I N D I A ’ S N O . 1 M A G A Z I N E F O R A U T O M O T I V E N E W S , V I E W S & A N A LY S I S
Auto Monitor
Vol. 12 No. 34
w w w.am o n l i n e.i n
15 October 2012
24 Pages
FOCUS
INTERVIEW
NEW MATERIALS
“WE HAVE FINALLY DEVELOPED AN ENGINE WORTHY OF THE BRAND”
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Dr Venki Padmanabhan, CEO, Royal Enfield
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` 50
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PCP looks at becoming global supplier Nabeel A Khan New Delhi
K
olkata-based Paracoat Products Ltd (PCP), NVH reducing components supplier, is gearing up to be a global player. It is looking to make Thailand as its another important base to cater to the South East Asian countries. The first plant of the company in this country is expected be inaugurated in the third week of November this year. The company had a trading presence for last eight years but with opening of its manufacturing unit it will have access to two major emerging markets including Malaysia and Indonesia with favourable duty regime. “This is a strategic decision, as under the ASEAN trade agreement, we can
The company is looking to have the access to markets like Malaysia, Indonesia and Thailand apart from availability of capital at lower interest rates export and import in Thailand, Malaysia and Indonesia without any duty,” Rajesh Poddar, Managing Director & Director, Business Development, PCP told Auto Monitor. The component maker currently supplies to GM, Suzuki and Nissan in Thailand and Malaysia’s Proton from India. It is looking to supply to these
customers from its upcoming Thailand facility as and when it becomes operational. PCP has also clinched a joint venture partnership with an Indonesian company to set up a manufacturing unit. Nissan Indonesia wants local billing and not import for which PCP will do the final value addition at Indonesia plant while child part will be shipped in from Thailand. Thus it will help them give local billing. The construction of the Thailand plant was started last year. In the first phase company is investing around `12 crore and plant is spread over one acre. A similar sized capacity plant will come up by 2015 in the second phase. The company expects that from this plant it will earn revenues of around Rs 45 crore on full utilisation, expected by 2015.
Despite the high cost of labour in Thailand, the company took the decision in order to have the access to markets like Malaysia, Indonesia and Thailand apart from availability of capital at lower interest rates. “When we look at today’s automotive scenario, OEM customers want global suppliers. They want to talk to a person who can provide service at multiple locations,” Poddar added. PCP’s export business currently contributes around five percent of its total turnover. The company notched up a turnover of around Rs 135 crore in the last fiscal and hopes to clock to reach `225 crore by FY15. The export contribution is expected to rise to ten percent. In the first year of the operation of Thailand plant that is FY 12-13 it is hoping to earn
around `15 crore. The company has maintained a CAGR of around 25 percent for last ten years for which it has continuously invested in the expansion. PCP makes an EBITA margin of around nine percent while PAT is two percent. The family owned and managed PCP has been supplying NVH to Hindustan Motors and Fiat from Kolkata. It shifted towards North India and set up its plants in Bhiwadi near New Delhi in the 90s. Currently, it has two plants in Gujarat, one each in Pune and Hosur. Another plant is likely to be operational in Chennai. The company has also plans to enter UAE and is evaluating opportunities there. The company also has presence in Europe through an alliance partner for trading of its product.
Auto industry’s dismal September show compels SIAM to extend AMP by a decade Our Bureau New Delhi
S
IAM has urged the Government to extend the Auto Mission Plan up to 2026. It believes that leverage of a decade would allow sufficient time to nurture the
DATA MONITOR Top 5 Car Makers Company
Sep-11
Sep-12
Change
Maruti
78,816
88,801
12.67%
Hyundai
35,955
30,851
-14.20%
Tata Motors
30,809
29,261
-5.02%
M&M
22,189
26,310
18.57%
12,807
12,115
-5.40%
TKM
Top 5 Car Exporters Company
Sep-11
Sep-12
Hyundai
21,867
22,706 3.84%
Change
Nissan
7,192
10,043
39.64%
Maruti
6,749
5,187
-23.14%
Ford
2469
1624
-34.22%
Tata Motors
767
856
11.60%
* Source: SIAM/ ** Excluding exports/ *** all sub segments considered/ ^ excluding MRPL
sector in order to extract the full potential benefit for the economy in terms of contribution to the Gross Domestic Product, value addition and employment creation. SIAM has taken the step after seeing a considerably slower growth in the second quarter this fiscal. Passenger vehicles sales have registered a meagre 4 percent growth over the last year and the overall growth for auto industry has remained at 3.62 percent. “Going by the assumptions, as per the current growth, we would have fallen short by 20-25 percent than what was projected in the Auto Mission Plan,” President, SIAM, S Sandilya pointed out. More than the overall growth, it’s the dismal show especially in the month of September that has further dented the sentiments of the industry. While the overall production has declined by almost six percent, domestic sales for the month of September 2012 have registered a decline of 9.43 percent. Most disturbing has been the four percent negative growth seen in the two wheeler seg-
The gloom surrounding the Q2 results for the auto industry has led SIAM revise its forecast that reflected a projected growth of 11-13 percent in July 2012 to 5-7 percent in Oct 2012 ment in the second quarter. The month of September saw a 13 percent decline. “Primary concerns impacting the two wheeler segment is weak rural demand, stagnant income levels, higher interest rates and increased fuel prices,” explains President, SIAM, S Sandilya. SIAM has further shown intentions for understanding the phenomenon of degrowth of the two wheeler segment. While the three wheelers have remained almost flat during the quarter, major concerns have been related to the introduction of very small four wheeled good carriers. Similar show put
S Sandilya, President, SIAM
up by commercial vehicles has been credited to mainly the stagnant economic growth on which the MHCV has taken a beating. While LCVs have seen 13 percent growth, 20 percent of this growth has come from less than 3.5 tonne capacity vehicles while there has been a decline in growth of vehicles exceeding 3.5 tonne capacity. Sandilya has further termed that the supply is more than the demand in this segment. Apart from the domestic sales, exports have been another region of concern and has seen a decline month after month. The three wheeler segment appears to be the worst hit with around
21 percent decline followed by a negative 10 percent growth in the two wheeler category. SIAM has further expressed concern over the reduced drawback rates for commercial vehicles, two & three wheelers from 5.5 percent to two percent that they feel would further impact the exports. SIAM has also managed to point out some positive aspects like government’s focus on rural development and money targeted at the schemes. However, it feels that it is yet to reach its beneficiaries. SIAM has also remained positive on constant commodity prices and deregualtion of fuel prices. The gloom surrounding the Q2 results for the auto industry has also led SIAM revise its forecast that reflected a projected growth of 11-13 percent in July 2012 to just 5-7 percent in October 2012. The projections based on Q2 performance indicate a greater growth percentage for Utility Vehicles than previous projections owing to aggressive pricing and new launches. SIAM is however not bullish on the upheaval of the market in the festive season as well.