Matthias Zachert, CEO and Chairman of the Board of Management of Lanxess AG is confident that its investment in the country will help in its global business aspirations.
18 Mar 2024 | 5486 Views | By Chandan B Mallik
One could say, this is a company where things move fast. And its whirlwind of restructuring and metamorphosis from a polymer manufacturer to specialist chemicals maker in a short span of seven years has been nothing short of spectacular, considering the dynamic pace and fast changing business needs.
Lanxess ...
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One could say, this is a company where things move fast. And its whirlwind of restructuring and metamorphosis from a polymer manufacturer to specialist chemicals maker in a short span of seven years has been nothing short of spectacular, considering the dynamic pace and fast changing business needs.
Lanxess started with a rich heritage inherited from Bayer but has since undergone a significant transformation, particularly since its spin-off in 2004. This transformation has involved shifting focus from bulk chemicals and polymers to specialised chemicals and mid-sized markets. The company's strategy involves concentrating on chemical-based divisions rather than polymer-based ones. This includes segments like consumer protection, additives, intermediates, and inorganic pigments, with a clear emphasis on
specialty chemicals.
This aspect involved a series of divestments and acquisitions, with the above three mentioned business segments in mind, according to Zachert. Between 2016 and 2023, the company embarked on a mission to get its current business portfolio in place.
Zachert is also aware of the global chemicals industry’s status. “The weak demand in the global chemicals industry persists, and we see no signs of recovery for the rest of the year,” he said during his recent visit to India. As part of its future business strategy, the Cologne, Germany-headquartered company aims to reduce cash outflows and decrease net financial debt by minimising dividends and divesting non-strategic assets.
According to him, the company will retain its business in Germany but not expand it and rather focus on growth and profitable markets. While Europe remains an important market, Lanxess is focused on growth in North America and Asia, particularly India. This marks a strategic shift from solely focusing on China to also prioritising the Indian market. As part of its future business strategy, the company aims to reduce cash outflows and decrease net financial debt by minimising dividends and divesting non-strategic assets.
In 2020, Lanxess did business worth Euro 208 million. Growth in India for the company has been steadily increasing with turnover of Euro 248 million in 2021, rising to Euro 316 million in 2022. Zachert is also wary of the global uncertainties impacting the chemical industry, wherein the weak demand persists with little to no signs of recovery in the near term. As a result, the company estimates that its India business will touch around Euros 310 million in 2023.
Meanwhile, Lanxess has successfully completed and commenced operation of its expanded Rhenodiv production line in Jhagadia. This expansion marks a significant enhancement in the production capabilities of the company’s Rhein Chemie business unit, enabling it to meet the increasing demand in the Indian sub-continent and the wider Asian tyre and rubber goods markets.
The facility is equipped with cutting-edge technology and machinery, the new production line empowers the company to manufacture high-quality technology tyre release agents. This facility adds to Lanxess’ existing production capacity, with another similar facility located in Argentina. The production of high-performance tyres and moulded elastomer products hinges on the utilisation of effective release agents. Ensuring process safety and minimising scrap rates are paramount for efficient tyre and moulded elastomer production. Rhenodiv release agents stand out for being strictly water-based, solvent-free, and devoid of volatile organic compounds (VOCs), aligning with environmental sustainability goals.
Zachert claims that the company is well-ahead in its sustainability programme and 84% climate neutrality on an annualised basis was achieved in 2023. A host of measures were implemented to accomplish this target, which included the implementation of several measures such as change of fuel from coal to biomass at both of its India-based sites, process improvements and green power purchase agreements for Jhagadia.
Zachert concluded by saying, “India is an important region for us, and this strategic milestone reflects our commitment towards meeting the growing demands of our valued customers in the region. The new
facility not only amplifies our production capacity but also showcases our faith in the immense potential of the Indian market.”
This feature was first published in Autocar Professional's March 1, 2024 issue.