Shohab Rais, COO, Indian Chemical Business, Tata Chemicals
In an interaction with India Pharma Outlook, Shohab Rais, COO, Indian Chemical Business, Tata Chemicals shares his views on the challenges faced in specialty chemical manufacturing and how they can be addressed.
Specialty chemicals market is witnessing a wave of product diversification. How do you see the evolution of this industry in India and what is driving growth of this market?
Product diversification happen to fulfill evolving customer and market needs and to capitalize on the emerging market opportunities. Import substitution is one area which industry constantly explores to identify products that could be potential candidates for diversification.
Demand supply gaps in export markets provide another opportunity for diversification. Today, globally, companies are exploring to develop alternate vendor bases to have China plus one supply chains to reduce their dependence on a single country. This supports creation of additional production base in India for global markets, and this export demand is also pushing product diversifications.
R&D and innovation provides companies with diversification opportunities to develop products that offer better value in comparison with available alternatives. This includes customization and application development that can expand market and help business growth. This also helps create intellectual properties that are valuable in the long-term as well.
Which are the major technologies emerging in this segment with regard to manufacturing? How are they transforming the industry for the better?
Customers and manufacturers today are looking for solutions that are sustainable, both for raw materials and finished products. This is driving technological development to a large extent.
Natural, sustainable and renewable sources for raw materials and energy are focus areas. On the principles of circular economy, reduction in the generation of effluent and converting same into a usable product as input to other industries are other areas of technological developments.
Carbon neutrality in manufacturing and reduction in water consumption are other areas where companies are seeking technological solutions. Health consciousness of consumers, use of natural inputs in the manufacturing of products, both for human/animal consumption or otherwise are other areas of research. Use of information technology, including AI, IoT, digital imaging, data analytics etc. is driving efficiency, quality and cost optimization efforts of the industry.
Where does India stand in this field on a global scale? And what metric measures need to be taken to further the growth of R&D efforts?
Indian domestic specialty chemical industry is not heavily investing in innovation with exception of a few companies that are engaged in developing innovative products in the true sense. Some of the larger players in India spend less than 3% of their revenue on R&D whereas many global companies spend about 5-8% of their revenue on R&D.
Metrics on R&D, like spend as percentage of revenue and number of patents give indication of R&D efforts of an organization. At Tata Chemicals, we have two R&D centers, one in Pune and the other in Bangalore, and have cumulatively filed for more than 160 patents and have been granted about 50 patents.
Technology adoption and innovation got further accelerated during this pandemic, and led to customization to suit the evolving needs of customers. Tata Chemicals used its expertise in chemistry and has developed customized applications for their Nano Zinc Oxide using its excellent antiviral and antimicrobial properties. The versatile product finds application across industries, from textiles to paints and protective skin creams.
One of the major challenges faced by the specialty chemical manufacturers is unpredictability and uncertainty in the demand patterns. How would you assess the scenario from an Indian market perspective, and how can manufacturers adapt accordingly?
Many manufacturing units have equipment and facilities that can manufacture multiple products using chemical reaction and synthesis from the same manufacturing line. This provides companies with flexibility to modulate the volumes to manufacture products based on demand, including seasonal peaks and change over to other products during normal market demand.
Secondly, it is the swiftness with which the supply chain of a company responds that determines the ability of a company to capitalize on the demand elasticity and fulfillment flexibility.
Hence, distributed stock points, minimum lead time requirement and responsiveness, apart from manufacturing flexibility help companies to get over the challenges of uncertainty in demand patterns.
How is the increasing cost of raw materials affecting the profit margins of manufacturers? What is the way forward to achieve business viability?
I agree that the cost of raw materials is increasing. However, irrespective of the cost of the raw materials, the manufacturers need to continuously work on optimizing their production facilities, and on reducing costs.
Increase in productivity, reduction in product variability, better quality and optimized supply chain costs will help companies to maintain profitability even during challenging times when input costs keep going up. Work on improving value proposition with higher customization and better product offerings can get better value from the customers as well.
Documentation and certification of product quality and procedural compliance is another area of concern for manufacturers in this segment. How can the process be streamlined?
More product and facility certifications mean increased and stringent process orientation, documentation and compliance/adherence.
Many of the certification requirements are market or regulation specific while some others are focused on quality, processes, sustainability and societal responsibility. And then there are individual customer specific or product specific requirements, either for certification or for test protocols etc.
These requirements help the organization build in robust processes and systems and the same also facilitate opening up of more opportunities for business growth. It is an extra effort and investment initially, however soon this becomes normal business operation and the systems that are built in begin to support good manufacturing practices, product quality, test protocols, traceability of finished goods right up to raw materials and their sources.
All these complement one another in an effort to build successful organizations that have 360° approach towards their businesses. There are electronic solutions available which can be leveraged to automate and put all the documentations in system.
Where do you see the market going in the future? And what can you give the future roadmap for Tata Chemical?
The Indian specialty chemicals industry currently stands at USD 32bn and driven by global supply chain dynamics, macro tailwinds and government as well as industry thrust, is expected to grow at about 12% CAGR over the next five years, to reach about USD 64bn by 2025.
For over 80 years, Tata Chemicals has operated with a sense of purpose and has played an active role in doing business in a way that strives to exceed expectations of all the stakeholders, including customers, employees, society, environment, biodiversity etc. to contribute towards shaping a better world.
We are advancing science to create value. Being an Innovative, Science-led Sustainable Chemistry Company, we are using our expertise and R&D capabilities to develop innovative solutions to drive value for customers.
We are simultaneously working on many fronts and customer segments to grow our business. Value addition through application development, new product development, development of green products, addition to Intellectual Properties and creation of sustainable solutions are some of the priority areas for us. Using cutting-edge technologies, we will continue to drive value for customers across our business, while also fostering a responsible manufacturing ecosystem.
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