Erik Fyrwald, chairman and chief executive officer of US-based NLC Nalco, is in India for two weeks to decide how India will play a major role in the fortunes of the $4.2-billion turnover company. NLC Nalco is the world’s leading water treatment and process improvement company, with over 20 per cent market share. In an interview with P B Jayakumar, Erik said acquisitions, partnerships, strategic collaborations, millions of dollar investment in plants and people, and various other plans were being worked out for the India play. Edited excerpts:
NLC Nalco has a history of many decades in industrial water and process treatment businesses, but your business in India picked up momentum only in the last two-three years. What is the reason?
I agree we had not seriously looked at India in the past, since we were more of a US-centric company and India was not a strategic priority for us. The US still contributes 40 percent of our business. We began selling in India in 1970s and Nalco Chemicals India was started in 1987. India’s economy is one of the fastest growing in the world and we expect India’s growth story to remain intact for next 10-15 years.
We recently set up a $8.5-million technology centre in Pune, which monitors water quality 24x7 at all our client locations in any part of the world — whether a steel mill at Sao Polo in Brazil or a refinery in Russia or the US. We have about 16,000 units of water monitoring equipment at various client locations and all are monitored from the Pune facility.
We had a growth of 35 per cent in India during last year and expect this growth to be at least 20 per cent annually for next few years. If India contributes only two per cent of our turnover at present, this will grow to over 5-10 per cent in the coming few years.
How will you achieve this target?
Indian customers are increasingly quality and cost conscious and are ready to invest in systems to reduce water and energy consumption. India also has issues related to consistent availability and quality of water. We work with Indian companies like the Tatas and Essar Group, which are emerging as global companies. Globally, we have 11,500 employees in 150 countries. Of this, more than 7,500 are service engineers, who work round the clock at our customer locations. Indian companies will benefit from the experience and expertise of our employees. We are looking at collaborations and strategic alliances with Indian companies.
Investments in plants and machinery, including acquisitions, will be part of the Indian strategy. We will invest millions of dollars in India and funds will not be a constraint. Now, Nalco India is a Rs 200-crore company, with over 400 employees and this number will double in the coming years. Nalco India is headquartered in Pune and also manages offices in Mumbai, Baroda, Kolkata, Delhi and Chennai. We have manufacturing plants in Konnagar in West Bengal and Pune, which produce full range of blended formulations used in industrial water solutions. We will expand these units and our programmes in India are developed to focus only on local needs.
Are you looking at India and other emerging markets because the US and Europe are yet to get out of the slowdown? What are the strategies you adopted to get out of the slowdown?
We have 48 plants in various countries and out of this, six were closed down. We also reduced our workforce in the US and relocated production to India, China and other BRIC (Brazil, Russia, India And China) countries, with stress on cost reduction and productivity improvement. The US is still to get out of the slowdown and I think the growth will be stagnant in that market. Europe is also facing the same situation and except for Germany, we are yet to see recovery in that market. As against this, I am amazed by the growth rate and optimism in India and China.
India is also witnessing a lot of activities in waste water and municipal water segments. Do you have any plan to enter these segments?
We are looking at all opportunities. We have products for reverse osmosis and India has a market for such products. Though industrial water segment is our core strength, we will look at alliances and strategic partnerships in such areas in India. I am here in India for two weeks to explore such options.
