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Executive Interviews: Interview with Venkatesh Sankaran on Managing Troubled Times
March 2009
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By Dr. Nagendra V Chowdary
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.
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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.
1.
Troubled Times Case Study
2. ICMR
Case Collection
3.
Case Study Volumes
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