India must bridge the gaps in building blocks of raw materials: Namitesh Roy Choudhury, Vice Chairman & Managing Director, LANXESS India

LANXESS is focused on growth in North America and Asia, particularly India

  • July 03, 2024

Emerging trends/challenges in the Specialty chemicals in 2024 and how LANXESS India is planning to circumvent it? 

Firstly, we are well aware that Artificial Intelligence (AI) is going to bring about transformational changes and exciting opportunities in the chemical industry. We are trying to leverage it and are actively working on the same. We will be doing a pilot scale in India and take that learning to a global level. AI can be used for forecasting, improving productivity, predictive maintenance, supply chain management and also order management to bring operational efficiency. That is one emerging trend we see and we are trying to leverage it fully.   

Secondly, LANXESS has transformed into a specialty chemicals company and with headwinds in the chemical industry, we are also working on the Excellence initiative. This will be rolled out in a phased manner till end of Q1 2025. We are going to leverage it to become more efficient for our customers, improve customer management, operational management, logistics, supply chain, procurement and innovation. The focus of innovation is mostly on the development part and not the research part. 

In terms of challenges, there is a lot of geopolitical tension because of fluctuations in energy prices and recession in Europe. I think that's also impairing logistics because we are seeing that the shipment is taking a longer route, longer time, and is becoming more expensive. We are trying to circumvent it to the extent possible. Comparatively, the demand in the Indian market is still stable but prices are down because of distribution from China but we are trying to keep our top line intact and also trying to improve the bottom line. 

Key achievements of LANXESS India in FY 2023-24 and plans for FY 2024-25?

LANXESS is a leading specialty chemicals company, and our core business is the development, manufacturing and marketing of chemical intermediates, additives and consumer protection products. For us, safety is a core value and we have done very well on this front in the last couple of years. Our focus is on asset utilization, and it was quite good last year.  

For our safety and sustainability initiatives, we have been acknowledged and rewarded by various industry bodies and associations. In the recent past, we received the FICCI Chemicals & Petrochemicals Award for Sustainability – Excellence in Safety. We also got the prestigious CII Western Region Award for Excellence & Innovation and BCCI Award for Workplace Safety.  

Apart from this LANXESS India also received the Global CEO Safety Award 2022. This is an internal award by LANXESS presented to teams who showcase exemplary commitment towards safety over the year and drive successful initiatives and contributions related to safety occupation at LANXESS. The focus is on preventing accidents and incidents by sustainable implementation of safety processes. 

Going forward in FY 2024-25, we would continue to focus on safety and sustainability. Our Excellence initiative is currently in the process of being rolled out and has been very strategically devised keeping in mind that both India as well as the chemical market is on a growth trajectory. Our board members are very excited about the growing India market and we are aligning and adopting strategies for further growth including upgrade of the ERP system.  

We are looking at both organic and inorganic growth in the coming years. More organic, as the listed companies are overvalued at the moment. Since 2019, we are increasingly looking at finding attractive companies for takeover in all the segments where we are present like - paints and coatings, polymer additives, water treatment and detergents, tyre and rubber industry.  

LANXESS Jhagadia has three production facilities for 3 BUs – Liquid Purification Technologies (LPT), Material Protection Products (MPP), and Rhein Chemie Additives (RCA). How are things progressing on BU fronts? New initiatives at Jhagadia?  

The site in Jhagadia is a key manufacturing base for LANXESS globally and has been built to world class standards. The production facilities as well as the utility services at the site ensure safe and environmentally responsible operations. 

The National Chemical Safety Committee recently visited our Jhagadia site and appreciated the safety efforts undertaken by LANXESS.  

Going forward, we will continue with our focus on Safety. There are many leading indicators that have been set up and actions on finding out near miss incidents and reporting thereof is encouraged. Every employee has a target of reporting near miss incidents and all managerial employees have to conduct periodical safety dialogues. They observe the work and discuss whether it is being done in safe or unsafe manner and then start with a positive dialogue on how it could have been done better.  

We have also acquired an additional five-hectare land keeping in mind the long-term growth plans.  

LANXESS India completed and put into operation the expansion of the Rhenodiv production line in Jhagadia on February 1, 2024. What's the update on this front?  

We see a potential good market here in India. Currently, we have commissioned the plant and the new Rhenodiv grades are successfully undergoing approval tests at various Tyre companies, a fundamental step towards ensuring product excellence and market readiness and we expect to receive full approvals by the end of Q2.

The product will not just be for India but also for the subcontinent including other Asian countries. 

What strategy India should adopt to become a global manufacturing hub for LPT, MPP and RCA chemicals? LANXESS India's role for making India a global manufacturing hub? 

The global chemical industry is ~US$ 5 trillion in comparison, the Indian chemical industry that is ~US$ 180 billion, which is roughly about 3%. It is estimated that the industry will be having a CAGR of 10% plus in next few years. Also, currently the trade deficit of US$ 20 billion gives us two opportunities - either to improve exports in the selected areas or reduce imports by becoming self-sufficient.  

China plus one strategy was there for quite some time, but it didn’t gain much traction in the past. Now we see it gaining traction due to a lot of initiatives taken by the Indian government. India has a large domestic market including a huge middle-class population as a lot of people have been pulled out of poverty. The pull factors are - change in the bankruptcy code during 2016, high quality infrastructure development initiatives and a large pool of manufacturing talent in terms of good engineers.  

Having said that India must bridge the gaps in building blocks of raw materials. The chemical industry is looking for good PLI policies. While ease of doing business has improved significantly, it needs to be improved further. This will surely help India to become a global hub for chemicals. 

LANXESS AG CEO & Chairman of the Board Management, Matthias Zachert during his recent visit to India was very impressed to see the development and was excited over upcoming infrastructure investments. He commented that LANXESS is focused on growth in North America and Asia, particularly India. This marks a shift from just focusing on China to prioritizing India. I think it's a very powerful and encouraging statement.  

What’s the sustainability plan for LANXESS India in FY 2024-25? 

LANXESS is highly committed to sustainability, and we have launched many initiatives in this direction that we are very proud of; however, as we are aware, sustainability is a journey and not a destination. In terms of climate change, we have done a lot on climate change, water utility management, water stewardship and employee safety. 

In India, we have achieved about 84% of climate neutrality on annualized basis for Scope 1 & Scope 2 emissions and have significantly reduced the emissions at our plants. We made an inventory of emissions at Jhagadia and Nagda plants. After creating the inventory of emissions, we then looked at process optimization and process improvement. We have done extensive energy audits to bring down the specific consumption of energy. At Nagda, we are generating our own electricity and at Jhagadia we have done a green power purchase agreement.  

LANXESS India’s plan to achieve climate neutrality by 2040? Milestones that you have set for achieving it and plans for FY 2024-25?

Globally, we are aiming to achieve climate neutrality by 2040, completely eliminating Scope 1 and Scope 2 emissions. Further, we have prepared two guidance documents - First, is decoupling emission growth. Here the growth has to happen, but emissions have to be controlled. Second, is pursuing technology innovation. Here we have to be innovative and see how to keep the growth intact yet reduce the emissions. 

LANXESS is aiming for 30% women management positions globally by 2030. What’s LANXESS India’s plan on this front? 

LANXESS has been globally committed to diversity and inclusion because we feel that diverse teams can make better decisions and also drive innovation. I think the development and training opportunities have been designed in such a way that it is attractive for women employees. Balancing work between personal and professional life, flexible working and also knowing other colleagues might be needed. Gender sensitive policies, equal pay for work of equal value and also zero tolerance for sexual harassment at workplace have been implemented. We have created an internal platform called WinX for imparting skill and empowering women to know their concerns. About 10% of our workforce in the India organization are women. We have identified the gender-neutral positions where we can take women based on competencies. With this plan in the picture, I am sure 30% women workforce globally should be achievable by 2030. 

Key CSR initiatives of LANXESS India in FY 2023-24? Plans for FY 2024-25? 

In terms of CSR, our focus areas are education, climate protection, water and culture. We also focus on skill development, employability and healthcare. We engage in sustainable development projects that aim to uplift local communities, promote social welfare, and protect the environment.  

In Jhagadia & Nagda region, over the last few years, we have been working on various projects like solar roofing of government schools, solar lighting in villages, facilitating digital smart class for municipal schools, providing basic educational amenities like school bags to municipal schools, vocational training and skill development etc. We are closely involved in uplifting these government schools. Apart from this, we have also supported the communities in times of need by mobilizing our resources and providing them with essential relief material during natural disasters like floods.  

In 2024-25 also, we will continue to support the communities through our CSR interventions with clear focus on topics of education, climate protection and skill development among others.  

Initiatives taken by LANXESS India for enhancing process safety across all facilities/processes to make operations intrinsically safe?

On quality and safety, we share the same standards as followed by any developed and developing countries. Process safety is an important vertical of safety and thus plants are designed in a way that these are intrinsically safe. For that we have a muti-disciplinary team consisting of different experts who identify the hazards and decide on measures. That becomes a basis for getting the licence to operate because without that we cannot start the plant.  

There are other important factors under Process Safety Management (PSM). One is the plant asset integrity where we do regular check-up and keep the assets intact. Second important part is the human aspect where we are imparting training and sharing the standard operating procedures with all our employees. After we impart the regular training, we also do an efficacy check to see how much has been understood by the employee. Then there are digital safety audits where the global experts come down and see what mitigation measures are in place and then give rating based on that. We firmly believe that employees should remain safe and go back home safely. 

How do you see the chemical sector outlook in 2024?

India's outlook is good as the market is still intact except the fact that we are experiencing price pressures due to distribution from China. We sincerely hope that the Chinese economy picks up so that distribution comes down and the prices improve. While the prices are improving, we need to evaluate how sustainable it is. Globally, we are seeing a little bit of light at the end of the tunnel but how much of it translates into business, needs to be seen.

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