October 03, 2014

Taking the Indian Market Seriously

aei india

SACO AEI Compounds is a leading global player in the development and sale of thermoplastic and crosslinkable polymer compounds. With over 30 years’ experience, the company prides itself on the ability to supply a comprehensive range of products specifically developed to meet customers’ needs. Insulations, bedding and sheathing materials are produced for the wire and cable industries as well as products for the manufacture of hot water pipes, fittings and underfloor heating.

New and exciting compounds are continually being developed for these markets and the company is also working closely with the automotive, heat shrink,injection and blow moulding industries. With a heavy development bias, the company is agile enough to design and produce customised solutions to meet customers’ exact requirements.

In August 2011, Saco Polymers acquired AEI Compounds Ltd., a leading Compounding major in the USA, was formerly known as Padanaplast USA Inc., which was established as a joint venture between some private investors and Padanaplast S.p.A of Italy in April 1998. To underscore its increasingly diversified product range, Padanaplast USA changed its name to Saco PolymersInc. in March 2010.

Since its start a little more than a decade ago, Saco Polymers has played avital role as a supplier of polymer compounds to manufacturers of plastic pipes and of electrical cables in North America. The importance of its products in these markets cannot be understated, and the Group continues to expand its presence worldwide.

Saco’s products portfolio includes items such as pipe and tubing products,thermoplastic & thermosetting insulation & jacketing compounds for wire& cable and specialty thermoplastic compounds and additive concentrates.

This acquisition has significantly strengthened AEI’s position, providing it with access to the North American market and exciting new technologies. At the same time, Saco was able to tap AEI’s existing network in over 30 countries.

The Wire and Cable India team recently interviewed Mr. Andrea Savonuzzi, CEO& President, Saco Polymers, Mr. Mark Shaw, Managing Director, AEI Compounds Limited and Mr. Jaideep, Managing Director, Bihani Group, to have a clear understanding of the developments that have recently taken place at Saco, AEI,and their plans for India.

Here are some excerpts from this information-packed interaction.

The Saco Group

Speaking about the Saco Group, Mr. Andrea Savonuzzi said, “The Saco Group is an international group based out of the US. We produce a variety of products indifferent companies. Saco is a Wire & Cable Compound specialist company.

Our other companies include Macromeric, which does a variety of products and compounds for this industry, and NWP Inc., which is another associated company that does flame retardant compounds impact modifiers or behaviour modifiers for the plastic industry. Our group is therefore quite diversified in terms of the product portfolio. Added to this is our association with Mixer Compounds SpA.,which has an extensive range of rubber compounds and thermoplastic compounds for the insulation, sheathing and filling of flexible cables and flame-retardantcables.

We bought AEI two-and-a-half years ago because our operations were limited to North America and we wanted to be more global. AEI was one way to do so, given its global footprint. When AEI was being reorganised, and two-and-a-half years later, we were able to take it into our group. We then assigned to AEI the task of expanding the company globally. All the international work in countries like India, China and South America is done by AEI largely because the products we produce in the US do not have the specifications that are most used in the rest of the world. There are zero halogens, and they come out of Europe. By and large, AEI is more experienced than us and this is why we set up a company in India through AEI.”

Indian Wire and Cable Scenario

Expressing his views on the Indian wire and cable industry, Mr. Savonuzzi said,“India is a massive country with a need for infrastructure. I think it’s going to be a very exciting market; it already is; it’s going to be even more exciting in times to come. And as projects become more and more ambitious, the need for higher specifications becomes more necessary and because of that we feel the expertise we have for wires that are infrastructure-wise used in rail,metro or ships and so on is a good possibility for us on the Indian market.

But of course we are also producing materials for new opportunity markets such as clean energy – solar & wind…and also some other things are significant in India. Almost two years ago, we established our Indian subsidiary and production has now started. The future plan for the Indian subsidiary is to grow. Growth has always been our key strategy. The issue is to try and follow the needs of the market, as the market is not the same everywhere. So the purpose of this venture in India is to try to supply exactly the sort of product that the market requires and make it grow. We have a great potential and I think there would be some export market for the Indian company as well in other parts of the world and near it.”

Market Share Acquisition

Speaking about the acquisition of market share, Mr. Savonuzzi said, “I don’t know if we have a target for acquisition of market share. We just like to be present and grow. Our company is in the US and has started growing between15 to 20 per cent a year. I think that’s good growth on a mature market like the US market. It could have not have been ambitious enough for a developing market like India. Our target is increasing growth rate, not the acquisition of market share.”

Adding a footnote to the exposition given by Mr. Savonuzzi, Mr. Bihani said,“We have good prospects and are looking forward to having a great future in India. AEI India is part of a big and resourceful consortium. The targets will not be set in India. Our targets will be set by the Group, and AEI India will work towards meeting them. In the coming years, AEI India is expected to become a strategic arm of the Group-something that Saco & AEI will look up to.”

Adding Value“If you look at the Indian market, you’ll realise that in general, it is divided; it’s classified. For example, there is an export focus approach that looks at markets and businesses in places like the Middle East, Africa, etc.They all are being driven by certain specifications, which have been historically the forte of AEI. So by having those products in India, we are there right in front of the customer so that their deliver ability actually increases.

“With two research units in the US and one in England, we intend to add value to the work we are doing in India and hopefully to be successful in the cable industry,” said Mr. Savonuzzi.

Speaking about the advantages of Saco’s presence in India, Mr. Bihani said,“With Saco and AEI India in the picture, the paradigm of specifications, which have been primarily focused on Western Europe, now also moves to the US. Until now we did not have UL- and CSA-rated products. With Saco in the picture, we have already initiated activities that are taking us to the markets of those sources, of companies that are coming to India from the US or companies that are eventually going to supply their products to the US. Hence, the customer has a complete array of specifications to work…with only one company; and that’s AEI India.”

New Developments at AEI Compounds Speaking about the new developments that have taken place at AEI Compounds, Mr.Shaw said, “We constantly develop and upgrade our product range. For example,we have a new range of products based on Ceramifiable technology for fire security cables and we also have a new range of oil resistant products. So, the focus of AEI Compounds is very much on developing new products to keep the lead, to support customers and to be at the niche end of the market as well as to be able to supply the regular products that customers need.”

Commitment to the Indian Market

“We have a very serious commitment to the Indian market. Recognising the Indianmarket has been very important. We have set up a division of AEI Compounds –AEI Compounds India – in conjunction with the Bihani Group, which has supported us over a number of years. Our plans for the future of AEI Compounds India are to manufacture locally in India to enable us to support the Indian market with fast lead times and rapid response and to increase the level of technical service we can offer to our customers,” said Mr. Shaw.

Assistance to Local Industry

Mr. Shaw said, “We can help the local industry by having technical expertise on the site of local manufacturing, which means we’ll be out to respond in terms of both formulation development and rapid lead times.”

Market Scenario

Commenting on the Indian market scenario, Mr. Shaw said, “We operate globally.We have manufacturing sites in North America and Europe. With the development of manufacturing in India…I believe that it shows our commitment to the Indian market…to be able to service it more efficiently. Potentially, the Indian market is very large and we believe it’s going to develop technically: moving from just being a commodity market, which it has been historically, to offering more technical cables. It’s already doing that… . We need to be there to service all that in a better way.”

Mr. Shaw further added that “Traditionally, the Indian market is being built upon British standards. Being a global group, we can offer British standards and also US standards. Asa group, we can supply all ranges against all standards anywhere in the world. And we have manufacturing base not just in India but also in South East Asai. We should be out to supply all needs as the Indian market develops.

“We very much believe in the Indian market and are keen to be present on it.And we believe we can offer fantastic technical service with advanced cable compound designs.”

Interview by: Wire and Cable India WCI