Finland-based manufacturer of CV and locomotive electric systems and wiring, the PKC Group is foraying into India.
Story by:
Bhushan Mhapralkar
A leading global supplier of electrical distribution systems and electronics for the transportation and industrial markets, Finland-based PKC Group is making a foray into India. It is evaluating the path that it should take to make a successful entry into the Indian market. Operating under two business verticals – wiring systems and electronics, the PKC Group, headquartered at Helsinki, is keen to tap the commercial vehicle and locomotive market in India. Serving commercial vehicle OEMs like Daimler, MAN, Scania and many others, the PKC Group posted a revenue of Euro 908 million in 2015. Also catering to locomotive manufacturers like Bombardier, the Group, according to Jyrki Keronen, President – APAC, is keen to increase its revenue as well as its reach in the Asia-Pacific region. He drew attention towards the Group employing 22,000 people the world over. The highest (55 per cent) number of people are in the USA, followed by Europe, South America and the Asia-Pacific region. This should provide some idea of the potential that remains untapped in the Asia-Pacific market. Said Sandeep Nigade, Business Development Director, India, PKC Wiring Systems Oy, that stress would primarily be on the commercial vehicle market in India. “The PKC Group caters to trucks and buses, light commercial vehicles, construction equipment, agriculture and foresty equipment, and engines. A number-one supplier of wiring systems to commercial vehicles in the USA, the Group is keen to leverage global relations for an Indian foray,” Sandeep added. He further mentioned that the Group’s foray into India is linked with the demand of its global customers to set up operations in India so that they can be served.
To serve locos too
Planning to invest Euro 20 to 30 million initially, the Group, according to Sandeep is also looking at foraying into the locomotive industry. “While the primary focus will be on the commercial vehicle industry to begin with, given the Group’s capabilities in the locomotive industry, it is quite logical to look at a foray into the Indian locomotive industry,” said Sandeep. He described the PKC Group as a growth-driven company. Planning to establish manufacturing operations within the next few years, the Group, in India, is looking at offering a complete range of products it supplies to the commercial vehicle industry. The commercial vehicle product portfolio comprises of electrical distribution systems, vehicle electronics, components, and wires and cables. Expressed Sandeep, “The Group takes pride in one engineering change per day over the life-cycle of a product platform. This essentially translates into the fact that the core competence of the Group lies in complexity management, process, data, systems and organisation.”
A global company
A look at the manufacturing operations of the PKC Group will reveal that they are spread quite evenly across continents. The electrical distribution systems are manufactured by the Group across its facilities in Brazil, China, Estonia, Lithuania, Mexico, Poland, Russia and Serbia. They find use in commercial vehicles for supply of power and transfer of data; in truck and bus engines in particular. The Group’s manufacturing facilities in Germany and Mexico supply power switching and distribution systems and components to trucks and buses. It would be important to mention at this point in time, that the Group also supplies power switching and distribution systems to agriculture and construction equipment manufacturers. From its manufacturing facilities in Germany and Mexico, the PKC Group supplies power distribution centers, connectors, routing and retention aids, and sensor wires for application in trucks and buses. The manufacturing facility of the Group in Mexico offers insulated and non-insulated wires, multi-conductor cables, and battery cables.
Manufacturing & engineering services
Planning to manufacture wiring harness and provide engineering services in India, the PKC Group, according to Sandeep, is well aware of the domain changes that are taking place. Averred Sandeep, that the commercial vehicle industry will need a wiring harness manufacturing partner as complexity in the wiring harness will increase due to emission norms change. “More customisation and purpose built vehicles will find an opportunity,” he added. Investing one-per cent of its annual revenue into R&D, the PKC Group is hoping to achieve good growth in India. It is looking at offering wiring harnesses, terminals, connectors and power distribution centres in India with good attention to the increasing need for technology, demand for mass customisation and stricter standards. “Factors like these result in complexity of customer’s products and processes. This tranlates into an opportunity for us,” stated Sandeep. The strong domain expertise of PKC Group is highlighted by the fact that it delivers 11 million parts for 50,000 trucks annually. The Group, for a typical commercial vehicle platform, is known to supply 810 routings, 2,650 harnesses and 5,200 active part numbers.
The Indian foray
The PKC Group’s Indian foray, according to Sandeep could be through a Greenfield venture or through acquisition of an existing business. “We are evaluating both the routes and would come to a clear conclusion very soon,” expressed Sandeep. The Group is said to be in discussion with some players in India for an inorganic entry into India. The third possibility is to set up a joint venture. A look at the journey of the PKC Group, and it is evident, that its growth has been derived out of a mix of organic and inorganic routes as well as through joint ventures. The Group entered into a joint venture with Jiangsu Huakai Wire Harness Co. Ltd. (Huakai) last year. As part of the deal, Huakai transferred its business of developing and manufacturing electrical distribution systems for trucks, construction vehicles and buses in China to the JV. Key customers of the JV include Foton (and Beijing Foton Daimler Automotive), Kinglong and Iveco. In 2014, Huakai posted a revenue of Euro 43 million. Early this year, the PKC Group entered into an arrangement to acquire the wiring and controls business of Poland’s automotive seating manufacturer Groclin. The Groclin acquisition would also include its subsidiary Kabel-Technik-Polska (KTP) for Euro 50 million, and is subject to necessary clearances.
A major development during the last two years apart from the two joint ventures was the bagging of new business contracts amounting to Euro 30 million from two major global commercial vehicle manufacturers. Estimated to be effective by 2018, a major part of the development relates to the manufacture of high current fuse modules and associated EDS routing and retention shields for a light vehicle platform. This would provide economies of scale and strengthen the Group’s partnership with a key customer. The foray in India, based on the premise of further strengthening relationship with global clients, stems from the fact that the Indian commercial vehicle as well as the locomotive industry is changing. Mentioned Sandeep that local brands would need to adapt to international ways of operating in order to survive. He concluded, “We are looking at gaining 30 per cent market share in the next three years.”
