Global presence with a wide customer base across various industries having high entry barriers

We supply our products to customers in India and export our products to over 25 countries, including the USA, China, Germany, Japan, South Africa and the UK. During the Fiscals ended March 31, 2018, 2019 and 2020, and in the nine months ended December 31, 2020, exports of products accounted for 64.99%, 69.57%, 76.74% and 70.72% of our revenue from operations, respectively. We also have two wholly owned subsidiaries in the USA and Netherlands, to facilitate our overseas operations. In addition, we participate in various domestic and international industry specific exhibitions and advertise in industry magazines, weekly and daily publications in USA, Europe and India. We also actively participate events such as Convention on Pharmaceutical Ingredients (Cphi) and Chemspec. The varied applications for our product portfolio have helped us build a wide customer base across many sectors. It has also helped build on existing relationships by enabling us to provide multiple product-oriented solutions for the varying requirements of our existing customers. We also believe our customer relationships are led by our ability to develop innovative processes, meet stringent quality and technical specifications and manufacture customers’ products in a cost effective and safe manner. We have established long standing relationships with marquee players across various industries. Of our entire customer base as of December 31, 2020, 38.34% of these customers have been our customers for over five years (but less than 10 years) and 28.77% of these customers have been our customers for over 10 years. Further, we have set out below details of the new customers acquired by us, and the number of customers served by us, during the periods indicated below:

Product category Fiscal 2018 Fiscal 2019 Fiscal 2020 Nine months ended December 31, 2020
Number of new customers acquired by us 83 110 107 130
Number of customers served by us 386 444 445 449

We believe that our wide customer base across various sectors has helped us to minimize the impact of sector specific disruptions, on our business. Due to the involvement of complex chemistries in the manufacturing of products and complex production processes requiring high levels of technical knowledge and research and development capabilities, the specialty chemicals industry observes a high barrier to new entrants. Given the nature of the application of products and the complex processes involved, the products are subject to very sensitive and rigorous product approval systems with stringent impurity specifications. Typically, the requirement has to be enlisted as a supplier with customers after lengthy qualification for the products, particularly with the customers in industries such as automotive, petrochemical refineries and pharmaceutical industries where stringent regulatory and industry specific acts as an entry barrier. As a consequence of this, approval of any such product typically takes a few years. Further, the costs involved of approving any change in suppliers of such products are relatively high, consequently disincentivising any such change in suppliers. Customers typically select suppliers after carefully reviewing them and tend to develop long-term relationships with them as well as limit the number of such suppliers. (Source: F&S Report)

The specialty chemicals manufacturers enjoy strong entry barriers in the form of vendor acquisition, lengthy and complex product approval, registration process, customer loyalty among others. These barriers help companies ensure sustainable growth. Further, a distinguished and resilient business model is also a unique driver for these companies. The level of technical skill and expertise that is essential for developing in-house innovative processes, undertaking complex chemistries and handling some of the raw materials and intermediates, requires a significant amount of training that can only be achieved over a period of time thereby creating a further entry barrier for new entrants. (Source: F&S Report) In addition, with respect to end products manufactured by certain of our customers, we believe if the usage of our products has been formally recognised in filings with regulatory agencies, any change in the vendor of the product may require significant time and cost for the customer.