Business Case Studies, Executive Interviews, Venkatesh Sankaran on Managing Troubled Times

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Executive Interviews: Interview with Venkatesh Sankaran on Managing Troubled Times
March 2009 - By Dr. Nagendra V Chowdary


Venkatesh Sankaran
Venkatesh Sankaran, Director and CFO, LANXESS India Private Limited


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  • Sir, how did your career path lead you to LANXESS?
    Out of the blue, when things were going very fine on the professional career front, I got an opportunity to join Bayer India Ltd., in July 2003 as Head of Controlling for their Chemical division. Within a year, the Chemical division got spun off globally into a new company called LANXESS in July 2004. I quickly decided to take on the challenge of moving into the current position as Director and Chief FinancialOfficer of LANXESS India Private Ltd., the Indian subsidiary of the German parent.

  • What is LANXESS into?
    Our name represents the focus of our efforts: The combination of the French word ‘lancer’ meaning to thrust forward, and the English word ‘success’.

    On July 1, 2004, a new company with many years of history was born. Bayer’s chemical division and parts of its polymers division were consolidated to form LANXESS, which was listed as an independent company on the Frankfurt stock exchange on January 31, 2005. Thus our roots go back to 1863, which is the year in which Bayer was founded.

    LANXESSis a leader in speciality chemicals with sales of ¤ 6.61 bn in 2007 and currently around 15000 employees in 21 countries. The company is represented at 44 production sites worldwide. The core business of LANXESS is the development, manufacture and sale of plastics, rubber, intermediates and speciality chemicals.

  • What are the industries that Lanxess caters to? Is it domestic or do you also export? Are you also looking at innovative and new business opportunities?
    We cater to a wide range of industries like rubber, Leather, Paint, Construction, Automotive, Pharmaceuticals, and Agrochemicals, to name a few. Our major business is in the domestic market, but we also cater to export business.

  • Globally, the US meltdown has affected finance, insurance, banking and service sectors. Yours is a chemical industry which does not fall into any of these categories. Yet, has this meltdown affected your company in any way even indirectly?
    Of course yes, LANXESS has also been affected due to the global downturn. We have announced some corrective measures by putting off some investment projects given the decline in demand for chemical products which we are seeing throughout the world. In addition this will ensure the necessary financial flexibility for the difficult fiscal year 2009. LANXESS also decided on temporary production cutbacks and plant shutdowns over Christmas and into January 2009.

  • In the US, the government has announced a $750 bn bail out package for these industries. Certain other industry specific bailout plans such as $15 bn for the auto industry are being considered. Similarly, the UK, France, China, Japan etc., have announced bailout plans or stimulus packages. In India, our own government has announced a Rs.20,000 cr stimulus package recently. RBI has similarly cut the CRR and repo rate which has been followed up by the public sector and private sector banks by reducing their prime lending rate. Do you think these steps announced by the government and banks so far are adequate to stimulate growth?
    The government’s stimulus package of Rs. 20,000 cr is unlikely to have the desired effect on the economy as its too little, considering the enormity of the problem. The reduction in interest rates too are not likely to create any impact, as banks, companies and people have to some extent become risk averse. Most of them are following a wait and watch approach. In a situation where job losses and pay cuts are rampant, would somebody take up a loan if the interest rate is dropped by 0.5% - 1%. When a company is not able to assess their future sales plan, then why would they expand capacities? That’s precisely the reality today. Thus Indian government taking some measures would not help, unless the global situation improves. So currently it’s not the time to build assets, but to conserve cash. We hope and pray that the situation would not continue for long and some radical changes would happen for the good.

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