April 2015 | Gayatri Kamath
'Fiscal 2016 is going to be a year of consolidation for us'
Leap 2020, Tata Chemicals' five-year growth plan, aims to triple the company's market capitalisation and expand its three business pillars. Excerpts from an interview with managing director R Mukundan.
After a growth phase, Tata Chemicals seems to have taken its foot off the pedal with its acquisitions. Does this mean organic growth is the preferred way forward?
As of now, we are focusing on growing organically. We do have investments in mind, and as and when opportunities arise we will make such investments. Our major investments are going to be in the consumer and farm businesses, but none of them is going to be big-sized. In the future the bulk of our business is going to be less capital-intensive than it has been in the past. We do believe that will expand our operations in the United States and Kenya. But barring these two, our India business will grow in an asset-light manner, and mainly in the technology, market or brand spaces.
What does the financial year 2015-16 hold in store for Tata Chemicals?
Fiscal 2016 is going to be a year of consolidation for us. We will ensure that our operations in the United Kingdom and Kenya are nursed back to proper health and that our operations in the United States and India continue on a healthy keel.
We intend to make greater investments in the consumer space. We have just launched Tata I-Shakti spices in Punjab. We intend to roll these out elsewhere in North India and maybe one more region during the year, with a national rollout next year. And there are other new food and nutrition products in the pipeline.
We are increasing the reach of I-Shakti Dals (the pulses brand) to about 100,000 stores; by next year, the brand should be available in about 150,000 stores. We believe that the major investments that we have made in this brand will start paying off in the next fiscal, and the business will start turning profitable.
The company has drawn up an ambitious vision called 'Leap 2020'. What is it about?
Leap 2020 denotes where we want to be five years from now. We want to triple our market capitalisation and we want to grow our three business pillars. The target for our consumer products business is to grow from Rs12 billion to Rs50 billion. The exciting task ahead of us is that we want to touch 1 billion people with our food and nutrition products. Tata Salt already goes to 100 million households, which translates into about 500 million customers.
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All three businesses will grow but the major share of profits, which currently flows from the chemical business, will shift to the consumer and farm businesses. Going forward, we see the branded businesses of Tata Chemicals comprising 50 percent of our profits. Increasingly, the shape of the organisation will be that of a branded food and farm company. The industrial chemicals business will continue to give the company the cash flow it needs to build the branded businesses.
Our growth will be driven by the values of the company — safety, passion, integrity, care and excellence, what we call 'spice', which is the underlying foundation of our organisation.