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"Innovating in India for India"
The Dow Chemical Company and Saudi Aramco have jointly formed Sadara Chemical Company (Sadara) to construct an integrated chemicals complex in Jubail Industrial City II, in the Eastern Province of the Kingdom of Saudi Arabia. It will be the largest petrochemical facility ever built in a single phase. India is likely to be benefitted with this facility the most, says Vipul Shah, Chairman, CEO and President, Dow Chemical International Pvt Ltd. (Dow India). In an exclusive interview with CEW, he further talks about the transformation and restructuring of Dow and shares insights into the company's future plans.

From a leading basic chemical producer, Dow is transforming into the performance chemicals oriented company. How Dow is going about restructuring and shuffling the portfolio? Dow is one of those few fortune 100 companies and the companies which are 100 years old that have remained in its own shape and size, - specifically in three basic molecules - chlorine, ethylene and propylene. You can put almost 99 per cent of Dow products under these under categories. However, how we use and develop these molecules today is fundamentally very different with what we would do two to three decades back.

Dow Chemical witnessed a new phase of transformation after the acquisition of Rohm and Hass in 2009 when the organisation started metamorphosing from highly cyclical basic chemicals company to performance oriented solution offering company. With seamless integration of Rohm and Haas from both cost and growth standpoint, we have entered into a complete new phase of restructuring.

During the past three years, we have consolidated our hydrocarbon assets base, performance envelope ?? heritage of Rohm and Haas and are in the process of implementing innovation and joint portfolio book. As a part of restructuring, streamlined our workforce and consolidated our business from 30 business verticals to 13 and looking at the market in number of ways during this next phase of our journey.

Three Executive Vice Presidents and 13 Group Presidents look after each of the 13 business lines and their own value chains. This has enabled us to function in decentralised manner across different geographies and make centralised decisions enabling us to move faster with agility to explore new opportunities in regional markets. We are currently trying to spread ourselves in emerging market places and looking at offering performance oriented innovative solutions across various industries. We will continue to have a constant focus on expanding our asset base in different regions to give the push to the regional markets.

How important Asia Pacific region is in DowĘs overall growth strategy. How do you plan to steer the growth of Dow Chemicals in this region? Currently, Asia Pacific region represents 30 per cent of worldĘs GDP; however, I feel that we are not properly represented in this region since only 18 per cent of our revenue is based out of this region. We intend to increase the number to 23-25 per cent by 2020. Asia Pacific region is a very important market for us and being an asset based company, we have made significant investments in Thailand and Saudi Arabia to support our operations globally.

Thai government has developed consortium site in Map Ta Phut at the southernmost part of the country. We are partners for the consortium cracker at this site and have 23 per cent stake in the cracker, which allows us to use 23 per cent of C2 and C3 from the cracker as feedstock for our further downstream operations. We have also set up world class facility to produce Propylene Oxide (PO) via innovative Hydrogen Peroxide based on HPPO technology jointly owned by Dow and BASF. The plant has Nameplate capacity of 390 ktpa. This has enhanced our position as the global leaders in PO and brought out our further strengths in derivative businesses of Polyurethanes (PU) and Polyglycol (PG).

The consortium site has given Thailand an edge to be globally competent in petrochemicals production. As a part of ASEANĘs trade block, Thailand enjoys the advantage of access to much larger zero duty market comprising of Vietnam, Indonesia and other markets in ASEAN region which has made the country's petrochemicals industry globally competent. As mandated by the Thai infrastructure bill, the countryĘs government is building port infrastructure to move the products from the consortium cracker.

After Germany and Singapore, this is the third consortium cracker built globally. The biggest advantage of having a consortium cracker is that with partial investment you get a fully integrated asset. Our second major investment is the Sadara Joint venture project in Saudi Arabia which is 20 billion dollar investment and is probably the largest chemical complex to come over in shortest possible span of time globally. All the 23 plants in the complex have been targeted to go on-stream by 2015 which will produce three and a half billion tonnes of material, 45 per cent of which is targeted for the Asian market itself.

What is the support that the Indian market is getting from these assets?
The production from our assets in the Asia Pacific region have strengthened our position in the Indian market since moving the products from these hubs significantly reduce the response time and enable us to be more cost competent in the Indian market.

Despite India being one of the largest individual markets for Dow Chemicals, why hasn't the country seen such huge investments in the country?
Business strategy varies from country to country since each market is altogether different and has different business drivers. In case of Saudi Arabia and Thailand, we had very clear advantage of feedstock, which is the fundamental reason of investing in building hydrocarbon assets in these countries to become globally competent. In case of India, two-thirds of supplies of crude oil are still imported and we take our products down from naphtha or gas and do not have upstream capabilities which make investments into crackers or further downstream not so viable for us as a global company.

India is a different market altogether and we do have major plans for the Indian market in the years to come and are aggressively working towards them. Last year we inaugurated our state of the art lab to provide applications for water, pharma, food and cosmetic care industry in India and by the end of next year we intend to introduce 8-10 new portfolios for the Indian market.

So what is the way forward for Dow in India?
India is one of the very key markets for Dow, and as I have already talked about, all 23 plants at Sadara Chemical Complex will be on-stream by 2015 with 45 per cent of production targeted for the Asian market. We have a herculean task ahead of us to have all systems in place to move the products quickly into the market.

First and foremost, we are setting up the required infrastructure to take the products seamlessly into the market, figure out the supply chains, enhance warehousing capacities, and line up C&F agents to reach out to the wide customer base across western and northern regions in the country.

Secondly, we are making substantial investments in people as there is a sudden need to position our products in a more strategic way than ever before.

Third and most important thing that we are working on is that instead of providing simple products to the market, we provide complete solutions. Our systems capability in Kalwa (Mumbai) is a classic example where we blend polyols and MDI and offer value added products such as polymeric polyols and blended MDI for our customers. We have lot of monomer investments in Saudi part of Rohm and Haas where acrylic acid plant will start up next quarter.

We plan to bring this to the Indian decorative paint market through emulsion process at our facilities in Taloja (Mumbai) and Chennai. There is a lot happening on the innovation front in India especially towards safety. We are creating new applications such as composite development. We had seven patents filed out of India and some of them have been granted which we will announce shortly. Our global engineering excellence centre located at Chennai offers engineering services to our global operations where we have the capability to develop PDP and FEED packages for batch and continuous operations of Polyethylene (PE) and Coating Emulsions plants.

We are currently investing in the next phase of Dow application technologies both for people who understand the Dow platform as well as the market disconnect. We intend to scale up our application technology capability in India from innovation standpoint to provide solutions for the Indian market. We are at the forefront of offering innovative solutions and are focused on creating application technologies specifically targeted for the Indian market. We will innovate in India for India.

What kind of growth are you targeting in the Indian market over the next few years?
Double up by 2016!