Henkel eyes high note in India growth story

German chemical major sees huge potential from India operations with the push for localisation and digitalisation adding new impetus.

By Nilesh Wadhwa calendar 15 Jul 2021 Views icon21788 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

The Indian automotive industry is undergoing a trough but that has not deterred the ambitions and the huge potential the country holds for many global companies. In fact, for Mumbai-headquartered German chemical major Henkel, “India holds a strategic position for Henkel as a part of the company’s long-term growth strategy both as a domestic market and a base to serve the other international markets.”

“Our biggest focus areas are strengthening Henkel India’s manufacturing and innovation footprints in the country as well enhancing product development resources,” says Sunil Kumar Sathyanarayanan, country president, Henkel India.

The company has established a solid footprint in the country — seven plants, two innovation centres, a customer experience centre and one-of-its-kind flexible packaging academy — and it will continue to expand to leverage as part of its India growth story.

In 2018, it forged a partnership with RLE to form The Mobility Alliance for enhance its innovation and cutting-edge design and material sciences capabilities. “We believe the time for India is now, and that the next decade and beyond will see huge investments into India. The government’s focus on making the country a global manufacturing hub is well stated. Initiatives such as Make in India, Digital India and the PLI scheme have been putting manufacturing in India at the tipping point of unprecedented growth. Besides engendering opportunities for large multinational corporations interested in setting-up their manufacturing bases in India, these initiatives have been providing avenues for MSMEs to leverage in the capacity of co-developer, co-manufacturer or supplier of raw materials, components, assemblies, sub-assemblies or outsourced services,” adds Kumar.

Henkel is continuing to invest in India. “Since the last few years, we have been setting up India’s largest adhesive manufacturing site in a phased manner. We have already made an investment of Rs 400 crore to set up the first two phases of site in Kurkumbh, near Pune. These investments bear testimony to our commitment to the Indian market. In terms of the contribution Henkel India makes to the global pie, it is a major part of our emerging markets which is forecast to achieve double-digit organic sales growth,” the Henkel India country president points out.

Huge potential for adhesives,  sealants
Globalisation and urbanisation will play a crucial role in the company’s India business plans. Kumar says the company is studying the megatrends and based on them, its Adhesive Technologies business develops high impact solutions to make its customers’ products safer, more sustainable and efficient.

“We also support our customers develop new products, make their existing products better and improve their processes.When we talk of the India market, for our adhesive business, it means both the existing conventional market as well as the untapped market, which can be tapped into with innovative sealing solutions that can replace the existing technologies. The challenge here is to translate potential markets into actual markets. Replacing the mechanical fastenings with liquid sealants, is just one such example. We see India as a high potential market, 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 every year creating opportunities in the markets by providing innovative solutions that cut across different industry verticals.”

How does India stack up when compared to global markets? Kumar says, “India is an emerging market and thus is evolving in every aspect. A key differentiating factor between the developed and the emerging markets is the growth opportunities in latter. The growing middle class and urbanisation in the emerging markets, especially in India, is increasing demand for adhesives and sealants in these markets. When you talk of ease of doing business too, the country has evolved when you compare it to the last few years. There is room for improvement on some aspects; however, it would not be fair to compare an emerging economy with a developed one.”

Coping with the slowdown
Like most businesses, sustainability will continue to be an important factor for all aspects of businesses. Kumar agrees the pandemic has been wreaking havoc on economies globally. “However, the Indian economy bounced back quicker than most other economies during the unlock phase. The onslaught of the second wave on the country has created a little bit of a slowdown but with the acceleration on the vaccination drive, we are confident that the demand will soon bounce back.”

What’s helped the company is the fact that having diversified business units — beauty care, laundry and home care and adhesive technologies — for industrial and consumer business, ensured that the impact from anyone sector would not weigh heavy on its overall business.

“While some of the industries that we cater to were affected, concomitantly affecting our business, other have recovered. However, recovery across different industries is going to be different. The automotive sector has been really hit hard. The industries which have revived faster are those relating to essentials. We have a quite large business in packaging and demand for flexible or rigid packaging, which are primarily used in the food and pharma sectors, are back to normal. So, businesses with a consumer bias and focused more on essential goods, have revived very well. On the industrial side, there has been some recovery in recent months. We do not foresee any further nationwide lockdowns or shocks of this nature and believe this recovery will continue,” explains Kumar.

Glocal approach pays dividends in India
For any organisation to excel, being reactive is no longer a luxury it can afford. Most successful businesses have understood that being agile, proactive and being close to its customers is what plays a key role in attaining growth.

Kumar says the company is witnessing ‘high growth of adhesives and sealants in the agriculture and construction equipment and appliances, white goods and filters — water filters, oil filters and high-efficiency particulate air filters.’

“Although localisation is a huge part of Henkel’s plans for India, the ethos from our parent company in Germany also trickles down to reflect in the Indian operations. Thus, you will find that our made-in-India products have the same quality and performance as those that are made at any other plant of Henkel. Quality checks are conducted for incoming raw materials and in-process checks take place at various stages of our manufacturing processes. After we produce our final products, we have very stringent quality control, which includes bonding and adhesion tests, and many-a-times, application checks,” shares Kumar.

Henkel says it has also made significant investments to establish its innovation capabilities close to its customers. The company has established centres globally, which are fully equipped to capture the emerging trends and needs of the local customers. These globally connected centres bring out the global know-how to the local customers. “In these high-tech labs, we are able to develop, simulate and demonstrate the performance of our adhesives on our customers’ parts, which helps them gain confidence in our products. "

He added, "Henkel’s Adhesive Tech business in India has an Innovation centre that is housed in our KoparKhairane manufacturing site that caters to our Packaging & Consumer Products division, while our Innovation centre at Pune caters to the General Manufacturing & Maintenance and Automotive & Metals businesses. These centres are equipped with customer component testing facilities, dispensing systems, application training, product development and engineering facilities which provide customers comprehensive adhesive solutions. For the automobile and metal industry portfolio, the laboratory is well-equipped with a simulated environment for automotive acoustic structures. The centre also has customised training assistance programs and interactive sessions for customers to equip them with the latest developments and sustainable solutions. The Indian innovation centres contribute significantly towards Henkel globally and several innovations created here have seen utility globally. Henkel is generating a significant percentage of its total sales in emerging markets and 55 percent of its employees are in these countries.”

“At present, we have a core team of engineers and scientists at our innovation centres who are at par with their global peers in terms of their knowledge and capabilities. At both the locations, various teams work on myriad chemistries/ technologies, developing products and innovations for local, regional and global customers,” concludes a confident Kumar. 

This feature was first published in Autocar Professional's July 1, 2021 issue.

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