The importance of the Indian chemicals industry in the growth and expansion of the economy can be gauged from the fact that it directly accounts for 2.1% of the country’s GDP. India is the sixth-largest chemicals producer in the world and has entrenched itself as a formidable player in the global chemicals arena. The sector is largely connected to key economic sectors like agriculture, agro-commodities, services and manufacturing. Indian chemicals companies are facing a peculiar challenge. In a global economic order marked by low growth volumes and a hyper-competitive landscape, profit margins are shrinking fast and operational capacities are dwindling at a speedier pace. In order to maintain steady production levels and ensure that profit margins are not eroded in the face of weakened industry fundamentals, chemicals companies are exploring inorganic growth avenues like acquisitions. Limitation on organic growth is forcing firms to look at M&As as a viable alternative for sustained high valuations. The consolidation of product lines not only enables them to leverage organizational synergies, it also allows them to venture into hitherto unexplored business areas in alignment with their strategic goals. India is on the cusp of becoming a global economic powerhouse and there is a huge scope for the chemicals industry to scale the next growth curve. By strengthening their product development capabilities and creating a robust in-house R&D architecture, Indian chemicals companies can take the lead in identifying potential outbound deal opportunities and expand their global presence in new markets.
Limitation on organic growth is forcing chemical industry firms to look at M&As as a viable alternative
Date posted: Friday 26 May 2017
Tags: Featured, Indian Chemical Industry