Saudi Basic Industries Corporation (SABIC) ranks as the world's second largest diversified chemical company. SABIC has been active in India for more than 20 years. With a manufacturing facility, a Research Centre, 11 offices in major cities like New Delhi, Gurgaon, Mumbai, Bengaluru, Chennai and Pune and over 550 employees across India, SABIC seems to be set to participate in the multitude of possibilities presented by the renewed economic vigor of one of the world's fastest growing economies.
In an elaborate discussion with Lekhraj Ghai of POLYMERUPDATE, Janardhanan Ramanujalu - Vice President, SABIC South Asia & Australia - speaks on topics such as:
Standing left: Mr. Janardhanan Ramanujalu; Right: Lekhraj Ghai
In the backdrop: SABIC-made components for OEM Mahindra Automotive
Interview of Janardhanan Ramanujalu (JR) with Lekhraj Ghai (LG):
LG: Could you tell us more about SABIC's business strategies, especially SABIC 2025?
JR: Our current strategy SABIC 2025 aims at transforming ourselves into a more integrated, more differentiated and customer-centric organization. SABIC 2025 is a global vision and it is a comprehensive strategy for SABIC to grow in people, assets and business in new areas with valuable growth at its core.
Asia plays a very important role as it is a major market for five business units of SABIC, namely, Chemicals, Polymers, Fertilizers, Performance Chemicals and Innovative Plastics and with over 3,000 employees. Within Asia, China and India hold critical significance for SABIC's growth. The Indian polymers market is growing at very attractive rates; much higher than the GDP growth rate of the country. SABIC's growth strategy in India is aligned with India's growth strategy and we have an all-round participation in the Indian market.
LG: Where does SABIC have a manufacturing facility in India?
JR: We have a manufacturing plant based in Vadodara, Gujarat. In 2007, SABIC acquired GE Plastics globally. The Vadodara plant is a part of that acquisition and we have been active in manufacturing in India for more than 20 years. The plant caters to the most advanced engineering plastics applications in the country. For instance, almost all automotive brands have a presence in India and they have very specific and complex requirements, which we have been able to successfully cater to, such as the electronic, electrical and interior applications in the automotive industry. We have also been able to develop new applications like railway seats for the Mumbai suburban rail system, and its new trains will be equipped with seats made of SABIC's Lexan polycarbonate material.
Another innovative example of locally developed application is the plastic structural housing for inverters. Inverters are unique to developing countries like India where there are power consistency issues. Having a manufacturing plant close to the customer helps us adapt to the local needs.
LG: How can ties between SABIC and India be further developed?
JR: SABIC's strength lies in being a competitive producer and the close proximity between Saudi Arabia and India. Further, there are applications and customers within India that need to be catered to with local presence and local development and that is what we do with our Innovative Plastics business.
SABIC has been engaged in India for over 20 years and we participate comprehensively. For example, apart from our products being imported into India, we have an Engineering Plastics Manufacturing plant in Vadodara to cater to the needs of advanced manufacturing industries such as Automotive, Electronics, Electricals and appliances. In addition, we have one of our largest Technology Centers with over 300 scientists in Bengaluru, which caters to the research requirements of SABIC and SABIC's customers globally. We act responsibly as a good Corporate Citizen with many of our Corporate Social Responsibility (CSR) programs and skill development programs to benefit the communities around our operations.
LG: Are there plans of SABIC to start full-fledged manufacturing in India?
JR: We already have a compounding plant in India. The Vadodara plant is one of the largest engineering plastics compounding units in the country and has a capacity of approximately 30,000 MT. At the same time, it is necessary to meet the demand for polymer products in India, which is still growing at a double-digit rate. Being one of the largest petrochemical companies in the world, we focus on complementing local production with our imports. India is a core market for SABIC and we are eager to participate in all ways; namely, imports, local manufacturing as well as exports.
LG: How does SABIC intend to capitalize on the 'Make in India' ideology advocated by Prime Minister Narendra Modi?
JR: 'Make in India' is an exemplary campaign by the government of India. India's manufacturing sector has a significantly low share of the country's GDP as well as its growth. Considering that manufacturing creates urban and semi-urban jobs it is essential that there is growth in the manufacturing sector to provide opportunities for the nation's youth. In terms of jobs creation, the plastics industry is already a big employer. In fact, the projected polymers consumption in India of 20 million MT by 2020 could be reached a few years earlier thanks to the 'Make in India' campaign. At that point, companies like us who have already invested in India will be happy to expand as per the market demand.
LG: What are SABIC's views on sustainability? How does SABIC contribute towards sustainable development?
JR: Sustainability is core to Chemical industries' existence. We at SABIC are deeply committed to sustainable growth. For us sustainability comprises three overlapping components; namely, social, economic and environmental. Social sustainability is what we do as a corporate citizen. Economic sustainability is the benefit we need to provide to our stakeholders, customers and employees. Environmental sustainability is a broad term and involves various aspects such as carbon footprint, energy use, water use, material efficiency and safety in manufacturing and in the use of our products. Our sustainability strategies and targets are reported in our Sustainability Annual Report. In addition, as a part of our CSR program we also do community work at places where we have a presence in India. Key projects undertaken include the Hosahalli Lake restoration project, reconstruction of Hosahalli Government School, a Community Resource Center in Hosahalli Village and bus shelters around the vicinity of our technology center in Bengaluru. Similarly in the vicinity of our Vadodara plant, we have helped upgrade three government schools and conducted a large-scale comprehensive eye-care program for over 20,000 less privileged school children covering screening, vision correction, treatment and surgical support, for government and government-aided schools in National Capital Region (NCR), India.
LG: What are your thoughts on innovation in the plastics conversion industry?
JR: Plastics applications such as food packaging or household products can be catered directly by the plastics conversion industry by using its own know-how. The other type of applications are those that are driven by the customer industry. For instance, the requirements of the automotive industry decide the technology the plastics conversion industry has to implement. Gradually, the plastics conversion industry is transforming and is becoming increasingly customer-driven. To be able to supply to the automotive industry it is not enough to be just a plastics converter; you also need to be able to bring in other non-plastic components and assemble the final unit. Thus, value addition in the plastics converting industry can be achieved by the integration of plastics processing with advanced component manufacturing for the end-user.
LG: What are SABIC's contributions to the plastics processing industry of India? How does SABIC spread its technical know-how among small and medium enterprises?
JR: At our Technology Centre in Bengaluru, we focus on comprehensive application development starting from design, performance simulation and analysis, making the prototype and testing the product extensively. There are times when neither the plastics processor nor an automotive original equipment manufacturer (OEM) has the expertise and material knowledge to assemble a particular component. That is where we step in. For example, we worked together with Integral Coach Factory (ICF) to design a seating system using injection-molded polycarbonate for the Mumbai Rail Vikas Corporation (MRVC), which is responsible for executing projects for the Mumbai Urban Transport Project under the sanction of the Indian Rail Ministry.
As one of the largest polymer producers in the world, we focus on developing business for our materials and we are
happy to help in the integration of the material using sophisticated technology. We work collaboratively with many small, medium and large enterprises and provide them with total solutions and support.
In addition, SABIC is also involved in promoting skill development in the plastics industry of India. In association with Central Institute of Plastics Engineering & Technology (CIPET), SABIC is piloting a six-month fully-residential skill-development program for 50 unemployed youth from less-privileged backgrounds selected through a screening process undertaken independently by CIPET. SABIC will be providing full sponsorship to the participating students, covering their course fee and boarding and lodging costs. On successful completion of the course, the students will be provided with qualifications certified by CIPET and SABIC, thereby becoming vocationally-trained frontline workers for the plastics manufacturing industry in India.
LG: What are your thoughts on India as an export market, particularly for polymer products from the Middle East?
JR: India is a large market with demand driven by population size and the demographics. Cost competitive and better performance products are constantly needed due to changing technologies. India is a just 4–5 days shipping time from the resource-rich Middle East, which has always filled the gaps in supply both in volume as well as quality to meet India's growth ambitions.
LG: A few domestic petrochemical producers are soon coming up with new capacities? What is your take on the increased competition in the Indian market?
JR: Petrochemical projects take a long time to be built and involve long-term growth plans. Eventually, all ongoing projects will come online with the new capacities. This new supply can even spur growth in the industry. Today, the country's plastics consumption stands at 10–11 million MT and India is still a net importer. With the plastics consumption in the country projected to reach 20 million MT by 2020, India offers long-term growth opportunities. Every plant that has thus far been built in India has been fully absorbed and this will continue. Moreover, with government initiatives like the "Make in India" campaign the country's appetite for plastics could grow at even faster rates. So it can be imagined that the new polymer capacities will not be enough for this country.
LG: The import duty for certain polymers in India has been an issue with some GCC producers operating in the Indian market. Is the import duty a problem for SABIC too?
JR: Inter-country trade is not just governed by duties alone. Other factors such as demand-supply gap and free trade agreements (FTAs) also come into play. Today, polymers come with 0–7.5 percent duty range also owing to FTAs. As far as SABIC is concerned, we have a strong presence in the Indian market and we are growing at a good rate. As long as we are able to deliver the right product at the right time to our customers offering superior performance, we will continue to share India's growth story.
LG: How are SABIC products marketed in India?
JR: Each Business Unit has its own marketing division. Polymers and chemicals are our main global products for which we have individual marketing divisions. For fertilizers like urea, we also participate through tenders. Engineering plastics need close association, development, understanding and consistent supply and we work mostly OEMs and vendors to the OEMs. So there is a separate marketing team for each line of business.
LG: To what sector does SABIC primarily supply?
JR: SABIC is perhaps the only petrochemical company that has everything from commodity plastics to highest-temperature engineering plastics in its product portfolio. In most polymers, SABIC is among the top three globally. Then there are specific new applications like medical plastics applications. In engineering plastics some of our major products are polycarbonates, high-temperature polycarbonates, acrylonitrile butadiene styrene (ABS) alloys, polyether ether ketone (PEEK) and polyaryletherketone (PAEK). Our customer industries include automotive, mass transportation, consumer electronics and lighting. We have innovations everywhere, from household switches to railway train seats.
LG: How has the fall in global crude oil prices impacted the polymers business?
JR: Lifestyle changes and people's purchasing power drive plastics demand more than crude oil prices. The demand in turn drives the production of polymers. Megatrends such as global economic growth, growth rates in developing countries like India, growth of the middle class, the demographic dividend and stable and encouraging government are all positive drivers for plastics demand. Of course, the drop in crude oil process will cause the prices to accordingly change. However, despite the fall in prices, the demand for polymers all over the world is still healthy.
LG: How was your experience at the Plastindia 2015 exhibition?
JR: Plastindia is an international event having a strong presence not just in India but also across South Asia. It is the major event for participants from neighboring countries like Bangladesh, Pakistan, Bhutan, Sri Lanka and Nepal. As such, we would have participated in Plastindia irrespective of where it was being held. The move from New Delhi to Gandhinagar is perhaps not such a bad thing as it lies in the heart of the plastics hub of the country. Holding the event at such short notice and at such high standards is already a big achievement and it highlights the country's capability of delivering such exhibition centers and convention centers in a limited time. The brand new facility has come up very well, the quality of stalls that have been put up is excellent and the reception is very good. This year's event will hopefully spur the industry to the next level of growth.
Janardhanan Ramanujalu (JR) is Vice President for SABIC South Asia & Australia. In this role, JR is responsible for the growth of SABIC's market leadership through partnerships and collaboration with industry and government stakeholders across Australia, India, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. He is based in New Delhi, India. JR is a veteran in the petrochemical industry with more than 25 years of experience from polyolefin to styrene & engineering plastics and
chemicals. Prior to joining SABIC, JR was the Head of Global Textile Chemicals for BASF. He also held other regional and global roles with BASF in his more than two decades of service with the company, including marketing, product management, sales & technical service, industry management & market development for engineering plastics.JR holds a Mechanical Engineering Degree from University of Mysore, India, and MBA from University of Madras, India.
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Saudi Basic Industries Corporation (SABIC) ranks as the world's second largest diversified chemical company. The company is among the world's market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers.
SABIC recorded a net profit of SR 23.3 billion (US$ 6.2 billion) in 2014. Sales revenues for 2014 totaled SR 188.1 billion (US$ 50.2 billion). Total assets stood at SR 340 billion (US$ 90.7 billion) at the end of 2014.
SABIC's businesses are grouped into Chemicals, Polymers, Performance Chemicals, Fertilizers, Metals and Innovative Plastics. SABIC has significant research resources with 19 dedicated Technology & Innovation facilities in Saudi Arabia, the USA, the Netherlands, Spain, Japan, India, China and South Korea. The company operates in more than 45 countries across the world with around 40,000 employees worldwide.
SABIC manufactures on a global scale in Saudi Arabia, the Americas, Europe and Asia Pacific.
Headquartered in Riyadh, SABIC was founded in 1976 when the Saudi Arabian Government decided to use the hydrocarbon gases associated with its oil production as the principal feedstock for production of chemicals, polymers and fertilizers. The Saudi Arabian Government owns 70 percent of SABIC shares with the remaining 30 percent held by private investors in Saudi Arabia and other Gulf Cooperation Council countries.
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