Tata Chemicals (TCL) posted a 47 per cent rise in net profit to Rs94.44 crore for the fourth quarter ended March 31, 2007 against Rs64.42 crore in the same period last fiscal. It also recorded the highest ever sales for soda ash, salt and urea in a single financial year. TCL's managing director Homi Khusrokhan is not only delighted with the strong operating and financial performance for the year, but also upbeat about the future. In this interview with Candida Moraes, he talks about TCL's recent joint venture and its plans to enter new areas of business.
Early this year, Tata Chemicals entered into a joint venture with Total Produce — Europe's largest fresh produce company — to create state-of-the-art distribution facilities for fresh fruits and vegetables across India. What plans does the company have for the joint venture?
We aim to become India's most successful supply and distribution company for fresh produce. We feel we have a very good chance of achieving our ambition because of the excellent relationships we have built with farmers over the years by virtue of our Tata Kisan Sansar (TKS) outlets, which now number 589 in the north and east of India. We will also have the advantage of working with Total Produce of Ireland which has over 100 years of experience in the business of managing supply chains for fresh produce.
Our first two distribution centres will be commissioned this year, in Ludhiana and Kolkata and possible locations for the next two have been identified. There are plans to have around 40 centres in the next three to five years. Currently, recruitment is in progress for the new 50:50 joint venture company, which has been named Khet-se Agri-Produce India (Pvt) Ltd.
Tata Chemicals is looking at alternate fuels as another business area. Can you elaborate on this?
A couple of years ago, Prasad Menon — former managing director of Tata Chemicals and currently managing director of Tata Power — introduced a "screen" for entry into new business areas. All new businesses that TCL enters should, as far as possible, be "green and sustainable". It was out of this thinking that the idea of entering bio-fuels (and for that matter also looking at the broader area of alternate energy) was born.
After some research into possible options for feedstock and narrowing the choice to crops that do not affect food security, have a positive energy balance and are not environmentally degrading, we chose sweet sorghum for the production of bio-ethanol and jatropha for the production of bio-diesel. Our first bio-ethanol facility will probably be in Maharashtra, which is one of the states where sweet sorghum is grown. Agro-climatic trials are being done for jatropha in five regions of India and a pilot plant will be put up at Mithapur.
While we will start manufacturing by using conventional technology, our innovation centre is looking at improved and breakthrough technologies on both bio-diesel and bio-ethanol.
Tata Chemicals recently set up its innovation centre in Pune to look at emerging areas such as nano-technology, fermentation and bio-fuels. What has been happening since then at the centre and what is the main focus of the project?
The innovation centre was originally set up to examine new areas and businesses that TCL could enter in the next few years. The company has for many years stood on two large pillars, both in the domains of heavy inorganic chemicals. In line with our vision for being more "green and sustainable", we felt we should explore technologies that are cleaner and less capital intensive.
We soon narrowed down the choice to biotechnology and nano-technology and found that there are some very interesting possibilities in the bio-nano space, ie, in the area of overlap. I am referring here to the use of biological processes for the creation of nano-materials. This, therefore, has become one of the main areas of focus of the innovation centre and it would be the dream of the centre, as we call it, to become one of the world's leading centres for research in the bio-nano space.
While we do some work 'in-house', the innovation centre also collaborates with research institutes and specialised firms in various fields of technology. What is also highly encouraging is that a lot of networking has started between the innovation centre and other Tata companies, and some interesting collaborative projects are taking shape.
Given the positive results and the good general outlook, can you share some of the company's short- and long-term plans for the coming future?
Tata Chemicals plans to continue growing aggressively through both organic expansion and acquisitions in both its core business areas — inorganic chemicals and fertilisers. At the same time, we see new business opportunities emerging in ancillary spaces. For instance, TCL is today a branded market leader in the food additives space because of Tata Salt, which serves over 50 million households, giving us an enviable number of consumer touch-points. We would have a major advantage in leveraging this relationship with Indian homes.
Additionally, the inorganic chemicals business is emerging into an integrated global business, with increased size and scale. There are possibilities of bringing in new value-added offerings, in our core consuming sectors of automotive, construction and households. In addition in the fertiliser space, TCL no longer sees itself as a company merely selling fertilisers but one that operates several businesses in the agri-space, such as crop and soil nutrition, farm services, fresh produce and other fields evolving in this sector of the economy, as it slowly changes and rural prosperity improves. Here again, the company has a large number of touch-points to farmers, which creates an excellent platform for entry into new businesses.
At the same time, a whole new set of businesses can emerge from the efforts of the innovation centre and a search for cleaner and greener technologies. We call this phase of the company's development 'sowing the seeds of tomorrow'.