Ion Exchange shifts focus to value addition

By Ramnath Subbu

MUMBAI, NOV. 17. The Mumbai-based Ion Exchange India (IEL) is into providing total water management solutions and its core business involves purifying water for drinking, treating water for process industries, removing pollutants from waste water, recycling and recovering water and valuable products for re-use and reducing water waste and pollution.

IEL today is among the few companies which offer total water solutions and has three decades of experience. Formed as a subsidiary of Permulit Company of the U.K. in 1964, it became a wholly Indian company in 1985 when Permulit divested its holding.

IEL has six divisions - standard systems, projects, chemicals, consumer products, waste water and international operations.

The company's units are spread across the country - resin manufacturing at Ankleshwar, Gujarat, and Ambernath, Maharashtra, packaged plants are assembled at Hosur, Tamil Nadu, domestic/institutional water purifiers at Verna, Goa, water treatment chemicals at Patancheru, Andhra Pradesh, and an export oriented assembly centre at Rabale, Maharashtra.

The company also has subsidiaries - Ion Exchange Specialty Chemicals which markets water treatment chemicals, and Total Water Management Services India, which offers consultancy in water management.

With an overriding dependence on process industries, the company bore the brunt of recessionary conditions. Mr. Rajesh Sharma, managing director, Ion Exchange (India), said ``A number of projects were announced about five years ago, but so many players have wound up and gone away like in the power sector where 100 projects were announced but only a handful have come to fruition. We have shifted our focus from heavy industries like power, petrochemicals refinery, which have really suffered and from where we were getting 50 per cent of our business".

Two years ago, the company slipped into the red with the generally sluggish industrial environment and its major user industries seeing a lull in activity.

It reported a loss of Rs. 4.68 crores in 2000-01 and a loss of Rs. 5.10 crores in 1999-2000. For the quarter ended September 2001, however, the company reported a loss of Rs. 15 lakhs and is confident of turning around for the full year 2001-02.

``We analysed our business and found we had not addressed the inefficiencies in the organisation effectively. Projects failed and payments were not being made in time. We suffered significant losses in projects in the period and the volume of business came down with the liquidity crunch," said Mr. Sharma.

So, the company has shifted focus and the contribution from projects is now down to 25 per cent. ``Consumer products business is around 15 per cent and we want to take it to 25 per cent in the next two years. We were a one product company four years back and today offer the largest range in the country," said Mr. Sharma.

IEL had developed a team to deliver much larger volume of business and has been cutting down on overheads. ``We realised the problems and analysed which markets are going to grow.

The company had talked about a lot of investment in water and waste water treatment but we were not present in public health at all. We started getting into this area selectively - only those projects which are internationally funded or means of finance have been arranged - the private sector, World Bank or Asian Development Bank - funded projects. We look at projects where there is value addition and overall addition," according to Mr. Sharma.

Mr. Sharma said public health department had been doing projects for 50 years but with conventional technology, ``but we have introduced technology to save time in construction, money and where the system is more efficient". One such project is in Chandranagar, West Bengal. IEL executed a project in one year instead of the estimated two years and project cost was at 50 per cent of envisaged costs.

IEL provides specialised treatment for problems like fluoride, iron, arsenic content in water. ``We are in specific states - sometimes through NGOs and the major problem is the guideline of giving a project to the lowest bidder. We should look at capability and we need to have a qualifying requirement like technology back-up or track record before awarding contracts. Unfortunately that does not happen and we end up with half baked projects. Only the bigger players like us or Dorr Oliver and Thermax can execute specialised projects".

The company has also ventured into the operations and maintenance (O&M) of water services where the water management of projects are outsourced. ``This is quite new to India and we are now handling four large projects in steel, power and heavy chemical business. There are 30 medium sized industries where we have to complete O&M. We depute our staff and monitor the quality of water for the customer allowing the customer to concentrate on his expertise," said Mr. Sharma.

Another foray has been packaged water although the company has steered clear of bottled water. Mr. Sharma said this was because the bottled water business was not environmentally friendly. ``It uses too much of plastic and there is a severe problem disposing of the containers. Although we had the technology for one litre bottles, we did not get into it. A more effective means is vending machines. We have already introduced one vending machine in Jaipur and soon in a suburb of Mumbai. It has already met with success and we plan to expand this all over the country. These will be used in public places and corporate offices.

Our important strengths are in industrial water treatment and re- usage of water. These will run parallel to bottled water business globally as there is less and less water, more contamination and more need for water".

In terms of bringing down costs, IEL has already gone in for reduction in multi-location of plants. ``We have already brought down our employee strength from 1,215 two years ago to around 900 now. Our operations have been rationalised," said Mr. Sharma.

The company is confident of turning around by the end of the year. ``In the first half we have reduced losses by more than Rs. 5 crores and we have accumulated losses of Rs. 90 lakhs in the first half. Next year onwards we should be on a fast growth path. Our USP is that we can handle the total water management. We have technologies to give solutions for total water," he said, adding, ``Companies specialise in industrial water treatment or waste water treatment, chemical treatment or industrial resins. But we have everything in our basket and can handle any problem related to water".

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