The 72-year-old company is making a strategic shift from just chemicals to water purification and products that promote health and wellness
Off the scenic Pune–Bangalore highway, in a quiet lane, sits a nondescript building. Once a marriage hall, it is now a laboratory that even runs a pilot scale biofuel manufacturing plant. The laboratory and the chief scientific officer, Murali Sastry, are pivotal to Tata Chemicals’ (TCL) new game plan, but you wouldn’t guess that from the façade of the building — it is even missing the Tata logo.
TCL sees new opportunities in segments like water purification, specialty chemicals that go into plastics and paints, customised fertilisers, biotechnology and nutraceuticals (products isolated from foods that are used for health and medicinal purposes). Secondly, most chemicals companies are perceived to be polluting; TCL wants to be seen as one that is sustainable and green.
So, the company set up the Innovation Centre in Pune in 2004 with two clear objectives: One, engage in cross-disciplinary work to develop new technologies that would drive new businesses; two, help get an image makeover.
“The group [at the Pune centre] has taken some creditable first steps in that direction. We are not saying it, the market is saying this,” notes TCL managing director R. Mukundan. He is referring to Tata Swach water filters, one of Sastry’s early successes. Launched in December 2009, the sea-green filters already sell 400,000 units in 15 states.
Sastry had joined the Innovation Centre soon after it was set up. After 14 years at the National Chemical Laboratory, he had decided to enter the corporate world to learn how technologies are taken to the market. “It was a culture shock. I knew nothing about how industry works,” he says. TCL’s managing directors before Mukundan — Prasad Menon and Homi Khusrokhan — helped him make the transition.
Periodic nudges from the finance department and the top management ensured that his team remained focussed on the market.
Swach was his first lesson in corporate R&D. A group at TCS had developed a prototype water purifier and wanted to reduce the cost of purification dramatically. R. Gopalakrishnan, a director of Tata Sons, had suggested to Sastry that he use nanotechnology for bacterial protection in it. This was back in 2006. The best Sastry had done by way of research commercialisation was to write a business plan with an IIM Ahmedabad graduate back in 2001 and win a prize at the institute’s annual contest Anveshan. He had a few patents to his credit, but nanotechnology for him, until then, was for high-end uses like cosmetics and drug delivery. Cost-effectiveness — a puny purification cost of 10 paise per litre in this case — had hardly been a consideration. But he took the bait and developed a nano-silver coating that allows Tata Swach to filter bacteria without the use of electricity; the raw material of the filter comes from waste — rice husk ash.
Swach provided the first proof of principle for Tata Chemicals (TCL). Today, a whole gamut of opportunities are opening up: Point-of-use purification, large community-use filters, desalination of seawater, distribution of water supply, industrial waste water treatment. As for Swach itself, “There’s a lot of improvement that can happen in this, including the material that is used for filtering,” says Sastry.
His team is testing attachments that can filter arsenic and fluoride, harmful minerals found in the ground water in some regions in the country. Swach sold in these regions will soon carry such attachments.
Sastry’s team now has a bunch of similar green, low-cost technologies that could shape TCL’s plan of having “new avenues to grow the business in a very different way”.
After water, nutraceuticals and functional foods (foods fortified with health-promoting additives) are next for TCL.
Through its work on oligosaccharides, a type of sugar polymer derived from micro-organisms, the lab has stumbled upon healthier substitutes for a few nutraceuticals which are today made by chemical processes and hence are not very healthy. One candidate for commercialisation is xylitol, which could be used as a zero-calorie sweetener in many foods, including chewing gums and dairy products. Whether the group company Tata Global Beverages, which announced a tie-up with PepsiCo in 2010, commercialises these nutraceuticals or whether TCL spins it out as a sub-business unit is a decision that will perhaps be taken once all the pilots are complete.
“We are also an ingredients company, so having novel ingredients that add health benefits to drinks or confectionaries, or special features to plastics, provide a good [business-to-business] case,” says Sastry.
“But TCL is a conscientious company and [the] Tatas have a track record,” he says. The Tatas consulted McKinsey again in 2009 to help reduce the carbon footprint across five of its most polluting companies and TCL was one of them. As a result TCL has done a company-wise carbon footprint and says it will reduce it by 20 percent by 2020, in line with the target for European companies.
(This story appears in the 29 July, 2011 issue of Forbes India. To visit our Archives, click here.)