Mumbai, Feb 12: The Rs 970-crore Bayer group is evaluating the possibility of expanding its Indian polymer business to the area of synthetic rubber. The proposed project comes alongside the German multinational's plans to scale a turnover of Rs 2,000 crore by the year 2001, a targeted growth rate of over 106 per cent. The Bayer group is expected to finish this calendar year with sales between Rs 1,100 and 1,200 crore.Industry sources said the German multinational has been in talks with the Rs 8,000-crore petrochemical giant Reliance for its synthetic rubber project as it is essentially based on key feedstock, butadiene. No official confirmation on this was, however, available.
In an exclusive interview with The Financial Express, Bayer group's country head and Bayer India managing director, Alan McGilvray, said the company was essentially looking at a production site for the south-east Asian region since "you've got to produce where the market is."
McGilvray said the proposed project would be inthe form of a joint venture though inadequate infrastructure development in the country could pose a problem. While exact figures on the proposed investment were not available, he said, "the money would be available when the project was viable".
Synthetic rubber finds application in a range of industries including tyres and conveyor belts and a greenfield facility could take at least two years to build and another two-three years to reach optimum capacity.
The Bayer group had, in June 1996, stated its intent to invest about DM 1 billion in the Far East by the year 2000, with a significant share coming to India. The group's investment in the country, since then, is in the region of Rs 83.1 crore.
McGilvray, however, added that Bayer India's rubber chemicals business had been affected due to a drop in prices and liquidity problems in the domestic tyre industry. Globally, Bayer is among the world's leading suppliers of raw materials to the rubber and tyre industries while India figures among the leadingusers of rubber chemicals.
The group's "jewel in the crown", Bayer ABS, had allowed the German giant to make inroads into the automobile and white goods markets, he said. Bayer indirectly supplies a range of polyurethane and plastic engineering products to the auto industry. Significantly, both Audi and Mercedes-Benz already use Bayer's hybrid technology overseas to manufacture lightweight yet heavy-duty components.
Bayer Industries, a 100 per cent subsidiary of Bayer AG, had in October 1996 acquired a 51 per cent stake in the Baroda-based ABS industries (subsequently rechristened Bayer ABS). Bayer ABS is the market leader in the acrylonytrile butadiene styrene market and plans to enhance its capacity to 45,000 TPA from 25,000 TPA.
"No interest in Nocil's rubber chemicals business"
The Bayer country head and Bayer India managing director has categorically denied any interest in acquiring Nocil's rubber chemicals business though the group had, at one time, considered the proposal.
On theresearch and development (R&D) front, Bayer is weighing the option of "outsourcing its R&D", and senior company officials have visited a host of government institutes like the Indian Institute of Science, Bangalore, the Council of Scientific & Industrial Research, Delhi, the National Chemicals Laboratory (NCL), Pune and the Indian Institute of Chemical Technology and the Institute of Molecular Biology both at Hyderabad.
However, the entire exercise is in a preliminary stage. Most of Bayer's R&D effort is currently concentrated in Germany to avoid a duplication of effort. The group's R&D budget for 1997 was DM 3.7 billion.
"May seek marketing ventures to enhance presence"
MUMBAI, Feb 12: The Bayer group plans to double its turnover to over Rs 2,000 crore within the next three years. And the Indian subsidiary has already adopted a new set of group guidelines aimed at enhancing corporate value for the benefit of employees, stockholders and the community as a whole. These measures include bettercustomer approach, change in the hierarchical systems and environmental protection initiatives.
Bayer group country head and Bayer India managing director Alan McGilvray spoke to The Financial Express on a range of issues including possible new areas of interest in the Indian market. Here are some excerpts from the interview:
Globally, Bayer has acquired Pharmacia & Upjohn's animal vaccine business in 1996. Would Bayer India enter this segment in India given its immense potential?
Bayer India would look at any attractive business opportunity, but the group takes adequate time to check out the market and its potential before making any decision.
Bayer's well-known Baygon range of insect-control products is the market leader in oilsprays and bait segment. Does Bayer plan any brand acquisitions/joint ventures in the over-the-counter products segment given its alliance with Roche (for some OTC drugs) in the United States.?
We would prefer to build on the strength of Baygon and Autan (amosquito repellent lotion) since we are already strong in the sprays and mats segment. We also plan to introduce coils in future. We could expand our OTC business via joint ventures but are not looking at brand acquisitions at present.
Bayer group chairman, Manfred Schneider, has been quoted as saying that the group's aim was to become the world's top integrated chemical and pharmaceutical company. So, would Bayer India consider a spin off of its photo business, Agfa?
Bayer is a diversified group and Agfa is and will stay a part of Bayer.How is Bayer's leather chemicals joint venture with the south-based Indian Syntans group faring?
The venture will manufacture and market over 400 Bayer leather processing products and Bayer has incorporated its technical expertise into the venture. We are looking at sustained growth in this segment and the venture is expected to account for business worth roughly, Rs 60 crore.
Would the absence of product patent protection dissuade Bayer frombringing in their latest products into India? What are your growth plans in the pharmaceutical segment?
Bayer is very strong on the technology front and a market with patent protection would be a lot more reassuring. We are just seeking a fair reward for years of research and development effort. Now that we have received approvals to upgrade our Thane facility we can manufacture products as per international GMP standards. We are looking at ways to expand mainly via the formulations business by sourcing raw materials from Indian companies. We may look at tie-ups/ marketing ventures to enhance our presence.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
