Zanini drives into India with Polyplastics JV

Haryana-based Polyplastics Industries and the Barcelona-based Zanini Auto Group SA have once again joined hands, but this time to set up a manufacturing plant in Maharashtra, preferably around Pune’s automotive belt, to work closely with local OEMs. Though the companies are yet to announce the formal name of the new entity and the chosen location for the manufacturing plant, they plan to produce wheel rim covers and related parts such as the hub caps and centre caps at the upcoming unit. The proposed plant is expected to make nearly 500,000 wheel covers a month and will employ 150-200 skilled workers in the initial phase.

Talking exclusively to Autocar Professional, Kamal Gupta, managing director, Polyplastics Industries, said that “we are working backwards from our pre-decided dates to schedule developments step-by-step. We are looking at commencing operations at our upcoming plant by mid-2015 and break even in the next one-two years.”



LOCAL MANTRA

Gupta, who is bullish about the volumes from this location, has a clear priority of addressing local requirements before exploring export avenues, which are also on the cards for both the companies from this location. Gupta estimates that both the companies together will make investments in the range of Rs 240-250 crore.

The JV is set to benefit both the parties as the upcoming unit will mark Zanini’s official entry in the Indian auto component industry while the same will add to Polyplastics’ wide network of manufacturing units across the country.

Though officials of both the companies have not confirmed their total investments in the planned unit, expect both to hold an equal share in the JV. On the export front, besides benefitting from the low cost of manufacturing, Polyplastics will also gain access to Zanini’s customers in Europe and USA.



PROMISE OF INDIA

Commenting on the gameplan to set up a plant in India along with Polyplastics, Jordi Torras, CEO, Zanini Auto Group SA, said that “India is a burgeoning market with promising growth in the longer run. We are very bullish about the contribution of Asian countries to our global revenues, which we estimate would touch around 40 percent by 2018.”

Currently, Europe stands as the largest market for Zanini; it contributes a nearly 60 percent share in the company’s global revenues while the US and Brazil contribute 30 and 10 percent respectively. According to company officials, its European business at present is seeing a growth of around 8-9 percent annually. Notably, the company has been absent in China and India so far.

Alejandro Roca-Umbert, sales and marketing director, Zanini Auto Group SA, said: “It is important to stay closer to the OEMs and, according to our rough estimates, if a proposed plant is supposed to make over five million wheel covers annually, it is more cost effective to be located near the OEM’s production facilities. That is our strategy for sound investments.”

Interestingly, Polyplastics and Zanini’s relationship goes back to 1998 when the two companies entered into a technical tie-up enabling the former to bag the product order for the Ford Ikon in India. In 2006, the two companies consolidated their tie-up with increased technology sharing to make wheel rim covers and centre caps.

Currently, business for Polyplastics, whose total turnover for FY2012-13 stood at $51 million(Rs 300 crore), is segregated with a nearly 80 percent share coming from the passenger car vertical while two-wheelers, commercial vehicles and tractors comprise the balance 20 percent.

On the other hand, according to Zanini Auto Group officials, the company has an estimated 60-65 percent market share in Europe and the US for the supply of steel wheel covers and related technologies. The Spanish company (with branches in USA, Brazil, France and Mexico) has eight plants around the world with two in Spain, one each in France, Czech, USA, Mexico, Brazil and also including one coming up in China by April-May 2014. The company’s total global production currently stands at nearly 350 million wheel covers per year.

The proposed India plant will mark Zanini’s ninth plant globally, while the company is planning its 10th plant in Russia by 2015 as well. Umbert also disclosed that the company is focussing on a number of new, innovative technologies such as multi-colour integration of plastics for wheel covers, ultra-light wheel covers (in tune with the lightweighting trend initiatives globally) and others.

Domestically, 2013 marked a year of expansion for Polyplastics when the company acquired a new plant in Bhiwadi and started the construction of two new units at Bawal (Haryana) and at Oragadam (near Chennai). Besides these, the company has two units in Yamuna Nagar (Haryana), Ranjangaon (Pune) and another unit at Bawal (Haryana).