Parag Jhaveri, Managing Director & CEO, Yasho Industries

Mr. Parag Jhaveri has a Master of Science degree in Chemistry from Mumbai University. He has over three decades of experience in the chemical industry. He played a key role in ensuring the robust growth of the organisation with oversight over the functions of sales, finance, R&D and marketing along with our founder promoter. Under his visionary leadership, the Company has built a model for a sustainable future.

 

The pandemic on its arrival brought in its wake a lot of challenges and gave crisis management a whole new definition. Some of these challenges include the deteriorating supply chain crunch factored along with effects of deglobalization and travel restrictions, potential impacts on climate change, resource management and reduction of biodiversity.  These challenges directly impacted the chemical industry and gave rise to opportunities that witnessed a transformation from Indian companies that grew by gaining favourable market share. The Indian speciality chemicals segment is pegged to grow at twice the global average. This growth can be attributed to the high-quality talent pool within the country that were quick to seize the potential with key industry leaders backing the move. By focusing on navigating the crisis and turning obstacles into opportunities, Indian companies were able to shift and generate consistent growth and success. Market share gains reflected the results of further augmentation of existing capabilities to deliver products of the highest quality.

When the pandemic struck, the speciality chemicals sector began to take industry-defining steps to combat challenges within their operations and ensured that the business is kept on the move. In February 2020, global chemical output fell by 2.4 %, with Asia-Pacific reporting a 3.9 % reduction in production. Small and medium-sized companies (SMEs), which account for up to 30-35% of the speciality chemical sector, have been severely impacted. Real GDP was estimated to contract by 7.7 % in 2020-21, as compared to a growth of 4.2 % in 2019-20. Exports and imports of goods and services are now estimated to contract at 8.3 % and 20.5 % (at constant prices) respectively in 2020-21. With a market size of $175 bn, the Indian Chemicals & Petrochemicals sector is now slated to grow to $300 bn by 2025. Of this, the speciality chemicals constitute about 18% of total chemicals and petrochemicals in the market in India with an expected growth rate of 12% from FY19-22. However, there was a lot of innovative and tactical manoeuvres that shaped the utilization of technology and brought in sustainability to fill the gaps caused by the global crisis. This eventually gave rise to shifts that came about changing the face of the chemical industry.

The impact of the global supply chain distribution created growth opportunities and brought about a slew of changes that were led by larger chemical industries. With China being impacted as a supply hub, major players relied on other countries to source the supply and this move was capitalised by Indian companies who provided themselves with the requisite capability. These alternative sourcing strategies helped reduce travel and shipments cost, thereby offsetting the overall price of the overall manufacturing process. Identifying these needs, the Indian companies helped streamline key operations and made themselves ready to meet the demands of the global markets. Export strategies build in to overcome this supply chain shock has proved to be a boon and helped the subcontinent players to bounce back while creating a positive image for the other players in the region.

The focus of growth by Indian companies for increasing their market share began by capitalising on the available inventory and continuing the existing processes to fulfil committed demands and match the shortage buying behaviour of new customers. By optimizing the production and distribution capacity, companies have been able to gain a strong foothold in the competitive global landscape. Identifying and securing key global standards clients and delivering optimized projected capacities while maintaining safety norms for travel procedures helped accelerate the growth and network across the key markets.

The deep pool of highly skilled chemical talent and experienced industry veterans facilitated the turn of tide among the speciality chemicals and the overall chemical industry. This feature was seen strongly within the content of seizing the opportunities for leveraging existing technologies and providing quick solutions to global demands and for creating new products that were high on demand among key markets. With a crisis that made distancing a norm, technology created a gateway to deploy automation and technological advancement to create more options to meet the global market demands.

The heavy R&D investment paid off for the companies that had the foresight to see beyond the crisis and prioritise its potential. With these research and development breakthroughs, the transformation was evident by efficient gains and increased reliability for bettering the product offering and meeting market expectations. This allowed businesses to reevaluate their assets and create ways to diversify themselves. This diversification was possible as newer products were optimised and developed in conjunction with upgrading the existing with fresh market insights. These products further exemplified the emphasis on green chemistry and sustainable processes for the environment and long term efficiency. Indian companies optimized their existing core competencies along with achieving market-centricity to bettering the overall sentiment. Understanding the key evolutionary norms of the industry and addressing respective customer requirements is what led to the development of innovative products and revolutionary solutions.

As with many other big industries, the chemical industry also began to operate in challenging situations to overcome operation hurdles and other complexities with its ecosystem. As part of a larger ecosystem, the chemical industry borrows from other businesses and places a heavy reliance on certain raw materials, resulting in a vertical expansion to fulfil the market requirements. Segmented sectors like speciality chemicals, petrochemicals and diversified production companies had to unite available resources and build an ecosystem by incorporating various factors that mitigated the increasing complexities among different players in the industry. This highly diversified portfolio insulated against drops in demand from any segments or markets. Creating such differentiating products within the chemical ecosystem generated an overall increase in demand for the market and the speciality chemical industry.

The industry has witnessed an increase in demand for all chemicals, especially speciality chemicals, rubber chemicals and lubricant chemicals businesses. With an exported oriented business model, there has been a continuous investment to achieve steady growth in innovation, customization and manufacturing for our global clients. This continuous investment in product development, product cycles and quality standards should be garnered to satisfactorily serve long term business partnerships and satisfy global market needs.

The pandemic did open up other trends that gave the chemical business to help address health and safety concerns. The demand for safety and precautionary equipment and material created a special category of its own. This demand also gave rise to strong investments in sustainability and became active in building a circular economy. Such a demand gave rise to biocidal plants, coatings, and surface functional materials for public spaces and parks. With the rise of sustainable platforms to meet these demands, capabilities to build an equally maturing ecosystem is increasingly dependent upon machine learning algorithms that are influential for developing innovations for process creation in improving production efficiency. These innovations then transform as key accelerators to meet demands for chemical exports in specific verticals like speciality chemicals, food antioxidants, aroma chemicals, rubber accelerators, and lubricant additives. These have seen a major rise within markets such as the US, Iran, Australia, South Africa, and some countries in South America, Europe, and Asia.

At its core, the chemical industry is witnessing a stronger resilience to build strong value chains that are backed by crucial government policies and a positive consumer outlook for new products. The post-Covid era will necessitate businesses and governments to strategically analyze and work in safeguarding the growth and sustainability of the hugely critical chemical industry for the growth of the country. In the wake of the COVID-19 pandemic, many companies across the globe are scouting for new alternate vendors for which companies must qualify and become their long-term business partners. This has already ushered in an era where economies will look to reduce their overall dependence on China for raw materials and other services. The ‘China+1′ approach, which has been adopted by global players to diversify their supply chain as a result of recent trade tensions with China, may convert into multi-year development potential for domestic firms. Companies with a broad product and geographic variety are better positioned to resist any strain on-demand from certain end-user sectors. There is the necessity to work on increasing exports to fulfil capacities, especially for the industrial and speciality chemicals segment. With the way how global markets have already been responding to business exports resulting in turning to the subcontinent for raw materials and supplies.

A keen lookout for commercial opportunities to introduce products conducive within its economies will help to expand export capacities and accelerate the export cycle to meet these demands with high-quality products. The rise in demands for biocidal material and increased investment in sustainability for building a successful ecosystem has garnered a strong strategy to meet the different preferences by utilizing automated channels. The credit prognosis for the speciality chemicals industry remains steady, supported further by the firms in this segment’s solid balance sheets, which have modest gearing and healthy coverage indicators. The domestic speciality chemical sector is well-positioned to profit from global MNCs’ supply chain variation strategy and may expect multi-year growth in the medium-to-long term. The other positive takeaway is seen in the way the chemical industry will retain itself in the face of huge demands rising from an increased focus on health and safety in the post-pandemic era. Irrespective of the logistic challenges, Indian companies are slated to perform better than their Chinese counterparts. In conclusion, even while domestic demand has been weak, better export demand and a favourable outlook for industries such as agrochemicals and surfactants have mitigated the COVID-19 impact on speciality chemicals. All these and more, do have a major influence on the exports of Indian chemical companies and will help strengthen their position as key exporters for the growing global market.

Related Articles