2012 South India Special: Johnson Controls Pricol to expand product range

Johnson Controls Pricol (JCP), the recently formed 50:50 joint venture between Johnson Controls and the Coimbatore-based Pricol Ltd, has announced that it will include more products in its repertoire for the Indian market. At present, the JV will focus on instrument clusters, while Body Control Modules (BCM), immobilisers and driver information systems are on the anvil. The introduction of BCMs will be the first priority. The first BCM supplies will be to an existing customer, followed by future projects of Volkswagen and Renault-Nissan. For both Johnson Controls and Pricol, this is a one-of-a-kind JV in which the details are emerging as the clock ticks. The fledgling JV was a result of intense discussions and a play of existing market conditions.

K U Subbaiah, CEO, Pricol, says that Pricol was in an enjoyable position of being able to choose its JV partner. “Since Pricol has a strong position in India, we could pick and choose our partner. In Johnson Controls, we are fortunate to have a very open and fair partner,” he says. “We also thought that a marriage with a global major will not leave us behind,” he adds. Eventually, the JV aims to get into the two-wheeler market also but, “the JV will not cannibalise Pricol’s business.” The focus of the JV will be frugal engineering, especially for the two-wheeler segment.

Mutual benefit

Despite maintaining that there is an ongoing discussion on how to address the various opportunities in the Indian market, both PrashanthNayak, member of the Board of Directors of the JV, and Subbaiah insist that the JV wasn’t hastened into existence.

"As of today, it is clear that we won’t compete with either Pricol’s or Johnson Controls’ businesses. Both partners will look at it as an opportunity to grow each others’ business and the JV,” Nayak says.

Subbaiah adds, “I think, in a way, the JV’s questions have been answered. It has ensured that the JV has a clear path on what to do. Not competing with each other is something we have agreed upon. In terms of addressing the existing opportunities in India, we need to discuss on how we do that. There is no difference of opinion on what needs to be done. What exactly the shape of the JV would be is probably a couple of months of discussions away.”

Supplier to Renault

While it is now famously known that the order to supply the instrument clusters to the Renault Duster SUV was bagged even before the JV was officially put in place, Nayak says that this was easily done as Renault is an existing customer for Johnson Controls in Europe and the company already supplies to the original Dacia Duster.

Enunciating further on the Duster programme, Nayak explains that, initially, he was under the impression that Renault was being too optimistic. “I was sceptical about the numbers the company was projecting initially. More specifically, in India, we do have a situation where volumes are high till another model comes in. I think it is their pricing. The Duster is definitely creating a strong buzz,” he says. In the fortnight since its launch on July 4, the Duster has received over 10,000 bookings.

Renault’s fifth product for India – the Scala saloon – is slated for launch around Diwali this year. Given the current situation, it can be surmised that Renault India's future business for JCP will also include orders for the Scala. JCP at present will use both Pricol’s and Johnson Controls’ engineering capabilities in India. The JV’s board has three representatives each from Johnson Controls and Pricol, with Vijay Mohan, Pricol chairman, as the chairman of the JV.

The rationale behind the JV was simple, says Nayak. “This is the first JV for electronics across the world for Johnson Controls. I think from Johnson Controls’ point of view, many of its customers began selling their wares in India and another was the opportunity to bring itself in India. From both sides, it worked. It was our business to lose. If you choose to give up the business in India, for which you are already a supplier abroad, there is always a possibility that the programme abroad could be affected,” he says.

The joint venture is also clear on who brings what to the table. Johnson Controls gets technical support, customer access and customer relations, while Pricol’s facility in Pirangut, near Pune, will be the base for manufacturing. Johnson Controls Pricol at present will not focus on exports. “But if opportunities arise,” says Nayak, “we will look at exports also.”

KARTHIK H