S. C. Mehta
Chairman & Managing Director
From a Gas based chemical complex mindset of over 35 years, last year we took an outside-in strategic deep dive to create a vision for our next decade into covering the four sectors we find ourselves in, namely:
• Crop Nutrition • Performance Chemicals
• Mining Chemicals • Lifestyle Mall
What will give us sustained strength… what will create shareholder value…Drawing from the deep-rooted, soul-searching, emerged a confluence of the classical two ends of strategies
Commoditisation, as is typically known to be, relies on the strength of size, scale, efficiencies and backward integrations for delivering sustained results. The outcomes would bring:
- Market Shares
- Cost Optimisation
- Risk Mitigation
- Industry benchmarked returns
Customisation, as is typically known to be, relies on the strength of segmentation, focus, value addition and holistic offerings. The outcomes would bring:
- Premium positioning & value pricing
- Entry barriers
- Brand creation
- Sky-high innovation scope
Commoditisation and customisation do sit at contradictory ends, requiring mindset allocations of different kinds, namely - High capital management v/s intense empathy, narrow product range v/s holistic soultions approach, cost optimisation v/s Valueenhancement.
What has now emerged as our game plan for the next decade is a happy convergence of the two ends and the beginning of a transformative journey from customers to consumers.
Our thrust on distilling the advantages of commoditisation is reflected in:
a) With the trippling our capacities of the NPK Fertilisers commissioned last year that has helped climb our market share in Maharashtra from 12% to over 20% this year. In the year ahead, we plan to further enhance the cost optimisation drive as we spread our sharpened fixed costs over more volumes.
b) With the new Acid capacities soon to be commissioned at Dahej, now we will scale up to probably be Asia's largest Acid complex serving three unique end industries.
c) With the effective steps taken to double our manufactured IPA capacities and combining with strategic trading in solvents, we plan to be a holistic and favoured supplier to the Pharma Sector.
d) With the acquisition of worldclass ready unused assets, we will scale up our TAN capacities by another 75% and inch-up to become among the Global top three merchant TAN suppliers to the Mining Sector.
e) Above all, again the advantageous acquisition of a world class Kellog- Brown-Root nused facilities for Ammonia, will provide at one-go a 100% backward integration to our ready Chemical, TAN and Fertiliser downstreams mitigating the risks of timely availability of cost effective life-line Raw Material.
Despite the large capex plan we see a Risk Mitigation enfold since:
A) For every single capex plan, we are advantageously relying on our 40 years of proven strengths in Raw Material Sourcing, Manufacturing, Energy management, Safety, Pollution norms, Logistics, Sales, Distribution, Collections and Regulatory environment management.
B) For each of the Capex Plan we have captured cost effective top class assets en-block which will not only give us lower capital costs but also a head start in project delivery schedules as well as simpler project management.
C) The capex plan being in the very same products where we already have strong market presence, we see the lowest gestation phase to ramp up from commissioning to rated capacity utilization which could otherwise have been a typical painful initial phase in any capexcycle.
D) Based on current operations we are already putting in place various Business Excellence initiatives encompassing IT, logistics and operation efficiency systems that will make us future ready and customised to the needs saving precious ramp up time. However, the strengthening and scaling up on the commodity strategy is only half the story.