Founded in 1972, Vipul Organics has grown from a small dye manufacturer to a global provider of pigment and color solutions. Now led by third-generation leadership, the company is expanding into membrane technology and setting up a new facility in Sayaka. With a presence in over 45 countries, Vipul Organics focuses on integration, sustainability, and meeting diverse industry needs. Tune in to the conversation with Executive Director, Mihir V Shah below:
Mubina Kapasi: Hi everyone and welcome to SmallCap Spotlight. I’m Mubina Kapasi and today we’ll be speaking with a company that manufactures pigments, dyes, colours that are actually used in our day-to-day lives in our clothing, paints, agriculture and many other industries. The company is Vipul Organics and we have with us Mr. Mihir Shah who’s the Executive Director of the company.
Mihir, thank you so much for joining us today. The company has been around for five decades. In fact, it was earlier called Vipul Dye Chem and recently the name has been changed to Vipul Organics.
I’d like to understand a little bit about the company’s journey in the last five years and what has exactly shaped the company’s identity in the last couple of years.
Mihir V Shah: So, Vipul Organics is a 50-year-old company. It’s the journey of three generations and I would say it’s a journey of evolution.
So, it was started by my late grandfather, Praveen Bhaisa in 1972. Before that, he started a chemical venture in 1968 and Vipul was established in 1972. Since then, we have gone through major evolution both in terms of the product manufacturing as well as scaling the company.
It was almost like 100 square feet operation back in 1972 and now today we have over 1 lakh square feet plus and more than 500 people working for the company. It has been an evolution from, I would say, from a domestic dye manufacturer to a global colorant solution provider and this journey has been possible by the contribution of, as I said, of people who joined my grandfather and now I’m fortunate to work with them and it’s a journey of trust, ethics and continuous innovation. So, that has shaped what Vipul Organics is today.
Mubina Kapasi: You know, you started off as a domestic dye manufacturer and now you’ve become a global player. Could you tell us a bit about those key milestones that the company has seen?
Mihir V Shah: Yeah. So, several factors or milestones have been there in this journey that has led to this growth of the company.
So, the first one is a major shift that we did from a dyes manufacturing company to a pigment manufacturing company. Very early on in the journey, we realized that pigments had more enduring demand, global demand as compared to the dyes. So, we shifted our focus from dyes to pigments.
Also, pigments contribute to a variety of applications as compared to dyes which have a limited application to textiles. Like in pigments, we cater to the plastic, printing ink, paint, agriculture, cosmetics, you know, some part of food, textile, rubber. So, it has several different verticals and the application knowledge of each of these makes the pigment business very, very interesting.
Though we continue with our dyes business, but the entire focus expansion of the company and the innovation is happening more on the pigment front. So, the first milestone, I would say, is a shift from the dyes to the pigments. The second is backward-forward integration.
So, we are the only company in the world today perhaps that is completely integrated when it comes to the pigments. We manufacture our pigment intermediates from which we produce our own pigment powder and from the powder we produce our pigment dispersions. So, it’s to be a lot more self-sustainable, have very little or limited dependency of raw material from outside of India and also when it comes to catering to the customer, we can deliver the right quality at the right pricing given our backward-forward integration.
So, this is something that has been a key milestone in our journey and we are building on this, you know, on this backward-forward integration on every application such as like intermediates, we are focusing on making high value intermediates apart from pigments. Pigment powder, we are focusing a lot on innovating, you know, from the traditional pigments to high performance pigments as well as in pigment dispersions. We are working on multiple applications on the pigment dispersions as well.
The third definitely being a public limited company was a key milestone for us. We are listed since 1994. It was a very small issue but it was a momentous milestone for the company and the fourth I would say is our strong focus on the export market.
So, my grandfather was an early adopter of, you know, think global, act local. So, he has always been responsible for, you know, starting the export division and my father has really exponentially grown that. So, focus on the export market is our key milestone.
When we started this very early on, we were amongst the very few exporters from India and today we are one of the leading exporters when it comes to the, you know, the pigments category as such. Over 80% of our revenue still comes from outside of India. Last is, you know, our sustainability investments that we have made.
We were, as you know, that pigments and color business as specialty chemical as such is a very water intensive industry. But early on, not by compulsion but by our own will, we have, you know, invested in sustainable manufacturing practices wherein we recycle, reuse 98% of water. We are following the, you know, the ZLD system in most of our manufacturing practice.
So, that makes us more sustainable, also adds to the trust factor when it comes to the customers because they know we are not dependent on any, you know, on anybody else for our effluent. So, I would say these five were the major milestones in our journey so far.
Mubina Kapasi: I’d like to know a little bit more about your own journey in this space, in the company and what gave you or what led you to take the position that you have taken right now at Vipul Organics. A little bit about your own career path.
Mihir V Shah: So, yeah, I represent the third generation in the business. My grandfather, he started the company.
All the three generations, I would say, have been fortunate to come from, you know, a science background. My grandfather was an MSc in chemistry. My father is a, you know, chemical engineer and I have also done my pharmacy along with my MBA.
So, though I am from a pharma background, it is a part, pigments and chemicals is a part of applied science. So, a lot of overlapping of the knowledge of the background comes into place. After I was done with my MBA, I saw that there’s a big opportunity in the color space to make it global.
If you see, globally, traditionally, there has always been, you know, Germans leading the way in terms of the branding. Second is Chinese when it comes to the volume. So, there is a big opportunity for India because now it’s only India and China as, you know, as a manufacturing hub for the specialty chemical as such.
So, my idea was, I saw an opportunity, the foundation was already set for me. So, the idea was to grow the company global and get into the markets more closer to the customer. So, that is what I’m doing at the moment.
Though we are expanding in India, but we are also expanding in terms of our sales activities outside of India like in North America, in Mexico, in Egypt. So, there we are having our own people, own sales offices and that’s how we are trying to get India onto a global map which has always been dominated by the Germans when it comes to, you know, the specialty chemicals.
Mubina Kapasi: So, for someone, let’s say, who’s hearing about Vipul Organics for the first time, how would you describe the company?
Mihir V Shah: So, you know, simply put, we make life colorful. So, Vipul Organics is a color solution provider. So, any application you pick up around you, whatever you see, your electronics, textiles, printing ink, your Bisleri bottles, the food package, the food you eat, the packaging, whatever you see outside around you which has color is contributed by pigments or dyes. So, Vipul Organics is responsible for adding the color to that object that you see around you.
So, we are a global color solution provider. To give you a small example, when you pick up a Bisleri, the green cap of the Bisleri, whether you pick up from Kashmir or you pick up from Kanyakumari, the green remains the same green. So, that is the level of accuracy and the quality control that is required when it comes to the color.
When you look at any automobile, you pick up an automobile in any state of India. So, whatever color you are seeing, so that comes from pigments. Again, there you will find the color is same though they are manufactured in different plants.
So, that is the level of quality consistency that we provide when it comes to colors. When you pick up a Coke bottle from anywhere in the world, the red color of the Coke is the same red. The Ferrari red remains the same Ferrari red anywhere you buy.
So, basically, we are a one-stop solution, color solution provider globally. So, that is our positioning of our company and now we have also transcended into another very interesting application that is membrane manufacturing. We are one of the innovators and manufacturers, actual manufacturers of membranes in India.
There are very few people who actually manufacture membranes and more of them are OEMs, but we have an expertise and the plan to have our own manufacturing setup and membranes. So, I would say we are a one-stop color solution provider and now also building our capability into the membrane manufacturing.
Mubina Kapasi: So, you have a portfolio that includes pigments, dye stuffs and now membrane technologies. Could you tell us a bit about that and also how these different verticals fit into your overall strategy?
Mihir V Shah: See, basically, if you see at first glance, it may seem very distinct, but they are all based on the foundation of chemical processing, membrane science and performance optimization. The move into membrane has been very strategic for us as we ourselves use a lot of membranes for our own environmental systems that we have. So, we saw that there is a big gap in this if we can fulfill that gap because as a chemical manufacturing company, we were seeing a lot of challenges, lack of knowledge and understanding into this subject by the OEMs which we were working with.
So, and when you see at a micro level, everything is interconnected and a part of a circular economy that we really promote and encourage in our company. So, as I mentioned to you earlier, we recycle and reuse 98% of water. So, that is only possible because of the use of the right membranes.
So, the move into membranes has been very strategic by us. As you know, chemicals is a very water intensive industry. So, this was a very synergistic organic complementary product line, I would say, that is membrane.
As one side, we are responsible for increasing the pollution load, but at the same time, we are also developing novel, innovative membranes which is indirectly recycling, reusing the water and also bringing it back to our manufacturing system. So, it’s a very strategic move by us. In India, as I mentioned earlier, there is a big opportunity because it’s just the start of using membranes across the industry.
We all started as part of compulsion in terms of the regulatory, but now it’s become a norm. It’s become hygiene for every industry to recycle and reuse water. We have our capability in the chemical space.
So, we have our partners who are our raw material suppliers who also need similar product line. So, why we got into is that we also sense that a lot of people were looking up to us when they saw our zero liquid discharge facility. They asked us how did we do that.
So, to even give them a cost effective solution which is made in India, boosted us, made us go through that entire learning phase and then we started with the membrane manufacturing activity and this has been handled by my younger brother who is coincidentally a PhD doctorate in membrane technology. So, under his leadership, we have started this new vertical as well.
Mubina Kapasi: So, you’ve recently also completed a rights issue and announced plans for a new plant at Sayakha.
Could you tell us a bit about this expansion? What’s it going to be like? Any targeted date of completion and how does it essentially fit into your overall plans for the company?
Mihir V Shah: So, Sayakha is our key milestone in our next growth phase. Here, it’s going to be one of our own single largest pigment facilities for the company. It’s going to be the first plant outside the state of Maharashtra for us.
Also, we are setting up the membrane facility at the same premise. The rights issue was done to fund this Sayakha plant and why rights? Because we wanted to be responsible in maintaining our financial discipline and also we wanted to give an equal opportunity for all our shareholders to be a part of this growth journey. Hence, we did the rights.
Before this, we did three preferential issues where majority contribution was done by the promoter family but this time we thought and we also were celebrating 50 years. We wanted that the shareholders also get rewarded and be a part of this journey. So, the rights.
The rights will take care of our first phase of expansion. So, we are looking at the investment of over 50 crores. So, that is going to be majorly being through internal accruals and through this rights.
Where we are going to use this money is in terms of building a modern infrastructure, a very high level of technology when it comes to pigments and focus on economies of scale so that we can compete with the global companies who are leading this business because of higher production capacity.
Mubina Kapasi: Today, Vipul Organics is exporting to close to 45 countries. So, are there any regions or markets that you’re particularly focusing on?
Mihir V Shah: Yes. So, certainly we are looking at the North America and the South America market very aggressively. Recently, we have also incorporated a company in North America. So, the idea is to focus on having initially the stock available locally in North America and South America so that we can cater to the demand of the customer very quickly and avoid the lead time that takes about more than two months from the order to the time the goods are received by the customers.
So, to bring this down to a few hours, this move was made to have our own presence locally in that particular country. In terms of focus, we are very focused on the American and the European market. Mainly, I would say the American market is the primary focus for the organization because both North and South America are the biggest consumers when it comes to the organic pigments and the pigment dispersions.
Along that, we are focusing also on African markets because Africa is a developing country. There also, there is a lot of consumption done by the population there. So, that is our focus.
Thirdly, we are also focusing in India business now. I look after the India operation. So, as I mentioned earlier, it has been 85% of an export-oriented company but India, as we know, is growing very fast as compared to the rest of the world.
So, India also, we continue to grow our distributors. We already have about 15 distributors in India and this number is going to grow very fast because of the variety of applications we cater to and with our increasing production capacities, the idea is to have the local stock outside of India as well as within India through our distributor channel. Got it.
Mubina Kapasi: Okay. Now, you know this specialty chemical space which is essentially where Vipul is operating is obviously competitive. So, I would like to understand from you, what do you think sets Vipul apart?
Mihir V Shah: You are right, it’s highly competitive and you must have read a lot of big players in the last four to five years have even exited this business who traditionally were the leaders like BSF, Clarend, Hoibach.
So, this gives us an opportunity, right, that traditionally, as I mentioned, it was dominated by these multinationals and now, you know, the ball is, the game is more open for others to step in. So, we are trying to step and take this position globally. It is a very competitive business.
So, I would say it’s become, it’s going to become the survival of the longest and the fittest in this particular space. We are, as you know, very, very focused onto the colour solution since the last 50 years. We have not really invested in any other, you know, diversification or, you know, complete new business or something like that.
The focus has always been into speciality chemicals, primarily into colours. So, that is our USP, I would say. We have a competitive advantage when it comes to the value chain because as you know that, you know, we are backward forward integrated.
So, that really gives us the leverage and a key differentiator point also for us to set us apart from our competitors because there are competitors who, you know, who are bigger than us but they are primarily focused onto, you know, just one aspect. So, there are companies who are only focused onto the pigments, there are few companies only focused onto the dispersions and companies who are the raw metal supplier, they don’t manufacture pigments. But we have our equal focus on all the three segments and that’s something which, you know, gives us an edge over our competitors.
Second is customer intimacy that we share. As you know, Vipul is a 50-year-old company. So, we have a legacy of 50 years.
There are customers, you know, till date who started with few hundred kgs of business and who have grown along with us and, you know, they are not going to see the quality, they are just going to see that it’s coming from Whipple. So, the quality is going to be of top notch. So, we enjoy such customer base who really, you know, respect the company and we respect them in return.
So, that gives us a motivation to continue. Second is sustainability. As you know, I explained earlier, we invested heavily onto, you know, sustainable manufacturing practices.
So, there is no, you know, cutting corners when it comes to following the regulation at Vipul Organics. So, again, you know, in the long term, the people who are going to follow the right business practice ethics in terms of the manufacturing are going to last in this particular game. And we are very agile and responsive, I would say, when it comes to our customer demand.
So, unlike other, you know, giant companies, we don’t follow the model of, you know, brochure selling, I would say that, you know, I have an X product in my brochure and this is the only thing which you can buy if you want. We understand the needs of the customer firsthand. We have an excellent R&D development team with us who provide tailor-made solution for our customers.
So, this capability very few companies have because the understanding of the color, you know, is not as much prevalent in today’s time as it was two or three decades ago. There are very few people now in the market who have this technical expertise and color is something that you learn every day and you learn to grow every day. So, there are a handful of people remaining in the industry who are very, very knowledgeable.
We are fortunate that we have several people who have spent nearly three decades, four decades, two decades in the color industry and, you know, are leading the growth phase in Vipul Organics. So, you’re right, it’s a competitive space but we have found our edge, the differentiator with these pointers and also we have invested heavily on the application side. So, that is something that also sets us apart that when we work with the plastic industry, to give an example, we have the same brand of equipment that the number one plastic company in the world would have.
So, we want to be more and more closer to the customer as compared, you know, to our competitors so that we understand their language better and we can service them faster.
Mubina Kapasi: All right. Okay, Mihir. Now, the other impetus for companies like you is the government’s entire Make in India initiative. Obviously, chemicals is the kind of industry where you see a lot of import from China. So, what do you think of this entire Make in India focus and how is this aligning with the larger industry trend that you are seeing?
Mihir V Shah: We are fully aligned. The fact that we are expanding with the Sayakha facility is an example of how we are fully aligned with, you know, the government’s initiative of Make in India. As I mentioned to you that we are manufacturing for the world now with the Sayakha facility coming into place, the economies of scale is going to kick in. So, you know, the Chinese have dominated this particular space because of the economies of scale.
So, there we are trying, you know, to fill this gap with an increased production. Second, through the circular economy, I mentioned to you about our membrane technology. So, when it comes to Make in India, also the government is focusing a lot on the green initiative.
So, the fact that we are investing into the manufacturing of our own membranes, not only for our company, but for the entire country, that itself is, you know, a testament for Vipul Organics to, you know, to, I mean, to be in align with the government’s initiatives. And I mentioned that, you know, Make in India is not just about domestic substitution, but about building global Indian brand. So, in the beginning of our interaction, I mentioned that is our ambition to be a very global color solution provider and a trusted brand.
Mubina Kapasi: I’d like to know a little bit about the leadership team that’s working alongside with you to help propel the company to reach newer heights.
Mihir V Shah: Yes. So, we are investing a lot in our people in growing our team, in growing the capability and also growing the skills of our, you know, our contract workers across.
So, leadership is something that is going to drive the next growth phase for the organization and we are very consciously committed in developing. So, in terms of the senior leadership, my father is the managing director of the company. I am the executive director.
I look after the operations and, you know, few key global accounts and growing strategically into other applications of the color. So, recently, we have also, you know, expanded into the paper color business and now I’m happy to share with you, we are one of the leading color solution provider to the paper industry in India. So, like this, there are other application where we are working with some stalwarts in the industry who are guiding the company and making us, you know, better and better in newer and novel applications.
In terms of overall leadership, I would say that there are people who joined my grandfather and now they are still continue to be a part of, you know, the company. So, we learn a lot from their experience. Alongside that, there is also a new mix, a new talent, young blood in the organization.
So, we have a mix of both, you know, the experienced people who are sharing their wisdom and experience and the energy of the youngsters who are also proving to be great leaders in their own space, in their own vertical. So, overall, the organization has a mixed bunch of, you know, people having great experience and also people having a lot of energy and I think this is the right combination to go forward.
Mubina Kapasi: So, when you look 5 to 7 years ahead, what’s the vision that you have for Vipul Organics?
Mihir V Shah: So, in the next 5 to 7 years, I would say it is to be recognized as a global color solution provider, to have a name established in terms of the same trust factor that was, you know, with the other multinationals.
Internally, we want to double our, you know, the pigment manufacturing capacity. We are working on launching high performance pigments. So, moving away from the traditional pigments to high value, innovative pigments, expanding our portfolio onto the pigment dispersions across various applications, like we are working on, you know, having our own colorants for the cosmetic vertical for the printing ink business because that’s going more and more into the waterways.
As you know, cosmetics was always dominated by solvent by NC system, but we are working on, you know, having our own water-based technology when it comes to color, which is much more eco-friendly, safe for use. And also, it is fitting well into this bracket that the consumers, you know, are getting more and more, you know, there is aspirational amongst the users. They are spending more on themselves.
So, we are trying to, you know, do as much as we can by giving a safe coloring solution to this industry of cosmetics as well. We want to establish our name into the membrane manufacturing sector also. So, that is going to be under the name of Adimem Technologies.
And also, overall, we want to be the most preferred one-stop global solution provider.
Mubina Kapasi: Are there any specific targets or milestones that you are looking at in the medium term in terms of scale, in terms of market or product diversification?
Mihir V Shah: So, immediately, it is to commence the Sayakha operation, I would say, and also to, you know, make it run on auto mode. So, that would be the number one priority.
Second one is to double our pigment capacity and, you know, the pigment business. So, that is number two milestone that we are looking at.
Third is going into further markets. Right now, we are amongst 45 countries. The target is to go up to 75 countries.
Fourth is to have our own operations in, you know, in various countries, like growing our US operations, having our own sales team and sales operations in North America and as well as in South America.
Fifth is to make Adimem Membrane Technologies a successful venture for the company so that we have a significant presence in green chemistry and sixth to continue to invest in our R&D capabilities to develop innovative products, to develop products that are more sustainable, more green using greener chemical technologies. And, overall see the idea for us is not get in to the big volume race as a specialty chemicals which you must’ve heard these many million tons per annum etc. we want to be a very healthy company when it comes to our top and bottom line specifically, captively use the colours and provide the end solution so that we reduce the operations for our customer, be one step ahead of our competitors in delivering the products, more than what the customer requires and in the right costing. So that is the vision for the next 5-7 years.
Mubina Kapasi: Alright, Mihir. This was indeed a very insightful conversation. Thanks so much for joining us. And thank you viewers for tuning in. Don’t forget to hit the ‘Like’ button, share in the comments below what you think of this company and we’ll be back with a brand new company right here on this channel.