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MOSL: CHEMPLAST SANMAR (Unrated)-Integration at the forefront

CHEMPLAST SANMAR: Integration at the forefront

(CHEMPLAS IN, Mkt Cap USD0.9b, CMP INR453, Unrated)

Chemplast Sanmar, the largest manufacturer of Specialty Paste PVC resin India, via its wholly owned subsidiary - Chemplast Cuddalore Vinyls Ltd (CCVL) is the second largest manufacturer of Suspension PVC (S-PVC) in India. It has four manufacturing facilities (all in South India) with a high degree of backward integration.

We visited the company’s Mettur facility, wherein it manufactures Refrigerant gases, Specialty Paste PVC Resin, Caustic Soda, Chlorinated Solvents, and Hydrogen Peroxide. Below are the key takeaways:

Physical proximity to key customers

• The Mettur plant of the company is located close to the Mettur Dam or the Stanley Reservoir, which is one of the largest dams in India. The plant has a capacity of 93.5TMC ft. The dam power house and the tunnel power house have a capacity of 40MW and 200MW, respectively.
• CHEMPLAST has four facilities in Mettur with each plant being managed by a separate plant manager. The four facilities are spread over 330 acres, with Plant 1 being 70-80 acres, Plants 2 & 3 being 80-90 acres each, and Plant 4 makes up for the remaining.
• Plant 3 is the oldest plant (commissioned in 1965) of the company wherein Caustic Soda, Chlorine, and Chlorinated Solvents are manufactured, followed by Plant 2 (1967) where Specialty Paste PVC Resin is manufactured, Plant 1 (1988) in which Refrigerant Gases are manufactured, and Plant 4 (2019) which manufactures Hydrogen Peroxide.
• The company also has a coal power plant with a capacity of 48.5MW, sufficient to supply power to all its plants in its Mettur location. CHEMPLAST uses 700-800tn/day of coal. The company imports a total of ~2.5L tonnes of coal from Indonesia. It imports a specific kind of coal having low ash and low sulphur content.