Rahul Tikoo, Managing Director – South Asia, Huntsman Corporation spoke exclusively to Pravin Prashant, Editor, Indian Chemical News on the impact of COVID-19, Capex plan, South Asian market for Polyurethane business, manpower intake in development centre, growth potential in India and South Asia, company's preparation for EV onslaught and CSR activities. Excerpts of the interview:
How has lockdown impacted your industry and what has your company done when things were unlocked?
COVID-19 has impacted our industry, much like every other sector. However, we are glad that we are not reliant on a specific industry, and our exposure across value systems and consumption patterns has helped us stay ahead of the curve. While there was a significant impact on demand and the supply chain during the early days, we have noticed that conditions are gradually stabilising. This crisis has given us an opportunity to redefine ourselves. For instance, we’ve used technology at its best to virtually remain present and connected with our customers.
We have resolved our customer’s challenges and developed newer and better solutions which reiterates our commitment towards them. An example of that is during the phase of the lockdown, we successfully developed new products for our customers whether it was Polyurethane or Textile Effects, we introduced products for customers online. This is a testament to our core expertise, which is not only developing products and technology, but also understanding our customers’ challenges and evolving requirements.
The pandemic has also presented us with an opportunity to make our operations more agile, efficient and explore new avenues for our business. For instance, our Textile Effects business has been supporting and enabling the medical textile segments through our range of textile finishes designed to improve protection of textiles, for both washable as well as disposable PPE kits.
While we have been extremely dynamic in our approach to resurrecting our operations post lockdown, we have not shied away from our responsibility towards the community. During the pandemic, we distributed a large number of PPE kits to government and healthcare services in Pune and nearby villages. That is how we have performed - we have navigated well, and we have also not lost track of our responsibility towards society, thus ensuring that we are building a resilient environment to withstand testing times which may lie ahead.
Apart from supply chain, were there any other challenges you faced after lockdown and how did you rectify it as you moved forward?
Honestly, most industries have faced common challenges. The first is demand, second is foreseeing that demand. Therefore, effective planning of supply chains became extremely crucial once the lockdown was imposed. The pandemic has ensured everyone thinks of new ways to operate. There has been a great amount of reset of the work and that of the business ecosystem during the past few months. There are some consumer driven industries such as packaging, which have done relatively better than others, but largely there has been an impact. Therefore, we have been gradually adapting to build better resilience for our business. It is important to deep dive into how we respond now, and also how we respond to the post pandemic era, whenever that comes.
Immediate steps included keeping our people safe and ensuring effective functioning of our key business and support functions. As a company we have managed this very well. Even during the peak of lockdown, we were able to function and fulfil our commitments to the Textile PPE industry. Talking about the current situation and the future, we must plan effectively and be ready to scale up as we rebuild, recover and rethink our operations. Most importantly, we are excited about revamping our organisation and making sure we are building an entity suited for a dynamic environment, consisting of evolving opportunities.
I associate this action plan post pandemic with a very nice study that I read a few months ago which speaks of an adapt and adopt system. This approach involves the ability to iterate future plans and be prepared for the emergence of the new normal, as nobody knows what the new normal will be a few months from now. What we do know is that we can stay agile towards inevitable changes in the business context in the upcoming months. Thankfully, at Huntsman we run our business with a lot of domain knowledge complemented with global best practices and I think this helps us to adapt, adopt and evolve faster.
You mentioned the 4R and 1S, recovery, rebuilding, resilience and rethinking along with scaling up. What’s the strategy behind making these 4R’s successful and any Capex plan in 2020?
At Huntsman, whether it’s globally or in India, our strategy revolves around our most important customers. Regarding our plans for Capex, we remain committed to long term potential and future ideas. Hence, we have continued to build scale in India with continued investments in the right talent, research and capabilities, not only for the current scheme of things but the future as well.
We will not hesitate to leverage new opportunities with appropriate investment whether it is near or long term. We are strongly embedded within India, and our ability to work very closely with our customers has helped us understand them better. When business starts picking up, we won’t hesitate to back it up with strong investments to serve the incoming demand.
How do you see the India market post COVID-19?
If you observe the outlook of the Indian chemical industry as a whole, we are at an inflection point of an incredible opportunity. This is largely because we have been a consumption driven market and the middle class households in India, which I call the big belly of the consumption ecosystem, will continue to grow with increased per capita income. We are talking about a growing middle class of about 300 million people with increasing consumption patterns. A huge amount of sustainable urbanization is taking place and as a young population, we continue to be agile for a few decades. The chemical sector is largely poised to be influenced by these macro-economic trends.
The chemical industry has always been a consistent value creator and has remained an attractive hub of opportunities even in an environment of global uncertainty. The macro perspective indicates that while the short term outlook is challenging, the region’s long term growth story is intact and it will be positive in the years to come.
In the markets we operate in, I have observed accelerated correlations between the Indian chemicals or speciality chemicals market when compared to the GDP, and in some cases the acceleration has been 1.2 to 1.5 times of the GDP as well. This is predominantly led by growing per capita consumption for some of the products which is very low currently compared to the developed markets. Our markets are witnessing infrastructural development, alternate material replacements, changing consumer preferences and all of this will unfold a very interesting opportunity, largely for the chemical industry. Whether it is our polyurethanes business or the textiles business, it is touching the lives of most consumers in India. As GDP accelerates, so will the possibilities of doing more for Huntsman in India.
You have an additional portfolio of taking care of South Asia Polyurethane, how is that market doing?
If we look at the polyurethane sector over all, it is a very versatile industry. From a market perspective, it is all related and driven by application and consumer preferences. From the Huntsman Polyurethane perspective, we are the global leaders in MDI based polyurethanes. Our polyurethanes business offers end-to-end solutions for industries such as adhesives, coating, automotive, insulation, flexibles amongst others. When we look at the South Asian market, these are largely strong economies. Things are shaping up well, the disposable income factor in these markets provide a good tailwind to the consumption.
Additionally, the growing demand for sustainability across the industry has also led to a paradigm shift in how vehicles will be produced. Auto manufacturers are actively seeking out newer materials and technology that will help them bring down the total weight of the vehicle. Polyurethane is one such lightweight material that offers a wide range of applications and properties such as very good aggression, tensile strength and good insulation properties. I always call it the smart designer’s polymer, as you can do more with less and therefore the opportunities for such applications to really transform e-mobility will lead to a further increase in demand for polyurethanes.
What’s the difference between a washable and disposable PPE and how many times can one wash it?
As the COVID-19 situation evolves, there is a growing need for medical supplies to combat the spread of the virus, such as surgical masks and protective suits. Our Textile Effects division has a complete end-to-end range of offerings including pre-treatment, coloration and functional finishing for woven and non-woven fabrics for both washable/reusable PPE as well as disposable protective wear such as face-covers and scrubs.
Huntsman has a technical centre in Bombay and technical development centre in Pune. What are the activities you are performing in these two centres and is there a plan to increase manpower?
We have three centres, one is our global research and development centre located in Lighthall, the India headquarters. The centre carries out all activities right from ideation to commercialization. Technical expertise is largely provided through the entire life cycle of the product. The centre has been delivering innovation and research not only for India but also the rest of the world. The other branch of the same centre is the global research centre for Polyurethane, which is also the backbone for every molecule that we are modifying or creating here in Lighthall.
The second is the technology centre, which for us is more about the fast route to market anything that customer needs in a quick pattern. This is what we do in Baroda, as well as our Chakan site near Pune. The centres are also an example of our approach towards customer centricity. We make sure that we address customer or industry specific challenges within the shortest possible time frame. The quick solution and turn around opportunities for customers are based out of our technology centres and the long-term strategic aspects are handled by the Lighthall R&D centre.
Any plans on increasing manpower?
If you look at the overall innovation metrics of Huntsman, one of the fundamental pillars for our business is innovation and differentiation. Therefore we will do everything possible to make sure that we build on this. Our research centre in Mumbai has already begun adding value to our global portfolio footprint.
As we go along, we have some ambitious plans of growing our footprint in India both through innovation, which is our research centre and the customer support market which is through our technology centres. We are very positive that once the current situation stabilizes, we will further be able to enhance our capabilities, both through people and equipment in these centres by the next year.
Any new products or molecules that are being developed in these centres?
As we speak, there are numerous offerings out in the market from Huntsman that are touching lives in many ways during the pandemic. One of our key priorities as a brand is to continue driving sustainability through innovation. It is not only about producing new products but also about producing them in a sustainable manner. We continue to support our customers through the development of these solutions that result in better resource optimization and of course better cost efficiency. So doing more with less is what we are working towards. One of our products for the handicraft industry and general purpose applications was launched this year.
At Huntsman, we don’t make plans for six months or one year, our plans are largely milestone driven and we have a strong commitment towards it. We have always ensured that once we set an eye on achieving a goal, we will deliver.
So you want to say your growth potential for India as well as south Asia remains intact for the remaining part of the year and 2021?
Yes, very much so. The way we envisage the market in terms of how it may evolve, we are quite positive that next year will present interesting opportunities as the COVID-19 situation gradually improves. Another reason is also because most of the industries we serve in some way or the other are related to the consumer market.
So the reason for optimism is that other verticals are doing well hence definitely your products will also do pretty well?
I want us to be as resilient and as prepared as I have always been to tap and capture any opportunity or challenge that comes our way.
The automobile industry has not done bad if you compare the last two months numbers. This is an indication that the economy would not be as bad as it was perceived earlier. What's your views?
Yes, that is a very good point and I largely agree. However, we need to ascertain what the drivers are for some of the automobile traction which the industry has garnered. If you read through the numbers, you will see a lot of this traction coming via entry level cars which are also driven by the revised perception as to how mobility will occur post the COVID era. My opinion is we must observe the numbers over the next few months before we can start making any predictions on how 2021 is going to evolve from January up next year. Overall, I think there are a few positive signs.
How do you see Huntsman global and India preparing for EV onslaught whenever it comes?
For us it is not a challenge but an opportunity. If you are talking specifically about E-vehicles that is where the play gets very interesting for Huntsman because I believe that Polyurethanes can play a critical role in addressing many such global megatrends. As the most effective thermal insulant in the market, MDI based polyurethanes are used widely to deliver energy savings in various domains. Specifically, if we move to automotives, I believe that with a lot of demand for sustainability across the industry, there has been a huge shift in the way vehicles will be driven, and more importantly, the way vehicles will be produced. So auto manufacturers today are actively seeking out various alternate materials. Polyurethanes are therefore the perfect alternative to create better fuel efficiency. Even in the EV domain, a very interesting opportunity lies ahead for Huntsman. We could offer a wide range of materials like thermal insulation products or even for seating and aggression resisting technologies.
I was part of one of the industry forums a couple of weeks ago and it was interesting to see how the world has changed and how dynamic technology has transformed into. It has become clear that companies which are heavy on innovation, technology and understanding the markets will be able to deliver leading performance in this changing environment and that is the case with Huntsman. We understand this market very well, we have been in it for a long time now and as EVs take centre stage, we are poised to be in a good position to work with the industry and resolve the challenges they are facing today.
Is MDI a patented technology or is it a general technology you have adopted?
There are products in the MDI domain that are patented by our organisation but MDI as a product is a chemistry and it is not patented by us.
Do you have plans on hiring new talents and diversifying your base of doing fundamental research in India?
I believe that as we develop and grow solutions we need more innovation creators, be it in Mumbai or our technology and innovation centres of Baroda or Pune. I am personally excited and bullish about the R&D capabilities we have been able to build over the years. Another important aspect is the availability of talent in India which is integral to achieving our goals. This means that there is scope to further develop it which will help us advance value creation for the chemical industry at large. We also need to find means to bridge the gap between industry and academia to facilitate more innovation. I think fundamentally this will be the greatest asset that India may build if we have to transform India into the next chemical hub of the world.
Huntsman should engage with young chemical engineers and try to focus on a start-up module which will be a win-win for both Huntsman and startups. What's your thought on this arrangement?
Over the past few months, I have also been trying to work closely with our R&D teams. We have been quite active in this space be it academic institutes or engaging with students to come and do some work in our research or technology centres. Through your publication, I am also inviting people to talk to us and tell us how we can do more together whether it is through innovation or through start-ups which have a concept and want to incubate it and grow it faster, we are more than happy to collaborate with these individuals, associations, companies and institutions.
What are the CSR activities you have done in Baroda as well as Pune factories?
I strongly believe that we need to demonstrate our commitment towards society by investing in education, health and economic development of the people. For instance, we have created a massive education focused empowerment through our Anandi initiative which was inaugurated near our manufacturing sites in India in 2011. It has been nine years, and what we do there is improve water supply, upgrade school facilities and also improve teaching methods. Anandi has changed the lives of many local villagers and improved the livelihoods of farmers as well. It is incredibly exciting to see this change. At Chakan site in Pune we are starting a mobile medical unit there. This unit can travel to far off villages and make sure that we provide primary medical care to those who do not have access to a basic doctor and primary treatment. If we are able to manage initiatives at this level, we will be able to make a significant contribution to the society that we are living in. Also, child education and setting up a system for it is another initiative we have undertaken around Baroda and Chakan. For Huntsman, the business is not just about numbers but giving back to the community in as many ways as we can.