How an Indian Specialty Chemical Startup navigated the environmental, social, and regulatory obstacles to work its way up the success ladder?

An Indian chemical company producing a range of specialty chemicals found itself trapped amidst stringent environmental and regulatory protocols. The compliance costs and process modification requirements were hampering its growth. The company authorities turned to Research Nester Private Ltd to help manage the regulatory and social landscape for survival and sustainable growth.

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An overview:

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An Indian Startup, ventured into the production of specialty chemicals in May 2017 with the aim to build a strong market position in the domestic region and globally. It opened 2 facilities in two locations in Gujarat. Its major products were linear carbon chains, called alkanes, that were used in various applications such as cosmetics, food waxes, paint, coatings, lubricants, and other industries. The company intended to tap the regional market and diversify its customer base.

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However, the use of energy-intensive petrochemical and oil processes was not going down well with the environmental norms, and government regulations. This majorly challenged its operability.

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By September 2019, the leadership had significantly failed to incorporate a replacement strategy that would be environmentally sustainable. It then sought out Research Nester’s services to facilitate long and sustainable growth with profitability.

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Research Nester offered to analyze its product portfolio as per the regulatory norms of the Indian government. Apart from that, it also speculated the incorporation of bio-based production of alkenes by the company.

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The Story

The Startup dealing in specialty chemicals started operations in May 2017. The demand for the products was high since they were used as raw materials for multiple industries and as such the company showed a successful turnover in the first year. However, in December 2018, owing to the failure in complying with a range of regulations including environmental norms, hazardous waste management, and flouting social responsibility protocols, the company was slapped with a financial penalty of 2 lakhs (~USD 2422), and 1 of its 2 facilities was sealed. The company leaders failed to devise a convincing and also socially and environmentally responsible plan to reinstate the production. Finally, they reached out to Research Nester to lead them towards sustainable growth while staying up to date with the latest regulatory compliances.

The Solution:

The startup boasted a highly in-demand product portfolio. However, as analyzed by the RNPL team, the production process was not environmentally friendly. The processes such as thermal cracking, hydrocracking, polymerization, alkylation, and isomerization of alkanes were energy-intensive processes that produced significant carbon emissions. With the deployment of bio-based production technology, this pain point could be managed efficiently. Research Nester analysts offered a customized solution to the client startup in the analysis repost of Bio-Based Platform Chemicals Market Analysis. The potential prospects of the use of metabolic engineering of microorganisms for the production of a range of chemicals were highlighted in the market study. Research Nester analysts observed that alkenes and alkanes were important high-value chemicals with a wide range of industrial applications, but the company needed to re-strategized its production processes to incorporate the following-

  • Environmentally friendly raw materials and green practices.
  • Metabolic engineering strategies that use microorganisms to biosynthesize alkanes and alkenes naturally.
  • A conversion process that uses less energy per gallon facilitating low carbon emissions.
  • The introduction of a cloud-based software-as-a-service (SaaS) model to modernize the production process.
  • Proper waste management practices.

Finally, by the efficient and effective amalgamation of the above, the company started achieving better sales figures and a strong market position.

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Results

The Company had already invested ~USD 9 million in its two facilities. In the first year, the turnover was ~USD 67000. However, by the end of 2019, with the penalty and sealing of one of his facilities, the company’s turnover dived down to a meager ~USD 15500. The first quarter of 2020, along with the onslaught of COVID-19 saw negative growth. In September 2020, Research Nester analysts after reviewing the drawbacks and key pain points of the Company’s strategy suggested a restructuring of the production processes. It also incorporated cloud-based strategies and practices based on research and development. RNPL environmental analysis brought in knowledge and a better understanding of the regulatory dynamics. Deploying the bio-based tools and technologies, and meeting regulatory norms, the company was able to have its facility unsealed and resume operations by the end of 2021. The turnover of the company started picking up pace and by the end of 2022, it stood at a robust value of ~USD 80,000.

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Swara Keni

Head- Global Business Development

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