Linde India’s Lifeline

AS THE SECOND WAVE of Covid caught the country unawares and triggered a massive shortage of medical oxygen, industrial and medical gases manufacturer Linde India’s newly appointed managing director, Abhijit Banerjee, marshalled all the resources at his command to scale up production. At a time when the only difference between life and death was a few milligrams of oxygen, Banerjee ensured whatever oxygen was available with the company in any part of the country was efficiently mobilised and delivered to those in need. During the first wave of Covid, the company supplied around 300 tonnes of liquid oxygen per day across India. The cylinder business grew 25% in volume and 32% in revenue terms by year-end. During the second wave of Covid, liquid medical oxygen supply was ramped up to 1,700 tonnes per day. In fact, Linde, the leader in oxygen production in India, stopped making industrial gases such as nitrogen and argon, and dedicated all its resources to the critical task of producing medical oxygen. Since the oxygen needed to be transported near users, Linde India deployed its entire truck fleet, including vehicles that were temporarily out of commission. These deliveries weren’t limited to urban centres but extended deep into the hinterland, where healthcare facilities with limited storage capacity depended on Linde’s efforts to supply on time. “I tried my level best to ensure all our resources reached someone in need. That’s how I define success and contentment. They are both interchangeable to me,” says Banerjee, recalling his career’s toughest years.

Linde India is a market leader in gases and gas mixtures for industries, including healthcare, manufacturing, chemicals and energy. Its portfolio encompasses a wide range of products and services, including but not limited to oxygen, nitrogen, argon and hydrogen, apart from engineering solutions.

In February 2022, the CEO was faced with yet another global challenge — the Russia-Ukraine conflict. The war led to a rise in prices of key inputs such as energy. But Linde reported a revenue of ₹3,136 crore from operations in FY22, a substantial increase from previous year’s ₹2,112 crore, an impressive growth rate of 48.5%. The company’s stock has delivered positive returns in seven out of last eight years. The only year it delivered negative returns during this period was 2019 (-2.7%). Linde India, known as BOC India until its acquisition by Linde Plc. in 2013, is looking to accelerate growth in years to come.

The company hopes to capitalise on a multitude of opportunities. The healthcare sector, in particular, holds a lot of promise as the company has a significant presence in medical oxygen. Supply of medical oxygen to hospitals has been a key driver of the healthcare business; however, healthcare revenues were 22% lower in FY22 than FY21 as market returned to usual volumes after the pandemic-driven spike in FY21.

Linde India expects consolidation, productivity enhancement and expansion in steel sector to increase demand for industrial gases. It has identified several priorities — fast-growing pharmaceutical market and burgeoning demand from chemical and paint industries. It is also gearing up to serve railway and defence sectors. In the bulk segment, merger and acquisition opportunities are another goal. One of its strategies involves pursuing decaptivation, a system where another company takes over the plant and runs it, in order to increase operational efficiency. Apart from this, it is looking for growth from areas such as electronics and photovoltaic cell manufacturing. “We are constantly looking out for opportunities to increase our volumes using applications that Linde offers,” says Banerjee.

Banerjee’s journey at Linde India Ltd. began with an undergraduate degree from Indian Institute of Technology Kharagpur. Focus on operational efficiency and cost management has contributed immensely to his achievements as the head of the company. In FY22, the company reported earnings before interest, depreciation and amortisation of ₹872 crore, 45.2% more than ₹601 crore in FY21. Its efforts to become more profitable include increasing the share of high-value products. The company was debt-free at the end of FY23. “We have a very healthy balance sheet,” says Banerjee.

“Profitability is primarily driven by pricing mechanism and high growth markets like Gujarat, NCR. And a lot of emphasis on bottom line through enhanced productivity, where every function is given a target of reducing costs with respect to last year,” he says.

Banerjee believes a company must be capital-intensive to grow revenue. “Any surplus money typically gets ploughed back into investments to support growth. The majority of the (surplus) funds would be reinvested to expand our revenues,” he says.

In a world where investors as well as customers expect sustainability, Banerjee says he’s aligned with the growing global awareness about the importance of sustainability in business. Globally, over 20 years, Linde plc has featured in S&P’s top 10 sustainability leaders in the gas industry. Meanwhile, in India, the company has adopted ESG policies while following statutory requirements. “We are dovetailing India-specific requirements within the overall framework of sustainability. We have started a culture of enhancing ESG awareness within our organisation,” says Banerjee.

Linde India has lowered energy intensity by 9% in FY22. It achieved a 12% reduction in water consumption and undertook initiatives aligned with global decarbonisation targets on greenhouse gas (GHG) emissions. This year, it achieved a 15% reduction in scope 1 and 2 GHG intensity compared to the previous year. Scope 1 includes direct GHG emissions, while Scope 2 covers indirect emissions from where the energy it purchases is produced.

The green initiatives are an icing on the cake for the company.