An unknown Indian firm Dorf Ketal buys up the global catalyst business of DuPont Chemicals! Why isn’t everybody this side of the Atlantic celebrating, asks B&E ‘s Angshuman Paul
Seriously, how many of you had ever heard about Dorf Ketal? Considering that it is an Indian specialty chemicals company worth $220 million (revenues for year ending March 2009; targeting $300 million by 2010-11), you would understandably be quite reluctant to reply in the negative.
However, it isn’t entirely surprising that the company operates in relative obscurity. Besides the fact that it is a B2B player, the company has followed a very conservative model for growth and diversification. Consider this – after eight years of their corporate journey, the company decided to diversify (in 2000). And then, unlike other companies, Dorf Ketal hasn’t believed much in the concept of branding as a B2B company; even as world famous B2B companies are beginning to realise its criticality. And they intend to keep things that way. “Since we are in the B2B arena, mass consumers are not expected to know about us, but our target audiences like Reliance, IOC et al, know about us” argues a senior official from Dorf Ketal.
Nevertheless, things seem to be changing during the last decade for the company. They have grown by more than 30% during this period by cashing in on acquisitions. A bird’s eye view at the activity of the company during the past decade tells us that in a time span of eight years, the company has made at least five acquisitions to leverage potential synergies. For instance, when it acquired Sanmarg Specialty Chemicals-owned Intec, it helped Dorf Ketal to diversify into organic products like titanates and zirconates that have a strong demand in industries like oil & gas, paints & coatings, printing inks, industrial sealants, corrosion protection & emission reduction.
And now the name of Dorf Ketal has suddenly gatecrashed into notice with the acquisition of the global catalyst business of DuPont Chemicals and Fluro Products for around $40 million. The deal has been funded through debt and equity funds injected by the promoters. This particular venture of DuPont minted revenue of $50 million during 2008.
DuPont has deemed the business to be ‘non-strategic’ to its long term growth plans. On the other hand, senior officials in Dorf Ketal are hugely optimistic about the synergies that Dorf Ketal would enjoy from DuPont Chemicals & Fluoroproducts business. “It will provide us with several product innovations and technological developments pioneered by DuPont and also strengthen our position on the global platform,” says Vijay Malpani, Group Finance Controller, Dorf Ketal Chemicals (I) Pvt Ltd. The deal also enables the Indian chemical major to acquire DuPont’s assets associated with the Specialty Catalyst Business which comprises trademarks, sales, marketing and customer service. Strategically, the group has acquired the assets and deliberately avoided acquiring the entire business in terms of human capital. The company is trying to avoid the risk of a cultural mismatch with a US-based business.
The company plans to allow itself some lag time before it can take over operationally. DuPont will continue to manufacture and supply specialty catalyst products to Dorf Ketal for approximately 1 year under service and supply agreements. DuPont is also assisting Dorf Ketal with technology transfer & in setting up a new plant. Sudhir Menon, CMD of Dorf Ketal says, “The acquisition is a well thought plan to consolidate our position in newer product segment.”
Seriously, how many of you had ever heard about Dorf Ketal? Considering that it is an Indian specialty chemicals company worth $220 million (revenues for year ending March 2009; targeting $300 million by 2010-11), you would understandably be quite reluctant to reply in the negative.
However, it isn’t entirely surprising that the company operates in relative obscurity. Besides the fact that it is a B2B player, the company has followed a very conservative model for growth and diversification. Consider this – after eight years of their corporate journey, the company decided to diversify (in 2000). And then, unlike other companies, Dorf Ketal hasn’t believed much in the concept of branding as a B2B company; even as world famous B2B companies are beginning to realise its criticality. And they intend to keep things that way. “Since we are in the B2B arena, mass consumers are not expected to know about us, but our target audiences like Reliance, IOC et al, know about us” argues a senior official from Dorf Ketal.
Nevertheless, things seem to be changing during the last decade for the company. They have grown by more than 30% during this period by cashing in on acquisitions. A bird’s eye view at the activity of the company during the past decade tells us that in a time span of eight years, the company has made at least five acquisitions to leverage potential synergies. For instance, when it acquired Sanmarg Specialty Chemicals-owned Intec, it helped Dorf Ketal to diversify into organic products like titanates and zirconates that have a strong demand in industries like oil & gas, paints & coatings, printing inks, industrial sealants, corrosion protection & emission reduction.
And now the name of Dorf Ketal has suddenly gatecrashed into notice with the acquisition of the global catalyst business of DuPont Chemicals and Fluro Products for around $40 million. The deal has been funded through debt and equity funds injected by the promoters. This particular venture of DuPont minted revenue of $50 million during 2008.
DuPont has deemed the business to be ‘non-strategic’ to its long term growth plans. On the other hand, senior officials in Dorf Ketal are hugely optimistic about the synergies that Dorf Ketal would enjoy from DuPont Chemicals & Fluoroproducts business. “It will provide us with several product innovations and technological developments pioneered by DuPont and also strengthen our position on the global platform,” says Vijay Malpani, Group Finance Controller, Dorf Ketal Chemicals (I) Pvt Ltd. The deal also enables the Indian chemical major to acquire DuPont’s assets associated with the Specialty Catalyst Business which comprises trademarks, sales, marketing and customer service. Strategically, the group has acquired the assets and deliberately avoided acquiring the entire business in terms of human capital. The company is trying to avoid the risk of a cultural mismatch with a US-based business.
The company plans to allow itself some lag time before it can take over operationally. DuPont will continue to manufacture and supply specialty catalyst products to Dorf Ketal for approximately 1 year under service and supply agreements. DuPont is also assisting Dorf Ketal with technology transfer & in setting up a new plant. Sudhir Menon, CMD of Dorf Ketal says, “The acquisition is a well thought plan to consolidate our position in newer product segment.”
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