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I'm excited to share the next episode of
CEO Moments of Truth.

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We are featuring Aloke Lohia,
founder and Group CEO of Indorama Ventures

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a company that's grown into one of the
world's top 30 chemical companies.

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2023 was a year that tested even this
global powerhouse.

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In this episode,
Aloke shares how he navigated significant

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industry change and a set of challenges
that Indorama has not historically known.

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Aloke, you founded

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Indorama, also known as IVL,
more than 30 years ago in Thailand.

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Share with us some of the highlights of
that journey.

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I was the first employee of my company,
so I made a few mistakes.

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From there is when I developed
a few rules.

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The rule #1 was growth of the industry
has to be adequate so you can keep growing

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The rule #2 was that you have to be the
most competitive player.

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The third rule was that it had to be
diversified in the sense it didn't have

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to be in one country.

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Just be clear, prices of your products
are going to come down.

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Costs are going to go up.

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What are you going to do about it?

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Yes, you better come up with an answer
early on and systematically.

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So I'm amazed that you are actually the
market leader when it comes to recycling

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in the PET product space.
Where do you stand?

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Today in the West especially you need to
have 30% recycled content

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in your beverage bottles,
and we are one of the few companies who

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can give that to the brand owners.

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And not only that,
we have our 2030 vision,

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where we are going to have 25% of our
total portfolio

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made from bio-based or recycled content.

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And you continue to pioneer when it comes
to recycling.

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You are also now delivering products from
recycled PET for the textiles and fashion industry

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Share a bit more about that.

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A beverage container is a dollar.

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It's always been a dollar in the US.

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It hardly moves away from that.

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So all the cost competitiveness has come
from scale,

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from millions to billions to trillions of
bottles.

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But in fashion,
you add a lot more value and therefore

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there is much more affordability for
recycled content.

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Aloke,

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in your recent letter to stakeholders,
you state that you believe that at some

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point you're going to look back to 2024
and it will be seen as a pivotal year in

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the history of Indorama.

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On the one hand,
because you started to see the tea leaves.

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On the other hand, because
you took control of your own future.

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What were the tea leaves?

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You know, there's always a curse
of being a successful company.

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Thirty years of success.

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We had a fantastic 2022.

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All our factories were humming.

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Our business model of being a local in
every major market

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means our goods were reaching our clients.

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So everyone was happy.

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Margins were good.

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I felt that this was this was unreal.

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This is not going to last.

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I could not get my team
to fully align to that.

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They said it was fine and nothing is
going to change and there's going to be

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slight modifications,
but we're in a good space.

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I had to talk to them and say,
'What is changing, what is cyclical,

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and what is structural?'

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The cyclical stuff, I fully agree,

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we can live with that.

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But the big change that is coming from
the outside is electrification.

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And our raw material is all linked to
crude oil as an input.

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There were no new refineries getting
built in the West. For the last 20 years,

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while we were in Asia, Europe, and the US,
relatively the price of raw materials

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were about the same.

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It started changing in 2022.

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That was a structural change.

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That was what I meant by in the letter
that we read the leaves.

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The moment of truth for me was that all
the capacity that we had in Europe and in

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the US and Canada,
not all of that was the most cost

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competitive and we were running,
not all those sites fully utilized.

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And therefore we started making some
playbooks.

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Now what was that like for you?

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You had a model that was very successful
over decades and now you realize, well,

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we have to change that model.

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How did your team take that?

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Christoph,
I think that was a sweet and sour moment,

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making that pivot,
closing down 10% of the capacity.

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I think that was also my moment of
humility that not everything is within your control.

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It's never easy to shut down 10 plants.

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You have an emotional attachment with
those people, with the site heads,

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with the leadership of those sites.

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I think our teams in a very sensitive way
made a very smooth exit from those sites.

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We reduced our cost by about $200 million.

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So that just improved the quality of
earning.

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It did not impact our customer deliveries.

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It improved our operating rates.

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So all in all, by hindsight, today,
a year and a half down the line,

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I think we all agree that it was a
decision that was required.

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My worry at that time, Christoph,
was that we have been a successful

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company, we've been growing,
This was degrowth.

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And what is the message to the market?

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Are we admitting to the market that we
made some mistakes?

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Are we saying that we don't have a cost
competitive business model?

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What do our lenders think?

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We are quite a leveraged company,
but I went with my gut feeling

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that the right move is a right move and our
stakeholders will appreciate it.

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And all in all,
this is going to help us to come back

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to our peak earnings.

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Because our peak earnings were in 2022.

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The market for the first three months
did not understand it.

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And it showed.

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Our share price went down quite
dramatically.

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Once we continued to explain to the
markets with actions,

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I think our share price has recovered
more or less to where it was.

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Our most important stakeholders,
who we rely on,

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told me, 'We would have been disappointed, Aloke,
if you would not have come clean

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and admitted the issues that your industry is
facing and what actions you were taking."

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At BCG,
we often say one of the hardest jobs

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in leadership is to turn around
a successful company.

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Indorama was exactly that.

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Over decades,
one of the most impressive value creation

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stories and market share gain stories.

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What is your advice to leaders who find
themselves in a similar situation

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and realize, OK,
now it's time for bold action?

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Christoph, that's very difficult
for me to say for others.

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We were a growth company,

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we are a growth company,
and we will be a growth company.

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It's just that the growth tomorrow is
going to come from based on the mega trends,

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based on the ecosystem,
based on ground realities.

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At IVL, we have built certain businesses,
we have expertise,

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we have operating knowledge, know- how,
and all of these are valuable to other parties.

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So we are looking at just not only
growing by ourselves,

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but growing in partnership with
like-minded people.

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It's wonderful to hear about Indorama,
about the moment of truth that you went through,

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about the big changes that you initiated

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that are now starting to pay off.

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Thank you so much for your insights and
thank you also for your time.

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Thank you, Christoph, for having me.

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Thank you.