While Western material suppliers scramble to up their stake in the growing market in India, Chinese compounder Kingfa Science & Technology Co. Ltd. is building on its previous acquisition and seeding further growth with organic expansion.
Kingfa Chairman Yuan Zhimin said the company, ranked as the largest Chinese compounder, has decided to build a large campus in Pune that integrates production, R&D, sales and offices, which will serve as the regional headquarters for Kingfa India.
The company didn't specify details of the investment in the statement. But Kingfa's India executive told Chinese state media that production base will target an annual capacity of 200,000 metric tons.
Yuan met with Indian officials during his visit to Maharashtra last month and received promises of support on land acquisition, tax benefits, construction approval and more, Kingfa said in the statement.
Kingfa acquired controlling stakes in Indian compounder Hydro S&S Industries Ltd. in 2013 for $18 million. Hydro had capacity of 29,000 metric tons per year at three factories in Chennai, Pune, and New Delhi, where it compounded polypropylene, thermoplastic elastomers and glass-fiber materials for auto makers.
It took Hydro — Kingfa's first production base outside China — a while to turn a profit. After struggling with net losses in 2013 and 2014, the business reported a net profit of 703,663 yuan ($108,000) in the first half of 2015. Kingfa currently holds a 75 percent share of the company.
Head of Kingfa's India operation, Bo Jingen, told Chinese state media that the Indian engineering plastics market is largely undertapped outside the automotive industry. He cited materials for power tools as an example, and said China produces 20,000 metric tons per year while India only makes 300 tons.