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A ‘piped’ dream

Belgium-based Aliaxis Utilities and Industry entered India looking to tap the piped gas market. However, with the government delaying its ambitious project to have piped gas in every home, the company used its manufacturing unit at Verna to churn out products for the export market

By Michael Fisher | B&C

 

Like many foreign investors, Belgium-based Aliaxis Utilities and Industry (AUI) in 2008 was a wide-eyed investor ready to be wowed by the growth of India that was taunted as the world’s second fastest-growing economy after China. And wowed it was. Everywhere Aliaxis looked, it saw dynamism in all Indian metropolitan cities.

A sibling of the Euro 2.5 billion Aliaxis Group, AUI responded to India’s announcement policy on city gas distribution. The Indian government had announced an ambitious project that every home will have piped gas.

“We anticipated being part of it by supplying new generation fittings,” said AUI India’s managing director Rajiv Dhaimodker. The products are called electro fusion fittings used with HDPE pipes for gas and water distribution.

The foreign direct investment started coming and AUI invested ` 35 crore towards setting up the manufacturing unit, machineries and equipment at Verna Industrial Estate. It recruited highly-skilled and qualified staff.

Now five years have elapsed and the availability of pipe gas is still a dream in India.

“Looking back, of course, I realise that I saw what many have seen. In doing so, I ignored many of the problems that have cropped up waiting for the gas dream to turn into reality,” says Dhaimodker. “And we now know that India’s hasty efforts to build an impressive gas distribution network were fraught with all types of hurdles and cut-corners to stall projects. The bureaucratic delays in making gas available from the Krishna Godavari Basin have been a letdown.”

However, the die-hard Belgium Group looked at alternate plans and utilised its installed manufacturing capacity churning out products for the export market. Considering the competitive cost of working in India against Europe, the company has been exporting since the past four years.

On an average 1.5 million plastic fittings have been exported to the US and European markets, fetching foreign exchange earnings for the government of Goa and India. The Alexis Group has acquired controlling stake in Ashirvad pipes, Bangalore, which has a turnover of ` 1,200 crore.

Dhaimodker says the bottlenecks that prop up in doing business in Goa are unavailability of power and water. Goa IDC is not able to supply quality power nor a drop of water since the factory‘s operation had started in 2008. Overall, the plastic industry is very competitive and the cost of power in processing of plastic makes a huge difference.

Frequent power outages and running of DG sets leads to increase in manufacturing cost.  Totally, the company has 80 direct employees of which 25 are in the administration and the rest on the shop floor (factory) working in three shifts.

AUI India’s 2014-15 turnover of ` 25 crore would have crossed ` 100 crore if the gas distribution projects had taken off as per schedule. The company exports 90 per cent of its products and 10 per cent in the national markets.

Dhaimodker reports to Germany, the group company called Friatec Germany, which has a turnover of Euro 160 million and manufactures similar products as in Verna.

Overall, the Aliaxis Group is a global leader of primarily plastic fluid handling systems used in residential and commercial construction, as well as in industrial and public infrastructure applications.

“The Group is present in over 40 countries, has more than 100 manufacturing and commercial entities and employs 15,700 people. In addition to the well-established markets of Europe and North America, we have operations in Latin America, Australasia and Asia,” says Dhaimodker. “We leverage our local and global knowledge of the industry, regulations and building habits to provide consistently excellent customer service through our distribution partners to building installers, infrastructure contractors and others. Attributed to the entrepreneurial spirit of local people, balanced with the strengths, know-how and international reach of the Group, we continue to develop and improve our positions in key building applications throughout the world.”

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