'Almost
30% of our export turnover is contributed by
businesses that
are on long-term contracts'
Interview
How
has your other acquisition — Aryan Pesticides — fitted
into the scheme of things? SG: Contrary to name of the company,
Aryan Pesticides never made any pesticides. The
problem with Aryan was that they had erected capacities,
but had not properly tied up the market. so they
were always under-utilised. Aryan
was one of our customers for nitrochlorobenzenes.
methanol and nitric acid. So we were familiar with
Aryan and when we saw such a company tottering
and not coming out of the red. we thought of acquiring
it.When we looked at their portfolio, we found that
many of their customers or potential customers
were already in our fold. So we saw tremendous
marketing synergy in the acquisition. Apart from
good customer fit and raw material synergy, we
realised that in the particular belt of Maharashtra,
where Aryan was situated, big educational institutes
were coming up which meant availability of a tremendous
pool of technical talent.
So people, raw material
and customers were the three drivers for acquiring
Aryan and we have been effectively utilising these
to our benefit.
At this point of time, do you see
the need to augment resources in terms of capacities,either
through organic growth or through acquisitions? DM: I think what we really
need is to augment our research capacity — strengthening
the R&D base still further and adding more
groups, which work on additional products. With
the number of manufacturing sites we have right
now, I believe we would be better off focusing
on getting the maximum value out of these sites,
rather than adding any new sites, unless we come
across some synergistic businesses, which need
us to look at different sites.
What are your plans for the domestic market?
With exports on the upswing, are there any
plans to lessen emphasis on the local market
and concentrate fully on exports? DM: I think we need the Indian market as much
as we need the export market. In the long term,
India will continue to be important from the
point of view of value-addition. Today, almost
40% of our turnover is contributed by exports.
We may be able to push the figure to around
50-55%, but being in the field of intermediates,
Deepak would always be significantly large
in the domestic market also.
Deepak has one
of the largest numbers of end-product customers.
We see a tremendous opportunity in the field
of intermediates also. So it would be prudent
to ensure that we are in both the domestic
as well as export markets.
The dyestuff industry is an important end use segment
for your products. This segment has seen its ups
and downs. What growth prospects do you see in
this segment? DM: To a certain extent, the dyestuff
market has been showing resurgence in growth, particularly
in the exports market. But the growth prospects
would depend on how the textile policy evolves
and whether we are able to create much larger domestic
market for dyestuffs.
In terms of competing with China, which has
put up huge capacities. India can only be number
two in the dyestuffs exports market. If our textile
market grows then there is good chance of our
internal consumption going up.
However, compared to dyestuffs, I feel there
is good potential for growth in pigments and
the printing inks businesses as more and more
publishing companies are being set up in India — for
our own requirements and for targeting the international
markets. We do face a great challenge in this
area from China,as it is also doing the same
thing. But if one goes by the amount of investments
in India in setting up printing presses and publishing
activities, particularly in South India, businesses
in printing inks and pigments will continue to
grow.
