As the global market leader in chemicals and ingredients distribution, Brenntag is present at more than 580 locations in 73 countries worldwide. Despite the broad footprint in each of our four regions, EMEA (Europe, Middle East & Africa), North America, Latin America and Asia Pacific, Brenntag continues to look for growth opportunities in enhancing its resilient business model based on complete geographic coverage, a wide product and service portfolio and high diversification across suppliers, customers and industries. This continuous improvement process and growth mindset allows Brenntag to strengthen its value proposition and role as the strategic partner and service provider for manufacturers of industrial and specialty chemicals at the one end and end users at the other end of the value chain.
In 2018 Brenntag successfully acquired a majority stake in Raj Petro Specialities Pvt. Ltd. in India which distributes own-blended brands of petroleum-related products to a diverse range of industries in India and other countries in Asia Pacific, the Middle East and Africa. This acquisition allows Brenntag to make a significant step into the high-potential Indian market.
Raj Petro Specialities was a family-owned business that was founded back in 1942. With strategically important locations in Chennai and Silvassa as well as a number of warehouses, sites and sales offices across the country, it covers the entire Indian subcontinent. Raj Petro Specialities offers a strong market presence and a broad range of products and services spanning the full spectrum of petroleum specialty chemicals. The product offering complements the Brenntag product portfolio and is divided into three groups:
Specialty petroleum products – Products such as electrical transformer insulating oils for power and energy supply, liquid paraffins, petroleum jellies, gels for a variety of industries such as personal care, pharmaceuticals and food and nutrition, specialized waxes for rubber and other industries.
Process oils and industrial oils – Specifically formulated products such as mineral oils, process oils and formulated distillates which are used in a broad range of industries including rubber, ink, lubricants and textiles. Raj Petro Specialities offers these oils in a number of different grades and viscosities, always complying with international standards for product quality.
Raj also produces own brand formulations in its facilities in Chennai.
Lubricants are used in almost every customer industry, as industrial oils, greases, high-performance metalworking lubricants and premium automotive lubricants, as well as in foodsafe quality grades in the food and nutrition, pharmaceuticals and personal care segments. All these lubricants deliver higher productivity and ultimately lead to cost savings in the customers’ production processes.
While producing and distributing own-brand formulations, which are the leading brands in their segments supported by a strong in-house Product Innovation and Research & Development team, Raj also offers value-added services such as customized formulations, individual packaging and mixing and blending as per customer requirements and specifications.
The advantages for both Brenntag and Raj are manifold! On the one hand, Brenntag can expand its chemical distribution business by entering a high-growth, new and extremely large market in India. On the other, Raj is able to leverage Brenntag’s dense global network and commercial infrastructure to distribute its products also in other countries within the Brenntag regions Asia Pacific, EMEA, North America and Latin America.
Acquisition provides mutual benefits
Mehul U. Nanavati is one of the founding family members and is responsible for Raj’s international business: “The cooperation with Brenntag provides great opportunities for our company within India, within the Brenntag Asia Pacific region but also on an international level. We have clearly defined strategic goals. We aim to use not only Brenntag’s logistics network but also the sales organization and application experts to deeper engage with international key accounts and expand our business into countries that are new for us. On the other hand, Raj’s mixing and blending facilities are key for Brenntag. For example, with our state-ofthe- art tank farm strategically located at the Chennai harbour, Brenntag is able to significantly expand its product portfolio in the Indian market.”
Chemical distribution is a very granular business with market characteristics that differ from country to country. The Indian chemical distribution market also has its own market conditions, and knowledge of local requirements, customer and supplier behaviour and cultural differences is key to success in this country. The acquisition of Raj Petro Specialities has therefore been structured as a joint venture. Brenntag gained a majority stake in a first tranche and will gain the second tranche for the remaining minority stake after a period of five years. This enables Brenntag to benefit from our Indian colleagues’ extensive knowledge of local conditions and country-specific requirements. The Raj management, meanwhile, aims to scale the company up internationally by cooperating with a strategic partner like Brenntag.
Simply put, the combined network, capabilities and knowledge will lead to the expansion of our product and service offerings in this exciting country and beyond.
1. How would you describe Raj Petro Specialities’ position in the Indian chemicals market?
Harish: Raj has a very diversified portfolio, which gives the company a unique position in the market. Having started the business in the manufacturing and marketing of industrial oils, it later extended the portfolio to include other products such as petrolatum, industrial wax and automotive lubricants.
2. What are the main opportunities and challenges in this market?
Harish: India is one of the fastest growing economies and so has a direct correlation to the segment we operate in. The rural electrification plan by the Government of India, industrial growth, the growing need in the personal care industry for quality products, the improved performance of tyre manufacturers and their ability to export out of India provide significant growth opportunities.
With regards to challenges, I definitely see any challenge also as an opportunity! At the moment, we are focusing on Raj’s integration into the Brenntag Group. It is not widely known that also within India there are different cultures, languages and habits. Nevertheless, we can certainly benefit from economies of scale and will work on standardizing processes.
3. How can Raj benefit from a strategic partnership with Brenntag in this joint venture?
Harish: For Raj, Brenntag is a strong, globally active strategic partner. From Raj’s perspective, what would take the business to the next level is our ability to bring in international standards, business practices and access to global markets. We believe Brenntag brings this to the table and it is already evident in a short period that there is progress on both fronts.
Mehul U. Nanavati is Senior Director International Business.
With Brenntag’s help, he aims to expand Raj’s business into
other countries worldwide.