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"We Expect Double-digit Growth Over the Coming Years"

PB Jayakumar     February 18, 2021

Richard Boocock, Senior Vice President, Chief Information Officer and Special Advisor to the Boards Chairman, tells P.B. Jayakumar that the policies announced in the last few months for Atmanirbhar Bharat will boost manufacturing in India further. Edited excerpts:

Since you assist numerous companies in manufacturing, do you see recovery in India post-Covid?

Air Products is among the leading industrial gases companies globally. Our market capitalisation is around $60 billion. That makes us one of the bigger American specialty chemical companies. Our industrial gases business is growing in double digits. Obviously, there was some disruption related to the pandemic. India is a growing market for manufacturing. The policies announced in the last few months around self-reliant India are supportive of continued growth of manufacturing in India. This means consumption of industrial gases will continue to grow. A lot of industrial gases are used in iron and steel manufacturing, semiconductor manufacturing, food processing, glass manufacturing, tyre production, and so on.

With Air Products and INOX Air Products (joint venture), we are definitely the leading industrial gases companies in India. India is a developing market for industrial gases with some steelmakers owning a lot of captive capacity. Then there's the Build Own Operate capacity that Air Products and INOX Air Products have built over the years. I think the Indian market for industrial gases is around 4,000 tonnes per day, probably around $500 million a year.

Industrial gases have numerous applications in chemical and hydrocarbon sectors. One of the areas where we have a world leading position is gasification of coal. If India is going to gasify coal, as announced by the prime minister, to take advantage of domestic coal supplies, Air Products has a leading position in gasification technology as well as supply of oxygen to gasify the coal. This is an area where we are looking to invest - on a Build Own Operate model - to make world scale gasification complexes in India.

What is coal gasification? What are its applications?

We take coal as a feedstock and gasify it using oxygen to produce clean synthesis gas. This gas can be converted into a number of high-value chemicals for which India has a significant need. The gasified coal that is converted into synthesis gas could be turned into methanol, which can be used to make ethylene; or we can use the same gas to make ammonia and fertilisers. This is a very good example of how we can make India self-reliant. Air Products' business model is Build Own Operate. We will invest in the entire facility, from receiving coal to making the finished chemical product. Air Products operates in more than 50 countries.

India is going to mine out more coal, but our reliance on coal for producing electricity is going to fall. We are moving towards green energy. There will be coal available for other applications. What are your plans for India?

We're ready to invest $5-10 billion in India for gasifying coal to make value-added chemicals for the Indian market. We positively look at the target set by the Indian prime minister for gasifying 100 million tonnes of coal per year. We will work with the appropriate coal company. It could be Coal India, for example the Dankuni project being developed in West Bengal. We will take coal, gasify it to clean gas and make something like methanol, for example. Methanol is feedstock for a number of processes. One particular application in India is its blending with gasoline (petrol) to improve the latter's environmental performance. That is the type of business structure we have in mind. Methanol can also be used in other chemical processes, for example, making certain acids. It can also be used to make other chemicals such as polyvinyl alcohols and polyvinyl acetate, which are then used in a lot of everyday materials that go into making many homecare products, paints.

Essentially, our facilities will use domestic coal to make chemicals that otherwise have to be imported. The other factor is the increasing sophistication of manufacturing in India, which means use of more industrial gases.

You have extensive presence in India with base in cities such as Vadodara and Pune. Air Products has been in India for a long time. Are you looking at other partners in 'coal to gas' projects?

Yes. We are prepared to do this ourselves as Air Products. We have also been very successful in joint ventures in many parts of the world, including in industrial gases in India, INOX Air Products. So, we are very comfortable doing joint ventures, but we are also prepared to make 100 per cent investments, because this is our technology, our investment, our capability, our value addition.

How many jobs will these projects will create?

Each coal gasification project will be a $1-2 billion investment. We have to employ hundreds to thousands of people. It will require a lot of material and equipment which we will look to source within India. We will also require a lot of support industries and companies around the facility which will perhaps generate another 5,000 jobs. We believe these types of investments are going to have a long-term positive impact on economies and generate local jobs.

This is a local business as is difficult to transport these gases over long distances. That is why we make in the country where they are consumed. The volume of our production will be measured in tens of thousands of tonnes per day. These are world scale facilities that support world scale production.

Apart from the West Bengal project, have you identified any other areas where you are going to invest?

Another area where we're very active is providing hydrogen for refining. Currently, we have a close to $500-million facility in Cochin in Kerala operating for almost four years. It is supplying hydrogen to the BPCL refinery in Cochin. As India continues to grow and develop, we expect to see continued growth in refining capacity in India. That will require additional industrial gases such as hydrogen. That will be a specific area of interest for us. So, if we take the Dankuni coal gasification opportunity, we will invest in that facility as part of the creation of that entire project. For large investments, we will invest in parallel to our customer that is consuming the gases.

We are always interested in additional investments in India. We're supporting BPCL in production of Oxo alcohols. If they have other plans to build on their capabilities, either further expansion of the refinery, or making additional chemicals and petrochemicals from the refinery, we would be happy to increase our investments there to support them.

Do you see India as a place from where you can export to other markets?

Yes. In engineering activities, we are already executing projects from our Pune and Vadodara offices for locations all over the world. We are currently supporting projects in Indonesia, in the United States, as well as in Western Europe. So, we are exporting engineering talent. We also have a programme to significantly increase the equipment and material that we are purchasing from India for our projects around the world. This is where we feel that we have a very strong commitment to Make in India. We are also supporting growth of domestic manufacturing and fabrication in India to support our exports to other geographies.

At the moment, India, as a proportion of our global revenues, is relatively small. Its a $9-billion company. You know, our revenues from India are a small percentage of that. However, we are expecting double-digit growth, very consistent double-digit growth, over the coming years. I hope that with some major projects and investments such as coal gasification projects, India will become a much more significant component of Air Products' revenues.

Are similar large-scale coal gas projects already operational in India?

There aren't major coal gasification facilities in India. But we see that a lot of value can be added through development of domestic coal reserves and policy frameworks that have been put in place in the last few months around the changes in the way coal resources can be developed and promotion of coal gasification for utilising domestic coal.

Going forward, because a lot of technology is coming into play in manufacturing, what kind of changes can happen in manufacturing?

So, one of the things that Air Products has always supported and been involved in its entire history is supporting improvement in manufacturing performance, manufacturing efficiency, and so, as manufacturing becomes more sophisticated and new technologies are brought into manufacturing, we would expect industrial gases to not only continue to have a very strong part to play, but to have some very exciting growth opportunities.

@pb_pbjayan


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