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"India will Attract Major Investments in Near Future"
With an investment of 1000 crores to set up a new chemical production site at the Dahej PCPIR in Gujarat, BASF has added one more feather to its cap. Prasad Chandran, Chairman, BASF Companies in India & Head - South Asia explains company’s strategies to strengthen its position in the country and more.

Provide us a complete insight into the integrated chemical production complex to be built in PCPIR region in Dahej, Gujarat. BASF India Limited will be investing 1000 crores to set up a new chemical production site at the Dahej Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) in Gujarat. The new site will serve as an integrated hub for polyurethane manufacturing and will also house production facilities for care chemicals and polymer dispersions for coatings and paper. Start of production is planned for 2014.

The new site, at full capacity will employ more than 250 people, primarily in operations. With shared infrastructure and State-of-the-art production systems, the site will also provide resource efficient BASF technologies for the conservation of energy and water. The sites advanced design takes advantage of the latest technologies from BASF facilities around the world and ensures safe and responsible operations. It will supports BASF's business growth in the important northern and western markets by ensuring increased local supply for growing markets and industries such as appliances, footwear, automotive, construction, adhesives, architectural coatings, paper and personal care.

What are your views on the growth of home and personal care market? What kind of growth momentum will this market provide to BASF's global growth strategy in the field of care chemicals?
Evolving consumer landscape, demand for better quality products and increase in disposable income are the main growth drivers of the Indian Home & Personal Care industry. There is a strong need for solutions with enhanced functional benefits, which can help our customers to improve existing products and integrate them better to suit the needs of their local consumers.

The Indian market with these dynamics, together with Brazil and China is therefore set to become one of the biggest Home and Personal Care markets worldwide in the coming decades. Sustainable growth can only be achieved if BASF invests adequately in increasing local production, improving technical service and supporting development of customer industries, based on its core competencies. BASF already has a wide array of products and strong technical capabilities which can enable the company to meet the shift in demand. Additionally, BASF will follow its global customers and also tap into the opportunities presented by their improved local presence. We firmly believe in partnering their growth by accompany them in markets where they are present and offering products manufactured locally. BASF will also participate in the expansion of leading Indian companies by furthering its supply reliability at competitive cost and offering broad-based cooperation on innovation with new facilities like the Dahej project.

What were the main drivers to come up with this project, and which are the major markets that you plan to tap?
BASF already has manufacturing facilities in Mangalore, Karnataka; Thane, Maharashtra and other locations in India. Through our solutions and network, we are confident about strengthening our market position with our well-established network in India.

The Dahej site is located in close proximity to many important customers in key industries such as appliances, footwear, automotive, construction, coatings and personal care. The PCPIR is an excellent site with a strong safety culture, good local infrastructure and transport links. The new site will therefore strengthen our position in northern and western markets in India and complement our existing production facilities in Mangalore and Thane sites.

In times of high energy price volatility and high energy costs, how do you plan to be cost competitive and energy efficient?
Our production processes focus on energy efficiency and the responsible use of raw materials. As a company, operating in the energy-intensive industry, our success also depends on the long-term security of our energy and raw material supplies. We pursue this goal through efficiency in energy generation, savings through integrated production, and our energy management, which analyses and further improves energy efficiency at all of our plants and helps us remain cost competitive and improve profitability.

Major feedstock suppliers in India have set up integrated downstream facilities thus creating feedstock deficit for standalone petrochemical companies in the Indian market. As an MNC how do you see this as a challenge and how will BASF address this?
Feedstock availability continues to be major concern for Indian specialty chemical industry. Petrochemical companies in India use feedstock for their captive consumption leaving limited quantity for the merchant market. As a result of this, the specialty chemical industry has not grown to its full potential. The new Draft National Chemical Policy recognises this problem and has made a few suggestions to improve the situation on feedstock availability and pricing in the 12th Five-Year Plan. BASF sources feedstock from across the globe. For the Dahej facility, we will utilise our global expertise to source raw materials at the most competitive price.

How do you compare China and India as the global manufacturing hubs?
I will not like to compare the two. Both countries, with their demographics and regulatory framework offer a conducive investment and business growth environment. Investments are directly related to the market size and in that perspective; the two markets are not strictly comparable. The Chinese chemical market is eight times bigger than the Indian market. However, we see a few sectors opening up in India as well and in times to come significant investments will flow into India, making it a manufacturing hub across industry segments.

What are the future plans of the company about translating the vision of achieving sustainable growth down the line and across the entire value chain?
Strong end-use industry demand is expected to boost growth for the Indian chemical industry. To create a favorable investment environment to tap into the strong demand, our focus will be to increase local production and widen our market base. Key success factors needed to achieve this are value chain access, technology, capital investment, access to a rapidly growing large domestic market, development of infrastructure and cost competitiveness.
Our current and future investments will therefore be concentrated in the areas of sustainability, R&D and site/capacity expansion to be able to serve our customers better.