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Adhesive Industry has witnessed exponential growth in the recent years and has formed a giant market globally and in India. The growth can be attributed to the widespread applications that adhesives find in a broad range of industrial and commercial sectors.
Henkel's first quarter figures- FY2013 highlights the success of company's investments in emerging markets particularly in India which has generated a strong momentum. This is a testament of the growth potential and opportunities in the emerging markets for adhesives.
Globally, adhesives are used in almost every manufacturing sector - right from flexible packaging to textiles - and have gained widespread popularity across different sectors including renewable energy, auto, aviation, construction, FMCG, healthcare amongst many others. Ashish Pradhan, Business Director - Industrial Adhesives (AI), Henkel Adhesive Technologies India Limited, states that the global trends of industrial adhesives point towards steady growth. However, growth in the emerging markets continues to build much faster than the developed economies due to rapid pace of industrialisation and rise in manufacturing or industrial output.
Henkel has three business divisions in India under Adhesive Technologies. The Industrial Adhesives division forms the largest of the three and consists of eight strategic units that cater a wide gamut of industries.

Henkel's Customer Focus
The growth of the adhesives market also indicates enrolment of many new competitors, both in the organised and the unorganised sector. This creates an open field for aggressive competition. Accepting the current market scenario, Pradhan clarifies that although the overarching trends of industrial adhesives have given rise to soaring competition, HenkelĘs focus on innovation, technology and customer centricity are the key differentiating factors which set it apart from competitors within the industrial adhesives segment.
Pradhan believes, the company's position is not just defined by the quality of products and technical expertise but is also equally dependent on a well-built supply chain network, extensive technical support and efficient client servicing. Henkel's customer centric approach which involves in-depth application knowledge, customised solution as per customerĘs machine configuration and periodic evaluation gives it the competitive edge. Additionally, strong technology platforms across all applications and portfolio of proven products are also a testament of the companyĘs quality assurance. Globally as well as in India, Henkel has established very strong customer connect and loyal customer base.
Talking of about the companyĘs India operations, Pradhan mentions that the journey started with importing products but now there are nine state-of-the-art manufacturing facilities of Industrial Adhesives, located in various cities across India. (Pune, Jejuri, Thane, Rudarpur, Chennai, Parwanoo, Gurgaon, Turbhe, Tarapur.)

The Challenges
While the industrial adhesives segment provides high growth potential in India, it is also faced with several challenges, particularly in procurement of important raw materials and technology absorption. Non-availability of feedstock is the key challenge which Henkel and the industry at large need to address. Besides, there are no manufacturing facilities for certain chemicals like adipic acid and isophthalic acid which find widespread use in the industrial adhesives segment. Hence, Henkel is forced to bank upon importing the same in bulk amounts from countries like China, resulting in cost escalation. One of the other major market challenges that most of the technology driven companies face in India is acceptance of new technologies by the customers. This is either due to the inability to integrate the technology into the existing system or the upfront cost of investment. In this regard, Pradhan cites the instance of cold seal technology which is almost two and half times costlier for their client as compared to the conventional hot seal technology.
However, in the long run, the coal seal technology yields way better productivity and faster ROI since it reduces the line speed drastically by approximately 400 per cent. Some of HenkelĘs clients which are well known brands in India have adopted the cold seal technology and are reaping benefits of the same. Pradhan further adds, "The consumer should look at the bigger picture and understand the entire value chain so that they can deliver as a system and not just a product."

Key Growth Drivers
According to Pradhan the adhesive and coating solutions catering to the Flexible Packaging is a key industry driver for Henkel in India. He states that flexible packaging has been growing phenomenally in last 15- 20 years. India is currently the largest producer of adhesives for the flexible packaging industry amongst all the manufacturing facilities of Henkel globally. The India facility of Henkel caters to both domestic as well as a few international markets including the Middle East, South East Asia, Africa and South America too.
HenkelĘs adhesive solutions for the non-woven industry (the diapers and the sanitary napkins) rank next in the key growth drivers for Henkel in India. Pradhan asserts that the penetration of non-woven industry is currently less than even 10 per cent but it is slowly making its way into the smaller cities and the rural parts of India. Percentage wise, the growth of industrial adhesives catering to the non-woven segment, is the highest for Henkel.
The growth in adhesive solutions for shoes is driven by the Asia-Pacific region and India alone churns out almost 3 billion shoes per year, Pradhan adds. Henkel also witnesses large demand from the labelling and industrial tapes segment which finds widespread use in the pharmaceutical product market. However, the size of the same is much lesser as compared to the flexible packaging industry. Industrial adhesives also find application in the packaging of diverse range of FMCG products and the consumption of the same is very high since FMCG caters to all categories of people across Tier 1, Tier 2 cities and rural areas.

Fostering Innovation
Pradhan also mentions that, aligned to HenkelĘs ÂWinning cultureĘ the company nurtures innovation and passion within the organisation and outside. An example of this is the encouragement and support that Henkel extends to entrepreneurs who wish to set up manufacturing bases of raw materials and any of their related industries locally. Henkel provides expert assistance right from the very beginning till the manufacturing units start production to their desired capacity.

Henkel's Future Roadmap
Kasper Rorsted's, CEO, Henkel has recently outlined the strategic priorities of the organisation where he highlighted HenkelĘs strong focus on emerging markets and that the company expects significant percentage of turnover to come from the emerging market. The revenue generation statistics over the past years reveal that India is especially promising amongst all the emerging markets and Pradhan confidently quoted a double digit growth specifically from the Indian market.
Mergers and acquisitions have helped Henkel to attain a steadfast hold in the Indian market in the past. The acquisition of National Starch in 2009 is one of the best mergers that accelerated the growth of Henkel. The recent acquisition of CAC has also proved to be a very successful business decision in the sector of industrial adhesives for the flexible packaging industry. Pradhan also mentions that Henkel plans to invest more in India and consolidate its position as the largest industrial adhesive manufacturer and supplier in India. Henkel intends to achieve so with a healthy mix of both inorganic and organic growth.