Mr. Merchant, Head of Exports Business of Permali Wallace, "Mega Composites Players Should Get Level Playing Field Vis-a-Vis Small Players"
The interview is a component of research report entitled "US and European Based companies in the Indian Composites Market: Lessons Learned." This report is based on series of interviews with multi-nationals, who are exploring growth opportunities in the Indian composite market. This 29-page report is FREE; to receive complete report, please write to helpdesk@lucintel.com. Following is an excerpt from interview with Mr. Mihir Merchant, Head of Export Business, Permali Wallace
Permali Wallace, a leading manufacturer and exporter of a wide range of Insulation Material and Composite Parts has set new benchmarks in the industry with its quality products. Permali started as manufacturers of wood based densifed impregnated laminates for Industrial and Engineering applications and diversified into wood veneer based components, glass reinforced composites, SMC & DMC moulded components, epoxy resin castings, cotton fabric composites etc.
In an exclusive interview with Editor, Lucintel, Venkat Rao; Head of Export Business of Permali Wallace, Mihir Merchant shares his companies experience in India
Q: When did you start a facility in India?
Merchant: Permali Wallace Private limited was established in 1961 in Technical and financial collaboration with Permali Limited, Gloucester, U.K. and Chase Lowe & Co., Manchester, U.K and production started in 1962. We bought back entire shares 5 years back. As per the purchase agreement we are still using the same brand name
Q: What do U.S. and European companies need to know as they prepare to do business in India?
Merchant: 1. The Foreign companies need to understand the Government of India (for foreign investments and statutory compliances) rules and regulations to start up the business in India. 2. Good idea of presence of unorganized sector and small scale composite manufacturers. 3. It is also important to understand the local culture in which the business is done.
Q: How significant is the Indian market to your business today and in the future?
Merchant: Indian market is significant for us. 80 pc of our business is in India. Even in the long run Indian market would be crucial for us though our Indian business might come down to 70 pc after a span of three years.
Q: What are some of the key challenges faced by your company in Indian market?
Merchant: Acceptance of composites in new applications and mega organizations like railways and others are major challenge. Pricing factor is another major concern. Whereas we look at long term benefit customers look for cheap product. Buyers in Indian composites market tend to be more price sensitive than quality. The concept of composite materials and its life-cycle cost advantage is lacking among Indian buyers. Another major challenge is "Low Cost Competition”. Mega organizations have to follow government rules and regulations in tenders due to which their Quote rates go up whereas small scale manufactures can quote low because of their being out of the purview of government taxes.
Q: What key lessons can you share from your company’s experience in India?
Merchant: Indian market lacks maturity. There is lack of awareness and lack of quality judgment.
Q: How is doing business in India different from doing business in Europe or US.
Merchant: Both are almost same whereas composites awareness in US-Europe is good but actualization of business is slow. Though it greatly varies from organization to organization but as per our experience that there too one has to cross many stumbling blocks.
Q: How much growth have you seen in last 2-3 years from your Indian business?
Merchant: We have been witnessing average growth of 20 pc per year for the last five years. Last year our growth rate was around 25 pc. This financial year we are expecting growth of 35 pc.
Q: How much growth do you expect in next 2 years?
Merchant: We are expecting slight slowdown due to recessionary trends in the global economy but our growth rate would be 30 pc.