CEO SPEAK -- Aditya Narayan

‘We are in no hurry to sell off businesses’

The Rs 810-crore ICI India, the 51 per cent subsidiary of ICI Plc. is midway through a major restructuring drive which it hopes will take finally it closer to being percieved and associated as a company touching the day-to-day human needs of it’s customers through its products in fragrances, textiles and toiletries and paints segments. ICI India managing director, Aditya Narayan’s vision is to be known as ‘the most admired paints and specialty company.’ Can he achieve that? He explains how he plans to do that in an interview to Sanjay Sardana. Excerpts:

Where is ICI today in the ongoing restructuring process?
ICI India, initiated its restructuring activity around 5 years back and at that point of time, we were almost 90 per cent misaligned. Today,
a large part of the job is completed and we are hopeful that over the next 3 to 4 years, we will be close to the parent’s business portfolio as far as possible.

The past few years have seen the company divest many of its non-core businesses and even aquire some businesses in line with the parent’s policy. The restructuring activity initiated a few years back is not over yet. Businesses like pharmaceuticals, rubber chemicals and nitrocellulose, which contribute close to Rs 220 crore or 26 to 27 per cent of the total revenues, form part of the non-core businesses for ICI. These businesses are in the pipeline to be sold off or hived off into separate joint venture.

How soon do you feel that the company will be able to divest these businesses?
Let me make it absolutely clear that the company is in no tearing hurry to sell these businesses. ICI India has always followed certain policies when it comes to divesting. We have never in the past recklessly dumped without caring for people’s interests.

Our policy is that the deal must be balancing in the best interest of the employees, shareholders and our customers. We try to create value in the best possible way and we are not in a rush.

We are trying to leverage our businesses in tune with what might be right in the 21st century.

Is the restructuring going the way you had planned?
The restructuring is not directionless. The underlying theme of restructuring is to have a well planned business portfolio. And within the business segment we want to be in we are getting our cost systems to compete globally.

So after all this restructuring, what will ICI India look like in the future?
The dream is to be known as ‘the most admired paints and specialty company’. Post-restructuring, ICI India’s core business will be paints, Uniqema, National Starch and Quest and the recent business acquisition of fragrances. While paints business contribute around 40 per cent to the total revenues, the specialty chemicals contributes the balance 60 per cent.

What has been ICI India’s contribution to ICI Plc. in terms of revenue and other parameters?
Although the Indian region continues to be an important territory for ICI Plc., the contribution to parent in terms of revenues has been hovering around one per cent to the global sales of the British major.
Apart from revenues, the Indian arm has been contributing to the parent in more ways than one.

The Indian arm has also been active in value addition to the parent through the quality of human resourses, innovation or R&D for building and developing technology and applying technology locally.
There have been times when the technology developed in India has been used by ICI Plc subsidiaries elsewhere in the world including the parent itself.

Which segments will be the growth drivers in future?
Apart from paints, national starch and fragrances and the processed food segment offers good growth potential. Although the processed food segment in India is at a very nascent stage and our products have a ready market.

Paints is a huge market. What is your gameplan here?
In the decorative paints segment, ICI’s share is around 12 per cent. But we are not necessarily chasing size. What we really are looking at is to create a special place for ourselves in the minds and hearts of our customers and any discerning customer of decorative paints must have ICI as the first choice.

We have to get our systems and processes in place first to service our customers and a lot investments have already gone into information technology for building processes. The results will be visible soon.

We are also keen to build channels and there has been a deep thought as to how to go about it. Exclusive brand shops may well be the part of the channel development programme. These may not come up immediately, but we will be looking at the option in the due course of time.

What sort of growth is ICI India looking at?
In paints, if we can grow at 1.5 time the GDP on a sustainable basis we would have done reasonable well.

In specialty, we would be doing pretty well if we can grow at twice the GDP growth. We should grow ahead of the market in our chosen segments.

Why was there a drop in profits last year?
The paints business has been very competitive and did not yield the desired margins. The company also suffered due to high energy cost, which we could not pass on to the customers as the consumer markets have been subdued. Further, explosives business was hived-off during the year and the profit this year does not include explosive business.