Title: Montrealer plunges into India’s growing auto parts industry (Part III of a series)
Sub-title: Uniproducts (India) supplies molded carpets as well as noise, vibration and heating-insulation components to the sub-continent’s main car manufacturers.
Ravi Mehra is one of those quiet, refined businessmen, who, although you get the feeling that they are successful, you can’t figure out exactly how they became so. His main offices on Mountain Street, give few clues as to how he earns his living. But from those quiet digs, Mehra has landed smack in the middle of one of the world’s hottest business stories – the rise of India’s car industry.
As its name implies, Mehra’s main holding company, Universal Paper Export is a paper products broker. The company buys newsprint, wood pulp and coated stock from manufacturers and then resells the stock in about 50 countries in the Americas, the Middle East – and in one of Mehra’s favorite markets: his homeland of India. Like just about anyone who has regular dealings there over the years, Mehra couldn’t help but be impressed by the country’s exploding economy and growing middle class. But unlike most people, Mehra decided to take advantage of the trend.
“Although India has been growing quickly for a long time, its car industry did not seem to be keeping pace,” said Mehra. “But I was sure that as more Indians began to see their lifestyles improve, that eventually that they would begin to want to drive their own automobiles, just like westerners.” Mehra couldn’t find the right opportunity to invest directly into an automobile manufacturer. But during the mid-1980s he decided to open a woven fabrics plant, whose product lines could be adapted to produce insulation components used in modern automobiles.
The timing was good. India’s prime minister at the time --Rajiv Gandhi,-- was in the midst of one of that country’s initial attempts at breaking away from its socialist/bureaucratic mindset, to attract significant foreign investment. These reforms, in addition to those later undertaken by the country’s current prime minister Manmohan Singh in the 1990s, led to a significant opening in that country’s then heavily-protected economy.
Mehra, like many diaspora Indians, -- including the million or so that live in Canada,-- was well placed to get a new business venture off of the ground in his homeland. “It was a bit rough at first,” laughs Mehra. “Although the Indian government wanted foreign investment, they wanted the companies to remain under Indian control. So I had to find a local partner.”
That said, Mehra’s new venture, -- Uniproducts (India) did have some advantages. The Indian car industry was very much in its early stages and the new venture was able to get in on the ground floor. This was a crucial advantage in an older society like India, whose history goes back thousands of years. As a result, contacts and experience count for much more there than in North America, where companies tend to be more open to doing business with new suppliers.
Today India’s car industry is the world’s second fasted growing and Uniproducts sells to all three of that country’s major producers, Maruti, Hyundi and Tata, as well as to most of the newer foreign producers that are trying to get a foothold. Last year Indian car sales hit the one million mark, a number slated to double by 2010 and to double again by 2016.
You can see the car industry’s success on roads in all of India’s major cities, which are jammed with several lanes of traffic, with tens of thousands of motorcycles zooming in and out of the gaps. The motorcycles are important, because India is one of the world’s largest manufacturers. Car industry experts, believe that as India’s economy matures, those motorcycle riders will all eventually want to become automobile drivers.
Not surprisingly, Uniproducts isn’t the only Canadian automotive products company looking to hop onto the Indian bandwagon. Earlier this year, Toronto based Magna International, announced that it was also looking to get on board. But according to Uniproducts general manager Ram Chauhan, it’s not easy. “Indian car companies have very strict quality control procedures,” said Chauhan. “And if you don’t meet their standards, you’re finished.”
To better service Uniproduct’s clients, Chauhan has instituted a policy of zero quality rejections, 100 per cent on time delivery coupled with a guarantee of competitiveness on all product lines. It’s a tall order, but the strategy has paid off. In fact the company’s sales have more than doubled in the last four years and are slated to keep pace with the growth of the Indian car industry as a whole, which is not too bad.
But while his investment in India is clearly paying off big time, one of the biggest advantages that it brings Mehra, a devout Hindu, is actually qualitative – it gives him an excuse to visit his native land more often and to keep up with local developments. “The country is changing so fast,” says Mehra. “Every time I fly back there, I never know what it is going to look like.”
(This article is the third of a three-part series on how Canadian companies are profiting from outsourcing, investing and trade opportunities created by China's unprecedented growth).
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|© 2005 Peter Diekmeyer Communications Inc.|