Despite a four-year bankruptcy that saw revenues halving, Delphi Packard Electric Systems remains a leading supplier of electronics and safety systems for the automobile industry worldwide. Majdi Abulaban, president, Asia Pacific, tells Sharmistha Mukherjee the company is looking at balancing footprint outside North America and upping investments in Asia. Edited excerpts:
Where does Delphi stand, post the financial restructuring?
We emerged out of bankruptcy last year as a smaller but a healthy company. The mandate is now to focus on core products in the green space and provide value to our customers worldwide. There are high expectations. But we have come out with a clean balance sheet, which has helped us to invest in the future. We are more of an international company now; we are working on growing our business globally.
Along which geographies would your business interests rest in future?
At present, over 40 per cent of our revenues come from operations in Europe, 25 per cent from the United States and about 19 per cent from the Asia-Pacific region. Our goal is to continue to grow and balance our footprint outside North America. Our APAC business should contribute a third of our revenues by 2015.
At present, 42 per cent of global production takes place in Asia. Over the next four years, half of all the vehicles manufactured worldwide will be produced in Asia. Clearly, the future of the company is in Asia.
The Indian automotive industry saw unprecedented growth last year. Was it difficult to keep up with the growing demand from manufacturers here?
The industry has experienced some problems. During the financial crisis, most companies saw significant restructuring of business. A lot of capacity, both for manufacturing components as well as vehicles, was taken out at the time. We have utilised our assets at optimum levels to support our customers.
We have $ 4 billion in cash reserves. We are working on expanding capacity. In 2011, we are making operational eight new facilities across Asia, three in India alone. Over the next four years, we will be investing $500 million to grow business in Asia.
Considering commodity prices are on a rise, would growth momentum sustain in 2011?
This year would be challenging for the industry as a whole. The dynamics of cost and growth have to be balanced in view of rising input costs. In China, there has been sharp escalation in cost of labour as well as operations. The cost differential is so high, it is going to take technological innovation to bring expenses down. Not everybody will be able to offset the increase in input costs.
But Delphi has experience with such environs. Our facilities are the leanest worldwide.
You have operations in India as well as China. How do the two markets compare?
India and China are the fastest growing markets in the world. There is a lot of opportunity in these places for suppliers, manufacturers. The products launched would, of course, be driven by consumer preferences, which are different in both countries. India is a cost-conscious market. I see India emerging as an export base for small cars in future. A lot of innovations for smaller vehicles will come from India. In China, on the other hand, people are status-conscious; the B and C segments are larger there.
