x 40.8x 11.4x 63.0x

Specialty Additives
Revenue EBITDA EBITDA LTM NTM
Name Mkt Cap EV ROCE (%)
(LTM) (LTM) Margin (%) EV/EBITDA EV/Revenue P/E EV/EBITDA EV/Revenue P/E
Fine Organic Industries 8,900 8,732 1,133 199 17.6% 12.1% 44.1x 7.7x 74.0x 30.9x 6.5x 44.5x
Camlin Fine Sciences 2,252 2,676 1,192 187 15.7% 8.1% 14.3x 2.2x 48.0x 14.8x 2.3x 50.4x
Apcotex Industries 1,747 1,729 541 69 12.7% 11.0% 25.2x 3.2x 39.5x 16.5x 2.5x 25.3x
Vidhi Specialty Food Ing. 1,023 1,016 234 51 21.9% 21.0% 19.9x 4.3x 29.6x - 20.4x -
Mean 17.0% 13.1% 25.9x 4.4x 47.8x 20.7x 7.9x 40.1x
Median 16.7% 11.6% 22.6x 3.8x 43.8x 16.5x 4.5x 44.5x

Source: S&P Capital IQ

All figures in INR cr, wherever applicable
All multiples are based as on 31st May, 2021
Note: The list is illustrative and since the companies have presence in various sub-segments, the classification is as per their focus area and their major revenue source

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

Recent Market News in Indian Specialty Chemicals

Agrochemicals HPCC Specialty additives

India pesticides Safex chemicals SI Group to scale

receives SEBI nod acquires Shogun up tackifier resin
for INR 800cr IPO organics capacity in India
Agrochemicals Life Sciences

India pesticides is the Deepak Nitrite The acquisition is SI Group announced

only Indian expected to provide Anupam Rasayan its intention to
investing INR 300cr
manufacturer and backward integration bags INR 540cr increase tackifier
in agro & pharma
order
among the top-five intermediates in the agrochemical resin capacity at its
companies globally technical segment Lote, India,
for several technical Investing into and provide an entry Signed contracts with manufacturing site by
products such as products that utilize into Home care two renowned life an expected 75%.
folpet and cymoxanil, its core platforms technical segment. science based MNCs
used to make Shogun manufactures With the expansion,
along with
fungicides active ingredients The tenure of the the site is set to
introduction of new
chemicals used in contract is for 5 years become a regional
platforms including
mosquito and insect and Anupam Rasayan hub for best-in-class
fluorination and
repellants was a part of their tackifier resin
photochlorination
product development production
Read
Readlink
link The new investment Read link process from the Read link
is expected to be start and received
completed by the contract once the
second half of next products are
year. commercialized

Read link Read link

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Specialty Chemicals Newsletter – June 2021
 o3 Capital - Overview

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

o3 Capital — Overview

o3 Capital - Global Reach

Mumbai
Bangalore Singapore

Total Value of Transactions

Transactions
171 Closed 7.0 Transactions 17 Closed
(USD bn) In Last 12 Months

Recent Transactions

z z z z z z z z

Cilicant Chem MedPlus Quest Global

Pvt. Ltd raised funds raised funds
raises funds PharmEasy New Mountain BMM Ispat from from True North TPG Growth
from acquired Capital invested raises funds invested in invested in
Medlife in Accolite Anthem Ascent Health
Flint Management from CPPIB BioSciences
Consultants LLP Digital
and JSW

Color denotes o3 Capital’s client

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Specialty Chemicals Newsletter – June 2021
 Cover Story Key Transactions Market Information o3 Capital Overview

o3 Capital — Chemicals Team

Mumbai

901, Piramal Tower

Peninsula Corporate Park
G.K. Marg, Lower Parel
Mumbai – 400 013
Tel: +91 22 6111 5700
mumbai@[Link]

Bangalore
Avni Vira Parekh
o3 House, No. 5, Crescent Road [Link]@[Link]
High Grounds
Bangalore - 560 001
Praneeth Reddy
Tel: +91 80 4241 0000
[Link]@[Link]
bangalore@[Link]

Singapore

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#02-20, Raffles Hotel Arcade,
Singapore 188719
singapore@[Link]

[Link]

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Specialty Chemicals Newsletter – June 2021