Tata Chemicals is riding out the recession, says MD R Mukundan in an interview with Tata Review, by setting strict financial goals, communicating closely with employees, consolidating operations and aligning the organisation to new growth and strategic plans.
Tata Chemicals’ performance has been on the upswing for a while now. To what do you attribute this?
One of the things that we had done was to set up a structured programme through which we focused on cash generation, cost reduction, improving net working capital and containing capital expenditure. This helped us ride out the recession. We also communicated constantly with all our employees. They have been spirited in supporting organisational priorities and delivering on difficult projects, such as the closure of the Netherlands facility.
We are still not out of the woods though and we remain cautious as we believe that 2010 will be a tough year.
How have the global operations of the company been faring? Is the worst of the slowdown over?
As far as the global slowdown is concerned, consumer confidence is still shaky and unemployment numbers are still high. While the darkest hour may be behind us, we should continue to be watchful and cautious.
Has the integration of Tata Chemicals’ businesses with those of its acquisitions proceeded smoothly? What about people and other cultural issues? What are the challenges here?
I sometimes feel that the downturn has been a blessing in disguise and has actually helped us in coming closer together. During the downturn, the collaboration demonstrated across geographies has been very positive. We are now building a common set of processes and metrics which will help us align, integrate and become more competitive.
We are looking at our global talent pool in an integrated manner. There have been senior-level movements between the countries we are in. We would like to see talent from outside work in India, even if it is for short-term assignments. We are trying to make boundaries porous so that best practices can be absorbed across geographies. This can only be done with constant encouragement from the leadership team and a continued effort to create an environment which fosters boundary-less behaviour.
What’s the logic behind the increasing strength and depth of the Tata Chemicals-Rallis India partnership? Will the two companies become one anytime soon?
Will Rallis merge into Tata Chemicals? Well, we believe we have achieved our objective of being a majority shareholder in Rallis; we believe the team at Rallis has done a terrific job in turning around the business and it is our intent to support them to grow faster and stronger.
What, in your opinion, have been the company’s big achievements over the past year or so? Has it done the best it could in a tough situation?
There are some areas where we would have liked to have performed better, including our operations in Haldia and Kenya. While Kenyan operations were largely impacted by market conditions, the issues in Haldia are both internal and external. We hope that both these situations will resolve and improve soon.
Which are the areas where Tata Chemicals can do better? Where does it have the most catching up to do to become a global force?
We remain largely a commodity chemicals company and it remains to be seen whether we have sown enough seeds for the future, in terms of products and services, for us to be relevant in the next 10 or 20 years.
As of today, we are largely an Indian company with leadership position in a few products and global footprint in two or three products. However, we are not yet in the global top hundred chemical companies by turnover and are probably at about the top fifty by profits (EBIT). We have a long way to travel.
Tata Chemicals has invested quite a bit on innovation. What has been the progress on this front? Are you satisfied with what has been achieved?
However, the pace of incubation of innovative solutions could have been faster. Overall, we need to work on the mindsets of the leaders to nurture innovation in the company.
Is the company going to change its strategy on global acquisitions? Are you considering more such acquisitions?
Is Tata Chemicals on track with its stated objective of changing from a chemicals and fertiliser company to one that operates across the agricultural spectrum?
How do you see Tata Chemicals evolving over the next five years, in terms of revenues, operations, global spread and products?
Going forward, we would like to shape our business such that we have less volatility and greater identity. We would like to continue to be a competitive company, be more innovative and begin to address areas beyond food, especially in energy, environment, water and wellness.
It’s been over a year since you took over as the company’s chief executive. How has the experience been thus far?