In conversation with Ashwin Muthiah, Founder & Chairman, AM International
"A competitive edge and consolidation will drive sustainable businesses in 2023"
As we begin a new year, Ashwin Muthiah, Founder & Chairman, AM International, shares his thoughts on the changing business environment. He explains how the US$ 2 billion, Singapore-headquartered, diversified multinational entity he helms is moving forward with a focus on ESG to create a sustainable foundation for future growth.
Here are edited excerpts:
Our priorities are procurement of environment-friendly raw materials, investing in technology for energy efficiency, and minimising dependence on fossil fuels. We are committed to investing deeply in people, nurturing the next generation, and inculcating a multicultural and gender-inclusive work environment.
1. It has been nearly three years since COVID-19. How do you see AM International companies conducting business in the new year?
AM: I see the new year as a time when we are ready to face competition, look towards strategic consolidation and conduct ourselves with more compassion and care. COVID-19 is an evolving challenge and businesses are currently waiting and watching, alongside ensuring business continuity. Encouragingly, business activities have returned to their pre-pandemic levels and even witnessed acceleration.
Today, we have better appreciation about the need to prepare for both challenges and opportunities. COVID-19 has taught us to bring urgency and clarity in embracing digital technologies at work and tackling uncertainties. This in turn has helped improve our business efficiencies, which would otherwise have taken longer to understand and benefit from.
The lessons are helping us mitigate economic challenges that are manifesting much more than the virus itself. With increasing inflation and interest rates, and global supply chain disruptions in an era of geopolitical uncertainty, our focus on ensuring sectoral balance across our operative businesses has been a sound strategy. I see increased competition in some of our businesses due to the uneven movement of global raw material prices. Additionally, there are increased chances of cheap raw material availability at unsustainable prices from neighbouring countries causing a demand imbalance for domestic players.
Our practice of disciplined leverage, being conscious of operational efficiencies and moving towards green raw material sourcing has helped our companies remain competitive. As a team we are committed to being prudent to drive results consistently. Our businesses recorded some of the best performances this year. I look forward to 2023 with optimism and implementing our learnings from the past to be future ready in a sustainable and predictable manner. Speed, flexibility and agility will be key to success.
"Any business expansion has associated risks, but the key is to expand with a measured approach and make it sustainable"
2. Last year, Manali Petrochemicals (MPL) acquired UK-based Penn Globe. What is AM International’s approach to inorganic growth?
AM: With the acquisition of Penn Globe, UK, our focus is on expanding our footprint in the overseas market and leveraging it to introduce green technologies to MPL customers in India and Asia. It is a high-end specialty chemicals company with niche skillsets in environment-friendly product development.
Any business expansion has associated risks, but the key is to expand with a measured approach and make it sustainable. Over the years, our acquisition strategy has been cemented in controlled risk-taking; we will continue to evaluate opportunistic M&A synergies that add value to our strategy of margin improvement through premium product offerings.
Today, we see synergies not only in the petrochemicals sector but also applications in the food and fertilizer industry. Going forward, we want to invest in technology that we can leverage in Europe and new geographies like the US and Asia.
Inorganic growth also brings international business understanding and builds a multicultural talent ecosystem. Cross-learning can benefit our companies across the UK, Singapore and India. We aim to get the best of both worlds. It reinforces our aim of building AM International as a multinational, family-oriented, professionally-driven entity and creates new pathways for our expansion to other continents.
3. Amid geopolitical uncertainty, how do you view the new world order? What are your business priorities in this environment?
AM: In the current fragile macroeconomic environment, addressing the impact of global energy and raw material price fluctuations is important. We're investing in improving efficiencies to reduce power consumption. Slow global growth, dual challenges of inflation and recession, and commodity price volatility are key macro-economic trends that needs to be tackled.
Amid existing geopolitical challenges, India is a good place to be in. With its origin in India, most AM International businesses are doing well, and we appreciate the Indian government’s policies. The India opportunity is significant. We remain committed to India’s socio-economic transformation goals. It’s where we have the best knowledge, know how to do business and are comfortable with our large investments. Outside India, we are looking at tapping strategic M&As to add value to our global operations. We look forward to increasing our footprint in Europe.
We are harnessing technology to reduce the use of fossil fuels as raw material inputs. For example, we are introducing technology to trap CO2 and reuse it as raw material. Essentially, we're focusing on aspects we can control to address what we can't predict.
Overall, our priorities are procurement of environment-friendly raw materials, investing in technology for energy efficiency, and minimising dependence on fossil fuels. We are committed to investing deeply in people, nurturing the next generation, and inculcating a multicultural and gender-inclusive work environment.
The floating solar power plant at the SPIC plant in Tuticorin, India
"Focusing on ESG is about value creation by optimising environmental resources and capital across businesses. The key to a sustainable future lies in harnessing green and clean technologies."
4. How are AM International companies taking the lead on ESG initiatives?
AM: Focusing on ESG is about value creation by optimising environmental resources and capital across businesses. The key to a sustainable future lies in harnessing green and clean technologies.
Our focus will continue to be on introducing new-age green and sustainable technologies to strengthen our foray into renewable energy. Our first floating solar plant under Greenam Energy, focuses on sustainable clean technologies and generating clean energy at our manufacturing plants. It will supply solar power for our flagship company that manufactures fertilizers, Southern Petrochemical Industries Corporation Ltd. (SPIC). The surplus will be sold to state power utilities.
Similarly, our partnership with Econic Technologies, UK to implement their catalyst technology will allow for substituting fossil-based raw materials with captured waste CO2 in the production of polyols. This green initiative is in line with our vision of being a responsible corporate entity.
5. What about the social aspect of ESG?
AM: I have always believed that a business cannot operate in isolation. It can only succeed by being inclusive to benefit the broader society and its immediate communities. This is the vision and mission of our group's corporate social responsibility arm, AM Foundation. We seek to create an on-ground measurable impact that acts as a force multiplier for broad-based and equitable societal change.
At AM Foundation, we will continue to focus on three priority areas: primary healthcare, sanitation & drinking water, and well-being.
There are significant challenges in operationalising primary healthcare delivery in rural India. AM Foundation seeks to address these challenges through initiatives like the “Happy Periods” project, aimed at women’s health and hygiene, and "Dr Mobile”, a medical care vehicle project. The foundation also creates awareness and delivers healthcare services at the doorstep in rural areas.
Our efforts are aimed at contributing to the Government of India’s critical mission of achieving universal health coverage by 2030. We recognise that collaboration and commitment are the key to realising this vision.