Supplier of automation equipmentinvests in capacity as it gears up for new opportunities in Gujarat, says Amit Panday.
Valsad-based Penta Automation Systems (PAS) is a clear example of how a small scale company can grow in an environment of conducive business policies and good governance. The company has registered a turnover of close to Rs 10 crore in 2012-13 and has been growing at a healthy rate of 30 percent year-on-year.
However, DharmeshMistry, director, technical, Penta Automation Systems, says the demand slowdown in the market has impacted the growth rate by a substantial margin, reducing it to barely 5 to 6 percent. But this has not deterred Penta Automation from making further investments in expanding its capacity and acquiring sophisticated equipment (in developing an in-house toolroom with state-of-the-art CNC machining facilities) to prepare for a larger scale of operations.
The company has recently invested nearly 25 to 30 percent of its turnover (Rs 2.5-Rs 3 crore) in building and relocating to a new 4,700 square metre facility with nearly 25,000 square feet of shopfloor space (from the earlier 1000 square metre facility) in Umbergaon, near Valsad, in the southern part of Gujarat.
“We believe that this slowdown is short-lived and once the market improves, there will be ample opportunities to regain our earlier growth rates. It may take another year before the curve starts to gradually shift upwards. The rain-drought scenario is something to be critically watched and assessed. Nevertheless, the fact remains that the ever increasing urban populace will still drive the demand for more automobiles,” remarks Mistry.
The story does not end here. Besides, this positive outlook which is common among many firms in the automotive industry, there are some concrete factors which cement the confidence of the officials of this company. “Operating out of Gujarat in itself is a secure opportunity. It is a huge advantage for us that many OEMs are setting up their production facilities next door. We are looking forward to secure a host of new orders within the state,” added Mistry.
Supportive Gujarat
He explained how Gujarat government’s focus to boost the businesses is a big support. “The state government policies help in the form of interest subsidies on new investments (in factories, machineries), offer a single-window clearance for projects along the Delhi-Mumbai industrial corridor (DMIC) and other non-agricultural land under the Gujarat Industrial Development Corporation (GIDC). Plus duty-free SEZs with facilities focussing on boosting exports, additional benefits such as exemptions on electricity duties in SEZs, tax-free trade zones (sales tax, VAT and other taxes are exempted), no octroi, availability of skilled manpower thanks to the government encouraged ITIs, Indo-German toolrooms and other engineering and management institutes, lesser issues with trade unions, good infrastructure with continuous power and water supply and easy proximity to sea and air ports together provide a good setup for the companies to start operations and grow,” says a pleased Mistry.
The private firm is a member of The Netherlands-based Manders Group which holds a small stake in PAS. The Manders Group comprises eight companies (including PAS) located worldwide and specialises in providing integrated systems and installations for industrial automation.
PAS manufactures and assembles machinery that includes automated welding cells, special purpose machines, lean work stations and other equipment deployed in the production process in the automotive, industrial and many other sectors. “Being a member of a global group, we do get various benefits in the areas such as sharing critical information about the Group’s global clientele, their requirements, global standards followed in automation and equipment manufacturing, engineering processes, latest machineries besides the regular technical know-how,” explains Mistry.
The 45-member company increasingly focusses on the domestic requirements of OEMs as well as Tier 1 and Tier 2 automotive component manufacturers. Nearly 90 percent of total revenues comprise the domestic share in the turnover.
He adds that, “with all the key automotive majors having their production facilities in India, Indian component suppliers have to focus on quality assurance at all levels of production which makes it mandatory that they have in place the production systems and equipment that can help them achieve the desired quality standards. This also gives the vendors an advantage of exploring the global markets via exports. For example, some of the best automotive castings are offered by local companies from Gujarat to key automotive players in the world. This is due to strong focus on quality. Moreover, global component suppliers present in the country are already investing in top-class equipment.”
PAS has been catering to the requirements from Ford India and Maruti Suzuki in the past six months. Besides a couple of select OEMs, it also supplies to Tenneco Automotive, Brose Automotive, TRW Sun Steering, Ring PlusAqua (bearings division) among others. However, Mistry reveals that of all the component suppliers in India, Brose Automotive, Tenneco Automotive, and TRW Sun Steering are the most aggressive in terms of making investments in high-precision equipment.
Going forward, Penta plans to set up sales and support offices at various locations in Pune and in north and south India. “That is required to get more business and justify the investments made. Completion of the on-going expansion at our production site and continuous development of the skillsets of our workers and staff members are other set of priorities for us in the near future,” concludes Mistry.