“Water scarcity will bring many problems for developing markets like Pakistan”
Mujtaba Rahim, holding a master’s degree in chemistry, has had a long association with Archroma, that initially went by the name Sandoz. Through mergers and acquisitions, Sandoz transformed as Clariant and later, Archroma. He joined Sandoz as a Chemist in 1982, and through the years climbed the organizational ladders.
In addition to his expertise in this field, he has achieved global recognition in corporate management, environment, health and safety and CSR. Mujtaba also stands as the President of Swiss Business Council that aims to promote trade relations between Pakistan and Switzerland. Excerpts from his interview with BR Research follow:
BRR: Can you first give us some background about Archroma, and its operations in Pakistan.
Mujtaba Rahim: Archroma is a comparatively young but fast progressing company that came into existence in 2013. It has a rich heritage that traces back to more than 130 years. Founded in 1886 as Kern & Sandoz, it produced textile dyes. In 1995 Clariant was formed as supplement from Sandoz. In 1997, specialty chemicals from Hoechst were acquired. In 2015 it acquired textile business of BASF and in 2018 completed acquisition of M. Dohmen.
Archroma is a global specialty chemicals company and has three businesses - Brand and Performance Textile Specialties, Packaging and Paper Specialties and Coatings, Adhesives and Sealants. It is headquartered in Reinach, Switzerland and operates in 35 countries with 26 production facilities and has 3000 employees.
The company has a presence of more than five decades in Pakistan. Its two production sites at Jamshoro and Landhi, operate with international standard. We also have an Archroma Center of Excellence (ACE) locally, a state-of-the-art R&D lab which provides world class sustainable solutions and technical services to the textile industry by enhancing their product value through our innovative systems and solutions. Our testing and training facilities at the ACE are supporting to develop human resource for textile industry and also facilitating to increase exports and improve competitiveness of Pakistani exporters.
BRR: What is Archroma’s product portfolio and client base like? Are you present in the domestic and international market, both?
MR: We have a highly extended client base. Brand and Performance Textile Specialties is our largest segment aligned with Pakistan's big and expanded textile industry. From raw cotton fiber to over-the-counter clothing, our textile specialties play a key role with chemicals for pretreatment, dyeing, printing and finishing of textiles. Archroma innovations and technologies enhance the value of apparel in applications as diverse as high fashion, home textiles and technical textiles.
Archroma's Paper Solutions provides expertise in management of whiteness, coloration, special coatings and strength for all kind of papers. Our Emulsion products have a wide range of applications in paints, adhesives, construction, textile, leather and paper industries.
In the context of the COVID-19 pandemic, our solutions for medical and hygiene textiles help manufacturers of specialized Personal Protective Equipment to support the fight against the virus, and its impact on communities.
Our client base is highly diversified. We cater to textile mills, paper mills and paint industry. We also cater to some specialized vendors associated with textiles. While the local textile customers benefit in their exports through our quality products, Archroma itself also exports dyes and chemicals to countries in Asia, Africa, Europe & Latin America and generate foreign exchange, for example aniline-free (below limits of detection according to industry standards) indigo dye to the denim industry around the world.
BRR: What is your perception of the market? Is it saturated?
MR: I think that no market can be called saturated. There is always a room for new avenues. The Pakistani market has great potential as it is growing at a fast speed. The domestic growth has been phenomenal in spite of the challenges faced. We see many promising new players in the market doing considerably well even in their beginning years. Rising middle income group and change in spending habits is also another reason for market expansion in apparel brands, home decoration and furnishing enhancing the paints industry.
BRR: Your company links to a lot of industries. Amongst the three major line of businesses, which is the highest contributor to revenue?
MR: As I mentioned, textile industry is our major contributor to revenue. Textile is also a big contributor to the national exchequer and if we add the secondary and tertiary vendors in textiles, I would say that the ratio goes even higher.
BRR: What are the industry dynamics and opportunities as well as some of the issues and challenges?
MR: The textile industry, being a well-established sector, is becoming highly automated. It partners with global players and is speeding up its operations with sophisticated machinery and processes which gives better output in lesser time and resources. It has realized that to remain competitive, adapting to technology is a must. On the other hand, Pakistani businessmen participate in international fairs and exhibitions and improve on the lessons learnt through networking. Majority of our industry has adequate quality certifications and are also compliant to international regulations on water and natural resource saving.
As far as problems are concerned, I would say that sustainability should now be taken more seriously as environmentalists demand stricter adherence to regulatory checks. Water scarcity will bring many problems for developing markets, especially Pakistan. In my view textile mills should work on saving water consumption as their top priority. "The Archroma Way" systems and solutions are specially designed to address these issues.
BRR: Chemicals is known to be an energy-intensive industry; do you have any suggestions to improve the current situation?
MR: At our Jamshoro and Landhi sites, we have well defined processes to reduce energy consumption, water saving and waste management with special emphasis on reducing carbon footprint with ambitious reduction plans. I think that each business must, first of all realize the big impact of the issue of energy, and then should allocate projects on energy saving.
BRR: Does your company rely heavily on imports for raw material procurement? How do you cushion yourself against currency fluctuation, especially if demand and/or supply of raw material is cyclical?
MR: Yes, we do have a sizeable imports inventory. It does, however, create issues in supply chain due to unavailability from sources e.g. any force majeure, shipping delays etc. We have to be on our toes all the time to ensure uninterrupted supply chain. Local manufacturing for basic chemicals is still in infancy stage. We will purchase locally if the chemicals meet our required standards.
Archroma is already producing textile chemicals locally to substitute imports. During the recent exchange rate fluctuation, local products remained a better option for the industry.
BRR: How is Archroma's vision is aligned to current market scenario? And how do you see industry dynamics- demand and supply changing gears in the post-Covid world?
MR: The three principles for our approach to do business- safety, efficiency and enhancement, all comply with the current market conditions. Safety is now getting utmost priority from all quarters. Emphasis is now being given on aligning commercial activities with safety regulations. Similarly, we need to adopt process that minimize resources and maximize productivity in order to save depleting strength of our planet, more importantly, through sustainable innovation; it has to be an ongoing process.
We had never come across a lockdown situation in our lives. So, our industry was unaware how to make adjustments but we adapted fast to the changing scenarios. During lockdown, in addition to the travails of keeping the businesses afloat, the industry also contemplated how to re-model internal costing systems with supply chains. Businesses diversified themselves, for example, textile industry took fast action towards designing, producing and marketing medical textiles e.g. face masks, protective gears, and Pakistan is now able to seize export markets of PPEs.
The Pakistani textile market is experiencing tough competition against global players. If we wish to remain competitive, we must act with an open mind and I think that Archroma's way of doing business through sustainability is an answer to growth and moving in the direction of value addition.