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Section A: Chemical Industry

Many chemical companies are located across the Mumbai cluster but there are certain areas such as Badlapur that are specifically reserved for these companies. The chemical companies produce almost all products in the chemical product segment.

The main highlights from the primary data collected on the SMEs in the chemical industry are presented below:

Characteristics of the chemical companies in the Mumbai cluster

Ownership pattern

As per the survey, private limited companies dominated the chemical companies in the cluster, constituting 60% of the sample. The partnership and proprietorship firms constituted 20% each of the surveyed companies.

Segment-wise classification

The survey reveals the various segments in which the chemical companies in the Mumbai cluster operate. Among these segments organic chemicals and inorganic chemicals were the two prominent segments which were a part of the business operations of the respondent companies.

Among the companies that cited organic chemicals as one of their segments, approximately 25% companies had their own brands. The use of brands among the companies that indicated inorganic chemicals as one of their segments was even lower at approximately 14%.

Industries served

Chemicals are used as raw materials and as processing agents of various intermediary products by many industries. The chemical companies surveyed in the cluster cater to various industries like pharmaceutical, agrochemicals, paints, plastic, food processing, textiles and others. Among these industries, the pharmaceutical industry emerged as the most prominent industry catered by the respondent companies in the cluster.

Operational analysis

Revenue classification

As per the survey, the turnover of 48% of the chemical SME’s was less than Rs 40 mn during FY09. The respondent companies whose income was more than Rs 250 mn constituted 7% of the sample.

Exports

The major export destinations for the respondent SME’s in the Mumbai cluster were Europe, US, Middle East and Asia. Europe emerged as the most preferred export destination.

As per the survey, approximately 33% of the companies catered only to the domestic market while 30% of the companies generated 50% or more of their revenue from exports.

Production details

Capacity utilisation

Majority of the chemical SME’s (60%) in the cluster have a capacity utilisation of 70% and more. All the surveyed companies work in two working shifts on an average and 30% companies have more than one plant. As per the survey, almost 50% chemical companies were operating at or above 80% capacity utilisation, pointing to high level of efficiency among the companies.

IT adoption in business

According to the survey, IT adoption is largely prevalent among the chemical SME’s with more than 75% of the respondents belonging to this industry adopting IT in their business. However, the share of expenditure on IT of 58% of the chemical SME’s was less than 1%. The survey also revealed that only 4% of the respondents are planning to increase their IT budget.

Challenges faced by companies in IT adoption

The survey revealed the various challenges faced by the chemical SMEs while adopting IT in their business. As per the survey, almost 81% respondent chemical SMEs cited scalability constraints (too small a business for IT adoption) as one of the challenges hindering IT adoption.