Shriram Polytech (now Shriram Axiall) is one of the largest organized players for PVC compounds in India. The company has manufacturing facility at Kota (Rajasthan) that was established in 1964, today ranks amongst one of the most advanced plant in country. DCM Shriram and Axiall Corporation (USA) entered into a Joint Venture in April 2014 for spearheading new applications, products and markets and formed a JV company Shriram Axiall Pvt. Ltd. Axiall Corporation in an integrated leader in vinyl, chemicals and building products industries with approximately USD 4.7 billion in annualized revenues.
The arrangement was hammered to avail world class technology from Axiall to bring new possibilities in Indian vinyl marketplace. “The idea behind Sriram Axiall is that if a product can be made out of PVC, then we will make it. We are two giants together now- Axiall with technology and DCM Shriram with trust and experience. Let’s have trust and technology work together for you,” says Mr. Rajiv Arora, President & Business Head, Shriram Axiall.
For Axiall, the deal may be seen a reach out process where it aims to diverge its exclusive North American focus to the world marketplace. Commenting on the rationale behind the Joint Venture, Mr. Kevin Skrada, General Manager International, Axiall Corporation LLC says, “Axiall is a highly integrated PVC producer in the North American market. Historically, we have always been North American focused. Being focused in a single geography is risky as we saw with the housing bust/ recession of 2008.
“The other issue we were facing was a shrinking domestic market for PVC. Therefore, in order to continue to grow in PVC we would have to shift our strategy focus from domestic to global supplier. In evaluating the various growth areas of the world, India was our number one choice due to the size of the market, underutilization of PVC, and the fact it was on the brink of becoming one of the leading economies in the world.”
India’s PVC Industry: The Background for Shriram Axiall
Mr. Arora says that it’s the prevailing scenario vis-à-vis technology in PVC compounding business in India that worked as the background for exploring the possibility of such Joint Venture as Shriram Axiall. He informs that PVC industry was reserved for small scale ever since PVC compounding was allowed in India. This led to mushrooming of a lot of small industries which were reluctant to invest in technology.
“Because it was reserved for small scale, none of big players was really interested in putting up technology. Three years back, the Govt. took out this reservation and it was no more reserved for small scale. At that point of time, we started looking for technology partner as we wanted to infuse technology into Indian market. We found that in absence of technology, you won’t be able to grow your business and Indian market will be deprived of quality products available elsewhere. That’s the background,” says Mr. Arora.
On zeroing on Axiall, Mr. Arora says, “Three years back, we started looking for technology partner. We talked with two-three companies and finally we decided to go ahead with Axiall. The reason was Axiall being very similar to DCM Shriram in a lot of ways.
“They are fully integrated as DCM right from salt and power to final product. Moreover, they are into chlor alkali which is again very similar to what DCM Shriram does. Axiall produces PVC resin, PVC compounds, and a lot of other chemicals. In a way, DCM Shriram is a clone of Axiall having the same culture.”
Besides, Axiall’s great technological prowess and its key position in the US market played decisively in DCM Shriram’s readiness to go ahead with the JV. “They are the largest merchant compounders in the US with capacities little over 600,000 tonnes per year of PVC compounds. If you look at the capacity, that’s probably the annual capacity of the kind of market we are operating in India for everybody put together,” clarifies Mr. Arora. “As per the deal, Axiall would provide us all the technology they have is US. All the products available in US market would now be available in the Indian market and the market around India through Shriram Axiall.”
Targets: Products, Markets, and Applications
Both Axiall and DCM Shriram are geared to explore new markets, diversify product portfolio, and extend the range of applications through this Joint Venture. “The North American market is fairly advanced in terms of the development of applications for engineered vinyls. We felt that our technology in both rigid and flexible vinyl compounds and our experience in developing applications for these products in the North American market would translate into the Indian market,” feels Mr. Skrada.
Mr. Skrada elaborates more on the applications and products that Axiall aims to infuse into the Indian market, “Engineered vinyl compounds are a very cost effective replacement for many more expensive engineered thermoplastics such as flame retardant polycarbonate and ABS. Engineered vinyls have a very good fit in electrical applications due to their inherent flame retardancy, good chemical resistance, and color hold. We have also developed a complete line of sustainable products to address the environmental concerns of the industry.
Mr. Arora clarifies more in terms of market options that the JV might be exploring in near term. “In terms of territory, Axiall has footprints only in US. The idea was to get a foothold in India as it is located strategically. We can service Africa, GCC countries, SAARC, and the Indian subcontinent through this JV. Certainly, our geographic outreach has extended beyond India now,” says he.
“All the applications available with Axiall in PVC compound and vinyl business will be available with the newly formed entity in India. We are extending the range of compounds and products as we are finding the need in the market. For example, we just launched CPVC which was not available with us. This product is available with only 3-4 suppliers in entire globe. That’s not related to wire and cable, but I am just stating it for example sake that as we are going forward, we are introducing new products in the market through the JV.”
On exports, Mr. Arora further clarifies, “Export is another area in which we have not done much in the past. We are basically in-land. So, we also lose a lot on freight getting on the port. As one of the plans, as export market starts looking up for us, with Axiall technology and our customer base, we might look into expanding and putting up a new plant somewhere near a port in India.
“However, the idea is to first fill up the capacity here, add few lines here if required, and then we look into expanding to other markets.”
Indian Vs US Market: The Need of Product Standardization
Mr. Arora feels that US market is way ahead of Indian market in terms of product standardization. US marketplace is highly regulated by way of highly updated norms for product approval. According to Mr. Arora, BIS of India has pretty old standards of products which need to be rewritten. “In US, agencies are very strong unlike India. Since the Indian market was not really technologically savvy and advanced, the most of technical specifications have not been upgraded with time. In US, they go strictly by agencies’ approval and they have all the products approved making customers avail quality products. In India, on the other hand, because of older technical specifications, customers have a tendency to use materials which are not of absolutely good quality,” says he.
The JV with Axiall underscores these moot points to be taken care of and aims to introduce in the market new standards after due consultation with BIS and customers. “Let’s see how we can help upgrade the standards so that the Indian market can be at the top end in terms of quality and technology,” remarks Mr. Arora.
Products: High Temperature, High Speed, and Sustainable
Shriram Axiall is all set to launch standard, innovative products into the Indian market. The products range from high temperature, high speed, to sustainable products hitherto unknown in the Indian market. “We are looking at getting high temperature application PVC compounds. Typically, PVC is used for 70-90 degree centigrade. But, for applications above 100 degree, people usually don’t use these compounds. Axiall has the technology, for automobile and wire & cable, which can be used at 125 degree centigrade-the application compounds not generally done in PVC,” states Mr. Arora.
“The other thing that we are doing is high speed applications which help the customers increase their productivity. Indian market, typically, has not been running at very high speeds. Until recently, we had customers who could run at 1000 mtr/minute. But, say for UAE, we have customers who run at 2000 mtr/minute. Axiall has the compounds which can run at very high speeds dispensing a high level of productivity for customers.
With the increasing concerns for environmental sustainability of the products, customers are demanding products in keeping with green practices. Axiall already has a sustainable product range-ASPIRE-a big hit in the US market, especially with automobile company. Now, Sriram Axiall is quite keen on getting that product into the Indian market for automobile and wire & cable.
“Today, you want to go green and want to cut using petroleum and heavy metal based products. In that case, PVC has a very low petroleum footprint. In this polymer, 58 percent is chlorine and the rest 42 percent is petroleum. In contrast, PE or polypropylene has 100 percent petroleum. Now, if you are able to replace even the plasticizers (which are actually based on petroleum) with some plant or bio based thing, PVC’s petroleum footprint would be lesser. Axiall has the sustainable product called ASPIRE, which we will be bringing to India,” says Mr. Arora.
Shriram Axiall will also be promoting its thin wall extrusion compound in the country which again is aimed at enhanc-ing the productivity by optimizing the material usages. “If you are able to introduce such PVC compounds where your insulation can be thinned down, customers can benefit by using less material and still get the same properties. This is all about price position, better technology, and enhanced productivity,” states Mr. Arora.
Axiall has 3000 active products in the portfolio, rigid and flexible put together. Shriram Axiall, right now, seems to be concentrated more on introducing new products in the rigid segment of PVC compounds. Wire and cable related products are slated to be taken in a big way in coming times. “Wire and cable, we have not hit at the moment as the industry has not been doing great in India. But, we have been working at the back end doing things and improving products,” says Mr. Arora.
On being asked about about Shriram Axiall’s special service to the wire and cable industry, Mr. Skrada says, “Our service to the W&C industry will focus on new technology and sustainable products. For instance, we have devel-oped high speed, thin wall, insulation and jacket materials to reduce material usage, increase productivity and reduce conversion costs.”
Corroborating Mr. Arora’s statements about high temperature PVC compounds for wire and cable industry, Mr. Skrada says, “We also have developed a 125 degree Centigrade automotive wire harness insulation compound that allows engineered vinyls to be used in higher heat applications, potentially replacing more expensive cross linked polyethylene materials. All of our products are lead free and we have a sustainable product line, ASPIRE, that has organic based stabilizers and plasticizers, replacing all heavy metals and phthalate plasticizers.”
Reiterating Shriam Axiall’s commitment to serving wire and cable industry with quality compounding solutions, Mr. Skrada says, “Our emphasis is on technology and sustainability. We will focus on improving the existing technology and moving engineered vinyl materials into higher end applications.”
Besides launching the CPVC pipes after the JV, Shriram Axiall is also working on Rigid Injection Molding. Untill now, in India, the rigid PVC has only been used in pipes and fittings; anything other than that has not been heard of. Now, Shriram Axiall is bringing Rigid PVC Injection Molding (also called Custom Injection Molding) into India in product segments other than pipes and fittings.
Indian Wire and Cable Industry
When asked about how he synthesizes the present status and impending future of wire and cable industry in India as DCM Shriram has been working for long and very closely with the industry, Mr. Arora says, “It’s a tough question. Yes, we have worked very closely with them, but we never understood the industry, honestly.”
He elaborated, “While the Indian market has been gearing up for next-generation products, the wire and cable industry has not really matured because it never has the availability of products. It stays on low technology platform. Even today, lots of re-processed material gets into the wire and cable market and that’s very unfortunate because we are talking about safety.
Mr. Arora believes that only by adhering to robust technological practices, the wire and cable industry can produce desired quality material fulfilling the benchmarks such as safety and durability. “PVC, unfortunately, also has witnessed a lot of re-processed material in the market. If we are able to work with BIS and key customers to upgrade the standards, which is of course our first task, I believe things would change for better,” quips Mr. Arora.
But, forging a consensus among regulators, industry and customers for technologically standard and safer products would not be an easy task. Mr. Arora, however, sounds optimistic and says, “I am not sure how to ensure that re-processed PVC is not used. I am sure, as a matter of fact, we will be able to reduce it, if not eliminate, by adhering to right standards. This, of course, will lead to better quality products with better life and fewer failures.”
Mr. Arora drives the above point home by citing an example and emphasizing the need of stringent regulations where safety is one of the key concerns. He says, “There was a fire in a mall in Bahrain sometime back; a lot of people died because of bad quality cable. There was a regulation immediately by the government highlighting things needed to be changed. And, everybody falls in line. Unfortunately, we don’t have the enforcements of that spirit. So, it’s going to be tough awhile before we see standards looking up.”
Educating Customers: A challenge
Spreading awareness about quality among consumers has been tough, especially in the wire and cable industry. As discussed above, the quality standards are old and outdated making it possible for bad products doing the rounds in the market. In such scenario, educating customers about technologically efficient, safer, and durable products becomes imperative and should be considered as the long term goal for any industry. However, the education starts only when you have really infused quality and value in the products by way of most updated technology. When the value is already there, convincing remain no more difficult as it seemed first.
Commenting on the aspect, Mr. Arora says, “See, the Indian game till now has been the price. There is hardly any technology talk. Our plan is to sell value. As I mentioned, we are going to launch 3-4 products aimed at enhancing productivity and are not available in India. Customers are not averse of paying more for value; but you have to convince them for the value first.”
Mr. Arora believes that price is only a parameter when you don’t have value and you fail to educate the customers about the intrinsic value of your product. “If you are selling a me-too product, then you have to talk about price which is normal. But, if you are talking of value, price becomes secondary as customers are happy to pay for the value and we have seen that. That’s our game plan,” says Mr. Arora.
“We will show the customers the value and take it forward from there. We are not going to talk only on price. We want to help customers upgrade their productivity by getting newer products and applications into the market. We want our customers grow in the areas they have not grown. And, that’s possible only with the value.”
And, we may ask how Shriram Axiall intends to impart this ‘value’ to the products and applications. “We already have a state-of-the-art laboratory in India. In fact, we are one of the most equipped among the PVC compounds suppliers. None of the PVC compound suppliers has a lab or a development centre as fully equipped as we have. In fact, now we have two, one at Axiall, and one at Shriram. And, we can work 24X7 as we are 12 hours apart; while we sleep, they work, and vice versa. So, we are continuously working to instill value in our products and applications,” says Mr. Arora.
“We will add equipments as and when required. But, we really don’t need that as we can always service from Axiall.”
On expansion plans of Shriram Axiall, Mr. Skrada says, “I believe Mr. Arora discussed the Kota facility which will be the primary base of production. We have plans to expand these in the future and may also develop alternative locations depending on market needs.”
‘Make in India’ Impact
“It’s a great campaign, but the Govt. will also have to ensure that people are able to make in India,” says Mr. Arora. He further clarifies, “For example, if the import duty/tariffs on the compound that I am going to produce and the material I am buying to produce is the same, then there is no incentive for me to make in India. So, either the Govt. has to reduce the tariffs on my inputs, or increase the tariffs on the products I’m supplying. I think it should be supported by the right tariffs on incoming raw material and final products.”
However, Mr. Arora believes that campaign would be fruitful if supported by right tariffs regulations in coming times. “I think a lot of work is going in that direction and lots of representations have been made by the industry. Investments are important for ‘Make in India’ to be successful; but, to make investments, you have to ensure that investments get the return,” says Mr. Arora.
“Today, the tariff for incoming raw material is 7.5 percent and the tariff on compound is also 7.5 percent. What’s the incentive to make in India?” asks Mr. Arora.
