Page 174 - CW E-Magazine (25-3-2025)

India Chemical Industry Outlook Conference 2025

Chemical industry seeing monumental shifts; India remains
bright spot, but needs to address structural limitations

he global chemical industry has
seen a monumental shift in re-
Tcent times, and is facing several
challenges that, if not addressed, will
hinder the industry’s recovery to a
profi table growth path.

For one, high growth economies
are maturing, which is slowing chemi-
cal demand, even as capacity addi-
tions continue with little reinvestment
logic. Stalling fundamental innovation
is leading to rapid commoditization
of even so-called speciality products,
and the changing regulatory landscape or diversifi ed companies, in the more Imperatives for growth and profi ta-
is raising compliance and operational recent past the diversifi ed ones have bility
costs for industry. In a comparison of done better. “Asia, excluding China and Outlining some imperatives for the
labour productivity in asset-intensive Japan, led by India, has been the highest industry, Mr. Musso urged companies
industries, the chemical industry also performance region in the chemical to prepare for growth without over-
seems to be faring poorly, coming in sector over the last 20 years,” he stated extending on costs or losing discipline on
the last quartile. while speaking at the ‘India Chemical inventory, and to invest in innovation.
Industry Outlook Conference 2025’ He also urged companies to leverage
India, however, remains a bright organised by the Indian Chemical technology to fundamentally change
spot, with the industry here benefi tting Council (ICC) from March 4-5, 2025. how business is done. “Artifi cial intel-
from rising demand in end-user indus- ligence (AI) is causing a massive shift
tries, increased support from govern- The shift in the industry is also evi- in the industry, and can bring about a
ment, and possibly even from the dent from the growth in Price-to-Equity consolidation,” he stated. In addition,
rebalancing of global trade, stemming (PE) ratio, which has exceeded GDP astute AI deployment can bring several
from supply chain concerns amidst growth over the last 75 years, but has benefi ts to fi nancials: 3-7% savings in
geopolitical shifts. now changed. While profi tability in procurement; enable dynamic pricing
the European chemical industry rose for 3-5% incremental return on sales;
No longer a market outperformer despite soaring energy costs, due to 2-5% EBIT improvement; and 20-40%
On a global perspective, the chemi- supply chain issues that provided some reduction in time-to-market for new
cal industry is losing its status as a mar- measure of protection to the domestic innovations.
ket outperformer from a value creation industry, that too has taken a turn for
perspective – one it has retained for the worse more recently. Mr. Musso also advised industry
much of the last two decades. While leaders to relook their international
this can be partially attributed to the Mr. Musso also observed that long acquisitions strategy. “Rethink how
boom in the technology-focused indus- term demand growth forecasts are you play across geographies.”
try and the supply boom & demand decelerating, and are down by 0.5% in
bust in China, it is not the whole story. most commodity polymers, enough Deep-rooted challenges facing
to crush profi tability. “Multiple petro- Indian chemical industry
According to Chris Musso, Sr. chemical products are reaching utilisa- Addressing the deep-rooted chal-
Partner, McKinsey & Co., while the tion troughs with anticipated recovery lenges facing the Indian chemical
speciality chemicals industry has his- only beyond 2030. It is going to be industry, Suyog Kotecha, CEO &
torically delivered higher Total Share- diffi cult to beat out the national players Executive Director, Aarti Industries Ltd.,
holder Returns (TSR) compared to bulk in the Middle East or China.” pointed to the over-dependence for raw

174 Chemical Weekly March 25, 2025

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