Perth-based building products supplier, JV Global Ltd, is on track with its Indian joint venture with that country’s oldest construction company, Shapoorji Pallonji & Co, to manufacture steel door frames.
Perth-based building products supplier, JV Global Ltd, is on track with its Indian joint venture with that country’s oldest construction company, Shapoorji Pallonji & Co, to manufacture steel door frames.
The venture follows a similar agreement in the United Arab Emirates, while the company also is working with Jordanian company Tuhama Investments on the development of low-cost housing to provide 100,000 homes in Jordan over the next five years.
Listed on the Australian Securities Exchange since 2005, JV Global believes there are enormous opportunities in India, based on its large population, increasing middle class and rapid economic growth.
Managing director Terry Opie said the company first looked to India in 1997 to expand its steel door projects.
“Globally there has been a shift from wood to steel and, as a result of logging restrictions, people are looking for alternative markets, which led us to believe there were opportunities overseas,” he said.
Mr Opie said an AC Neilson survey revealed a shortage of houses in India and a demand for building products.
“The survey indicated a construction shortfall of 20 million homes each year, and 80 to 90 million additional dwellings are needed by 2015,” he said.
Through its joint venture, JV Global has established a manufacturing plant in Mumbai, which started production in November 2007, and plans to set up further manufacturing facilities in New Delhi, Kolkata and Chennai to cater to the local market.
Mr Opie said India was a considerable market for the company and one that was driven by costs.
“It is not practical to manufacture in Australia as there is a lower labor cost in India and high import duties,” he said.
According to Mr Opie, companies considering India should take the time to profile the country and enter into a joint venture partnership with well-established companies they have synergies with.
“The secret to getting into the marketplace is understanding that it is very difficult to just go in and start your own business; you need contacts,” Mr Opie said.
“The Shapoorji Pallonji Group has a significant market share in India and by partnering with them, we had an immediate and major client for our joint venture.”
Mr Opie said finding the right partner made market entry easier, and opened doors for business expansion. But working in India was not without its challenges.
“We have established a factory outside Mumbai but a lot of infrastructure still needs to be put in,” he said.
“The way of doing business in India is really slow, there is lots of bureaucracy and red tape.
“You need to go through different layers of management before you get to the real decision makers, so you need to be prepared to put in the leg work, persevere and be persistent.”
The first year’s production at the Mumbai factory is expected to reach 100,000 door frames.
The joint venture partners are discussing expansion of their operations into other building products including light-gauge steel framing for low-cost residential housing.
In Jordan, steel framing for a three-storey display home has been successfully erected and Tuhama Investments is in discussion with JV Global over the next phase of development.
