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"The Industry both globally and in India has remained well balanced in terms of demand and supply equilibrium"
R S Jalan, Managing Director, GHCL GHCL strongly believe that to maintain sustainability in business it is of paramount importance that one should focus on all its stakeholders which results in operational harmony leading to long term business sustainability. It has been actively working towards meeting its corporate social responsibilities, says R S Jalan, Managing Director, GHCL as he discusses about GHCL's expansion plans, Anti-Dumping duty, Sustainability, Effects of China's slowdown, Goods & Service Tax Bill, Make In India initiative and organisation's future plans in an exclusive interview with Chemical Engineering World

Please share insight into company expansion plan with respect to production facilities & other aspects?
We have been able to deliver a very healthy growth for our stakeholders in the last two years. To continue on this momentum, we have announced various expansion plans in both our business segments i.e. Inorganic Chemicals and Textiles. The following are our expansion plans in both these segments:
  • Our Soda Ash expansion is on track and we expect it to complete in Q4 FY17. This will result in 12 per cent growth in the volumes with an additional 1 Lac MT brown field capacity expansion. The total capex outlay for the project was 375 crores, which is much lower than a normal Greenfield expansion. The benefit of the same shall be reflected in FY18 in terms of higher volumes.
  • An incremental capex of around 80 crores has been allocated for debottlenecking our Soda Ash capacity by another 25K MT along with doubling the Sodium Bicarbonate capacity by 30K MT. Looking at the expansion, we are also installing RO Plant to remain self-sufficient for our water needs.
  • In the Textiles Segment, we have taken a holistic approach wherein we have allocated 70 crores towards our various expansion plans. To achieve volume growth, we are increasing our processing capacity from 36 million meters per annum to 45 million meters per annum along with the installation of 24 TFO machines for value-added yarn. We are also expanding our weaving capacity in addition to further installation of windmills to better operating efficiency.
GHCL's net profit has reported 79.09 per cent rise to 90.28 crore in the quarter ended September 30, 2016. Revenue of GHCL has grown 1.85 per cent to 703.14 crore during Q2 of current financial year as against 690.34 crore in Q2 of financial year 2015-16. What are the key growth drivers for ROI?
The improved performance is dedicated to our motivated work force which is working on continuous process improvements resulting in better efficiency in both our business segments. The company has also been benefited by the lower commodity prices especially of coal as compared to the corresponding previous quarter.

With efficient cash flow management and constant focus on deleveraging, we have been able to save substantially on our finance cost for this quarter.

GHCL's Inorganic chemical segment have shown robust EBITDA margin from 27 per cent to 32 per cent with industry leading performance in soda ash. How will these margins sustain against effect of China's slowdown, impacting soda ash process?
The way we look at our business has been a game changer for us. Over the years, we have clinically reviewed our internal processes to identify opportunities for improvement and worked relentlessly to achieve the same. This has enabled us to establish robust work processes resulting into unmatched operational efficiencies, best in class productivity (surpassing Global standards) eventually giving us the edge to be a better margin leader in the Industry.

The Industry both globally and in India has remained well balanced in terms of demand and supply equilibrium. This is largely due to the key entry barriers such as nearness to the source of raw material and high logistics cost as compared to Selling prices, make soda ash a domesticated commodity like cement. The producers only export the surplus quantity after meeting local demand. Whereas China's soda ash Industry is 50 per cent of the global industry, however their Industry is operating on optimum productivity with matching demand supply. China exports only 7-8 per cent of its production and India's share in this export is very miniscule.

Recently Chinese producers have announced increase in soda ash prices which are largely on account of surge in commodity prices.

In your opinion, how beneficial has been government's anti-dumping duty on soda ash imports from China proved to be for industry at large?
Anti-dumping duty protects the interests of the domestic manufacturers by enforcing duties on dumping of any commodity in domestic market from any particular country which disturbs the market conditions in the country.

Duty on Soda Ash has thus protected the local industries against any such instances of dumping below certain levels which can cause harm to the domestic manufacturers. However over the period China has also developed its own natural markets where there is no Soda Ash production, reducing its reliance on Indian markets unlike other commodities.

GHCL has been active promoter of inculcating sustainability in its business functioning through environment-friendly initiatives.
How important is sustainability in the prevailing competitive business environment?

Please share some of the initiatives that have been undertaken till now & future initiatives in the pipeline?

We strongly believe that to maintain sustainability in business it is of paramount importance that one should focus on all its stakeholders which results in operational harmony leading to long term business sustainability.

GHCL has been actively working towards meeting its corporate social responsibilities. Recently we have given a major thrust to this area and constantly guiding our key management executives to work with a business philosophy addressing the concerns of all our stakeholders be it shareholders, employees, society, customers and vendors.

This approach has been successfully guiding our path towards a holistic growth. To highlight some of the areas we are working, here is an outline of that. Last year GHCL has successfully run projects worth around Rs. 14 crores on various initiatives such as sanitization, women empowerment, child education and animal husbandry. GHCL has also announced ESOPs for a wide range of employees to recognise their efforts and align them with our long term business growth objectives. For the shareholders, we have come out with a clear Dividend Policy of 15-20 per cent of PAT thus defining the shareholders expectations.

Going forward, we shall continue this drive with vigour and dedication that shall lead to Business sustainability benefiting all our stakeholders.

You thoughts on the Goods & Service Tax Bill?
Indian economic system is currently stuck under the web of various taxes which not just increase the cost of production but also results in administrative hurdles. With our vision of “Make in India” it is essential that we should have such reforms wherein all the taxes are merged under a single platform that transforms the current ecosystem.

In our view it will boost up the economy as this will enable the seamless flow of goods and services across the country, tax the supplies on value added principal thus result in removal of cascading effect of taxes.

Your thoughts on the "Make in India" initiative?
I think this is an excellent initiative by the Government. It will result in enhancing the GDP of the country, when the manufacturing facilities are commissioned with the most advanced technology in India. This will also generate skilled labor, ample job opportunities, better livelihood for countrymen and more revenue for the government.

What are the future plans of the organisation in India and globally?
As already communicated above, we are focusing on expanding our domestic manufacturing capacities which shall be