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
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
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
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!