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From heavy chemicals to health products...
 
From heavy chemicals to health products...
For years, Tata Chemicals Ltd (TCL) was known for its leadership in heavy chemicals, salt and fertilizers and for its dominance of the domestic market. In less than a decade it has spread its activities across four geographies North America, Europe, Africa and India. Courtesy acquisitions, it now

Murugan lives in Cheyyar, in Tamil Nadu. For years, the village has been suffering from water-borne diseases. Murugan’s children used to fall ill frequently with diarrhea and other gastro enteric diseases. The reason: at the village, water from the wells is consumed directly, untreated. Not just in Cheyyar, but in lakhs of villages across India.

Murugan heard of a low-cost water purifier named Swach. But he had his doubts. Would this work in his village that was subjected to 16 hours of power cut? The kind salesman, knowledgeable with the working of the appliance, explained to him that Swach needed neither electricity nor a plumber to connect it to running water.

Murugan bought it. It was affordable. And since January he has been happy using the water from Swach that delivers pure water. There has been a significant drop in his doctor’s bills.

Let’s move from Cheyyar to Allahabad.

Large number of devotees, estimated at 10 crore, who thronged the Maha Kumbh Mela at Allahabad to take a holy dip at the Triveni Sangamam (confluence of the three rivers – the Ganga, Yamuna and Saraswati) were served with hygienic water. Tata Swach partnered with the Uttar Pradesh Water Board to provide safe, clean, drinking water through a network of 28 water kiosks. More than three lakh litres were provided free for 55 days. Surely, it was a brilliant brand promotion.

 

Changing face of TCL…

Swach is just one instance of the changing face of the Rs 15,000 crore plus revenue Tata Chemicals Ltd. The seven-decade old company, until eight years ago, had been known for its lead in heavy chemicals and fertilizers.

In 2005, TCL had a turnover of Rs 3100 crore with manufacturing facilities in Gujarat and Uttar Pradesh. Today, it has metamorphed into a Rs 15,000 crore plus corporate with manufacturing facilities spread over four continents - America, Europe, Africa and Asia. The products cover a much wider range: apart from being world’s second largest manufacturer of soda ash and fourth largest producer of sodium bicarbonate, TCL is the largest producer and seller of branded salt! TCL has diversified into a large producer of branded dhals and nutraceuticals. Making effective use of its by-products, it is also a producer of cement (last year, cement production was in excess of 4.4 lakh tonnes) and specialty chemicals.

With production of over 1,127,421 tonnes of urea and 661,149 tonnes of phosphatic and NPK fertilizers, TCL is a leader not just in the production of fertilizers but also in offering a vast range of farm services. The latest is the production of customised fertilizers designed to aid farmers to use the right mix and quantity of fertilizers for raising rice, wheat, potato and sugarcane. Through its subsidiary Rallis India Ltd., the company is also a leader in crop protection chemicals including pesticides and insecticides.

Through global acquisitions and thrust on innovation, the face of TCL has changed so quickly and so dramatically.

This is what R Gopalakrishnan, Vice Chairman, TCL says: “since Tata has activities across a chain of small towns, it is important to think of supply chain holistically. If Rallis can use its exceptionally strong farmer connect to positively impact the farmers’ product mix and income, then a solution to reduce the market risk of farmer’s produce can be offered.”

For a company that has been focusing on heavy chemicals for decades, reaching largely B2B customers, this diversification and expansion meant tapping the huge market at the bottom of the pyramid. A welcome aspect of this is the concern for health through the focus on supplying quality salt, filtered water, protein-rich pulses and nutraceuticals.

 

Products that touch people’s lives

TCL has, for years, been the largest distributor of branded salt. Tata Salt reaches over 65 million households  per month through 14.3 lakh retail outlets and is the most familiar household branded  product in India.

With sales of over a million units, Swach has been making deep inroads into the water purifier market. Swach is based on nano-technology and is a product of research at the MIT and the Tata Innovation Centre at Pune. Likewise, the nutraceuticals to be manufactured at a new plant at Sriperumbudur, near Chennai, to produce a range of probiotic products, is also the product of research in biotechnology at Pune.

The share of revenue from these non-chemicals and fertilizer products has been increasing. It is estimated to increase faster in the coming years. In each category of consumer product, the Tata Innovation Centre and the research institutions of the company have been endeavouring to expand the range of products with focus on healthcare. The company has expanded the Tata Salt range of products to include new salt varieties that sell on the health platform-  Tata Salt Lite aimed at hypertension patients and Tata Salt Plus, an innovative iron fortified salt.

 

Working at the grass roots...

The changing face of TCL is also visible in terms of the extension services taking science and technology to farming in the states of Uttar Pradesh, Haryana and Punjab. If you had visited the villages in western UP in 2005 and later in 2011, you would have noticed a spectacular change. In 2005, TCL focused on persuading the farmers to opt for high yielding varieties of grains. There were efforts to encourage farmers to raise high quality basmati rice with the assurance of procuring the produce at remunerative prices. The results were spellbinding. Yields doubled in just two seasons. Today, the spread of science and technology in leveraging the strengths of the Tata Group in terms of information technology and telecommunications is great.

The five’ fold increase in revenues during the last ten years has resulted in a vastly expanded reach to consumers in India and abroad. TCL serves 12 crore households in India. The farmers serviced by the company exceed 1.75 crore. The expanding range of fertilizers and consumer products are reached through 15.20 lakh retailers. The Tata Kisan Sansar outlets, designed to serve farmers’ requirements, number 821 and industrial customers for the range of products exceed 8000.

 

Call centre for farmers!

TCL has set up a hi-tech system to reach out to farmers. At a call centre in Babrala where the fertilizer plant is located, TCL provides a vast range of information and guidance to the farmers in Hindi-speaking states through phone. One would witness a precious co-ordination using the expertise and resources  of TCS, TCL and Tata Teleservices.

    The Tata Chemicals Society for Rural Development (TCSRD) reaches out to thousands of farmers’ families through women self-help groups (SHGs). The society helps farmers to engage in a variety of non-farming occupations. In the villages, women SHGs help its members own high-yielding milch buffaloes. The self-confidence it has built and the revenue generated have helped rural families to attain higher standards of living. It’s not just the changing face of Babrala; it’s now the changing face of TCL!

 

Acquisitions with eye on technology and raw material...

In line with the massive spree of expansion of the Tata group through global acquisiti

ons, TCL has also embarked on such growth. In 2004, it started with the merger of Hind Lever Chemicals Ltd with TCL that marked a major expansion of fertilizer products. In 2005, TCL acquired one-third stake in Indo Maroc Phosphore S A at Morocco and strengthened its source of supply of phosphoric acid. In 2006, TCL acquired the Brunner Mond Group of UK and the Magadi Soda Company, Kenya. In 2008, it acquired General Chemical Industrial Products in the US. The same year it picked a stake in the JOil Singapore Pte Ltd. In 2009, TCL acquired majority stake in Rallis India Ltd, which vastly expanded its crop protection products. In 2011, through Rallis, TCL bought a majority stake in Metahelix Life Sciences, Bengaluru, which helped expand its range of biotechnology products and hybrid seeds. In 2011, it also acquired British Salt Ltd, manufacturing consumer and industrial salts and a 25.7 per cent stake in EPM Mining Ventures Inc, USA, engaged in mining potash.

The company continued with its spree of acquisitions looking out for opportunities for expansion, particularly with an eye on technology and raw material sources.

The sea change brought about through such expansions is evident from the steep rise in turnover in foreign operations. For the year ended March 2013, of the total global sales

of Rs 14,719 crore, overseas operations accounted for a revenue of Rs 5296 crore and this is increasing.

TCL’s growth thus, forms part of the strategy of Ratan Tata and his team to expand overseas. Remember the massive acquisitions of Corus steel by Tata Steel Ltd, Jaguar Land Rover Motors by Tata Motors and the several acquisitions made by Tata Beverages and Indian Hotels?

 

Focus on R&D…

In an interview, R Mukundan, Managing Director, referred to the emphasis on research and innovative efforts of the company. TCL has five R&D centres. At the Tata Innovation Centre, Pune, the emphasis is on nano technology and biotechnology. R&D efforts are focused on producing products with a high degree of concern for consumer health. The successful functioning of Swach is the result of the work done at Pune. Such research efforts are focused especially on salt at Mithapur. On fertilizers, especially on the effectiveness and economies in use of farm inputs at the R&D centre, at Aligarh.

The customised fertilizer plant has been designed to ensure optimum use of fertilizers. This has become extremely important in the context of increasing costs and to eliminate the present wastages inherent in indiscriminate use of fertilizers.

TCL’s focus on innovation and R&D is reflected in the increasing number of scientists and researchers- 74 at the end of March; to the research partnerships that numbered 11, the number of patents applied at 66 and the R&D spend which has been registering continuous increase - it was close to Rs 50 crore last year.

 

Innovation centres to stir new ideas

The Tata Chemicals Innovation Centre set up in Pune in 2004 has helped the company expand its portfolio of consumer products with focus on value addition. The principles of sustainability and chemistry act as guiding forces, said Mukundan. Forays recently made in the fields of nano technology and biotechnology products are the results of the solid work done at the Innovation Centre under the lead of Dr Arup Basu.

TCL is setting up a nutraceutical production facility at Sriperumbudur near Chennai with an initial capacity of 300 tonnes per annum. This is directly the product of the patented process technology developed by TCL at its Innovation Centre.

The company has its Centre for Agricultural Solutions and Technology (CAST) at Aligarh. The centre is primarily engaged in developing innovative products/services in the domain of crop nutrient management, besides developing decision support system for soil test services. It also provides technical back up to sales and marketing teams.

At the research centre at Mithapur, TCL focuses on efficient and effective management for effluent treatment and disposal. A special result of this was the success in separating soda ash solids. With its pioneering soda ash filtration technology, significant amounts of solid waste have been filtered out of waste water. Mixed with fly ash, this enables the company to evolve as a significant producer of cement. Last year production of cement exceeded 4.4 lakh tonnes.

At the Rallis Innovation Chemistry Hub (RICH) in Bengaluru, the company focuses on chemistry product development and regulatory affairs. The thrust areas include development of new and safer crop protection formulations that provide better efficacy and improved value and services to farmers.


A bridge between producer and consumer

Mukundan referred to the strong bond established with farmers and consumers: “we constantly strive to bridge the gap between the farmer and the consumer. We endeavour to take the farmers’ produce to consumers by processing and packaging it,” said Mukundan.

 

Towards a pulses revolution

The foray into pulses was a sequel to the strengths built by the company in offering branded salt. The ace marketer Gopalakrishnan, has been concerned with the protein deficiency suffered by vast sections of the masses that are largely vegetarian. Pulses formed an essential supplement of protein.  Production of pulses has been stagnant for several years, necessitating large-scale imports. TCL embarked on a massive programme to expand production of pulses. The company offered comprehensive range of agronomical services that included supply of quality seeds, a wide range of crop nurturing practices supported by a vast range of crop protection chemicals and nutrition supplements. In Tamil Nadu, raising pulses had been a marginal activity, as an intermediate crop between two major rice crops or at the end of season in January when water availability becomes scarce. Tatas encouraged farmers to switch to pulses even as the main irrigated crop.

Rallis worked with farmers to expand yields, which were as low as 150 kg/acre. In quick time, the short-term crop was made more productive. Rallis witnessed four to five’ fold increase in average yields in a short time through concerted efforts. Most importantly, the company offered to buy the entire produce at prices that were announced in advance. Thus, one major drawback suffered by farmers, namely assured market at a fair price, was effectively attended to.

Gopalakrishnan launched the More Pulses (MoPu) campaign and drafted Amit Sridharan to work on this project. Sridharan described a fascinating experience: “I had to understand the farming business, yield, crops, seasons, etc. I visited farms in Maharashtra, Karnataka and Tamil Nadu. The learning was immense.” He referred to the experience driving him to leave the comfort zone of the office and to spend months with marginal farmers encouraging them to grow pulses. When the pulses were ready to be marketed in 2011, he took charge as Head of Pulses Business at TCL. Sridharan’s experience with the farmers was indeed precious.

“Now we are focused on the consumer– getting more consumers to try out our product, making sure of availability in retail outlets, leveraging the strong Tata Salt consumer network, carrying our partners along, getting insights into the end consumer needs. The big challenge is in engaging the retailers to see our product as competition to the loose or packaged dhal that they sell. The other challenge is in creating demand for our product,” said Sridharan (Tata Sphere, April-June 2013).

Mukundan expressed satisfaction over the doubling of turnover on pulses experienced by the company annually. At this rate, he expected revenues from pulses to cross Rs 1000 crore over the next 3-4 years.

Mukundan is confident that the continued thrust at innovation, research and development will help the company expand its range of consumer products with special focus on health and environment.  And to address the interests of producers and consumers alike.

 

 

 

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