New Delhi: A little over a year ago, two formidable global competitors – DSM Engineering Materials and Lanxess High Performance Materials, were combined to form Envalior. And, India had an influence in the deal. “It was one of the huge attractions for the transaction to happen and consolidating these two businesses.” Calum MacLean, CEO, Envalior, tells ETAuto.
India, which is growing the fastest among markets that Envalior is present in, will see new investments from the German major in one to two years, which could be “20 million orders of magnitude of euros”. Though Envalior India, with its three production plants, has capacity to serve the market for the next two to three years, the local team is drawing details of the investment plan.”The investment to get ready for additional capacity needs to be probably reviewed and approved in the next 12 months,” says MacLean.
The investment will be part of a five year global plan of Envalior. “We have a strategy, we have a five year plan for the region, we have a very close working relationship with all our end users and our customers, particularly in the automotive side. So we’re working with them to develop new products and grow alongside them,” adds MacLean.
Electrification megatrend drives demand
Envalior specialises in performance materials, and supplies to sectors such as automotive, consumer goods, electronics and electrical goods. Around half of the company’s revenue, pegged at approximately Euro 4 billion, comes from the automotive sector.
The almost evergreen trend of lightweighting is also a driver for the adoption of lightweight materials like engineered plastic in the industry. The electrification megatrend has added more weight to that trend, and provides more opportunities to tap for Envalior and its peers. “I think so because it’s an opportunity at the same time to look at the cost, a chance to look at the performance. You know, batteries are heavy. And heavy means high fuel consumption,” says MacLean.
A global R&D and engineering team of around 400 members, with around 15 of them in India, are developing new material solutions for Envalior to tap the demand for more advanced material solutions And, the growing demand trend of more innovative solutions is one reason that Envalior says it did not reduce any headcount in the two engineering teams of Lanxess High Performance Materials and DSM Engineering Materials.
“We had to refocus those people onto different things. So there was very little consolidation of those two, because we recognise that going forward in the next three to five years there, as I like to say, particularly when I’m speaking to R&D people, never has there been such an important time for this community in this function, because they need to add so much value going forward,” says MacLean.
Envalior’s product portfolio and applications are expected to change more significantly in the next five years than ever before because of the new areas and applications that are going into. “So we might supply the same amount of material into an ICE vehicle as we do into an electric vehicle, but it might have completely different applications,” says MacLean.
Sustainability: a ‘licence to operate’
In addition to lightweighting, advanced materials could also contribute to sustainability and circular economy significantly, which MacLean says are “no longer nice to have” but “are a licence to operate”. “Polyamides are a very well positioned product with respect to plastics and with respect to high performance plastics, when you come to talk about sustainability, circular economy,” says MacLean. A key reason for that, he says, is because they are highly recoverable and recyclable.
50% of Envalior’s products go into the automotive sector in “one way or another”, and with a growing focus on recyclability in the sector there could be new avenues for the company to tap.
The CEO’s top priority
Like in any inorganic move, Envalior has embarked on its own journey to merge the Lanxess High Performance Materials and DSM Engineering Materials teams well enough to tap the full opportunities in the global advanced materials market. For instance, the engineering plastics market is expected to grow from USD 107.2 billion in 2022, to USD 140.9 billion by 2027, according to Markets research firm Markets and Markets,
Understandably then, MacLean’s “priority today is to integrate these businesses, to run them efficiently to capture the synergies to load the assets to get the best technology and innovation in the market and to continue that evolution”.
And, since all of Envalior’s focus is on high performance materials, Envalior may make some inorganic growth move “where we see opportunities to expand within that area, within materials, within the markets that we supply”.
