‘We will add India capacity and do more localisation’

With over $100 million in investments over the last five months, the US-based Axalta Coatings Systems is looking to further its reach across the globe. The fifth largest coating company in the world, Axalta is a global supplier of coatings to the transportation and industrial sectors with 35 manufacturing facilities and presence in 130 countries. In a chat with Business Line , Charles Shaver, the company’s Chairman and Chief Executive Officer spoke of his India plans and the priority he accords to emerging markets. Excerpts:

What are your priorities and the roadmap for India operations?

In the last five months, we announced a $50 million investment in Shanghai and €50 million for expansion in Germany.

What is driving all this is not just growth in the automotive segment, but also the growth in waterborne coatings. Again, this is not just in the automotive but in the overall general transportation coatings. (Coating is a more generic term and encompasses paint.) Now, we are looking at India. We have a nice business in the re-finish and to some extent in the bus market, but in very many areas there are products we have not brought here.

What is the size of your India business?

It is roughly 15 per cent (about ₹700 crore) of our Asia-Pacific business, which is about $800 million. The Asia Pacific region for us is China, India, Australia and Indonesia. In the Original Equipment Manufacturers' dealer body shops here, we have 43-44 per cent market share.

You have a plant at Savli, near Baroda. Any plans for expansion?

Over the next five years, we will be adding capacity and most likely the expansion will not will not be at Baroda. We will add another facility and continue to do more localisation.

When will the second facility come up and at what cost?

(It will come up) within the next year. My guess is the next site will be in the $30 to $50 million range.

Our total capital investment for the next couple of years will be $150 to $200 million a year and half of that will go into our Asia Pacific region. So, on any given year, it will be a balance between India and China.

In India, you are mainly into re-finish. What is the step forward?

(We are) also (into) transportation — bus and truck. We will also move a little more into marine protective coatings. Globally, we are the second largest in powder coatings. We will look to bring coatings for the rail segment.

We are working closely with RDSO. Here, decorative is not in the highest priority. We have 80 per cent market share in coatings for high-speed rail in China.

Any plans to make India a regional hub for Axalta?

Today, we service the Middle East (West Asian) market where car park and transportation are growing, out of Europe and we believe can do a better job from here. Europe is high cost.

How is the Europe business faring after 2008?

In the second half of last year, we saw a pick up 2-3 per cent and we are seeing another 2-3 per cent so far in 2014.

Do solvent-borne coatings provide better finish than water-borne coatings?

Not any more. The new generation waterborne not only give a better finish but come with better properties too. The cost is almost the same on unit basis. In the US, people are moving to water-borne not because of VOC (volatile organic compounds) but due to productivity. In a high productivity shop, one can paint a car in 22 minutes, whereas it will take half-a-day for solvent-borne as it calls for three base coats and a clear coat. For waterborne, it is just one base coat and a clear coat.

The biggest challenge now is not about waterborne or solvent-borne coatings. Cars are getting smaller and lighter for fuel efficiency. Many automobile makers are using aluminium and plastic and in some of the large big trucks, they are using 50 per cent plastic of different types. So, colour match and material holding to the body is all technology based.

COMMENT NOW