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Siddharth Bhimrajka, Director of Bhimrajka Impex Group (BIG) talks to Global success club about some of the recent trends and changes in policies in the Chemical sector in India and its effect on business in this sector. Bhimrajka Impex Group is a leading distributors of Polymers, Chemicals and Performance Elastomers in India for several large international manufacturers viz., DuPont, Dow Chemicals, Dow Corning, Cabot, Schill+Seilacher, Indspec Corporation, Goonvean Fibres, Hans W. Barbe among others.
GSC: The chemical sector in India has undergone tremendous changes in the past decade. The most recent being, the Government of India granting approval for up to 100% Foreign Direct investment (FDI) in this sector. What effect do you see this having on your business?
Siddharth Bhimrajka: Most of the chemical majors like DuPont, Bayer, Dow, BASF & others are present in India. With liberalisation of the FDI policies, more MNCs are likely to enter, expand & diversify their operations in India. This would be more beneficial to the domestic consumer industry from a cost & availability perspective. Also, some of these major players are also considering India as a manufacturing hub for exports in the region.
India has better IP protection laws and is therefore gaining more interests from niche market players and innovative start-ups to invest into India through Joint Ventures or majority ownerships.
Attracting more FDI & investments in India is positive for our economy & BIG too as a company is interested in potential JVs in India. Our Group has already entered into a JV with a French coatings company and aims to be a major supplier to Indian Auto & Railways industry. We are also in discussion with other potential companies in fields of Rubber & Plastic for possible JVs.
GSC: The products distributed by BIG are applicable to a wide range of industries right from consumer goods to automobiles, semiconductors and pharmaceuticals. What are the major noticeable differences in the business requirements while dealing with these different sectors?
Siddharth Bhimrajka: Basic rule across all the segments remains the same which is product suitability followed by product consistency which also plays an important role. However, the way business is conducted is very different and mostly depends on the operating cycles of the business and how critical the raw material is to the process.
GSC: The chemical industry in India is one of the largest consumers of its own products. Does this naturally translate into a stable demand for products in this sector?
Siddharth Bhimrajka: In terms of growth prospects in local demand, the per capita consumption of most products in India compared to the western world is very low and hence stable and growing demand is inevitable for next few decades. There are several new petrochemical investments and expansions at the existing plants which are scheduled during 2013 – 2016 which would almost double existing capacities. Further, we see a growing trend among global MNCs to setup R&D labs in India because of availability of highly skilled personnel locally which will in turn lead to increase in new products & new application developments. Besides these, we also have a young population which is of a median age of 25-30years, this also supports the trend of growing consumption.
GSC: Industrial licensing for the manufacturing of most chemical products has been abolished in India. With this backdrop, what could one expect from SME's in this sector in terms of product innovation and competition?
Siddharth Bhimrajka: This would vary on a case to case basis as well as a product mix and minimum viable capacity basis. In not very bulk consumption products but mid-size product lines, there are chances and good opportunities for SME's to enter the market. The scale of operations allows product innovation which is easier to implement, competition is very relative and depends upon many factors, especially, scale of operations, location, land cost, capital cost, interest cost, technology effectiveness and raw material sourcing etc. Hence success will largely depend on the individual SME i.e. how focused they are and how smartly they manage their business in all aspects.
GSC: What do you believe the Government of India could do to promote foreign trade and increase the global positioning of the chemical sector in India?
Siddharth Bhimrajka: A great attraction for a foreign investor is the size of population and disposable income which means consumption is bound to increase organically. The government needs to establish policies which will create jobs and development on a long term basis. To an extent, this is being taken care of. The government has also laid out a road map for implementing these policies. However, we need a more concerted push in following areas to develop the sector:
- • Dedicated Chemical Zones close to major ports with affluent treatment facilities
- • Education institutions to train and build a skilled work force
- • Uniform taxation across states and union territories
- • Abolishment of Anti-Dumping Policies which creates an artificial price increases
- • Lower Interest Rates
- • Faster clearance of projects
- • Continued improvement in infrastructure activities
- • Reduce the cost of power and create more supply of power especially in remote areas
GSC: BIG has several large and well renowned international principals, what makes these companies chose BIG as a strategic partner when they look at catering to the Indian market?
Siddharth Bhimrajka: We have invested in offices and warehouses in and near the major metropolitan cities of India. In this process, we have developed a wide reach of over 2500 customers on a pan India basis. We have been able to reach out and retain so many customers due to our technical marketing ability, Market reputation & credibility and desire to learn continuously.
Beyond the 40 years of experience of being in the promoter group in this industry, we also have on board distinguished veterans from the Rubber, Plastics and Coatings industry with vast experience and knowledge in their domains.
Further, BIG has invested into 3 manufacturing units in India viz., Plants for manufacturing Footwear, Wire & Cable, Specialty Compounds & Masterbatches and Specialty Rubber Compounds. These investments are complementing our existing product lines and adding more value to our customers by collaborating with them in new product & application developments.
Last but not least, we have spent a lot of time in developing our back office systems along with developing a sustainable low cost supply chain for the products we distribute which enables us to supply various products in a cost effective and timely manner.