In an exclusive interview with Pravin Prashant, Editor, Indian Chemical News, Ravi S. Jalan, Managing Director, GHCL Ltd. talks about company's achievements, future plans, diversification, revenue forecast, renewable capacities, digitalization, R&D, CSR, and net zero

Key milestones achieved by GHCL in the last 40 years and what is the way forward?

As an organisation, GHCL has achieved many milestones but, if I have to recount a few, I would like to mention that today, we have India’s largest Soda Ash plant at a single location, with a production capacity of 1.2 MMTPA. We have been certified a Great Place to Work for seven years in a row. Our revenue is more than Rs. 4,500 crores, which is a six fold increase since 2010. Our profits are close to Rs. 1,000 crores, ten times higher than our profits in the same period. We have been able to reduce our debt from almost Rs. 1,900 crores in 2010 to become a net cash surplus company in 2023. If you look at market capitalization, we are now at Rs. 7,000 crore plus, for both the combined entities as the demerger is completed in the current year. Our investor pay-out is close to Rs. 700 crores through two buybacks and dividends in the last six years.

The spinning business has also seen a similar turnaround. It was a sick company under BIFR when we acquired it in 2002, and today it is a profitable spinning mill and one of the most reputed in South India. We have an installed capacity of 224K ring spindles which is a significant increase from 65K spindles when we began. Our Green Energy portfolio which is now more than 62 MW caters to almost 75% of energy requirement of the spinning division and is a benchmark in the industry.

There has been a complete transformation of GHCL in every possible way. The company has moved from a general manufacturing company to a value creator for the stakeholders in terms of RoI, corporate governance, CSR, adoption of environmentally friendly policies, and digitalisation, to name a few. As an organisation we have come a long way and we are grateful that we have been able to create value for our stakeholders. We have also had to take certain difficult but necessary decisions along the way - we divested from the Home Textiles business in 2021, which was important from a capital allocation perspective. We also demerged the Chemical and Spinning businesses into separately listed companies in the current year.

Going forward, we want to continue creating value responsibly for all our stakeholders. Our customers are our top priority, our relationship with vendors is more of a partnership. Society is an important stakeholder for which we have launched many initiatives under the aegis of GHCL Foundation that focus on agriculture, healthcare education, skill development, and empowering women to be equal contributors to India’s growth journey. We also have a target of 30% reduction in emissions by 2030.

From being an unknown company, GHCL, today is recognized by the stakeholders as an organisation that truly represents their interests. All these milestones give us the confidence that we are on the right path. We have delivered what we had promised to our stakeholders and the journey shall continue.

From this fiscal, you are leaving your legacy and focusing more on chemicals. What are your plans for the next 2-3 years and how do you plan to execute it?

The greenfield project in Kutch is being set up with an initial investment of around Rs. 4,000 crores and will take at least 2-3 years to complete. This project, once implemented will cement the growth of GHCL, create a robust foundation and provide responsible and enhanced growth for all our stakeholders.

Secondly, we will continue the journey of good governance practices and our focus on the cost and serviceability to customers. Our business practices shall continue to centre on accountability, transparency, efficiency, inclusivity, and compliance with the law. Without compromising on our values and governance we will continue working on the growth and expanding the product basket to enhance our opportunity size going forward. Soda Ash has huge demand and requirements across sectors including green initiatives such as solar energy, EV batteries, flue gas treatment etc. But product basket diversification is essential for expanding our footprint and future proofing the business.

In GHCL Textiles, we believe that we are on the growth path with an optimum mix of the right management team, a well-diversified product basket, value added products to fulfil specific customer requirements and almost 75% of energy requirements being fulfilled through renewable resources. Going forward, we are positive that the business will continue to take forward the GHCL legacy of creating value responsibly for its stakeholders.

You talked about product market basket diversification. Areas where you are looking for diversification?

We are setting up a vacuum salt infrastructure that will initially be B2B and ultimately B2C. We are also looking at bulk chemical opportunities especially through the inorganic route. In this direction, we are identifying chemicals that have huge growth potential in future.

Can you shed more light on the vacuum salt project?

Vacuum evaporated salt is a better form of edible salt as compared to solar evaporated salt. It is a premium product and has been well appreciated by consumers. Our manufacturing process will entail using the waste heat from the existing plant for making this product which will make it more competitive for the consumer. We will be investing roughly Rs. 170 crore in this project which will start production by December 2024.

What is the revenue you are expecting in the next three years?

This year our revenue was about Rs. 4,500 crore. Once the greenfield project is implemented, we believe our revenue will be close to Rs. 7,000 crore.

In terms of renewable capacity you have done pretty well in textiles but how do you see renewable capacity being added in the Chemicals business company?

Enhancing our renewable energy portfolio is one of the major areas of focus. In the new greenfield project, we will have a combination of both green energy and technological upgradation in a manner that our carbon footprint is considerably low. In the existing plant we are already implementing a 6.7 megawatt green energy initiative and we will gradually expand our renewable energy footprint further. 

What is the proposed investment and model you are implementing?

We will be investing close to Rs. 5,000 crore in the course of three years in the new greenfield project which will be mainly from internal accruals and some amount of leveraging, however our debt equity ratio will still remain less than one. 

You are setting up the greenfield operations in the Kutch area. Is this in a chemical park?

Chemical Park is a very good idea but the size of the business we are talking about is around 1,000 acres. Hence, the idea of a chemical park is not good for us as we have huge requirements. Ideally, the chemical park will be good for small and medium players.

You have been promoting IoT and AI with focus on digitalization. How do you see brownfield and greenfield operations where technology will play a big role?

This is definitely one area of focus for us. We have started using digital tools at the existing plant. We have digital twins for a number of equipment and our aim is to ensure that our plant is completely managed by digital platforms. We are also using technology to optimize operations and create a process driven organisation. Many initiatives have already been taken in terms of hiring people and procurement. Similarly, we have linked our systems with the banks so that all the payments from the customers are stored digitally and thus eliminates the requirements for paper. Even approvals will be on digital platforms. We have created a completely digital supply chain and data analysis for route information for effectiveness. The digital platform also helps in the overall decision making.

What are the new things that you are planning for automation and digitization for the upcoming facilities?

First and foremost, in the greenfield project the concept of the project is completely different. The basic focus is on two things - Operations & environment and digitalisation - all the equipment will be talking to each other. We are working with global experts who have implemented the digital initiative in one of the largest Soda Ash plants in the world.

How do you plan to increase your market cap from Rs. 7,000 crore so as to add more value for shareholders?

Like I said earlier, our market capitalization at present is at Rs. 7,000 crore plus for both the companies as the demerger is completed in the current year, and our investor pay-out is close to Rs. 700 crores through two buybacks and dividends in the last six years. Our objective is very clear - to create value for all stakeholders - including our employees, customers, society, partners, and investors. However, we cannot shorten this process. We are doing our job and ultimately the shareholders will reward those who grow the business and make money and also do it the right way in terms of environment and governance.

Are you looking at internal R&D or looking at external R&D?

We are not planning any big R&D initiative at this point of time and specifically not working on new molecules. Whatever small and relevant R&D we have done, we have been able to come up with a lot of innovations but these are all process improvements. For example, we are the only ones in the industry to have come up with innovation to convert coke waste into energy.

With respect to CSR, the company focuses on health, education, and agriculture. What are the new initiatives in CSR?

On the education side, we started vocational training last year and within six months close to 800 students have been placed in the areas of medical, engineering, and BPO trade. Another initiative is to help villages become completely self-sufficient in their water requirements. In the past we have built around 10,000 toilets in villages. We have also done many initiatives in drip irrigation and organic farming.

You plan to decrease carbon emissions amid talks about net zero. What target have you set for achieving net zero?

Frankly, we are planning to first achieve carbon neutrality by 2050 and after that we will focus on net zero.