In this edition of SmallCap Spotlight, Bhupesh Patel, Managing Director of Patel Chem Specialities, discusses the company’s evolution, current operations across pharma, food, and cosmetic sectors, and its ₹58.8 Cr IPO. With strong capacity utilization and a focus on quality and compliance, the company outlines its plans for expansion and continued growth.
Sheryll D’Souza: Hi there and welcome to this very special edition of SmallCap Spotlight with me, Sheryll D’Souza. Today, we will be talking to a company who’s all set to list on BSE SME. It is going to come out with a 58.8 crore rupees IPO where the book running lead managers are Cumulative Capital and Unistone Capital.
I’m talking about Patel Chem Speciality, where we are joined now by Bhupesh Patel, who is the Managing Director of the company. Thank you so much for joining us. Firstly, Patel Chem’s journey began in 2008.
Could you share the background of the founders and how the company evolved into a speciality chemicals player?
Bhupesh Patel: I, myself Bhupesh Patel is chemical engineer and I have experience of cellulose based product and I have started Patel Chem Specialities in the year 2008 with a vision of being prominent player in cellulose and start based excipients. Dr. Anshu Patel is a homeopathic doctor and is involved in the operations of Patel Chem Specialities. Vinny Patel is a master’s in pharmacology.
She is staying in USA. She helps company to explore market in Northern American segments. We began Patel Chem Specialities as a sister concern of Patel Industries, leveraging existing knowledge and networks.
From the beginning, we focused on manufacturing quality products, specifically pharmaceutical excipients like carboxymethyl cellulose. With combination of strong foundational expertise, strategic market focus, continuous innovation and commitment to quality has enabled Patel Chem to evolve from emerging chemical company to a recognized excipient manufacturer in our chosen segment.
Sheryll D’Souza: So, your company is actually known for cellulose as well as starch based excipients that is used across pharma, food as well as cosmetics.
Can you actually break down the core business model and how your different verticals complement each other?
Bhupesh Patel: Our core business model revolves around the manufacturing supply of high performance cellulose and starch based excipients, which are critical inactive ingredients in various formulations. We primarily serve three distinct yet complementary verticals like pharmaceuticals, food and cosmetics. It reduces our reliance on any single industry, cushioning us against downturns or regulatory changes in one sector.
Demand fluctuation might occur in one vertical, but our diversified portfolio allows us to flexibly allocate production capacity across industries, ensuring higher overall plant utilization and efficiency. Our ability to cater multiple high growth industries like food, personal care and pharmaceuticals widens our market significantly, creating a robust growth pipeline.
Sheryll D’Souza: So, how does Patel Chem position itself against competition in this space and also what differentiates you from the peers in terms of products as well as execution?
Bhupesh Patel: In the competitive landscape of cellulose and starch based excipients, Patel Chem’s speciality positions itself as a reliable, quality driven and innovative solution provider.
Our peers are prominent players in cellulose products. They are known for their specialization in single product MCC. While our peers are focused heavily on MCC and some co-processed excipients, Patel Chem’s speciality differentiates itself by offering more diversified, specialized portfolio within the cellulose and starch derivative space.
We also produce MCC. Our strength extends significantly into other critical super-density currents like cross-carmelous sodium, sodium starch glycolate and calcium CMC. Also, we produce versatile excipients like sodium CMC.
In this broader market, there is a broader basket of high-function excipients within our core, creating a background of robust growth in the near future.
Sheryll D’Souza: So, owning and operating your own manufacturing facilities, you have one at Vatwai, there’s Talol as well as now the upcoming one Indraad, they have been a big part of your growth, right? So, what’s your current capacity utilization and how do you actually scale or plan to scale from here on?
Bhupesh Patel: Owning and operating our manufacturing facilities has been a backbone of our growth strategy, providing us control over quality, cost and responsiveness. As of FY25, our installed production capacity for excipients across our Vatwai and Talol plants stands at 3,250 metric ton per annum.
We are currently operating at a healthy 98% capacity utilization rate. This high utilization demonstrates strong demand for our products and efficient operational management. The upcoming manufacturing facility at Indraad is a critical component of our future scaling.
This plant is specifically designed to meet the rising demand for our key products such as cross-caramelized sodium, sodium starch glycolate and calcium carboxy methyl cellulose. This expansion is not just about increasing volume, but also about enhancing our capabilities for specific high-demand excipients.
Sheryll D’Souza: So, your products cater to diverse industries and export markets as well. So, what’s your current product market share and how do you actually see the demand shaping up going forward?
Bhupesh Patel: While precise market share data for a specific excipient can be challenging to pinpoint given the fragmented nature of the global excipient market, we are confident in our significant and growing presence within our niche segments, particularly for cellulose and starch-based excipients used in pharma, food and cosmetics. Our strong order book and consistent high capacity utilization are evidence of our strong market acceptance. Regarding demand shaping up going forward, we see robust and sustained growth driven by several macro and micro trends like rising global population and increasing life expectancy continue to drive demand for pharmaceutical formulation, directly translating to higher demand of excipients.
The expansion of pharmaceutical manufacturing and healthcare access in developing economies presents significant growth opportunities for affordable and high quality excipients. Growing consumer awareness of health and wellness is fueling demand for nutraceutical and dietary supplements, where our excipients play a crucial role in formulation and delivery.
Sheryll D’Souza: So, supplying to MNCs and regulated markets come with high compliance standards, right? So, what capabilities and certification sets your company apart from all of that?
Bhupesh Patel: Basically, Patel Chem Specialities is an Indian FDA registered and approved manufacturing company with accreditation like GMP, HSECP, ISO 9000 certifications.
And our products are also certified kosher and halal for export markets. We also have filed US DMF for our key products like sodium CMC, cross carmelosodium, sodium starch glycolate and calcium CMC. And recently, Patel Chem Specialities have successfully completed US FDA inspection for our VATVA unit, which is a monumental achievement for the company.
This builds immense trust among existing and potential clients, particularly large MNCs and pharmaceutical companies in regulated markets.
Sheryll D’Souza: Let’s talk about numbers. You reported healthy revenue growth and strong margins in recent years. So, how do your key financial ratios compare to the peers and what’s actually driving that outperformance?
Bhupesh Patel: We are proud of our consistent healthy revenue growth and robust margins, which reflect the strength of our business model and operational efficiency. In FY25, we reported an operating revenue of 105.09 crore with an EBITDA of 15.27 crore and a net profit of 10.57 crore. While specific real-time peer comparison for listed companies can be dynamic, our performance metrics are indicative of our strong competitive standing.
We believe our focus on high-value speciality excipients coupled with operational rigor and robust compliance framework positions us for sustainable outperformance in terms of both growth and profitability.
Sheryll D’Souza: So, let’s talk about your IPO. Of the 58.8 crore rupees proceeds, 43 crore rupees is what you have earmarked for capacity expansion and working capital.
So, could you actually elaborate on the planned capex as well as how it will strengthen your execution capabilities?
Bhupesh Patel: Yes, from the 58.8 crore IPO proceeds, a significant allocation of 43 crore towards capacity expansion at Indraad unit are absolutely critical for our next phase of growth and will substantially strengthen our execution capabilities. This new Indraad plant will significantly increase our overall manufacturing output for key products like cross-carmelose sodium, sodium starch glycolate and calcium CMC. The Indraad plant will incorporate advanced manufacturing technologies and automation leading to higher efficiency, lower production cost per unit and superior product consistency.
This modern facility will optimize our overall production footprint. Increased in-house capacity reduce potential reliance on external factors and strengthen our control over the supply chain, ensuring timely and customized delivery. This is a critical factor for MNC clients and overseas buyers.
Sheryll D’Souza: So, you have already positioned yourself as an established, strong domestic and international player. Looking ahead, what’s your three to five-year vision? Deeper specialization? Is it going to be new chemistries or a broader global footprint?
Bhupesh Patel: Our primary focus will remain on enhancing our leadership in cellulose and start-biz executions. Of course, our ambition is to become a more dominant global player by actively identifying and entering new high-growth international markets, particularly in the region where pharmaceutical and food processing industries are expanding rapidly.
Also, increasing market share in our current export countries by building stronger distribution networks, enhancing local technical support and deepening relationships with key MNCs. Also, we would be exploring potential strategic partnerships or collaboration for market access or co-development opportunities in certain regions.
Sheryll D’Souza: So, the promoters of the company, yourself, Anshu as well as Vinny Patel, have actually steered the company’s growth. How do you describe the leadership style as well as the execution culture that’s driving your company, Patel Chem Forward?
Bhupesh Patel: I would describe our leadership style as hands-on, enterprising and quality-driven coupled with a strong emphasis on a long-term vision and continuous improvement. We have cultivated a culture that balances the enterprising spirit with a disciplined execution, a keen eye on quality and a constant pursuit of customer satisfaction. This combination is precisely what is driving Patel Chem Forward and enabling us to consistently deliver strong performance.
Sheryll D’Souza: So finally, let’s put the spotlight on the big event as you head for listing on BSE SME. What would you like your potential investors and shareholders to know about your company that’s Patel Chem?
Bhupesh Patel: Yes, Patel Chem Specialties Limited embarks on this significant milestone of listing on BSE SME. I would like potential investors and shareholders to understand that they are investing in a company with a proven track record, a robust business model and a clear sustainable growth trajectory in a resilient and high growth segment of chemical industry.
Patel Chem Specialties Limited offers investors an opportunity to participate in the growth story of well-managed, technologically advanced and high-compliant excipient manufacturing company. We are poised for sustained growth driven by our unique strength and a clear strategic roadmap. We invite you to be a part of our exciting future.
Sheryll D’Souza: And all the very best for you and your company journey going forward. Good luck to you, Mr. Bhupesh and the promoters as well as the entire team of Patel Chem. Thank you so much for joining us on this very special edition of SmallCap Spotlight.