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Privi Specialty Chemicals Limited

I will analyze today, for educational purpose only, Privi specialty chemicals Limited. I will break down the fundamental analysis in the following sections as mentioned below. 

  1. What does the company do? 
  2. Manufacturing sites 
  3. Key customers 
  4. Financial Highlights 
  5. Geographical distribution of revenue 2021
  6. MOAT - Barriers to entry 
  7. Bargaining power of the buyers 
  8. Bargaining power of the suppliers 
  9. Industry overview 
  10. Aroma chemicals categories and their consumptions growth drivers 
  11. Aroma Chemicals Regional Insights 
  12. Global Perfume markets 
  13. Distribution channels 
  14. Indian market scenario
  15. Associated risk 
  16. Growth drivers for aroma chemical market 
  17. Company Overview 
  18. Antithesis points or risk 
  19. Positive points about company 

So lets start 

What does the company do?

Privi Specialty Chemicals Limited (formerly known as Fairchem Specialty Limited) is India’s leading manufacturer, supplier, and exporter of aroma and fragrance chemicals and a globally trusted partner and supplier of bulk aroma chemicals.  

From a humble manufacturer of aroma chemicals in 1992 with only two products, Privi had steadily expanded to a range over 50 products today with a production capacity of 32,500 tons per annum. 

So, in the previous 29 years, Privi Specialty Chemicals Limited has expanded its product portfolio from only two products to 50 products as of now. 

Aroma Chemicals refer to chemical substances that impart odor. Hence aroma chemicals are used to provide flavor or scent. Aroma chemicals are basically used in so many applications mostly in spices, soap, perfumes, food, detergents, wines, fragrance oil, gels, creams, aftershaves, moisturizers, foundations, body or hand wash, lipsticks, body lotions, shampoo and other many applications for providing flavor or scent.  

Manufacturing location  

Manufacturing infrastructure includes two state-of-the-art manufacturing units at Mahad in Maharashtra and Jhagadia in Gujarat with knowledge and expertise to perform critical processes and applications. 

Key Customers 

Givaudan, Firmenich, Symrise, IFF, Takasago, Mane, P & G, Henkel, Reckitt Benckiser, among others. Privi caters to the world’s 10 largest and leading fragrance companies and has a significant presence in Europe and the United States (US). 

Financial highlights 

The Board of Directors has decided to retain the entire amount of Profits for Financial year 2020-21 in the Retained Earning. 

Geographical distribution of revenue 2021

Being Globally Competitive 

70% of its revenues are generated from exports therefore it is even more imperative to be globally competitive. 

Creating Global Scale of Operations

Privi Speciality Chemicals Limited qualifies amongst the top two global manufacturers by size for their leading products like Dihydromyrcenol, Amber Fleur, and Pine Oil. 

Maintaining market and customer share 

Privi Speciality Chemicals Limited aims to maintain the market share for their products and increase customer base by widening the product basket.

Creating long-term sustainability 

Being a leading producer of bulk aroma chemicals, management is focused to maintain sustainable operations and minimize environmental footprint. 

MOAT - Barriers to entry 

Privi specialty chemical limited has been in the business of supplying Aroma chemicals to global companies for about two decades and therefore has considerable in-house expertise and knowledge about the requirements of various global and regional customers. 

Further, Company has applied backward integration to use waste generated from pulp mills – CST as it has significant visibility of pricing and availability of raw materials. These factors provide distinct competitive advantages to Privi, against a new entrant or existing aroma chemical manufacturers.

Privi specialty chemical limited has done research on various components of the CST & is working on making value added products from these inputs which can be supplied to the Flavor & Fragrance industry. 

Bargaining power of the buyers 

Let us check here the margin stability of the company from March-12 to March-21. Following data indicates that the company is maintaining its operating profit margin or EBIT margin over a period of time and it indicates that the company has good bargaining power over its buyers or customers. 

Bargaining power of the suppliers 

Let us check here the gross margin stability of the company from March-12 to March-21. Following data indicates that the company is maintaining its gross profit margin over a period of time and it indicates that the company has good bargaining power over its suppliers too. 

(In Rs. Crores)

If a company is having good bargaining power with its buyers and suppliers, we can easily predict how the company will perform in the coming years. 

Privi specialty chemical limited is maintaining its margin over a period of time and it indicates that the company is growing consistently with good bargaining power with its buyers and suppliers.

Industry overview 

Aroma Chemicals 

First we need to understand what Aroma chemicals are and where they are used. 

Aroma Chemicals refer to chemical substances that impart odor. Hence aroma chemicals are used to provide flavor or scent. 

The global aroma chemicals market size was valued at USD 5.5 billion in 2019 and is expected to grow at a compounded annual growth rate (CAGR) of 5.8% from 2020 to 2027. 

Growing demand from the fragrance industries is expected to be a major factor driving the market. Rapid urbanization, coupled with increased consumer spending, has led to augmented demand with fragrance being a prominent factor. 

The aroma chemicals market is growing as the demand for perfumes and body deodorants have increased substantially in recent years. The practice of using aroma chemicals in cosmetics and new product line-ups with toiletries have fueled the market growth. 

Medical products and treatments using aromatic ingredients will spur the growth of the industry. End-users are actively interested in synthetic perfume ingredients, labels that specify ingredients, perfume ingredients by brand and perfume chemical ingredients among others which have been influencing market growth. 

Leading and growing players in the market have been investing an extensive amount in the research & development of these chemicals. 

Synthetic aroma chemicals are still preferred over natural chemicals by cosmetics and personal care formulators as the use of synthetic ingredients can produce a strong scent without hampering the characteristics of other chemicals used in cosmetic formulations. 

Natural aroma chemicals are considered to be therapeutic, sustainable, and greener by consumers. As natural aroma products are perceived as sustainable and environmentally-friendly among consumers, their demand in the global market is expected to grow at a large scale. 

However, lack of availability of raw materials, along with the high cost to produce fragrance by natural aroma chemicals, will hamper the growth of natural aroma chemicals. 

Aroma chemicals categories and their consumptions growth drivers 

Terpenes & Terpenoids emerged as the largest chemical segment with a volume share of over 30%. Terpenes & Terpenoids possess effective medicinal properties, such as antiseptic, anti-carcinogen and anti-microbial properties. 

Continuous usage of terpene for pharmaceutical and nutraceutical applications is estimated to propel the growth of the segment. 

Musk chemicals are a special type of aroma chemical that are extracted naturally as well as synthetically. Natural musk is obtained from animals and plants, which include roots as well as seeds as well as the rump gland of the musk deer, muskrat, and civet cat. 

Musk chemicals find scope in different applications, such as soap, detergents, cosmetics and personal care, food, and household products.

Growth drivers for the musk type of aroma chemicals market are the increasing number of working professionals, the growing middle-class population and increasing awareness. The rising popularity of different types of personal care items and fine fragrances is expected to trigger the demand for aroma chemicals. New product innovation and the increasing popularity of various types of perfumes and cosmetic items are anticipated to fuel the demand for musk types of aroma chemicals. 

Aroma Chemicals Regional Insights 

The Asian-Pacific region is the regional market for aroma chemicals with a revenue share of nearly 30% in 2019-2020 and is expected to dominate the global market over the next few years. 

Developing countries like China, India, and advanced economies such as Japan are also estimated to witness positive growth in the near future. Moreover, increasing demand for flavors and fragrances from developing countries, such as China, India, and advanced economies such as Japan, are triggering the demand for aroma chemicals in the region. 

Flavors and fragrances manufactured in Asia have also gained increased popularity in the major regions, such as North America and Europe. 

China, India, Indonesia, and Vietnam are among the prominent food flavors markets in the AsiaPacific region. 

Many manufacturing companies are focusing on investments in R&D facilities and the expansion of their business in the Asia-Pacific region. India is one of the largest emerging economies in the Asia-Pacific region. 

Demand for aroma chemicals is estimated to increase in India owing to rising demand from manufacturing companies for the production of soap, detergents and home care products. The high spending power of the consumers in the country is another factor contributing to the growth of the market in India. 

The market in North America is expected to be stable in countries such as the United States, Canada and Mexico, owing to growth in the consumer goods and food processing industries. The growth in developed countries has been spurred by marked trends which support mergers in the end-use industries. 

The market growth in developed countries is estimated to be slow as compared to the developing countries. The United States held the largest share in the North American market in terms of revenue in 2019 owing to growth in the cosmetics and personal care market. Moreover, an increase in the disposable income in the country is anticipated to fuel the demand for cosmetics, personal care products, and food and beverages that will further trigger the demand for the aroma chemicals.

So, there is clear growth seen in the demand of aroma chemicals especially in developing countries. 

Market size value in 2020

USD 5.9 billion

Revenue forecast in 2027

USD 8.2 billion

Growth Rate

Expected CAGR of 5.8% from 2020 to 2027 (Value based)

Market demand in 2020

Approximately 400 kilotons

Volume forecast in 2027

Approximately 525 kilotons

Growth Rate

Expected CAGR of 4.5% from 2020 to 2027 (Volume based) 

Global Perfume markets 

The global perfume market size was valued at USD 32 billion in 2018 and is expected to expand at a CAGR of 3.9% from 2019 to 2025. 

These days, people are much more focused on personal care, hygiene, fitness and natural personal care products. This tendency of using 

The rising importance of personal hygiene and grooming among both men and women is expected to remain one of the key driving factors. There is also increasing awareness regarding physical fitness among adults. 

Deodorants and perfumes have become essential daily personal care products, and play a significant role in personal grooming. This will promote the demand for body odor controlling products such as deodorants. 

Urbanization coupled with the improving living standards among middle-class income groups of developing countries including India, Thailand, China, Vietnam, Brazil and Argentina is anticipated to expand the market.. 

Furthermore, the rise in the percentage of working women with greater purchasing power coupled with awareness regarding cosmetic products encourages the demand for personal grooming products. Additionally, increased spending on attractive packaging, advertisement, and promotional activity by FMCG companies including P&G and Unilever have increased the market visibility of fragrance products. 

Application growth of fragrance products including sprays, candles, incense sticks, and gels in the household industry is anticipated to act as a key market driver. 

Distribution channels 

The offline segment was the largest distribution channel in 2018, holding 92.1% of market share. This distribution channel includes supermarkets and hypermarkets, brand outlets, drug stores, direct selling and unorganized retail. 

In developing countries, such as India, Thailand, Bangladesh, and Taiwan, unorganized retail is one of the key distribution channels. 

The online channels’ segment is expected to witness a CAGR of nearly 4% from 2019 to 2025. The increasing penetration of high-speed internet and smartphone users is expected to fuel the expansion of the segment. Besides, the hassle-free purchase, availability of a wide range of products and convenient delivery are also driving growth. 

The North American market is projected to grow at a CAGR of 5 to 6% from 2020 to 2027 on account of high consumer emphasis on the premium & luxury personal care products, especially in the U.S. and Canada. 

Asia-Pacific is the fastest-growing region witnessing a CAGR of 4.9% from 2019 to 2025. Many players are launching new products in developing countries such as India and China to cater to the increasing base of consumers. 

The Asia-Pacific region possesses one of the largest consumer bases and occupies a significant market share. This region is also expected to register the highest growth owing to rise in the demand for the personal care & cosmetics products, especially in the countries such as China, India, Indonesia, among others. 

Europe is the leading consumer in the cosmetics market and is expected to retain a significant market share by 2027. France, Spain, Switzerland Italy, among others are increasingly adding newer customers year-on-year due to higher penetration for cosmetics & toiletries products. 

Indian market scenario 

The fragrance market in India is anticipated to grow at a compounded annual growth rate (CAGR) of about 15% from 2019 to 2025. Lately, pocket perfumes have gained popularity because they are convenient to carry around, therefore acting as one of the major growth drivers for the market. 

The fragrance products market is segmented into perfumes, deodorants and other fragrance products. 

In 2019, deodorants held the largest share (~60%) followed by perfumes (32%) in terms of revenue. Deodorant is the most widely used fragrance product in the country owing to its affordability. 

The Indian deodorant market is expected to grow with a CAGR of more than 15% over next five years out of which the aerosol/spray deodorant is expected to continue its dominance. 

With a rise in disposable income and improved awareness regarding personal hygiene, consumers are not hesitating to splurge on fragrance products, thereby propelling the growth of the market. Increased adoption of smartphones and the Internet, especially in tier II and tier III cities, has made e-commerce websites accessible to customers, thus facilitating online shopping. 

Associated risk 

Stricter regulations are forcing companies to follow compliance, which could affect the market’s growth trajectory. 

For instance, wastewater discharge during the production of various synthetic aroma chemicals consists of many effluents, which need to meet applicable regulations for such discharge. As regulations are getting more stringent and imposing various restrictions on emissions such as wastewater, air emissions etc., producers are required to comply with the norms. The regulations are going to be more stringent in coming years for the protection of the environment. 

Growth drivers for aroma chemical market 

Market expansion and penetration of new generation lifestyle products like body deodorants has provided new opportunities for the growth of this sector. The use of aroma chemicals is not just limited to the personal and household care sector. 

Demand for aroma chemicals is expected to rise especially in emerging economies such as India, China, Brazil and the African continent. 

Owing to the rise in disposable income and improved awareness regarding personal hygiene, consumers are not hesitating to splurge on fragrance products. Shifting consumer preferences can create lucrative prospects for the aroma chemicals market. 

Increasing market penetration and investment towards product development will help the aroma chemicals market to register a good growth in forthcoming years. With companies focusing on product diversification, consumers will have wider options to choose from. 

Spurred by these factors, the global aroma chemicals market will continue treading along a positive trajectory. 

Company Overview

Privi has integrated manufacturing facilities both at Mahad in Maharashtra and at Jhagadia in Gujarat with knowledge, expertise and capacity to perform critical reactions. 

Privi started manufacturing aroma chemicals in the year 1992 with only two products, which it gradually expanded to a range of over 50 products today, having a capacity of over 32,500 tons per annum. Privi also develops and produces custom-made aroma chemicals as per specific requirement of the customer. 

Antithesis points or risk 

Foreign exchange rate risk 

Exchange rates have been very volatile, including the exchange rate between the Indian Rupee and the U.S. Dollar. While Privi depends on over 70% of the raw materials by imports, it also exports over 70% of the finished goods. Thus, Privi has a natural hedge against the depreciation of the Indian Rupee against the US dollar, after accounting for some of the borrowings which are denominated in dollars.

Pricing and availability of raw materials 

The pricing of key raw materials also varies considerably in FY2021. Therefore Privi, as a strategy, continues to enter into a half yearly or annual contracts for raw materials and finished products to mitigate the risks. 

Positive points 

Privi is expecting robust growth in the medium term as there is demand for the aroma chemicals - the main business of the Company. 

Privi plans to expand the product range in the coming years and is working on aggressive plans to offer a much larger basket of materials to its valued customers globally. 

Privi is making further inroads into developing markets (Nigeria, Egypt, UAE, South Africa) by seeking more customers as well as additional market share through existing customers.

Privi is continuously focusing over gaining market share 

Privi continues to establish strategic long-term business relations with global leading companies in the F&F industry such as Givaudan, Firmenich, IFF, Symrise, MANE, Robertet, Takasago etc. and with global leading FMCG producers such as P&G, Henkel, Reckitt Benckiser. 

Privi’s Projects at Advanced Stage

IBCH – Iso Borneol Cyclo-Hexanol


Prionyl (green process)

Recently Launched


Pre-commissioning trials


Water trials

Benzyl Salicylate

Under implementation


Annual Reports


Note - This is my view and my understanding about the company. This post is only and only for education and not for any kind of investment advice.

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