"We Have Solutions Which Could Help Cities Like Delhi Control Smog"
Venkatesha Babu March 5, 2018
Denmark-headquartered Novozymes is one of the world's largest biotech companies and the global leader in industrial enzymes, used in things ranging from laundry detergent and dishwashing soap to baking and brewing.
Novozymes, which posted a revenue of $2 billion-plus in 2016, has a client list in India that includes Hindustan Unilever, Nestle, P&G and Colgate. During a recent visit to India, the company's CEO, Peder Holk Nielson, discussed market opportunities and competition with Venkatesha Babu. Edited excerpts:
Q: With presence in five major segments - household care, food and beverages, bioenergy, agriculture and feed, and biopharma - how have you been faring?
Peder Holk Nielson: India is an exciting arena for us, not just from a market perspective but also because we do significant research here. Though China and the United States are much bigger markets, India holds much promise for Novozymes. It currently contributes only low single digits in terms of our overall revenue but is growing very fast.
Food and beverages is a very large unit in India. We have some household care business too, and our textiles business is pretty big. We are hoping to develop our bioenergy business as well as agriculture & feed business, which are still small, here.
How many people do you have in India?
A: Our Indian presence of about 600 employees (roughly 10 per cent of our global workforce of 6,200 employees) is much larger than our Indian business alone warrants. But we have research and back office operations, which support our global network. The 600 (in India) include those in sales, manufacturing, research and back office operations.
With several FMCG companies, including Colgate, Unilever and P&G, as your customers, have you been able to sell to newer entrants like Patanjali, which has grown large very fast?
A: Yes. A large part of our growth in the food and beverages segment has come from newer players, regional players in emerging markets like India. There is also significant support and interest from the political class about the emergence of a biofuel market in India.
You have been in India longer than China. How does enzyme consumption in these two markets compare?
A: As a larger middle class emerges in India, we will see a bigger opportunity for our technologies that happened in China too. Currently, India as a market is where China was 15 years back, but as the economy grows, our opportunity, too, will grow.
The Indian government has a stated goal of doubling farmers incomes. Your agriculture business focuses on enhancing yields and improving productivity. Have you been tapping this opportunity?
A: Yes, but the opportunity until now has been slow. Hopefully, it will accelerate.
In terms of research, what is being done out of India?
A: A large part of the world bakes and eats bread. India is more of a flat bread market. We are looking at ways to adapt our technologies to add value to the Indian market. We are conducting research in rice-related products, like processing it better, dealing with by-products, and the like. We are also looking at extracting spices and colours. We are also looking at unique cleaning solutions for India.
Take, for instance, the process of cleaning a shirt. The adaptations in each country are different. A European wash in a front-loading machine can take very little water but a long time to wash, and with very limited use of chemicals. In the US, the water usage could be four-five times the European level and they prefer top-loading machines. There you need a higher dose of chemicals to get the same effect.
In Asia, water temperatures drop, water quality is different. In humid conditions, there could be more dirt. In India, a large part of washing is still done by hand, so the chemicals required (in a bar of detergent soap) are different. Research addresses these different needs.
Much of the research we do here is also part of our global initiative.
Many cities, including Delhi, are choking with smog. Does Novozymes have any solutions to offer?
A: Yes, we do. There are different avenues and everything depends on how industrial and agricultural waste is handled and treated. The textile industry is a good example. We have several solutions which have reduced textile waste. But there should be (regulations and incentives) to adapt them rather than just pass responsibility down the chain.
If we can convert agricultural waste into renewable fuels and use them in vehicles, it is a good fit. G.S. Krishnan (Regional President at Novozymes South Asia) and his team are working with the Indian government to highlight the available solutions.
You bought Biocon's enzymes business for $115 million in 2007. Apart from global competitors like DuPont, are there any other players in the Indian market?
A: In South-east Asia, China and India, there are some smaller, regional players.
What is the status of the `300 crore investment Novozymes announced last year for setting up a new manufacturing facility near Mumbai?
A: We are going to start operating the plant by the middle or the end of the next year with a capacity for exports as well as domestic market.