From Local to National: A Manufacturing Success Story

This case study illustrates the transformation journey of a specialty chemicals manufacturer—a company that exemplifies the opportunity Hathwell sees in India's traditional business landscape. While details have been modified to protect confidentiality, the story and lessons are real.

The Starting Point

Prashant (name changed), a chemical engineer with 15 years in the construction chemicals industry, founded SpecChem (name changed) in 2012. Starting with a small formulation unit and limited capital, he built the business through technical expertise and relationship selling.

By 2022, SpecChem had become a respected regional player with strong customer relationships and quality products. But Prashant faced a familiar problem: the business had plateaued.

The Challenges

• Founder bottleneck: Prashant personally handled major customer relationships, technical problem-solving, and production decisions. The business couldn't grow beyond his personal capacity.
• Informal operations: No ERP system, limited documentation, and processes that existed only in employees' heads.
• Limited marketing: Growth came entirely through referrals and Prashant's industry contacts. No systematic sales process, no digital presence.
• Working capital constraints: Long payment cycles with customers (90-120 days) meant growth required capital Prashant didn't have.
• Geographic limitation: Strong in two states but no presence in major markets like Maharashtra or Karnataka.

The Engagement

SpecChem came to Hathwell's attention through our BNI network. After initial conversations and a PRIME assessment, we saw a business with strong fundamentals but clear transformation potential.

PRIME Assessment Highlights

The Transformation Plan

Working with Prashant, we developed a comprehensive 18-month transformation roadmap:

Phase 1: Foundation (Months 1-6)

Phase 2: Growth Engine (Months 7-12)

Phase 3: Scale (Months 13-18)

The Results

Key Success Factors

1. Founder Commitment

Prashant was genuinely committed to transformation—not just growth. He was willing to hire people smarter than him, delegate authority, and accept short-term disruption for long-term gain. Many transformation efforts fail because founders can't let go.

2. Right Sequencing

We resisted the temptation to pursue growth immediately. The first six months focused entirely on building foundations—systems, processes, team. This felt slow but enabled rapid scaling in phases 2 and 3.

3. Capital as an Enabler, Not a Crutch

Investment capital funded specific growth initiatives—capacity expansion, new market entry, technology systems. It didn't substitute for fixing fundamental business issues.

4. Data-Driven Decisions

With proper systems in place, SpecChem could finally see its business clearly. Which products were profitable? Which customers were worth pursuing? Which markets offered the best opportunity? Data replaced intuition.

5. Continuous Support

The transformation wasn't a one-time intervention. Monthly reviews, quarterly strategy sessions, and ongoing advisory support helped navigate challenges and adjust course when needed.

Investor Returns

Two NRI investors participated in SpecChem's growth round at the end of Phase 1, at a valuation of ₹25 crore (approximately 5x trailing EBITDA).

Lessons for Investors

This case illustrates several principles we apply across our portfolio:

• Transformation creates value: The 3x revenue growth wasn't luck—it came from systematic improvements in how the business operates.
• Entry valuation matters less than growth potential: A 5x EBITDA multiple seemed fair at entry. The real returns come from earnings growth, not multiple expansion.
• Active support accelerates outcomes: Passive capital wouldn't have achieved these results. The combination of capital + expertise + network drove the transformation.
• Time horizon alignment is crucial: Investors who need quick exits shouldn't participate in transformation stories. The 18-month journey requires patience.

Looking Forward

SpecChem's journey is far from complete. Current focus areas include:

• Building direct-to-customer channel alongside B2B
• Exploring acquisition of smaller regional players
• Developing export capability
• Preparing for potential strategic exit in 2-3 years

For our investors, SpecChem represents the type of opportunity we systematically seek—profitable businesses with transformation potential, where Hathwell's involvement can meaningfully accelerate growth.