"May you live in interesting times." Despite the gently hopeful cadence, the Chinese mean this as a curse when they say it. For Tata Chemicals, though, it is a blessing that has blossomed in full measure, signalling the global coming of age of the company.

Tata Chemicals has been quietly efficient, thoroughly competent and steadfastly focused as it expands and recasts its operations and objectives, establishing a presence in striking new geographies, finding fresh business opportunities within existing spheres of capability, and laying the ground for a future where research and innovation deliver consistent excellence.
The long haul back from the brink, where it found itself in 2000, has been for Tata Chemicals an odyssey of adventure, discovery and the realisation of the potential it always possessed. Over the last four years the company has secured a compound annual growth rate of 31 per cent, increasing revenues from Rs1,535 crore in 2003-04 to Rs5,982 crore in 2007-08, with profit after tax rising from Rs197 crore to Rs513 crore over the period.

Going global
Tata Chemicals has, just as impressively, spread its wings to Europe, Africa and the Americas during this time, reaching a revenue-sharing split that, in the first quarter of the current financial year, stands at 47 per cent from the Indian market and 53 per cent from international operations. In 2007 the company achieved its highest-ever numbers in almost every sales category, from soda ash (its principal product in the chemicals sector) and branded salt (in consumer products) to urea and agricultural services (part of its fertiliser business).

The chemicals tag in its name is a bit of a misnomer, because this is a company that does a lot more than produce chemicals. Fertilisers — or the crop nutrition and agri business, as it is now called — pulled in 46 per cent in revenues for Tata Chemicals in 2007-08. This figure could rise further still as Khet Se, the fresh farm products joint venture with the Irish company, Total Produce, begins to flower. Then there’s the packaged salt segment, where Tata Chemicals' market share now stands at 54 per cent.

“There has been enormous change in Tata Chemicals over the last five years,” says the soft-spoken Homi Khusrokhan, who took over as the company’s managing director in 2004. “What is remarkable is we have achieved all that we have with the same team of people that came together in 2000 to undertake a turnaround in the company. It reflects the ability of a well-chosen team to change gears when needed.”

Mr Khusrokhan draws attention to “the three cultural pillars” that have raised Tata Chemicals to heights not previously scaled: proactive cost focus (which was truly required during the turnaround), agile execution (this has been of particular relevance to the company’s acquisitions) and inclusive collaboration (teams working together and coming to terms with their business environment). Add to that a fourth pillar, enduring care, which means nurturing its people, the environment and the larger cause of sustainability. This ethos is embodied in the tagline, “The Human Touch of Chemistry”, that the company has adopted for itself.

The acquisitions play
The acquisitions chapter is an integral part of Tata Chemicals' revitalisation story. The first big one was the extension of the company’s fertiliser business into phosphates through the merger with Hind Lever Chemicals in 2004. This was followed, in 2005, with the purchase of a 33-per cent equity stake in Indo Maroc Phosphore (IMACID), Morocco, which ensures a constant supply of phosphoric acid and access to the North Africa and Middle East regions for fertiliser manufacturing.

Both acquisitions pale in comparison with the $180-million buyout from a venture-capital consortium of the British company Brunner Mond in December 2005. Established in 1873, Brunner Mond was once part of the mighty Imperial Chemical Industries which owned the Magadi Soda Company, a Kenyan enterprise that sits on a goldmine of natural soda ash in East Africa’s Rift Valley. Brunner Mond’s credentials are commendable: it works with 1,500 customers, has plants in England and Holland and is Europe’s second largest producer of soda ash.

The Brunner Mond acquisition was eclipsed by Tata Chemicals’ purchase in March 2008 of General Chemical Industrial Products (GCIP), an American powerhouse that is one of the world’s largest manufacturers of soda ash. This audacious acquisition has made Tata Chemicals the second-largest soda ash company in the world (with an output of 5.5 million tonnes per annum) while enhancing its access to natural, low-cost soda ash. Additionally, GCIP provides Tata Chemicals with crucial insulation if there is a downturn in the commodity cycle. It also gives the company a presence in all four major continents.

“I don’t think we’ll ever regret buying GCIP,” says Mr Khusrokhan of the $1-billion acquisition that was completed in 15 days flat. “It makes us better equipped to face the future. I see it as the beginning of the process of becoming the world’s premier chemicals company. That’s a difficult task for what is essentially a one-product company, but we will get there. What will this mean? It will mean having the best people, the best processes, the best products and, perhaps, the best customers.”

Coming together
How does the Tata Chemicals tale play out from the point of view of the acquired? “Going forward, I see Magadi Soda retaining its identity, albeit under the wider umbrella of Tata Chemicals,” says James Mathenge, the managing director of the Kenyan company. “We have a distinctive brand and it does not make sense to abandon it. We debated this when the acquisition happened and the thinking has been to sustain the brand, simply because it has a lot going for it.”

GCIP president and CEO DeLyle Bloomquist talks up the marriage with Tata Chemicals in terms of increased scale and improved access to resources. “Kenya, India, Europe — the trick is to coordinate the activities of our operations so that we can maximise their potential,” he says. “Our access to capital and to additional people and personnel, to the engineering and management domains, is another advantage of being part of Tata Chemicals. The Tata reputation is sterling within the soda ash industry and so is GCIP’s. We can all get stronger thanks to us coming together.”

“Tata Chemicals has encouraged us to modify our approach, from the cost-cutting culture that had become the norm over the last 20 years to one of growth and high aspiration,” says John Kerrigan, Brunner Mond’s managing director (Europe). “Since the takeover we have been encouraged to make substantial investments in developing our value-added businesses; this after we had spent the previous 10 years on sustenance investment. I think Tata Chemicals gives us the potential to be able to respond swiftly to opportunities; they are almost breathtaking in the speed with which they react to an opportunity.”

Mr Khusrokhan goes the extra yard to dispel the impression that Tata Chemicals’ acquisitions have been merely growth for growth’s sake. “Each has had a strong strategic logic: Brunner Mond was an attempt to migrate the skills and experience we had in soda ash onto a larger and more relevant international canvas. It gave the company access to global customers, new geographies and its first major source of natural soda ash, in Magadi. The GCIP acquisition gives us access to more natural soda ash, it expands our reach to Latin America, and it allows us to participate in the trade flows of soda ash around the world.”

There’s more in the chemicals basket at Tata Chemicals than soda ash, as R Mukundan, executive vice president, chemicals, is quick to point out. “We are the world’s third-largest player in sodium bicarbonate and our consumer products business has grown from a single-brand offering to multiple brands with products at several value points,” he says. “Through consumer products we have depth of penetration in the Indian market and through industrial chemicals we have our global breadth. Our senior leadership comprises a team drawn from the United States, Kenya, Britain and India. In essence, this is a story of business transformation in multiple dimensions, of scale, scope and diversity.”

Fertilisers to crop nutrition
Transformation of a different kind is also the theme for the other, less visible, half of the Tata Chemicals business bouquet, crop nutrition. Favourable changes in the Indian government’s policy on the pricing of fertilisers, the mushrooming and rising influence of the Tata Kisan Sansars — a network of resource centres that offers agricultural products and solutions through some 600 outlets and connects to more than 3 million farmers — and the launch of Khet Se, the food produce joint venture, have injected vitality to and refocused attention on a business long seen as playing second fiddle to its chemicals sibling.

“We renamed the business because we were going beyond fertilisers and giving the farmer services and solutions,” says Kapil Mehan, executive vice president, crop nutrition. “We started looking at the business differently, from the farmer’s perspective rather than from a production point of view. And that really has been a mindset change.”Adds Mr Khusrokhan, “We are, in a way, doctors of soil health; we can do so much more than sell just fertilisers through traders.”

Mr Mehan reckons Tata Chemicals and other companies in the farming space can help ease the crisis in Indian agriculture. “The problem has three parts: first, productivity is not growing as it should; second, our farmers are not able to connect well with markets; third, farmers don’t want their children to be farmers; they want a better lifestyle for their kids and they think only the city can deliver that.

We at Tata Chemicals are trying to counter the negatives by finding new and customised services and solutions for crops, by scouting the world for new produce [fruits and vegetables] that can be cultivated in the Indian environment, and by developing the skills and competence of our field force so that they can be of real use to farmers.” Mr Mehan says further changes in government regulations would be welcome. “We feel the time has come to free this industry of price control.”

Fresh food idea
The Khet Se enterprise is aimed at providing farmers with just the kind of backing they need. A cash-and-carry business with state-of-the-art facilities for the sourcing, packaging and distribution of fresh fruits and vegetables across India, it has kicked off operations with a distribution centre in Malerkotla, Ludhiana. A second centre is scheduled to open in Mumbai by the end of 2008 and there are expected to be 20 such centres in three years. “We source directly from farmers and deliver directly to retailers,” says Mr Mehan. “We have apples coming in from Himachal, bananas from Jalgaon and grapes from Nasik.”

Tata Chemicals, which took the better part of two years to cement the Khet Se partnership with Total Produce, sees the venture as addressing the farmer’s difficulties in reaching his fruits and vegetables to the retail market. This means eliminating middlemen, getting a better price and sustaining the quality of the product through delivery to the end consumer. “We felt we could succeed if we created a structure where we teach the farmer how to grow better crops, how to deal with post-harvest issues, how to reduce the chances of bad handling and how to feed his produce into the retail market.”

The Tata Kisan Sansars have been vital in making the Khet Se initiative a promising prospect. “The Sansars are a phenomenal platform for the company,” says Mr Khusrokhan. “They may not be vitally important to Tata Chemicals’ bottom line, but they are fundamentally important to the way we do business in the agricultural space. The fresh produce business is attractive for us because of the excellent relationships we have built with farmers over the years. There is more than mere commerce here.”

Tata Chemicals is not just focused on the here and now. It is looking ahead into the future. The medium for this effort is the innovation centre it has established in Pune, and the areas being concentrated on are biotechnology and nanotechnology, with crop genomics and biofuels thrown into the mix.

“In terms of R&D this is a modest beginning but the centre has all the ingredients needed to ensure longer-term success,” says Mr Khusrokhan. “The idea of creating it was founded on the premise that, over the next five-ten years, the chemicals industry will be faced with several challenges on issues such as shortages of energy, water and other natural resources, and of course, climate change; we will have to develop cleaner and greener processes. Additionally, we need to develop a new range of products that can be a third stream of offerings, outside of soda ash and fertilisers. One of the areas we have now entered is biofuels. This business has a good fit with Tata Chemicals because it sits squarely within the intersection between chemistry, agriculture and technology.”

People dynamic
In all of these and other initiatives, the people dynamic remains central to Tata Chemicals' philosophy of “The Human Touch of Chemistry”, which is rooted in a continuing commitment to the communities around its facilities, the environment, its workforce and even the new business areas that the innovation centre explores. The outcome manifests itself in myriad ways: meeting the needs of the poor in health and education, livelihoods and conservation; emphasis on workplace safety; employee engagement programmes — among them Home Shanti Home, which is about not staying back in office after 6.30pm — environment partnerships with the Wildlife Society of India, the Bombay Natural History Society and the Energy and Resources Institute; and minimising the company’s carbon footprint. “The goal is to practise green chemistry,” says Mr Khusrokhan.

Success has not been a constant for Tata Chemicals, which has had to deal with its share of setbacks and challenges even in what has mostly been a time of renewal and rejuvenation. Delays in commissioning the new plant at Magadi in Kenya have taken their toll and the steep rise in the costs of inputs, in both the chemicals and fertilisers businesses, has been a big burden. Then there’s the threat posed by the global economic meltdown.

“We are in a turbulent period once again and we are being cautious in our approach,” says Mr Mukundan, “but we believe we will emerge from this scenario in a stronger position. We need to look at adjacent business opportunities more closely than ever before. This could lead us into new areas, even the next stage in the transformation of Tata Chemicals.” Brunner Mond’s Mr Kerrigan does not see any deep dips in the short term, but he qualifies his forecast. “The wider view in Britain right now is that we are in danger of talking ourselves into more trouble than necessary. The only true certainty, though, is that all predictions will be wrong.”

Whatever the challenges may be, the way forward for Tata Chemicals is clear enough: completing the integration process at GCIP, improving operations at Brunner Mond and Magadi, upping capacity utilisation levels across its plants, building the fresh produce and biofuels businesses, and growing its sodium bicarbonate business.

“One of the challenges before Tata Chemicals today is to ensure that we do not become complacent,” says Mr Khusrokhan. “What is gratifying is that, despite our considerable achievements, we continue to be a restless bunch of people, seeking to expand, doing innovative things and being in perpetual motion. This is a company that likes to reflect, to learn from its experiences and the experiences of others. This is a happening place.” Whoever said you’re better off not living in interesting times?