An Interview with Manager of MachinePoint’s India on the Plastics Industry in Gujarat where its office is based
1. Your observation on the challenges and opportunities associated with business development in the plastics industry in Gujarat.
India is one of the top ranking countries when it comes to the availability of manpower, access to local and international markets, and its strong fundamentals. It is the second most favored destination for foreign direct investments; with its FDI inflow growing at an average rate of 9% at a time when the rest of the world was experiencing a dark recession.
Currently the world’s 12th largest economy; India is already on the path to becoming the fifth largest consumer market in the world by 2025, with predictions that the total Indian consumer expenditure will be at approximately $ 1.77 trillion by this time.
The economic boom in India has given momentum to such sectors as packaging, agriculture, infrastructure and health care – all of which use polymers, and therefore rely on the plastics industry. This will result in a great demand for plastic processing machinery and ancillary equipment, consequently creating a huge opportunity for business development in the plastics industry. This is the simple reason why a lot of foreign players, including us, are keen on investing in the Indian market. Furthermore, a lot of joint ventures are expected to take place in the Indian plastics processing sector.
Gujarat has probably played the most important role in the economic history of India, and has the fastest growing economy of all the states within India. In 2010, Forbes listed Ahmedabad as the third fastest growing city in the world. As the most industrialized state within the nation, and the largest producer of polymer, Gujarat will be at the forefront of all the aforementioned developments.
The unique challenge associated with business development in Gujarat is bridging the gap between the way that Indians conduct business and the way that Europeans do, as the majority of the machines we broker come from European sellers. Our added value solution at MachinePoint is that as a multicultural company, we are adept in intermediating between two culturally different parties and can ensure that the different cultural issues that constantly arise do not affect the negotiations.
MachinePoint India has decided to base its first office in Gujarat, namely because of the proximity to a major plastic hub, and also due to the fact that I, myself am personally based here.
2. Please comment on the hurdles faced by the your company while introducing novel concepts.
The primary hurdle we faced was overcoming the lack of awareness amongst the majority of processors on the advantages of using European Technology viz-a-viz an indigenous machinery. Moreover, the word ‘used’ is not always employed in the correct sense. In fact, most of the processors associate the term “used machinery” with “cheap machinery”, which is definitely not always true.
Furthermore, it has been observed that almost every processor is on the lookout for opportunities to purchase cheaper used machines but are seldom in an urgency to buy them; this results in increased demand, yet the order conversion rate is very low from this region.
Despite these hurdles, we have sensed that the scenario is slowly c hanging, with the majority of processors choosing used machinery with automation when they see the high cost savings and higher production rates.
3. What are the strategies being adopted for driving profitable growth in the Gujarat plastics industry while maintaining and promoting a strong commitment to social and environmental responsibility.
By recycling about a fourth of the plastic waste of the country, Gujarat already tops the list of the environment-friendly states on this front. Around 20 lac tonnes of plastic is recycled every year in India, with the Gujarat recycling about five lac tonnes of this alone. From this we can conclude that not only is Gujarat ahead when it comes to recycling plastic waste, but also when it comes to producing and using plastic, as we know that there is an impressive growth of 20 pc year-on year in the recycling of plastic.
Considering the need for more plastic throughout the country, the industry is working on making plastic a green product. “Living without plastics is impossible today. It is important to know how to use it correctly. Considering the growing needs and the concern for environment, AIPMA incorporated relevant discussions through Green Pavilion to let manufactures know what needs to be done at the recently held Plastivision 2011 at Mumbai.
Moreover, Gujarat hosts refineries like RIL, Essar & IOC, chemicals and LNG Terminals at Dahej & Hazira, Chlor Alkali Plants like Tata Chemicals, Indian Rayon, Atul, UPL, Shriram, GACL and IPCL (RIL), Soda Ash Plants of Nirma, Gujarat Heavy Chemicals,Saurashtra Chemicals, Dhrangadhra Chemicals, etc. and Chemical Fertilizer Plants of IFFCO, GSFC, GNFC, etc. In spite of being called the Hub of Chemical and Petrochemical Industry, Government of Gujarat has constituted the Gujarat Pollution Control Board with a view to protect the environment, prevent and control the pollution of air and water in the state.
At MachinePoint, we sell used machinery, albeit only the highest standard of used machinery. At the same time, we offer machine refurbishing which updates the systems to the latest technological developments, making them more efficient. We are planning to start offering the latest energy efficiency solutions for specific machine types. By implementing this solution to our used machinery, the result is high quality European machinery, at lower costs than new machinery, and which is updated to the latest energy efficiency solutions.
4. Could you reveal your company’s future plans to capture more market in India or globally
Having ventured into the Indian Market in 2009, we now have plans to increase our presence in India in the years to come. We want to be the reference company for all of those looking to purchase European machinery at affordable prices. Whilst the used machinery market is full of small entrepreneurs trading in used machines, MachinePoint has managed to professionalize this business by reaching a critical mass, which makes us the largest European used machinery seller. We offer only good quality machinery that can be sold without any sort of refurbishment or immediate attention to the functional parts of the machinery. We also offer a wide array of services, from refurbishing the machines to adding auxiliary equipment to them, which results in good quality machines at reasonable prices. Our product offering is not for those looking for bargain prices in the used machinery market; but for those looking to purchase good quality machinery at affordable prices.
Our financial security has helped us get involved in big projects, and offer financial support to buyers. Our banks have financial connections with the most nationalized banks in India and we can extend help, if required, to local buyers.
We deal in the plastic and beverage sectors. MachinePoint Group launched a new subsidiary last year within the beverage and dairy sector which sells complete plants to the beverage, dairy and agro food industries. This was done thanks to a partnership with a highly specialized custom equipment manufacturer and engineering company. The unique offer proposition of the new subsidiary, MachinePoint Food Technologies, is the capacity to integrate used equipment into our complete plant projects, making the offers more accessible for medium and small enterprises looking to launch a new production facility for beverages, dairies or fruits and vegetables. Our objective for 2011 is to also be able to offer this to the Indian market.
5. Please elaborate on Gujarat’s potential as a market and your company’s growth plans in the Indian market.
Gujarat´s plastic industry is witnessing an annual growth of more than 15%, with more than 70% of polymers being produced in the state. It is strategically located, boasts a consistent power supply, and thanks to Mundra and Pipava; it can ensure better connectivity, with access to major domestic and international markets in the South East Asia region.
As a Special Economic Zone (SEZ), the Gujarat facilitates foreign direct investment with ease. We have chosen Gujarat as the ideal location from which to penetrate the Indian market, with future plans to move into the South East Asia market.
MachinePoint Group offers:
Used machinery through MachinePoint Used Machinery
Complete plants and projects through MachinePoint Food Technologies
This is very interesting for India and a lot of the neighboring countries in the region.
6. What according to you will be the emerging trends and growth drivers in the years to come?
The key drivers which contribute to the growth of this sector include new innovations and technologies, coupled with high output machines and less power consumption. Since a lot of machinery manufactured in Europe meets these criteria, there will be a lot of demand for used machinery from this region. Furthermore, a strong knowledge base of the plastics processing machinery and new technologies – for both imported and indigenous machinery – brings in a widened horizon for entrepreneurs. Having said this, we are aware that in order to complement our products, we would need support from a few American brands, and we are working to incorporate these, as well as energy efficiency solutions into our portfolio.
We have taken into account that a few Asian brands have been making their presence felt in this area with highly innovative machinery that also has a good residual value. In line with this, MachinePoint may also look at supplying used machinery brands from this region.
7. What has been the role of the plastics industry towards the economic development of the State?
With over 72,000 TN of plastics consumed per month, Gujarat is arguably the second largest state after UP where the Tobacco industry dominates the polymer consumption. Gujarat shall soon take the lead at processing plastics and exporting it with the state, hosting some of the largest petrochemical complexes of the world such as IPCL (RIL), RIL & ONGC. With refineries like IOC, RIL and Essar and Container handling facilities like Pipavav, Mundra and Kandla. We already are aware that Gujarat produces 70% of PE/PP/PVC of the whole country’s production resulting in strong economic development of the state. The presence of Indian OEMs such as Windsor Machines Ltd, Rajoo Engineers, Kabra Extrusiontechnik, Mamata Machinery along with European Subsidiaries like The Negri Bossi, Rollepaal, KHS Machinery has contributed heavily to the economic progress of the state.
8. What are the advantages/disadvantages of investing in the plastics industry in Gujarat?
I don’t see any disadvantages as such for investing in Gujarat. As an engineer myself, Gujarat is an absolute paradise for investments due to rich infrastructure and a pool of technocrats readily available.
9. Can you please talk about your company’s performance in the last few years and its future plans.
Over the last three years, MachinePoint Group has delved into ambitious plans to further internationalize and amplify its product portfolio. MachinePoint Group initially started trading used machinery in 1997, and over the years has steadily diversified its product portfolio to reach where it is today. Three separate companies currently operate from within the group:
MachinePoint Used machinery – trading high quality European machinery at affordable prices
MachinePoint Food Technologies – offering turnkey solutions to the beverages, dairy and agro food industries
MachinePoint Finance – providing finance solutions to processors in the industry sector
MachinePoint Food Technologies is the newest addition to the group, yet has already firmly established its capabilities when it recently successfully completed its first project with Coca-Cola Enterprises.
The group’s headquarters engineering center are located in Spain, with additional offices in India, North Africa and Turkey. In the following years to come, our expectations are to continue expanding and developing our international presence by opening offices in Latin America and Eastern Europe.
We also have plans to increase our product portfolio by launching new offers to complement our current ones with energy solutions, cooling solutions, and other engineering solutions.
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