Paracoat, a provider of NVH solutions for the automotive segment, is expanding its footprint outside India. This month, it will commence operations in Thailand where it will manufacture asphalt sheets, a bitumen-based product for the passenger car market. Thailand has just one plant supplying this key product and with the Thailand market on the upswing – sales recently crossed the one-million mark – the Indian company sees a huge potential market for itself.
The company has been supplying this product to General Motors Thailand for eight years, exported from its India facility at Hosur, and with the new plant coming up called Paracoat Asia, the product will be supplied to the Thailand unit directly which will be then supply to customers there.
By setting up base in Thailand, the company hopes to take advantage of the India-Thailand Free Trade Agreement. This will entitle the company to a 10 percent duty in the first year which halves in the second and goes down to zero in the third year of operations.
Navin Banka, director, Paracoat, told Autocar Professional that the plan to foray into Thailand is part of the company’s larger strategy to be a global supplier. This foray was first conceived by it 6-7 years ago but was not found commercially viable. However, the scenario was changed drastically since then as the Asia-Pacific region become increasingly important in the global auto sector.
While the new Thailand unit is its first overseas foray, the company is also looking at acquiring a company in Europe. It has already kicked off its plans and hopes these will materialise in a year’s time.
The company’s products include insulations, vibration dampeners and interior products. In India, the company has made several strides towards its aim to be a key player of interior parts for commercial vehicles. These parts include bagging business from Daimler India Commercial Vehicles (DICV) and Scania. While the company will supply carpets for the DICV’s light and heavy truck range, it currently supplies interior components for the light duty truck (LDT) range.
For Scania India, which begins operations at a facility near Bangalore in mid-2013, Paracoat will supply carpets, interior trim and noise sheets. Banka is justifiably proud of the fact that Scania orders which were obtained after just three meetings. The company will also supply products to Scania’s ASEAN operations in Indonesia, Thailand, Malaysia, China, Korea, Japan and the Philippines. These orders could well be worth about Rs 17 crore a year.
The floor carpets that the company will supply have also been designed in-house and that is a feather in Paracoat's cap. Earlier, the materials were imported from Europe. However, Paracoat was able to produce some of the key backward integrated materials and it now meets international standards at a competitive price.
Apart from DICV and Scania, Paracoat has added other clients including Avia, the Czech company acquired by Ashok Leyland, and TAFE in the tractor segment for products that are exported to Turkey and Europe. It’s an area of business with much promise in India when the strict NVH norms become applicable here for the tractor segment, possibly by 2014. In India, Paracoat’s clients in the passenger vehicle space include Mahindra & Mahindra, Tata Motors, Maruti Suzuki, Hyundai, Toyota, GM India, Ford, Fiat, Honda and Nissan.
While Paracoat sources its technologies from a variety of overseas partners, the company has its own internal R&D whereby it has been able to develop materials that are not only superior in performance but are more competitive as compared to imported materials. Paracoat is also investing in processes that are energy-saving and enable better quality.
On the HR front, Paracoat is working on a semi-automation model which includes changes in processes, which will rationalise manpower on the shopfloor. Given the business orders of the future, the company’s staff has a variety of opportunities for existing staff. However, it is also in the process of making fresh appointments to senior positions.
Diversifying to grow
On other fronts, Paracoat has diversified into custom-built vehicle manufacturing by establishing a firm known as PCP Motors which developed the Terra Home Car that was on display at Auto Expo 2012 as well as at Defence Expo in New Delhi.
The company has made these fibreglass vehicles based on the Mahindra Genio platform. Aimed at the tourism and travel sector, the company hopes to assemble four vehicles which it will demonstrate at a later date.
Over the year, Paracoat has entered into collaborations with several overseas companies for its technological requirements. These include JSP Corporation of Japan for EPP, Aksys Gmbh of Europe for encapsulations and interior trim, Parker Corporation of Japan for expandable foams, Asahi Rubber of Japan for acoustics, Trelleborg Automotive of Europe for ADM pads, Temi Srl of Italy for heat shields, Bokwang Corporation of S Korea for stiffeners, and with Adler Plastic of Europe for interiors and insulations.
Given its global intentions, Paracoat will be able to leverage a wider range of technologies.
BRIAN DE SOUZA