Imran Qureshi is the Chief Executive Officer of Descon Oxychem Limited. Prior to this appointment, he was working as the Managing Director of J&P Coats Pakistan for a period of two years till April 2018. Having 20 years’ experience in the chemicals industry, Mr. Qureshi has had stints with AkzoNobel Coatings as Business Manager Performance Coatings and worked as a Business Manager with ICI Paints from February 2011 to December 2014. He has a bachelor’s degree in engineering from NED University, Karachi, and completed his MBA from Southeastern University in Washington D.C, USA. He also holds a diploma in Strategic Leadership from Said Business School, University of Oxford, UK.

Following are the edited excerpts of a conversation BR Research had with Mr. Qureshi after the COVID-related restrictions were lifted in the country:

BR Research: Let us begin with your key product, hydrogen peroxide. The last time we met, you mentioned that DOL was expanding its capacity by 25 percent to about 42,000 tons, which was expected to come about in the first quarter of 2020. What is the status?

Imran Qureshi: Descon has successfully increased the current plant capacity by 25 percent to about 42,000 tons per annum. The plant is up and running since September 2020 after reaching completion and we are glad to inform that the project was completed on time and within the approved budget

BRR: What kind of tariff protection do you get from the government regarding the competition from imports?

IQ: The government of Pakistan offers minimum tariff protection to the domestic industry of Pakistan. Currently, our sector is protected by 11 percent domestic duty, 5 percent regulatory duty, and 2 percent additional customs duty. This type of protection is generally applicable to all the domestic industries of Pakistan and complies with the general standards prevailing in the country.

We face issues relating to the dumping of Hydrogen Peroxide. With the changed demand supply dynamics in the region, manufacturers from Bangladesh increased dumping of Hydrogen Peroxide into Pakistan. To counter this Pakistan’s Hydrogen Peroxide industry was able to get the dumping duty on Bangladesh increased by effectively pursuing a Change in Circumstances Review at the National Tariff Commission (NTC). Dumping remains an ongoing process for our sector and resultantly we continue to pursue NTC on this issue.

BRR: Your prices are determined by global prices. How have global prices of hydrogen peroxide performed over the last two years and especially since the global coronavirus pandemic? What other factors go into consideration when determining local prices of the chemical?

IQ: As you know Hydrogen Peroxide is a commodity chemical, because of which our competition is not only manufacturers in Pakistan but also Hydrogen Peroxide manufacturers in the region. As a result, our domestic price is not only impacted by the cost structures in the country but also by the prices which regional manufacturers are offering in Pakistan. Because of COVID-19 and low economic activity in the region, oversupply is being witnessed in many countries. Companies have resorted to dumping products into Pakistan with Bangladesh taking the lead in our sector. It is particularly important for the government of Pakistan to take proactive measures to ensure that level playing field is available to the domestic industry of Pakistan not only at dumping side but also on tariffs, customs and FBR end. For Pakistan’s industry, it is an ongoing battle to pursue regulators to ensure level playing field and press for the removal of anomalies in policies.

BRR: 80 percent of the use of H2O2 is in the textile sector apparently. How has the decline in textile exports and the sector's performance affected DOL's revenues and margins?

IQ: Hydrogen Peroxide sale in Pakistan is indeed significantly dependent on textile industry. Luckily for us the textile industry in Pakistan - affected by COVID-19 in March, April, and May - has bounced back quickly. The demand is quite strong from the textile sector.

There are two major reasons behind the textile industry bouncing back quickly. The first is that regional textile exporters like India and China have been adversely impacted by COVID-19 and Pakistan has not been affected with the same magnitude. The second reason is that Pakistan textile exports has a large share of home textiles (towels, bed linens etc.) and during the COVID-19 crisis these products were more linked to hygiene, which did not affect its export. The major brunt on the textile side is being seen on the fashion side. It is safe to say that the textile exports of Pakistan have made a quick rebound and will remain intact.

BRR: The coming winters are expected to see a massive gas shortage. Given that the share of gas in your cost is around 25-30 percent, how do you see the situation unraveling?

IQ: For the production of Hydrogen Peroxide, natural gas or RNLG is a feedstock. Any gas disruption results in the closure of our manufacturing facility because we do not have any other option but gas to produce Hydrogen Peroxide. Since Hydrogen Peroxide’s availability in Pakistan is critical to support the exports of the country, we have highlighted this to the government. We expect that Hydrogen Peroxide manufacturers would not be put to winter gas load management so to ensure that the critical exports are not compromised.

BRR: Coming to COVID-19, tell us how the pandemic affected DOL's operations in terms of operations, demand, and supply chain disruptions? Did the imports decline, and if yes did it help you? And what hat has been DOL's strategy to combat the effects of the pandemic?

IQ: Just like other industries, the textile industry was also shut down because of lockdown. Descon diversified and took the initiative of launching a disinfectant by the name of Sanidol. Besides the commercial launch of Sanidol, Descon made significant donations of this disinfectant to the government of Pakistan for hospitals, police, and various other government departments who were at the forefront of battling the pandemic. It is also pertinent to note that Sanidol was made available at the time of crisis at a very reasonable cost as compared to other disinfectants in Pakistan and is one of the most effective products for the control of COVID-19.

The launch of a disinfectant was a good decision by the company not only for its survival but also as a service to the nation in the time of need in the sense that we concentrated all our efforts to ensure that it is easily available in the markets. In a short period, we saw most of the major industrial companies, multinationals, banks, households, etc. become our valued customers.

BRR: What are your plans for 2021 and beyond?

IQ: Descon has just finalized its strategy. The strategy approved by the board of directors sees transforming of DOL from a leading hydrogen peroxide company of Pakistan not only in the domestic market but also establishing a footprint in the regional markets. We will work by diversifying the product offering and entering into newer segments such as the food and beverage sector where Hydrogen Peroxide can be used for water treatment and disinfection.