Best CEOs: How Ande Prathap Reddy made Balaji Amines into a specialty chemicals giant

If you believe that you can find rags-to-riches stories only in movies, then Ande Prathap Reddy’s tale will make you sit up. His 10-km walk to school from a remote hamlet in Telangana (earlier Andhra Pradesh) served as an everyday motivation to become a “moneyed man” someday. “I have seen poverty. Those days inspired me to take risks and do something big,” he says.

Reddy was barely 25 when he started his first venture in 1976, with a bank loan of Rs 25,000. After dabbling with around eight successful small-scale ventures in RCC (Reinforced Cement Concrete) spun pipes, asbestos cement pressure pipes and the like, he changed tack in 1988. “I diversified because it was no longer viable to run these small businesses,” says Reddy.

By then, he had realised the high export potential of ‘speciality chemicals’. In common parlance, speciality chemicals are either single-chemical entities or mixtures of various chemical ingredients designed for some specific industrial applications. Back then, no Indian manufacturer was considering this sector as a potential business opportunity. “I started Balaji Amines [in 1988] with a small plant using indigenous technology. Alkyl Amines was my competitor, which took its amine technology from a UK company. But, I was the first [Indian] to take a local [amine] technology and perfected it at one-fourth of the price,” he says.

His first product, methylamine, is used extensively in industries like pharma, agrochemicals, water and paint chemicals, paint removal, resin, etc. Today, 45 per cent of his company’s revenue comes from pharma, while agrochemicals contribute 35 per cent. It is the largest domestic manufacturer of methylamines—producing more than 400 tonnes per day—and commands more than 60 per cent of the market share. Reddy, who had started the company with Rs 3 crore, has turned Balaji Amines into a Rs 2,300-crore (FY22 revenues) speciality chemicals giant. No wonder then that he is the winner in the Emerging Companies category of the BT-PwC India’s Best CEOs ranking.

Balaji Amines imports bulk raw material like methanol (8,000 tonnes every month) from countries like Saudi Arabia and Iran, makes speciality chemicals, and sells/exports the products. It saves a significant amount through import substitution. Around 35 per cent of its products are exported today to places like Europe, Japan, China, etc. Today, Balaji Amines has more than 12 plants in Maharashtra’s Solapur, and it has a portfolio of around 30 products.

If you think Reddy has had a charmed life since he turned entrepreneur, you’re far from the truth. Of course he faced challenges. “There were a lot of problems during the initial days. We had taken up the challenge of setting up a high-tech speciality chemicals plant that can compete with internationally developed technologies. Even today, we don’t have much competition in India, but are competing with global multinationals like BASF and Dow,” he says.

There have been challenges in the recent past as well. His customers in the pharma and agrochemicals sectors have been “facing profitability issues” for the past six months. Their demand and pricing have been adversely affected due to volatility in input cost caused by supply chain disruptions and fluctuations in oil prices. But Reddy, who knows the business inside out, is unruffled. “Our growth will come from stabilising the recently commissioned plants for dimethyl carbonate (DMC)and propyl glycol (PG) and commissioning the ongoing expansion projects for n-Butylamine and methylamine plants. The ongoing de-bottlenecking of some of the existing plants will also contribute to our growth this year,” he says.

In exports, too, the company is expected to see some headwinds. “We were exporting 35 per cent of our products earlier; that number has become 15 per cent due to lack of demand because of the [Russia-Ukraine] war.”

Since inception, Reddy has been closely involved in the day-to-day functioning of the company, but in the past few years, his prime focus has been on developing new market strategies, product selection and planning processes. “I am hands-off on operations; they are driven by the competent teams we have built in the past few years. I pick industries where I am either the No. 1 or the No. 2 player. My time is spent looking for future growth opportunities and long-term sustainability of the business,” says Reddy.

For 75 per cent of the products it manufactures, Balaji Amines is the only manufacturer in India. The reason for his success, says Reddy, lies in his agility and risk-taking nature. “Over the years, I have obviously made more correct decisions than wrong ones, resulting in value creation and growth of the company. I continue to be a risk-taker, which I believe is an important component of building a sustainable and growth-oriented business,” he adds.

As Balaji Amines continues to scale new heights, Vinay Khattar, Head of Research at Edelweiss Securities, believes its strong investment plans will drive the company’s long-term growth. “Under Phase II of the greenfield project, Balaji Amines announced a strong pipeline of capex for setting up the n-Butylamine capacity (15,000 million tonnes per annum), the acetonitrile plant (15,000 mtpa) based on new technology, which will aid in absorbing acetic acid price volatility, and the 40,000 mtpa capacity addition of methylamines to satisfy rising demand from the agrochemicals and pharma industries,” he says.

According to Khattar, Balaji Amines’s performance over the next three years will be driven by volume growth, coming from DMC and PG plants, n-Butylamine, dimethyl formamide, acetonitrile and methylamine plants. “With the operationalisation of these plants, the management aims to achieve the Rs 4,000-crore mark in top line. We expect Balaji Amines earnings to register 22 per cent CAGR over FY23-25E,” he says.

At 72, Reddy is not done yet. His vision is to make Balaji Amines one of the most efficient and value-creating speciality chemical companies in the world. “Given the base we’ve established, I believe we’ll reach there in the next few years,” says Reddy, who is often credited with putting India on the global map when it comes to quality speciality chemicals.

@PLidhoo