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Akzo Nobel sets up research centre in Bangalore

Fakir Chand in Bangalore

Akzo Nobel N.V., the Netherlands-based multinational corporation with diversified business interests in healthcare products, coatings, and chemicals, has set up its international research center near Bangalore to develop the new-generation car-refinishing products and colour formulae for the global market.

Akzo Nobel Car Refinishes India Ltd, the wholly owned Indian subsidiary of the $12-billion Dutch conglomerate, which has already set up a manufacturing facility at Haskote on the outskirts of Bangalore, has invested Rs 120 million (Euro 2.7m) in the research centre. It will have 65 specialists employed to undertake research activities by this year-end.

According to Akzo Nobel Refinishes general manager Cor de Grauw, the Indian R&D (research and development) centre will play a major role in not only growing the market for car refinishes in the sub-continent, but also help meet the needs of the global car refinishes industry.

"We have opted for Bangalore for setting up the global company's third such centre to cash in on the availability of skilled manpower and economies of scale. India is ideally suited to meet our requirements," Grauw stated. Its two other global research centres are at Sassenheim in the Netherlands and at Troy, Michigan, in the US.

The research centre will have state-of-the-art equipment and facilities, including labs for color formulations, robot operated spay machines for color testing, computerised color prediction, and test rooms for wet and dry paint.

As one of the world's five top players in the multi-billion dollar niche car segment with major competitors like ICI and Du Pont vying for the same market share, Akzo Nobel Car Refinishes supplies paints and offers services and software solutions for passenger and commercial vehicles.

"Besides developing new products and color formulae, the research centre will identify and qualify raw materials available in the domestic market for using them in manufacturing new products for exports," Grauw affirmed.

Currently, the company is retailing two of its global brands, Sikkens and Lesonal in the Indian market, and is gearing up to launch a third product in the next quarter. It has, however, not disclosed the product's brand name.

India subsidiary managing director Peter J Sadler told rediff.com in Bangalore on Monday that the in-house product development techniques would reduce the lead time for color formulation and enable delivery of superior service to its customers in the Asia-Pacific region.

"The polyurethane car refinishes market in India, estimated to be about Rs 1 billion, is heavily dependent on imports. When the import substituted products are made available by manufacturing locally, customers will have price as well as delivery advantage over their competitors," Sadler asserted.

Partnering with Indian and international OEMs (original equipment manufacturers) to ensure the correct and perfect color formulae for existing and new cars, the company offers customers a total solution for refinishes. Its Sikkens service centres in key cities monitor and control the quality of service provided to its customers.

"With the entry of the multinational car manufacturers, growing customer purchasing power, and the introduction of new effect/metallic colors in new models, car refinishing market is witnessing a 30-40 per cent growth annually in India," said Vinay Mathur, head of the global company's Asia-Pacific region.

In order to educate and train technicians professionally, Akzo Nobel has also set up a training centre at its plant facility. The instruction centre provides hands-on experience to painters, body-shop owners and managers, besides on-site training at the customers' end. It can train 300-400 service personnel at a time.

The company's latest car refinish products are termed as 2K technology as against the 1K conventional paint technology. Though it is over a decade since the Indian automobile industry has opened up for the entry of global players on the domestic turf, around 85 per cent of the Rs 2-billion car refinishing market continues to use the conventional or 1k technology.

The company is upbeat about a major shift to the new 2K technology by its customers, taking the market share to 30 per cent from the current 15 per cent. The total volume consumption of paint by the Indian automotive industry is about 10,000 tons.

"In terms of volume, our product sale has witnessed a quantum jump during the last three years from 30 tons to a whopping 350 tons at the end of 2001. It posted a turnover of Rs 670 million in fiscal 2001. The company's global net sales last year were euro 708 million.

"By value the 2K technology is four times costlier than the conventional 1K technology and has longer life-span, besides world class durable coating," Mathur claimed.

With around 6 million cars already on the Indian roads and sale of new cars hovering around 600,000 annually, the company is confident of increasing its market share over the years. It is also gearing up to market around 1,500 tons of its range of products in the next couple of years.

The installed capacity of its Bangalore production plant is about 1,000 tons, and is scalable, being modular in design.

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