Speciality Chemicals Industry Overview in India

Key growth drivers of the market:

  1. India has a huge technically skilled workforce which helps boost the specialty chemicals market in the country. As of 2016, 51.09% of the total population of science, technology, engineering and math (STEM) graduates were from India. Apart from the availability of a large educated population, India offers unskilled labor at much lower wages as compared to other countries. The availability of a large talent pool, along with a nominal wage rate makes India an attractive production hub for various foreign companies. This, in turn, acts as a driving force for the specialty chemical market in India.
  2. The Chinese government announced the closure of various chemical companies that produced hazardous waste, which led to disruption of the supply chain. The developed markets are, therefore, now focusing on having an alternative supplier of chemicals apart from China to ensure an uninterrupted supply of end products, making Indian players more competitive.

Key deterrents to the growth of the market:

  1. In the specialty chemicals market, only a few Indian players have the capability to compete with global giants in terms of product development and innovation. As a result, Indian specialty chemical manufacturers are generating less revenue, and sales have also dropped as compared to foreign companies.
  2. Indian specialty chemical manufacturers are often forced to deal with cyclicality, especially in the textile manufacturing sector. Therefore, companies face difficulty in surviving during periods of low demand. This, in turn, hampers the growth of small specialty chemical manufacturers of India.

Saregama Fundamental Analysis | Saregama Share Analysis

Saregama Fundamental Analysis:

A thread about different segments of its business model.

Revenue from segments like Music (IP + Carvaan), TV & Films (Yoddle Films & Tamil TV) & Publications are shown.
(1/9)
1. Music IP
Image shows collection of their retro music, their library has IP of 130k music.

All music streaming platforms from Amazon, Spotify, Apple, Ganna acquire license of its music and share advertisement/subscription fees depending on customer engagement. (2/9)
It also Licenses its music to Television Channels (for TV serials, reality shows) & OTT platforms (like Netflix & Prime) where they issue license at fixed fee.

25 youtube channels with 44m subscribers, ad revenue is shared with Saregama (3/n).
This segment is the cash cow and expected to 20-25% growth in future.
In FY21 due to no release of movies, they did not acquire new contents and margin shot up.
In future they want to have share of at least 20% of total new music. (4/n) 
Risk: New Content acquisition cost is amortized over 6 years and payback period is approximately 5 years.

As marketing cost is up front (hit P&L in the first year), profit margin may reduce for first few years. (5/n) 
2.Carvaan:
A device with preloaded songs suitable for older people

Generates 25% gross margin and influences other people to consume retro music in digital platform

Recurring revenue by providing podcast content (ad revenue shared with content owner) is being envisaged (6/n)
3. VideoSegment: Yoodlee Films
Creates Low budget content for 3rd party platforms and issues period-based licenses for fixed-fee.

Licensed 16 films (Netflix Hotstar & Zee) in 4yrs
Target to reach 100 films in next 3-5 years, TV series will also be released soon. (7/n) 
4. Video Segment: Tamil TV Serials
Provides around 9-10 hrs of content (3 serials) per week

IP owned by Saregama, so monetize it on Youtube and Facebook also

South TV Youtube channel: 577M views in Q4
Roja continues its leadership position on Sun TV (8/9) 
5.Publication Segment: Open Magazine

Launched in 2009 as a print-only weekly available in select Indian cities.
It has now also rolled out a digital version, giving it a global reach.
Negligible revenue and no plan for scaling up (9/n) 

• • •

Deepak Nitrite Future Outlook | Capex Plan |


Second leg of the journey is about delinking from margin volatility. Some key words here-formula linked arrangements, high margin products & downstream chemicals. This is essentially what an investor's thesis in Deepak today is. FY25-26 will be interesting