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ata eviewMarch 201222

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22

Some enterprises grow vertically, others horizontally.

Tata Chemicals has done both, and more, over the past

six years. And it is now positioning itself as a provider

of solutions that address tomorrows food, water, health

and climate-change challenges.

By Gayatri Kamath

The changing face of

Tata Chemicals


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March 2012 ata eview 23

COVER STORY

Ametaphor rom chemistry seems apt:

ata Chemicals has, over the last

couple o years, been through several

critical changes to transorm itsel

rom a simple, almost elemental entity into a

complex molecule-type o organisation with

new characteristics.

Six years ago, ata Chemicals was Indias

largest producer o soda ash (sodium carbonate,

a base ingredient or several industries); it also

sold ata Salt, Indias biggest salt product andmost trusted ood brand), and was a leading

provider o ertilisers. oday, afer a series o

acquisitions and mergers, it has gone much

urther. Te company is now the worlds second-

largest producer o soda ash and third-largest

producer o soda bicarb (sodium bicarbonate),

and it has expanded its agri-business portolio.

Yet apart rom the several obvious changes

its grown several orders in size, and rom a

company that used to be India-centric it now

spans our continents and delivers products

and solutions across the world theres a more

pervasive, almost holistic change in the vision

and orientation o the company.

o use a human metaphor, ata Chemicals

has developed an identity that is more well-

rounded and mature. From a commodity

company that dealt mainly in inorganic chemicals,

it is shifing towards providing end solutions,

is developing a strong business-to-consumerinterace, and is now seriously investing in R&D,

innovation and cutting-edge technology.

A BIGGER PORTFOLIO

Te evolution o the company is most apparent

in entirely new genres o products green

products that combat climate change, patented

hybrid seeds, biocides, customised ertilisers,

and a host o new consumer products that

The Tata Chemicals plant in Mithapur (Gujarat)


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24

satisy critical needs, such as the ata Swach

water purier (which oers aordable water

purication), iron-ortied salts to tackle irondeciency, neutraceuticals to promote health

and protein-rich, unpolished pulses.

But why on earth has the company put

itsel through this colossal transormation?

Te answer lies partly in the word earth.

In an era in which technology advances

and resource scarcities are rendering some

enterprises obsolete (the latest victim being

iconic lm-maker Eastman Kodak), companies

are increasingly looking at their strategies

through the lens o sustainability.

SUSTAINABILITY AT THE CORE

Says ata Chemicals managing director

R Mukundan: Sustainability is one o the

core elements o our vision or the company.

Our actions over the last ew years have been

driven by long-term considerations. oday

ata Chemicals is built upon the platorms

o resource availability at one end and, at the

other end, providing greater value through

speciality oerings, non-bulk chemicals and

application products.

Te quest or long-term viability maniesteditsel in a series o acquisitions and investments

that have helped secure the companys raw material

requirements (See box: Spread far and wide on

page 30). Tese upstream investments resulted in

ata Chemicals growing in several dimensions.

O these, the acquisitions o the US-based

General Chemical Industrial Products and the

Kenyan company Magadi Soda Company were

the most signicant. Tey gave ata Chemicals

access to naturally occurring deposits o trona (a

mineral rom which soda ash can be produced

economically). Says PK Ghose, ata Chemicalsexecutive director and chie nancial ocer:

With more than 60 percent o our soda ash

production based on natural sources, we could

leverage our low cost o production to become

ar more competitive. Te companys global

sprawl o soda ash plants (in India, Kenya, the

UK and the US) has now been consolidated and

rebranded to create a single customer-acing

business (See related story: When one is better

than manyon page 31).

O equal signicance are the more recent

investments in British Salt and EPM Mining.Adds Mr Ghose, British Salt controls hal

o the UKs salt market and is a leader in

consumer and industrial salts. It is a source o

brine, which is a key input or our operations

in the UK; the acquisition has lowered our

cost o production. With EPM Mining, we get

access to low-cost sulphate o potash, which is

a key input in our ertiliser business.

Ten there were several lateral investments

that increased the range o the companys agri-

businesses. Picking up a majority stake in sister

company Rallis India added pesticides to thecrop-products portolio; and a one-quarter stake

in a urea plant coming up in Gabon in Arica will

increase access to urea-based ertilisers or sale in

India. With Indian companies acing a shortage

o natural gas, urea production in India cannot be

increased and ata Chemicals is hoping to source

this product rom the Gabon project.

Te reasoning here is simple. Since soda ash

(which has industrial applications and accounts

The future is going to be in non-bulk

products, in value-added and customised

offerings, in speciality chemicals... And

thats where we want to be.

R Mukundan, managing director, Tata Chemicals


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or one-hal o the companys balance sheet) sells

in a cyclical market, the company has shored up

its oundations by growing its Indian arm input

business, a vertical that today touches 3 million

Indian armers and brings in about 40 percent o

revenues. Te idea is to make ata Chemicals

more recession-proo, says Mr Ghose.

FUTURE EVOLUTION

But what really catch the eye are the companys

investments over the past couple o years ininnovation, new technologies and new products:

J A one-third stake in both JOil o

Singapore and Grown Energy o

Mozambique to promote biouel projects.J Te acquisition o Metahelix in India

(routed through Rallis) or its hybrid

seeds and biotechnology prowess.J An oligosaccharides plant (300 tonnes per

annum capacity) in Chennai in India to

manuacture neutraceuticals (probiotics

and sweeteners that are ood and

pharmaceutical additives).J A stake in Natronx, US, a new joint

venture that will make sodium-based

products or ue-gas treatment and

climate-change mitigation.J Investments in captive R&D acilities

in India, namely the ata Chemicals

Innovation Centre in Pune and

the Centre or Agri-Solutions and

echnology in Aligarh.

The innovation centre in Pune focuses on creating products that are in sync with the companys LIFE strategy

The touch of technology

ata hemicals captures hydrogen gas in fuel

cells at its Mithapur plant.

he company has collaborated with M for its

5YCEJYCVGTNVGTVGEJPQNQI[CPFKPIGPGTCVKPI

solar energy.

6CVC%JGOKECNUKTQPHQTVKGFUCNVJCUDGGP produced in collaboration with the ational nstitute

of utrition, ndia.

he company is licensing technology from

the entral Salts and Marine hemicals esearch

nstitute, ndia, to make sulphate of potash from

bittern, a byproduct from the production of salt.

ata hemicals has joined hands with the

hilippines-based nternational ice esearch

+PUVKVWVGVQRTQOQVGPGYQQFFTQWIJVCPF

salinity-tolerant rice varieties in ndia.

acant salt caverns belonging to British Salt can be

sold or leased as captive chambers to store natural gas.

ata hemicals and allis are establishing schools

to teach the new generation of ndian farmers modern

agricultural methods and mechanised farming.


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26

When asked why a traditional industrial

and agricultural chemicals company is building

strong capabilities in biotechnology, cropsciences and nanotechnology, Mr Mukundan

explains that the new orays are a part o the

companys long-term vision: We are looking

to leverage these technologies to nd solutions

to tomorrows problems. Te uture is going to

be in non-bulk products, in value-added and

customised oerings, in speciality chemicals,

and so on. And thats where we want to be.

Te shif in orientation rom bulk and B2B

to consumer products and B2C is creating a

new buzz within the company. ata Chemicals

already touches 650 million Indian householdsannually with best-selling salt brand ata Salt

and has plans to put several new brands on retail

shelves. With multiple touch points in the ood,

water and health segments (See related story:

Its all about consumer intereston page 28), the

company is ocusing on upgrading its customer-

acing capabilities and building up its consumer

products division as a third vertical.

INNOVATION AND GROWTH

In this eort to expand its consumer products

portolio, the ata Chemicals Innovation Centre

plays a vital role. Says Dr Arup Basu, president,

new business and the innovation centre, Te

ocus is on creating new businesses with

potential: wellness products like neutraceuticals

and nanomaterials that reduce the stress on

resources, and customised ertilisers that

improve soil health.

With the consumer products businessacting as a new product hotspot, the agri-

business vertical going global in search o

raw materials, and the chemicals businesses

getting consolidated and rebranded, the

excitement within ata Chemicals is palpable

Industry

)HUWLOLVHUV7DWD6DOW

essentialsFarm

essentialsLiving

essentials

Bulk chemicalsSoda ashSoda bicarbonate

Cementata Shudh

Turnover: `30 billion

Facilities: Mithapur and Babrala (India)

The journey to Chemicals for LIFE

Tata Chemicals has matured substantially over the last sixyears, adding heft through organic and inorganic growth, and

developing competencies in several new product categories:


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not exactly what you would expect rom a

supposedly staid business.

Besides entering new segments, the companyis also growing organically. Te salt works at

Mithapur has increased capacity by 50 percent,

British Salt is upping capacity, the Magadi

operations have doubled its tonnage, and the US

plant has de-bottlenecked to increase its output.

All this activity in the middle o a

recession? Mr Mukundan insists theres no

reason to worry: India and Asia as a whole

are growing at 7-8 percent, the US economy is

showing a slight upturn, Arica is growing and

Europe is holding steady. In act we can just

about meet our current customer requirements.Te ground reality is that demand has not

shrunk, but companies are acing pressure on

margins because o higher costs that cannot be

passed on to the customer. We are responding

by trying to become leaner and more ecient.

Internally, ata Chemicals is busy

consolidating its global operations to derive

maximum bang or its buck. Clever nancialrestructuring has reduced the average cost o debt

to around 7 percent. o bring all its group entities

onto the same management page, ata Chemicals

has adopted Lean Six Sigma, SAP and Economic

Prot Management along with other I and HR

programmes as common platorms across its

branch organisations. We have over 4,500 people

across our continents. Its important that they

speak the same language, says Mr Mukundan.

Te company has moved away rom

its chemical identity to position itsel as a

provider o solutions. Its businesses havebeen restructured as LIFE: living (consumer),

industrial and arming essentials. And the new

acets o the ata Chemicals persona are being

expressed as its new vision serving society

through science.

Turnover: `111 billion (consolidated)

Facilities: Mithapur, Babrala, Haldia and Chennai (India);

Wyoming (US); Lake Magadi (Kenya); Northwich (UK)

Industryessentials

Bulk chemicalsSoda ashSoda bicarbonate

Cementata Shudh

Specialty chemicalsAlkaarbaemaarblue gas treatment

Farmessentials

Crop nutritionertilisersustomised fertilisers

Crop protectionesticides, insecticidesand herbicides

Seedsybrid seeds

Livingessentials

Saltata Salti-Shakti Saltata Salt Liteata Salt lusBritish Salt

Foodi-Shakti dalseutraceuticals

Waterata Swach

YCVGTRWTKGT


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28

Its all aboutconsumerinterestThe transformation at Tata

Chemicals has also led to

the creation of a much bigger

portfolio of consumer products

The most visible change at Tata

Chemicals can be seen in the

consumer products division that has

launched a slew ofnew products.

Internally, too, the division is creating a buzz.

Everyone in the company is interested in what

we are doing, says Ashvini Hiran, head o ata

Chemicals consumer products division.

For decades the consumer ace o the

company was the iconic ata Salt brand, whichreaches 650 million households every year and

has been named among the most trusted ood

brand in India.

A couple o years ago, ata Chemicals

launched ata Swach, the innovative low-cost

water purier designed to provide sae drinking

water to rural households without electricity.

Last year, the company pioneered branded

pulses by packaging all-natural, unpolished

pulses under the i-Shakti brand, thus adding to

its portolio o national consumer brands.

Now there is a thick pipeline o products

rom the house o ata Chemicals aimed at retail

shelves. Trough extensive R&D, the company

has extended the ata Salt brand name tolaunch new salt products that sell on the health

platorm ata Salt Lite, a low-sodium salt

aimed at hypertension patients, and ata Salt

Plus, an innovative iron-ortied salt.

In addition, the ata Swach production

capacity is going up to meet demand, and

i-Shakti pulses are being rolled out across

20 states. We want to grow the consumer

products business at least our times, rom `10

billion now to about `40 billion in the next ve

years, says Mr Hiran.

GOOD FOR YOU

Salt, water, pulses what seem to be completely

random choices o products actually have some

elements in common. First is what Mr Hiran

describes as serving a national need: tackling iron

deciency in women and children through salt,

making sae drinking water aordable or those at

the bottom o the pyramid, increasing availability

o protein-rich pulses, and reducing Indias

dependency on imports.

Te second element is ata Chemicals

newound capabilities in science and technology,with research at the ata Chemicals Innovation

Centre in Pune, India creating the pipeline or

new businesses. Te organisation, which worked

on combining the health properties o iron

and iodine together in a salt, is also engaged

in enhancing the ata Swach water lter to

eliminate arsenic and uorides, and has recently

created a new line o ood additives such as

probiotics and sweeteners.

ata Chemicals is setting up a 300-tonne per

annum plant in Chennai to make neutraceuticals

oligosaccharides (better known as probiotics)and polyols (articial sweeteners that are more

benecial than the conventional aspartame)

which will be used by ood and pharma

companies. Te plant will go operational later

this year and will eventually be scaled up to 5,000

tonnes per year; the new business is likely to

bring in `3-3.5 billion in revenue, selling to big

names such as Dabur, Kraf and Nestle.

Tere are new high-tech products in

Natronx a tripartite venture in the US

with Church & Dwight Company and FMC

Corporation will focus on environment-

related products aimed at tackling the

climate change challenge.


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The new line of products from Tata Chemicals will also address Indias health imperatives

the agri-business space as well. Rallis Indias

acquisition o the Bengaluru-based biotech

company Metahelix has brought in capabilities

in genetics along with a range o hybrid seeds

(see Tata Review, December 2011).

Yet another new ocus area is customised

ertilisers ertilisers that are tweaked to meet

the exact requirements o a particular crop and

soil combination, thus eliminating chemicaloverload in the soil and improving soil health.

Tis research is being conducted at the

Centre or Agri-Solutions and echnology in

Aligarh in India. Paras Farmoola, the companys

customised ertiliser brand, is manuactured

at a small unit in Babrala in northern India

to cater to the regions armers. Plans are on

to set up similar small plants at 20-30 sites

throughout India, with each site blending the

exact mix o nutrients that are optimal or local

soil conditions.

ADDING VALUE

Even the heritage chemical business is

eeling the touch o science. Te company is

putting out a range o value-added sodium

bicarbonate-based application chemicals:

additives or animal eed, haemodialysis, ue

gas treatment, etc. Te company has recently

invested in Natronx a tripartite venture

in the US with Church & Dwight Company

and FMC Corporation which will ocus

on environment-related products aimed at

tackling the climate change challenge. Te new

company will make and sell sodium-based, dry

sorbents or air pollution control, considered

to be a promising emerging market.

We believe that the answer to many o the

planets problems, whether it is energy, water

or climate change, will be ound in chemistry,says ata Chemicals managing director

R Mukundan. Dr Arup Basu, head o the

companys innovation centre and new business,

has been given the mandate and the resources to

encourage research in areas with potential.

Nanomaterials are one such area, with

applications in the manuacture o battery cells

and industrial catalysts. Co-crystallisation

is another interesting area, where ata

Chemicals R&D team hopes to improve

adsorption o nutrients. Were addressing

areas such as resource stress, ood security,health, and water, all o which are challenges o

the immediate uture, explains Mr Mukundan.

Te old ata Chemicals talked soda ash

and ertiliser. Te new ata Chemicals is

talking science. And the old and the new are

working towards a new line o products that,

it is hoped and expected, will orm at least a

quarter o the companys top line in the next

ve years.


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COVER STORY

30

Spread far and wide

INVESTMENT STRATEG C S GNIF CANCE

One-third stake in Indo Maroc

Phosphore (IMACID), MOROCCOPhosphoric acid

Brunner Mond Group, U ITED

KINGDOM

Magadi Soda Company, KENY

Natural resources(trona deposits)

2008 General Chemical IndustrialProducts, TATE

Stake in JOil, SINGAPORE

Natural resources (trona mines)

Low-cost biodiesel

2009 aj it ,stake i Crop protection pro

Maj i y stake in Metahelix, I D

ritish Salt, N

ant,One-quar ar stake u

M Mining,O i-t e in EA DA

t hnoloB y, hy id see s

Consu r an ltindustrial s

rea-based fertili ers

Potash

Inorganic growth has helped Tata Chemicals secure raw materials,

reduce cost and strengthen its market penetration across continents


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In an exercise with much to be

gained from, Tata Chemicals

multiple entities have been

brought together under a

common brand and vision

Tata Chemicals consumer products and

agri-business divisions may be showing

the greatest signs of invigoration, but

the fact remains that a good halfo

the companys revenues come rom that old

warhorse, soda ash, a vital input or several

industries, among them detergents, glass,

mining and construction.ata Chemicals soda ash is produced at

multiple sites across the world the original

plant in Mithapur, India, the Brunner Mond

plant in the UK, the Magadi Soda Company

(MSC) site in Kenya and the General Chemical

Industrial Products (GCIP) acility in

Wyoming in the US.

A year ago, ata Chemicals decided to

consolidate its many chemicals businesses into a

single unit: the Global Chemicals Business. Te

acquisitions were rebranded to reect both the

unied name and the global spread. BrunnerMond became ata Chemicals Europe, GCIP

became ata Chemicals North America and

MSC became ata Chemicals Magadi.

WHATS IN A NAME?

ata Chemicals managing director R Mukundan

explains the business imperatives that

necessitated the rebranding exercise: Brunner

Mond, Magadi and GCIP are all great and

well-known names, but we decided to go or

one common brand or several reasons. For

one, a ew key global customers wanted us tocreate a single customer interace. Plus, the

power o a global brand gives us better leverage

with nancial and government authorities, and

improved supply-chain eciencies.

Te businesses were realigned to present

the ata Chemicals brand across the world,

with each region taking ownership o certain

important accounts. India, or example, handles

the Unilever account, ata Chemicals Europe

handles the St Gobain business and the US takes

care o the Proctor & Gamble business.

Tere was also an internal actor thatcontributed to the rebranding employee

sentiments. Afer the acquisition o Jaguar

Land Rover and the launch o the Nano by

ata Motors, the ata group has become well-

known globally, says Mr Mukundan. We got

eedback rom our people that they wanted to be

associated with a brand like ata, one that stands

or ethics, values and stability. Tey wanted

to be a part o something bigger, a group that

understands business and is willing to invest.

Te rebranding also stimulated ata

Chemicals to undertake a massive consolidation

When oneis better

than many

The Green River (Wyoming) facility of Tata Chemicals North

America has been mining and processing trona ore since 1968


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COVER STORY

32

exercise. Instead o the our or ve dierent I

platorms that were being used in dierent locales,

the company moved to SAP. Support unctionslike nance, saety audit and risk management

have been centralised, while human resources,

treasury and sales and marketing remain ederal.

As Mr Mukundan puts it, the whole entity

unctions like an aircraf carrier-led eet o ships.

LETS TALK

One positive allout o the consolidation has

been a big jump in networking within ata

Chemicals. For instance, the company now has

intra-company saety audits, with a global audit

team visiting each o its businesses.Says De Lyle Bloomquist, the head o

the Global Chemicals Business, We started

identiying best practices, but people also began

to create networks. It broke the ice. Nowadays

people are picking up phones and talking to

colleagues across the globe. For instance, i

Magadi is acing a technical issue, theyll call the

US site and ask questions. On the commercial

and sales and marketing sides, we have quarterly

meetings, a King Arthur and the round table

kind o thing where we all sit down, talk about

dierent issues and share experiences.Another positive move has been the

planned shif to a leaner, tter organisation with

higher speeds o response. With one eye on the

balance sheet, ata Chemicals is implementing

programmes such as Lean Six Sigma and

Economic Prot Management to improve

returns on investment.

Christopher Douville, vice president at

ata Chemicals North America, explains, Since

the rebranding, many o our employees have

commented that they now see the business as

global versus regional. Tey have rst-handopportunities to interact with their counterparts

at other ata aliates. Tis has brought about an

exchange o ideas and success stories that will

continue to help uniy the global entities as one.

Rebranding, realignment, consolidation

these management terms dont ully capture what

ata Chemicals is actually doing: making sure that

the vintage chemicals business is in a sustainably

better shape to deal with the uture.

Magadi turns 100

Old as it is, Tata Chemicals in India is among the

younger entities in the Tata Chemicals group. The

oldest is the erstwhile runner ond, founded

in the UK in 1873. And last year, Tata Chemicals

agadi (formerly agadi oda Company, which

was set up in 1911), celebrated its centenary.

aving doubled its capacity in recent years,

Tata Chemicals agadi managing director

ichael Odera says the challenge now is to

remain cost competitive while delivering asuperior product and service.

ituated 120km southwest of airobi, on

the shores of Lake agadi in Kajiado County,

Tata Chemicals agadi produces about 600,000

tonnes of soda ash every year, making it a

RHFMHB@MSENQDHFMDWBG@MFDD@QMDQENQ*DMX@

Apart from its 680 employees, the

company supports a community of over 5,000

inhabitants, including family and ancillary

workers. It implements education, health, water,

employment, and micro-business programmes,

not only for the employees and family but alsofor the 30,000 local residents of what is known as

the agadi division.

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