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"Kurkumbh Manufacturing Facility Will Strengthen Henkel's Growth Strategy for Emerging Markets"
Shilip Kumar, President, Henkel India Backed by the success of nearly 140 years, Henkel Adhesive Technologies India Private Limited (Henkel India), a subsidiary of Henkel AG & Co. KGaA, Germany is the market leader in adhesive technologies, sealants and functional coatings. Shilip Kumar, President, Henkel India, discusses his new role of leading the organization and the investments in India to provide adhesive technologies domestically as well as in the international markets in a candid conversation with Mittravinda Ranjan

Let us start with the portfolio of Henkel in India and your plan to drive the growth of the organization.
Globally, we are organized into three business units of adhesive technologies, beauty care and laundry & home care, out of which, the first two are our key focus areas in India. In my new role, I will be responsible to drive the growth of Henkel in India, which also includes the vertical of transportation & metal adhesives business that I was leading earlier.

India has always been a key market for our global growth strategy and we have major plans to grow our footprint in the Indian market as well as serving some international markets through our Indian operations.

We are a specialty material company, and innovation has been the key driver for our growth globally and we have tried to emulate the same in India. Availability of a large talent pool in the Indian market offers us competitive advantage. We intend to tap these skills by working extensively in the areas of developing new applications for the Indian and international markets. Typically, we follow a four year strategic cycle and during the next cycle, starting 2017, we intend to further strengthen our efforts in this area.

Henkel has already set up an innovation centre at Pune with an aim to develop products for various adhesive technologies across multiple industrial applications. Here, our teams work closely with the customers to understand their requirements and develop the products accordingly. I am delighted to share that we have been able to develop cost – effective solutions for many of our customers. At present, we have a core team of 50 engineers and scientists who are working at the innovation centre. We have recently inaugurated the acoustic lab which has an anechoic and reverberation chamber. This will facilitate vehicle and component level testing for different applications as per international standards. It will also help meet high level product validation tests based on customer requirements.

Currently, we are also in the process of setting up manufacturing unit to produce adhesives in Kurkumbh, near Pune, which will be one of the largest adhesive facilities to cater to various end user segments such as general industry, metal and automotive industries. With this new manufacturing unit, we intend to further localise our product portfolio and offer cutting edge solutions to the Indian market. Considering the proximity of the plant to our customers in India, it will also help us to work diligently with them to develop customised solutions for various applications. We are taking these initiatives with the aim to win a greater market share in India, which is one of the biggest emerging markets.

What is the rationale behind setting up the Flexible Packaging Academy in India?
If you look at the statistics, the packaging industry in India is expected to reach $ 73 billion by 2020. Though, per capita polymer consumption in India is much less as compared to the global average, the market is expected to double in size within next five years which will be driven by the changing consumer behaviour and modern lifestyle.

Globally, Henkel offers cutting edge solutions in adhesive technologies and has set up the academy in the year 2015 in collaboration with Indian Institute of Packaging (IIP) with the idea of working closely with the customers to understand their requirements and develop laminating adhesives for sectors such as food, beauty care etc.

We follow the principle of ‘Learning by Doing’ where we offer hands on practical training on different aspects of flexible packaging to entrepreneurs, production managers, supervisors, operators, quality controllers and other professionals. The modules are designed to cover key aspects such as printing, lamination, web handling, finished product testing, substrates, their properties and material handling etc., just to name a few.

What is the kind of investment Henkel India is making in the manufacturing facility that is coming up in Kurkumbh, Pune?
Henkel will be investing $ 36 million to set up the first phase of the largest adhesives sealants and speciality coatings plant in Kurkumbh, Pune to cater to end user segments of automotive, metal and packaging sectors. The production facility will go on stream by mid-2017. In its initial phase, the new manufacturing plant will have an operational area of about 20,000 square meters and the annual capacity is expected to be about 80,000 metric tonnes of adhesives and surface treatments. This investment has been made with the intent to further support Henkel’s global strategy to increase footprint in emerging markets.

Please talk about other business areas of Henkel in India.
Besides adhesives, sealants and functional coatings, the other key business areas for us in India, where we are present in B2B side, is beauty care. In the beauty care business, we are focused on salons and our Schwarzkopf Professional brand caters to all the new-age hair care needs with a range of cutting edge products. The Indian beauty care market is showing very strong growth and we see strong business potential for us.

Can you throw light on your functional coating business?
Coming to the segment of functional coatings, we produce anti-corrosive coatings for pre-treatment of metals and functional coatings for the automotive sector. These are high end applications and there is a niche clientele for these applications.

How big is the market for adhesive & sealants in India?
If we look at the present market for our products, we would be very disillusioned. To me, the market means existing conventional market as well as the untapped market which can be tapped into with the new innovative sealing solutions that replace the existing technologies. The challenge here is to translate potential markets into actual markets by creating new markets for the innovative products that would replace the conventional ones. Replacing the mechanical fastenings with liquid sealants, is just one such example.

We see India as a high potential market for us, and as market leaders we intend to take on the challenge of converting the latent potential into actual market. As a company, we are determined to grow double digit every year creating opportunities in the markets by providing new innovative solutions that cut across different industry verticals.

There is a global vision for the company, a strategy to accomplish that vision and each region, or each country or each business unit works towards execution of the company strategy.

Henkel is recognised for sealing solutions for industrial equipment, what kind of opportunities do you see here in India?
We are primarily a bonding and sealing company and we offer chemical sealing solutions for various industrial equipment viz. pumps, engines, gensets and chemical processing equipment to name a few. Typically, mechanical fastenings such as nuts and bolts are used by the industrial equipment manufacturers, which we feel can be replaced with adhesives that are highly effective and can perform very well under extreme conditions. This is one of the examples of disruptive innovations that are going to set new market trends and open a lot of avenues in the future.

What are the organisation's future plans for India operations?
India holds a strategic position for Henkel as a part of the company's long term growth strategy both as a domestic market and base to serve the other international markets. We have already made an investment of $ 36 million to set up the manufacturing unit; and have invested in setting up flexible packaging academy and innovation centre which is a testimony of our commitment to the Indian market.

We observe strategic cycles of four years, where we set try achieving our goals by the end of this cycle. Just to give you an example- Our global vision for the last four years was 20- 10-10 that translates into generating $ 20 billion revenue of which $ 10 billion was to be generated from the emerging markets with 10 per cent CAGR, by 2016, globally. Now, that we are heading towards the new cycle starting next year, the group will announce the next four years strategy shortly.

Well, in India, our focus at present is increasing company's footprint as well as delivering innovative technologies and solutions that help create value for our customers. We have started with the construction of the first phase of the new manufacturing facility and we are focussed on doing it right. Phase II is already under discussion and we will possibly announce it next year. My biggest focus area is strengthening Henkel’s manufacturing & innovation footprint as well enhancing product development resources. These areas essentially go across our business units.