Pricing reactor hours and testing export demand

A multipurpose plant sells time, not tonnes. Each campaign needs cleaning, changeover and sometimes new equipment, and it displaces something else. With the plant heads I maintain a rolling eighteen-month view of reactor occupancy at Vapi and Sarigam, ranked by contribution per reactor-hour rather than margin per kilogram. That measure regularly reorders our priorities: a high-margin molecule with long cycle times and difficult effluent can earn less per hour than a plain intermediate. I use the view to decide which enquiries deserve process development, and to show the sales team why a large order may still be declined. The plant heads own the schedule and its safety. My role is to make the economic choice between campaigns visible before commitments are made, not after the reactors are already full.

After 2020 many customers wanted a second source outside China, and Indian producers received more enquiries than they could serve. I separate four stages in that demand: an enquiry, a sample, a validated commercial batch and a supply agreement with volume and price-adjustment terms. Only the last two support a capacity decision. I also compare Chinese export prices for our main intermediates with our own every month, because a customer's interest in diversification weakens quickly once the price gap widens. Since 2022 our rule has been that new dedicated capacity needs signed agreements covering at least 60 per cent of its first three years' volume. The rule has cost us opportunities. It has also kept us from building plants for buyers who were mainly using our quotations to negotiate elsewhere.

Crop-protection innovators offer long, technically demanding programmes, and a good one can come to dominate a supplier's revenue. I track concentration in three ways: share of revenue, share of gross margin and share of reactor time, because each can tell a different story. Reducing dependence is mainly a question of where scarce process chemists and kilo-laboratory slots go, and that allocation has to be discussed openly with the large customer, who will notice it anyway. I would rather explain a diversification plan to a key account than let it infer one from slower responses. I also accept that concentration sometimes falls for an unwelcome reason, such as a customer's destocking, and I report that separately from the progress we have made through our own effort.

In a family-promoted company an old business is rarely just a business. It may be the founder's first product, a relative's responsibility and a source of standing in the town. I have learnt to agree exit criteria before a unit's results deteriorate, so that the discussion concerns the company's capital rather than one person's management. The criteria we now apply are return on capital employed over a full price cycle, the unit's claim on effluent-treatment and utility capacity, and whether a better owner exists. I prepare the analysis with finance and the unit head, and I make sure the promoters hear it from me before it appears in a board paper. Independent directors then need a fair account of what the family is giving up, including people and history, not only the valuation.