Innovation driving change in Tata Chemicals: Mukundan

In an interaction with Moneycontrol.com's Kingshuk Mukherjee Mr.R Mukundan MD of Tata Chemicals describes how Innovation is driving change this year with the launch of flavored salts.

A: More than speed of decision making I think the agility that is more important I think it is not just about speed but also changing the direction so when the Lehman bothers crises occurred in 2008 we had a programme called as "ADAPT" it was a programme that was made anticipating the slowdown post the Chinese Olympics scenario. We had built a scenario where we expected an oversupply from the Chinese suppliers because they has built huge capacities fro the Olympics and that supply may flood the international markets once the Olympics would get over so we had this called "Adapt" even before the Lehman brothers crises hit us. So when the crises hit us we quickly fine tuned the ADAPT programme for address the credit issue and credit issue meant what it meant greater focus on cash so we actually tweaked the programme from cost control to cash control and cash control meant you focus on collections from customers, greater focus on working capital requirements, on conserving capital spend and we had a target of saving around Rs.500 crores odd of cash by September and we had six months target of achieving that we pretty much achieved that target. During that time there was lot of talk about employee disruption, some of the employees felt that they may loose their jobs so we had a town hall meeting that addresses this issue I was asked the question by the employees whether we had our jobs intact so told them no one is losing their jobs everyone will retain their jobs but it meant that everyone had to work as a team and individually we had to make some sacrifice so we had cut down on unnecessary expenses like we travel economy, travel by train we had do that as a team so we all can hold to the jobs. Luckily for us we did not loose a single person during that period employees helped achieve that target faster than what we had anticipated so two things helped during times of crises one you need a high employee morale if you can sustain it, give them focus , give them the tools to deal with the problem and at the same time you need to be agile which means you need to switch from one market to another, close those areas which are not yielding results and re-orient those efforts where we can get results and move on. Q: What would you describe as the key change / catalyst responsible for transforming the chemicals business today in India?　 A: The key issues that chemicals industry faces today are one related to "Sustainability" we have to become sustainable green business, we have focus today becoming more sustainable, we all have to reduce our energy intensity, water intensity also we have to focus on the whole issue related to safety standards not just at the production level, but also safety in transportation, safety is usage the whole safety in value chain. To that extent we encourage every chemical company in the industry to become members of "Responsible Care" which is an international practise to which we are the initial signatories. This is a certification that is run by Indian Chemical Council of which we are one of the patron members we are amongst 13 0r 14 chemical companies that are signatories as well as people who have been awarded the "Responsible Care" logo once your systems and practises once adhere to their norm then you are awarded the care certifications and you can their logo. We have been propagating from the chemical industry side for companies empanel themselves for this and undertake a process for internal certification for this so that they can improve their processes for their suppliers as well as purchases Q: How do you maintain growth targets without compromising your long term goals? A: We have a long term strategic plan we have goals of what to deliver to our shareholders what wee need to deliver to employees, what wee need to deliver to the communities so we follow a typical "Triple Bottom Line" approach and all these are collated into the strategic planning and we have specific targets to achieve in each one these areas some areas we are in the initial stages like we two years ago we undertook carbon foot printing we set ourselves modest goals like we have committed that by 2020 we would have 20% less carbon footprint then we have today. This year we have started the exercise of water foot printing to know what is water footprint and improve our water print and we also support certain Corporate Social Responsible activities besides supporting the normal activities like funding hospitals & schools in addition we have a programme called as" Dharti Ko Arpan" that we run in terms of protecting species and protecting the environment two species that we have picked up are the "Whale Shark" – the largest fish it comes to the shores of Gujrat we work with the Gujrat government and the WTI in terms of protecting this species and its all about educating the fisherman and all that. Right now we are in the scientific phase were we tagging them and tracking them a lot more data is recorded so the social awareness part is over and second is the Gir Lion we are working intensely with the Gujrat government to protect it so that they don’t die from accidental deaths, in addition to that we have done maybe the first or maybe the only coral transplantation where we have transplanted corals from the Andaman & Nicobar islands to the shores of Gujrat , its an experiment so you will come to know where it is success or not. We are taking good corals from a different region and transplanting it to another region. Here too we are working with the Gujrat government and the WTI on that programme. I would also like to add about the local communities like the "OKHAI" an NGO that we promoted it’s essentially about the art and craft of the local women in Gujrat. These OKHAI products are sold in at-least six/ seven stores we will be expanding the number of stores where we sell these products. It products like dresses, bed materials, mattresses etc. We have branded it "OKHAI" These are promoted by the "OKHA" mandals. We also have started a rural BPO where we work with a high proportion of scheduled caste, scheduled tribe people in our affirmative people programme called as "UDAY" that is something we are very passionate about doing in this we bring the men and women together and train them to becomes BPO (call-center) operators we run this in the rural areas we don’t run them in the urban areas. Also the improved connectivity the cost has come down so we can easily set up the BPO in the rural areas nobody knows where the BPO is set up whether it is rural areas or the urban areas. We have three local (Captive) clients the biggest clients are Tata Teleservices, Tata Chemicals and Tata Sky, these are dated figures and the latest figures must be something different.　　　　　 Q: Do you have access to the key information (data-points) needed to make vital decisions? A: Yes, we have dashboard that we have created called as "Key Assumption Tracking" so when we ever make a budget or a plan there are key assumptions on which it is based if these assumption change there will be some impact on your overall performance so many of us don’t make all the assumption critical ones on the table the ones which we are the most sensitive to the final outcome we track those assumptions. For example: One assumption is the demand supply situation in an industry so any capacity addition from the supply side or from the demand side like a new plant for the manufacturing of glass being started that can change the assumptions so we constantly track and keep updating the assumptions. The second element of input is getting early signs of customer collection delay and this comes straight out of the I.T systems as the customer credit starts to move from zero outstanding to three day outstanding to seven day outstanding to a forty day outstanding you can see the velocity change and I think that should then flash and sort of become active it should be actions take and there are some critical commercial parameters that our marketing team focuses on to keep things on track and engage with the customer and how can make sure that we don’t have issues with the customer going forward. Q: Tata Chemicals Innovation Centre has come out with a low cost water purifier "Tata Swach" do you have any products on similar lines or in different segments like nutraceuticals or like the "Paras Farmoola" for the customised fertilisers? A: The "Paras Farmoola" came out of our centre in Aligarh which is the Tata Chemicals agri technology centre. The "TATA SWACH" was the first product to come out of the Tata Innovation centre the second business is the "Nutraceuticals" business where are investing Rs. 50 crores for coming up with a plant in Nutraceuticals in Chennai. The Nutraceuticals business is mainly in the areas of Oligosacchiradires and polyols. These would sold to the various food companies Q: How’s the market reacted to the TATA SWATCH low cost water purifier? A: We have got a tremendous response from the market having sold a Million units already. We had a few issues mainly to do with the "Distribution" network but we have sorted that out and now progressing well. As it’s a new business for us we have our share of learning’s we had never done a consumer durable type of business and at the price point that we are operating it’s a new market that we are creating we did have new learning’s as the business segment was new to us Q: Are you trying to scale up the price point as well for the "TATA SWACH" or will it remain your mainstay product? A: We can but there’s so much potential in this market segment we don’t want to loose our focus about the potential and also it is aesthically modern as you would find. You can keep in your house it will never look out of place. It is an absolutely great looking product and our focus is to unlock the potential Q: What is your expansion plans in terms of geographies as well as capacity expansion in the Sodium Bicarbonate business?
A: We have already set-up a deep bottle neck plant in India & UK already and we will continue to see and observe options & opportunities as and when the market absorbs the capacities besides that we have set a new company called as " NATRONx" as a joint venture with FMC and Church & White with an investment of 60 million dollars this is for air pollution control product Q: What is Tata chemicals competitive edge when competing with global players like Solvay or BASF or Du Pont?
A: We as a company are mainly focused on the "Inorganic Chemicals" business as well as strong position in India. Our strength is low cost access to raw materials and also a strong position in a fast growing market like India we have been able to link the two Q: What is your vision for Tata Chemicals in the global landscape? A: I think Tata Chemicals would increasingly focus on growing the business in three things: Innovation, Application Orinetation and lot more focus on the Consumer facing businesses Q: In your diverse experience what lessons have you learnt in managing growth specially during slowdowns?
A: I think you need to stay close to your customers; you need to stay close to your person that’s the biggest strength that you can get