Case Study | 26 August 2025
How an Indian Specialty Chemical Startup Tackled Environmental, Social, and Regulatory Challenges to Achieve Sustainable Growth
Posted by : Abhishek Bhardwaj
An emerging Indian specialty chemical manufacturer found itself struggling with increasing cases of environmental, safety, and compliance challenges. Loaded by high operational costs, outdated production methods, and increasing public pressure to adopt greener practices, the company faced stagnation just three years after launch. In search of a path forward, the company approached Research Nester Private Ltd. for guidance on aligning its operations with changing environmental and social expectations without sacrificing profitability or market growth.
An overview:
1. Established in 2018, the Gujarat-based startup entered the specialty chemicals market with an ambition to serve customers both in India and overseas. It emphasized manufacturing specialty polymer additives and fine chemical intermediates for industries such as pharmaceuticals, agrochemicals, coatings, and packaging. Two manufacturing units, one in Vadodara and another in Bharuch, quickly gained a reputation for delivering high-purity products with consistent performance.
2. But the company’s faith in energy-intensive petrochemical feedstocks, its use of non-renewable resources, and its limited waste treatment facilities soon caught the attention of environmental rule makers. Meeting the requirements of the Hazardous and Other Wastes Rules (2016) and the Environmental Protection Act became an additional operational strain.
3. By mid-2020, the business was facing fines, the suspension of export licenses, and even a temporary shutdown order at one plant. Without a transparent, clear strategy for environment-friendly manufacturing, expansion plans were put on hold.
4. In late 2020, management brought in Research Nester to review the company’s product and process portfolio, uncover compliance gaps, and design a roadmap that would make its operations compliant, competitive, and sustainable.
The Story
When the company entered the market in early 2018, conditions looked promising. Demand for specialty polymers and intermediates was climbing in India, and the startup closed its first year with revenues of around USD 120,000. Orders from both pharmaceutical and agrochemical clients were strong, and the founders anticipated doubling output within two years.
However, rapid growth revealed weaknesses. The thermal oxidation units used for treating volatile organic compounds were not produced for the increased production volume. The effluent treatment plant was outdated, and hazardous waste storage did not meet prescribed safety standards.
By August 2020, following an unannounced inspection by the Gujarat Pollution Control Board (GPCB), one facility was ordered to halt operations pending compliance upgrades. The penalty charged was about USD 4,200. In addition to lost revenue, the reputational damage began affecting client trust, especially among export partners in Europe who were increasingly emphasizing ESG (Environmental, Social, and Governance) credentials in supplier evaluations.
Social issues soon followed. Local communities raised complaints about odor emissions and water contamination risks. Coverage in local media increased scrutiny. The founders recognized that without a complete operational overhaul, the business risked losing relevance both at home and abroad.
Our Solution:
Research Nester suggested a multi-layered, comprehensive turnaround strategy that solved immediate compliance concerns while creating a foundation for long-term sustainability and growth.
Regulatory Gap Analysis and Compliance Roadmap
- Conducted a full audit of manufacturing operations against Indian environmental laws, GPCB norms, and relevant international standards.
- Identified 14 primary compliance gaps from unsafe waste storage to excess carbon discharge.
- Made a 24-month pathway focusing on rapid, high-impact fixes to support the immediate reopening of the shut-down building.
Move to Green Chemistry Practices
- Suggested to replace petroleum-based feedstocks with bio-based raw materials, such as plant-derived oleochemicals, for selected products.
- Introduced enzymatic synthesis methods for certain intermediates, reducing both reaction temperatures and energy consumption.
- Installed solvent recovery units, cutting waste and lowering solvent purchases by 18%.
Process Innovation with Bio-Based Platform Chemicals
- Suggested using metabolically engineered microorganisms to produce specific specialty monomers.
- Applied continuous flow reactor systems to improve yield by about 12% and reduce batch variability.
- Expanded an AI-enabled energy tracking to streamline electricity and steam usage.
Digital Modernization with Cloud-Based Management
- Launched a cloud-based SaaS platform for production scheduling, compliance tracking, and real-time emissions monitoring.
- Allowed remote oversight for management and instant reporting to regulators and clients.
Community Engagement and ESG Positioning
- Facilitated structured meetings with the local community to solve issues and share progress updates.
- Published an annual sustainability report detailing progress on carbon reduction, water savings, and waste management.
- Marketed the company as a Green Chemistry Partner to strengthen its appeal to environmentally conscious clients.
Results
The recovery process required notable effort and investment, but the results were clear and prominent:
Facility Reopening and Regulatory Clearance
- The closed facility resumed operation within nine months after the GPCB approved the upgraded systems.
- No major compliance violations were recorded over the next two years.
Sales Recovery and Growth
- Turnover, which had fallen to USD 45,000 in 2020, rebounded to USD 95,000 by the year 2022.
- Export sales went up by 33%, enabled by the company’s robust ESG profile.
Improved Cost Efficiency
- Energy optimization and solvent recovery reduced operating expenses by roughly 15%.
- Switching to bio-based inputs lessened dependence on volatile petrochemical markets.
Reduced Environmental Footprint
- Carbon intensity dropped by 22% over two years.
- Water recycling efforts saved about 8 million liters annually.
Better Community Relations
- The company sponsored a small water treatment project for a neighboring village.
- Positive coverage in regional business media supported in restructuring the brand as a trustworthy, responsible, and forward-looking brand in the industry.
By 2023, the startup had not only settled operations but had also built the foundation for next-generation expansion. Expansion into bio-based specialty resins was already on the agenda, with the company confident in its ability to compete in a market where sustainability is as important as performance.
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