Dr.Arup Basu Tata Chem


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Presentation on “Beyond Traditional Businesses: Diversification and Globalization” made by Dr. Arup Basu, COO/Chemicals Business, Tata Chemicals Limited during Two-day Conference on “Vision 2020 – Indian Chemical Industry” held on 22-23 April 2009 at Mumbai.

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  • 5000 years ago, Eqyptians made glass ornaments from sodium carbonate (Na2CO3) recovered from dried desert basin lakes. To Solvay (ammonia-soda process) and now refining rich pure trona deposits in Wyoming and in Kenya/Tanzania. One of the top 10 inorganic chemicals produced in the USA applications include flue gas, water treatment, pulp and paper The largest single use of soda ash throughout history has been the production of glass. Soda ash commonly contributes about 12% - 15% of the weight of raw materials making up glass. Soda ash, with its low melting point and reactivity, acts as a flux for other ingredients, primarily silica and other oxides, allowing them to be melted at reasonable temperatures and to have a low enough viscosity to be easily handled and formed. Driven by the US Environmental Protection Agency's requirements governing removal of Sulfur Dioxide (SO 2 ) from utility stack (flue) gas even when burning low sulfur coal, soda ash has found application in this market segment either as a dry sorbent or as a feedstock in the conversion to sodium bicarbonate. Soda Ash is used primarily as a builder or filler in formulations of soaps, detergents and other cleaning compounds. In addition to these roles soda ash may also add benefit as an agglomerating aid, a carrier for surfactants and as a source of alkalinity for pH adjustment. Soda Ash is a base and therefore finds application in the water treatment segment by adjusting the pH of water when it is in acidic condition. Because soda ash is safer to handle than other alkalis and its pricing is more stable over time, more and more companies are choosing soda ash to assist in their water treatment needs.
  • Source: P&G and Unilever laundry detergent market shares: http://www.icis.com/Articles/2008/01/21/9093893/soap-and-detergent-makers-go-small-in-their-drive-for-green-products.html Re-quoted from Euromonitor
  • Unilever has detergent manufacturing facilities in Indonesia, the Philippines, Thailand, Vietnam, India, Saudi Arabia, UK, the Netherlands, France, Argentina, Brazil, Chile, Dominican Republic and Ecuador. P&G has detergent manufacturing facilities in the Philippines, Vietnam, India, Dammam, UK, Mexico, Argentina, Brazil, Venezuela and Peru. This map only shows directly owned facilities, not those on outsourced contracts.
  • Realising this, we have constantly been increasing our offerings to the farmers, and today through the TKS we have a basket of products and service offerings for the farmer that gives him a line of sight to his total stated and unstated needs.
  • Dr.Arup Basu Tata Chem

    1. 1. Dr. Arup Basu April 22, 2009 Beyond Traditional Businesses Diversification and Globalisation
    2. 2. Agenda <ul><li>Vectors for diversification and globalisation </li></ul><ul><li>Illustrative examples </li></ul>
    3. 3. Multiple driver - enabler combinations help expand scope and scale of a business Company Customers (Comprehension)
    4. 4. Soda ash is a key raw material for many industries; primarily glass and detergents Glass (~50%) Detergents (~15%)
    5. 5. Both the glass and the detergent sectors have a few major players… <ul><li>Glass </li></ul><ul><ul><li>Four Major Players </li></ul></ul><ul><ul><li>Capital Intensive </li></ul></ul><ul><li>Detergents </li></ul><ul><ul><li>Three Major Players </li></ul></ul><ul><ul><li>Market Intensive </li></ul></ul>Glass Maker Approx. Market Share NSG Group 17% Asahi 14% Saint-Gobain 12% Guardian 8% Others – China 30% Others – Non-China 19% Detergent Maker Approx. Market Share P&G 31% Unilever 19% Henkel 10% Others 40%
    6. 6. … each of whom have a global footprint NSG / Pilkington Guardian Asahi St. Gobain P&G P&G P&G P&G P&G P&G P&G P&G P&G U U U U U U U U U U U U Unilever detergent plant P&G P&G detergent plant
    7. 7. Growth is viewed from the customer’s perspective: how can the supplier make itself more attractive Attractiveness of Business Global Supplier Regional Supplier Local Supplier <ul><li>Most vulnerable to supply-side shocks </li></ul><ul><li>Small scale events trigger default </li></ul><ul><li>Competitive in the medium-term </li></ul><ul><li>If markets shift out of the region, is stuck </li></ul><ul><li>Competitive in the long term </li></ul><ul><li>Coordinate deliveries across the globe, irrespective of supply-side disturbances </li></ul><ul><li>“ Hot” markets of today may saturate or shrink tomorrow </li></ul>
    8. 8. Levers that determine the growth trajectory will be unique to each business Attractiveness of Business Low-cost Resources Low-cost Manufacturing High-cost Manufacturing <ul><li>Sustainable disadvantage </li></ul><ul><li>Medium-term sustainability (conversion: India, China, EE) </li></ul><ul><li>Competition can catch up with “mean” </li></ul><ul><li>Sustainable advantage (natural ash: Kenya, USA) </li></ul><ul><li>Fundamental difference in business case </li></ul>
    9. 9. Our Moves <ul><li>Africa </li></ul><ul><li>North America </li></ul><ul><li>North-East Asia </li></ul><ul><li>South-East Asia </li></ul><ul><li>Oceania </li></ul><ul><li>Middle East </li></ul><ul><li>Eastern Europe </li></ul><ul><li>China </li></ul><ul><li>Western Europe </li></ul>% Market Growth Cost of Production Low High High Low 0.9 0.7 1.3 2.5
    10. 10. Multiple driver - enabler combinations help expand scope and scale of a business Company Chemistry (Competence)
    11. 11. The vector of chemistry has driven the growth of Mithapur – TCL’s first unit Soda Ash NaHCO 3 Na 2 CO 3 Cement KCl & K 2 SO 4 Na 5 P 3 O 10 Na 2 SO 4 Sodium Chromate Sodium Silicate Sodium Phosphate Sodium Metabisulphite Brine Purification Electrolysis Bromine Plant Coke Limestone Sea Water Bittern (MgBr2) CaCl 2 MgO Mg(OH) 2 MgCO 3 CaCO 3 Na 2 SO 4 Pure Brine Cl 2 H 2 NaOH HCl Bromine MgCl 2 Sodium Sulphite IVSD
    12. 12. Multiple driver - enabler combinations help expand scope and scale of a business Company Concern (Confidence)
    13. 13. National interest and sustainability themes are woven into the businesses that have we have subsequently pursued Green Chemical Industry <ul><li>Indian Farmer </li></ul><ul><li>Triple Bottom Line </li></ul><ul><li>Resource Conservation </li></ul>
    14. 14. The Crop Nutrition and Agri Business Application & Credit Services Speciality Fertilisers Resource Centre Soil Testing TKK Operations 1994: Urea TKS Brand Contract Farming
    15. 15. The Fresh Produce Business <ul><li>Focusing on the supply chain </li></ul><ul><li>In 2008: 2 distribution centres </li></ul><ul><li>Partnering with “Total Produce”; 100 years of expertise </li></ul>
    16. 16. The Bio-Fuels Business <ul><li>Entry into Bio Diesel and Bio Ethanol </li></ul><ul><li>Trial cultivation of non-food agricultural feedstock </li></ul><ul><li>Dual approach: conventional and advanced new technologies </li></ul>
    17. 17. The Innovation Centre: Value creation by managing innovation & intellectual assets <ul><li>25% research into “Blue Sky” areas </li></ul><ul><li>Computational and combinatorial chemistry </li></ul><ul><li>Biotechnology </li></ul><ul><li>Catalysis </li></ul><ul><li>Micro-reactors </li></ul><ul><li>Nanotechnology </li></ul>
    18. 18. Multiple driver - enabler combinations help expand scope and scale of a business Company Customers (Comprehension) Concern (Confidence) Chemistry (Competence)
    19. 19. In a world of contradictions and concerns, the best place to look for a helping hand is at the end of your arm < Rs. 1.2 lacs Rs. 1.2 – 2.5 lacs Rs. 2.5 – 12.5 lacs > Rs. 12.5 lacs Source: Mint; Friday, October 17, 2008 Distribution of Households (%) and Forecast for Income Distribution for 2009-10 Based on 2004-05 prices
    20. 20. Thank You