Zenith Rubber is all set to make great differences in the industry by embarking on strategic diversification, more value addition to existing products range and inorganic growth in the coming years, says Aamir Vohra, the young and dynamic CEO of the company. “In the next five years, we want to add different product profile such as extrusion and moulding for specific and technical grades,” he says in an exclusive interview to Rubber Asia. EXCERPTS:
It’s heartening to note that Zenith Rubber has started a separate rubber compounding plant. What are the factors that led to starting the rubber compound plant?
The new rubber compound plant was set up around a year back. The basic idea was to enhance the capacity of compounding as we had capacity constraints. The plant provided us an opportunity to set up a state-of-the-art plant to produce high-quality and custom rubber compounds. Today, the plant has improved mixing quality that is helping us to our goal to produce more and more technical grades of rubber sheetings which require complex mixing procedures for our wide range.
At the new plant, the current installed capacity is about 110 tonnes per day and has the infrastructure to have a capacity of 150 tonnes per day. It will have total four intermixing units out of which two are in operation for internal consumption, and the third is being installed and will be utilized to supply custom rubber compounds to other rubber goods manufacturers. The fourth intermix line will also be used for our own consumption only.
It is pretty interesting business module to supply custom rubber compounds to other rubber goods makers. How will the company utilise its own expertise in rubber compounding for this business module?
We have been into the rubber sheeting and flooring business for 52 years, and today we have over 4,500 formulations in our own data base. We have a strong technical team that has been handling various types of raw materials and making technical rubber sheetings, coated fabrics and flooring products. We want to leverage our technical knowledge and expertise and formulation data in the compounding business.
For other rubber moulding and extrusions goods manufacturers, we offer the capability of developing formulations, and developing and testing of custom rubber compounds. We can provide our technical expertise to non-tyre rubber, particularly micro and small companies as there is huge shortage of it. Most of the competent technical personnel are employed by tyre companies, and big rubber goods manufacturers, leaving a void in the SME sector. That’s why we want to cater to customers who want to develop formulations and compounds with certain properties. We will take off the technical pressure of these company owners and provide them compounding capabilities which is capital intensive in setting up a rubber unit. So, they do not have to make any investment. Also it will save them the cost of inventory of raw material procuring and stocking which would add future value to our relationship.
Since our core business is rubber sheetings and floorings, we would avoid supplies to companies in the similar field. There are rubber custom compound suppliers in the market; but what makes us different from the rest is the entire package — from formulations to compounds to suit their specific needs.
Volatile raw material prices have hurt small players the most. How can the compounding business help on raw materials side?
Our in-house requirement of Rubber Compounds is over 1500 tons/month in a wide range of recipes. Hence we would already have in stock most of the comparatively priced inputs required for the compounding business. Our volumes afford us a strong purchasing power. Our customised rubber compound business will be an opportunity to small and mid-scale industries to grow with this as they save on the cost of raw material inventory and timely supplies of the required compounds as per their schedule. They can devote more time for their manufacturing activities. This gives us a competitive edge.
Zenith Rubber has also established a testing lab to serve other rubber goods companies? How is it different from others?
We have provided a large area for research and development and testing facility at the new state-of-the-art unit. All our equipments are the latest and procured from Germany and are capable of testing all parameters for our range of products including flooring products and flames retardant flooring. We also have a 2 litre lab intermix which runs simulations and gives us information on how compound will behave on large production scale.
We are in the process of acquiring NABL accreditation which we expect early next year which will be acceptable to third parties. The independent labs charge very heavily. We propose to recover the basic cost of testing and also suggest improvements based on applications. We must add value to the service rather than only provide certifications.
What are Zenith Rubber’s future plans?
Next five years, we would like to add different product profile such as extrusion and moulding for specific and technical grades. On extrusion rubber products, we think we can add some value due to our compounding capabilities as we have technology to cater to that segment. The Indian construction industry is changing in a big way. Modern structure and materials are the focus keeping safety as the focus. That’s where we see demand for our products. We shall keep focusing on innovations in our product portfolio. On revenue side, our target is a 20% growth in next five years. Our products pipeline is full and major CapEx has been well spent. We will be looking more at value addition to our products. We will also be open for inorganic growth.
How do you see the future of the Indian Rubber Industry?
The Indian Rubber Industry has a number of pull factors and is set to grow at between 8 to 12% CAGR. The low per capita consumption of rubber in India is about 1.2 kgs and is set to grow to nearly 3 kgs per capita by 2025. The growth in the automotive sector will drive these figures as all the major names are already here or are outsourcing their requirements due to which exports of automotive components have seen a rise of nearly 18 to 20% for the past few years. The availability of skilled, inexpensive labour and large bank of technical man-power augur well for this industry. There are a number of constraints that the industry is facing on account of restrictions of import of raw materials and high inverted duty structure. These are clear speed-breakers to be addressed on an urgent basis. We expect an appreciable expansion of the industry both in the domestic consumption and in the export markets.
The GST will certainly affect small manufacturers while it encourages the organised sector to further consolidate and improve their outreach. We must appreciate that the rubber industry is a multiple raw material and multiple process industry, hence it is imperative to keep abreast of the new developments in technology, process and inputs, which is not possible for the small industry. Upgradation is the name of the game at every opportunity which will win the day for anybody who follows this MANTRA.