“This is a relatively modern asset, established in 2018, and situated just 3.5 kilometres away from our current chemical complex in Jhagadia, Gujarat. The primary aim was to expedite our entry into the epoxy and advanced materials market. In that regard, I believe this was an excellent acquisition,” he shared with CNBC-TV18.
Agarwal acknowledged that HSCL has been operating at a loss, attributing this mainly to a significant debt burden. The company reported a net loss of ₹28 crore in FY25, more than ₹30 crore in FY24, and over ₹47 crore in FY23.
“A major portion of the debt will be settled as part of this deal. Nearly all of the term debt will be eliminated. That is a significant factor contributing to the negative PAT,” he explained.
The management anticipates that the newly acquired company will achieve break-even within a year. Agarwal highlighted various factors that will contribute to this turnaround: debt reduction, backward integration of Epichlorohydrin (ECH), enhanced operating standards, and improved capacity utilization.
“At present, they are operating at approximately 60–65% utilization. We expect to boost this to around 85–90% within a year,” he added.
The company has established specific targets for expanding capacity. From the current 17,000 kilotons per annum in both epoxy resin and its derivatives, DCM Shriram aims to triple its epoxy capacity and increase derivatives capacity by 4–5 times over the next three years.
“This will emerge as a vital business, significantly contributing to both revenue and profit,” Agarwal stated.
While the acquisition is not expected to substantially affect group-level margins given its current turnover of ₹300 crore, the company is aiming for standalone margins of 10–15% in the epoxy sector going forward.
“I don’t anticipate this will have a major impact on our margins; however, we are looking forward to promising figures from the group overall,” he mentioned.
The acquisition aligns with DCM Shriram’s broader strategy to advance within the value chain of its chemicals business and follows the company’s commitment made in February 2024 of ₹1,000 crore towards developing its epoxy and advanced materials platform.
(Edited by : Ajay Vaishnav)
