Formula for success
Aloke Lohia began with the advantage of coming from a business family, but it was hard work that built Indorama Ventures into a global powerhouse.
published : 2 Nov 2020 at 12:30
newspaper section: Asia focus
writer: Nareerat Wiriyapong
As the Group CEO of Indorama Ventures Plc (IVL), the Bangkok-based chemical company whose business spans 33 countries around the globe, Aloke Lohia travels frequently every year to visit 120 operating sites, with pleasure trips tacked on when he has time. While the protracted Covid-19 pandemic has brought that routine to a complete stop, the Indian-born business veteran says it doesn't bother him.
"My last trip before Covid was the end of February to Mumbai for the wedding of a friend. Since then, no travel," he tells Asia Focus at his Bangkok office in late August. "Actually, I enjoy it," he says with a smile. "I can pay attention to myself. I can pay attention to my family. And I can work from home and from the office. I can catch up on reading.
"Now due to Covid, I have more time to devote to important things, without distractions -- for health, work, building IVL. I don't have to travel a lot like in the past, not at all."
Just a few days before we spoke, his only daughter had given birth to her second son. "I just became a grandfather last week. It's a bunch of joy for the whole family," he says. "Now I have more time with my grandsons, family, and the IVL team.
"Several months without any travel has made me so happy and relaxed. I've seen the world already. I don't have a desire to go to this country or that country. I'm quite happy to sit, enjoy Thailand, enjoy working and the family."
From a business standpoint, the 61-year-old executive acknowledges that travelling and being on the ground in places where IVL operates gives him insights into how the company is doing, especially in challenging times.
"I'm not regretting that I'm not going anywhere," he says. "But what I'm regretting is that now we have a lot of transformations going on at IVL and I have to be with my people, so when I travel again, I will go to all the factories and meet all the people."
Founded in 1995, IVL is the world's largest producer of polyethylene terephthalate (PET) polymers by capacity with revenue of US$11.4 billion, employing about 25,000 people worldwide. Mr Lohia himself, with a net worth of $1.3 billion as of Oct 27, ranks 26th on the Thailand's 50 Richest 2020 list compiled by Forbes magazine.
In early February, SET-listed IVL announced a major transformation drive for 2020-23, comprising five strategic pillars. The first pillar, Cost Transformation, aims to reduce costs by 2023 by $350 million (11 billion baht). Asset Full Potential, the second pillar, envisions a more systematic, standardised approach to operating assets, with more reliability and better productivity.
The third pillar, he says, is Adjacent Growth, meaning the pursuit of organic and other forms of growth in attractive adjacent fields. The fourth pillar is Recycling for Sustainability, and the fifth is Leadership Development. "We have already started empowering our team, delegating, making them accountable. Therefore, I'm very happy with where we are," says Mr Lohia.
Compared to the previous crises IVL has gone through, he says, Covid is "the most unusual one because we've never seen such a global crisis like this".
During the Asian financial crisis in 1997-88, IVL was still a small company. "We were an exporter. By exporting products around the world, we managed through the crisis. Even during the crisis, we actually grew. We bought Siam Polyester in Nakhon Pathom. Now it's called IPI (Indorama Polyester Industries).
"Then the 2008 global financial crisis -- most people call it the Hamburger crisis -- was a western crisis and caused no major impact on IVL. At that time, the company made a billion-dollar acquisition.
"Those two were monetary crises. This one is a human crisis. People are getting sick, people are dying. Each of us, I'm sure, has somebody who is impacted by Covid, a family member or friend, somebody in hospital. We are unable to go and see our relatives.
"This one is not only about job security. The mental crisis is much bigger. Yes, many people have job problems. That's what we also saw in 1997 and 2008, but today even the people who are making money, people who are secure, there is some mental crisis, a tension and stress.
"The point is if you have a loved one somewhere, you can go and help. You cannot be there physically. This crisis is more human. Therefore, I call it very unusual."
The youngest of three sons, Mr Lohia was sent by his father from Indonesia to Thailand to pursue his own business. One of his brothers was sent to India where the whole family was born, and another stayed in Indonesia.
"He had three sons and he did not need all the three sons in one country," explains Mr Lohia. "I think I'm very lucky in that sense. I've got the best country."
Before moving to Indonesia in the late 1960s, the Lohia family lived in Thailand for 10 years. His father started a lace business in the Thon Buri district of Bangkok in 1955. The business is still in operation but now under the Lohia family.
"The whole family at one point migrated to Indonesia. The reason, I think, was for business, dreams and opportunities," says Mr Lohia. "Indians are very adaptable. They like challenges and they like to find opportunities. My father migrated to Indonesia as he found there were opportunities there for our family."
At the age of 30, Mr Lohia was given a $30-million project and his father gave him $6 million to launch his business career. "I needed to go and meet all the bankers. I decided by myself what business to set up," he recalls. "My father gave me a broad mandate because my other two brothers were in the textile business. He told me not to do textiles. Maybe chemicals or something, but not textiles."
That's one way to mitigate risks, he points out. "Don't put all your eggs in one basket by not putting everybody in one country and not everybody in one business. It was about how to mitigate risk.
"So when you look at IVL today, it's the same thing. We do not depend on one business 100%. Yes, we have core businesses but the core business is getting smaller because we are growing other businesses."
His first business in Thailand -- turning corncobs into furfuryl alcohol -- was supported by the Industrial Finance Corporation of Thailand, the German development bank DEG and a Japanese partner.
"That one wasn't fantastic (as a business) but it was fantastic for me personally," he says. "It was the first one in Thailand at that time. The factory is still there in Saraburi and I go once a year at least."
Armed with valuable experience from his initial venture, Mr Lohia set out to build other businesses that would have a brighter future. That was when IVL was started. "When we set up in 1995, we were the first company in Southeast Asia [making PET polymers]. Nobody else produced that," he says.
"That's the Lohias. We calculate the risks. We want to do something that is different from others. So the IVL business model is quite unique. You cannot find another company with this business model. You cannot find another Thai company that operates in 33 countries and 120 locations.
"Of course, your first project is the most difficult, especially when it's not making money. We lost money in the first two years so you lose your credibility. People doubt you. But up to now, the family has never undertaken financial restructuring and IVL never has either, because we have a good team, a good business, a good business model and hard-working people.
"Back in 1997 when the baht crashed, we were making money in dollars not baht. It was fun, it's been a memorable journey that is still continuing," he says.
Looking at the challenges facing the business world and the economy today, Mr Lohia believes IVL is well positioned to weather the storm. The main reason is that it is a supplier of a diverse range of products used in countless manufacturing applications.
"What I think is important is that the money part is okay as long as you have a business that is in demand, that is important," he says. "Seventy-seven percent of our demand is normal. Nine percent will see a V-shaped recovery, and about 10% will see a U-shaped recovery, but 80% of our demand is resilient."
In 2019, IVL reported a net profit of 4.27 billion baht on total revenue of 354.69 billion, compared with a net profit of 25.41 billion baht in the previous year, on revenue of 349.12 billion.
All of the businesses IVL has today are seeing growth, ranging from 2.5% to 6% with an average of 4.5%, he adds. "One of the very heartening things in the last 6-7 months is how at IVL we came together, and we managed after Covid came, for the 120 sites and to meet customer demand."
With people from 70 nationalities working all over the world, IVL is highly diversified. "We are a manufacturing company and we also do commercial. We are also able to keep the supply chain going and we are meeting all the customers' demands. Therefore, we have been growing our volumes."
Having lived in Thailand for more than 30 years, Mr Lohia calls it home. "Thailand has been good for me," he says. "Thailand's policy is very supportive to business and there is freedom to operate. You bring in your money, build your business, then you make the earnings. You can build all of that without interruption."
LEARNING AND LEISURE
Along the back wall of his office in central Bangkok, there are many different kinds of books that Mr Lohia spends his free time reading. "There are leadership books, books about transformation," he says, gesturing to the shelves behind his desk.
"Reading at first was to understand how to build a long-term business, just to understand how other people navigated," he explains. "Now it's about keeping up to date. The world has become so small. And IVL is in most parts of the world. Therefore, you have to to keep up with all the challenges, like regulatory challenges, sustainability challenges, leadership challenges, and succession challenges.
"One book that I understand a lot is Outliers by Malcolm Gladwell. And Good to Great, a management book by Jim Collins, is about companies that failed and companies that survived, not only survived only but succeeded," he says.
In Good to Great, one chapter compares good companies and companies that did not do well -- old companies of 50 years or more, not new ones. "It tries to understand why companies fail, and Jim Collins' research showed that the companies that failed did not have a charismatic leader."
All the companies that succeeded have some common themes in terms of leadership, the book notes. And while leaders are expected to have charisma, people who are introverted, humble and hard working can also shine -- especially if they put in the work.
"I think my favourite book is Outliers. It is about hard work. It says that if you want to become a number one tennis player, you have to work 10,000 hours to become the best tennis player. For anything, if you want to be number one, you have to work for 10,000 hours. It's the 10,000-rule -- it makes you an expert at what you do, and you only become an expert if you work that hard," he points out.
"If you are born in a business family, you have opportunity. It doesn't mean you will become successful, but if you have opportunity and you do the hard work then you can succeed.
"There are so many people who do hard work and they do fantastic work, but if they don't have the opportunity, they don't have the ecosystem, they can only go so far. It's a combination of being in the right place at the right time and then working your ass off."
Away from work, Mr Lohia likes to make the most of his leisure time as well, and a favourite getaway is Monte Carlo, located on the French Riviera. "Very few people know this but in mid-2005, after we listed [IVL's predecessor Indorama Polymers on the Stock Exchange of Thailand] and I was happy, I did a lot of my strategic planning sitting in a hotel room in Monte Carlo. That was 15 years ago.
"It was a nice atmosphere, good food and good people. I have a few friends there and it's quiet. I worked on my strategy alone, by myself in a hotel room.
"I have a car over there so from Monte Carlo, you can drive along the Mediterranean Sea in the South of France. For me personally, it must have been 10 days each time. Because we have business in Europe, on some of my trips I would go and spend time in Monte Carlo, thinking about the planning, thinking about what I really should do."
For exercise, Mr Lohia plays golf and walks 50 kilometres a week. "I started walking and swimming in June 2019 when I got fed up with my high blood sugar level. I have lowered my weight by 11 kilos since then," he says.
"If I'm thinking about what I miss, it is my walks in Europe because the weather there is very nice with a cool breeze and you can walk around lakes. When I was in Paris, in a day I would walk as much as 20 kilometres because the weather is nice when you walk along the river. You can do that anywhere in Europe, like London, Paris or Milan."
As the interview comes to an end, I ask Mr Lohia about what he wants to tell his children about what he learned from his father. "Trust. Don't lose your credibility," he replies. "As long as you are trustworthy, you can go through thick and thin. People will support you.
"And obviously (be a) hard worker. You cannot do anything without hard work. But hard work is a given for anyone."