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PCB | May 15, 2007

Spanish PCB firm prefers India to China

Spanish manufacturer of printed circuit boards (PCB) Circuitos Impresos Profesionalses, S.A. (CIPSA) has opted to set up its first overseas joint venture in India with an eye on the growing domestic demand and huge export potential.
Though China and Taiwan are way ahead of India in manufacturing PCBs and other electronic products, the Euro 18-million Circuitos Impresos Profesionalses, S.A. (CIPSA) has decided to locate the 50:50 joint venture - CIPSA-RIC in Bangalore with two Indian entrepreneurs - Anil Gupta and Alok Garg - and invest more to expand the production capacity.

'We have found India a strategic location for our first overseas venture outside Spain. Though manufacturing costs are cheaper by 10-12 percent in China, we have opted to come here (Bangalore) in view of the opportunities India offers in terms of skills, resources, market and huge export potential,' CIPSA director general Evarist Michavila told IANS here.
With an upfront investment of $10 million (Rs.450 million), the JV has started manufacturing single, double and multi-layer PCBs and membrane switches for the domestic as well as export markets.

Having reached full capacity utilisation in the first year of operations last fiscal (2006-07) and posting a turnover of $10 million, the venture partners have doubled the JV's authorized capital to $20 million (Rs.900 million) in this fiscal (2007-08) for expanding the production capacity and meet the growing demand from the parent firm (CIPSA), European and Indian OEMs.

CIPSA accounts for 70 percent of the JV's exports, while the balance 30 percent goes to OEMs such as Zollner, Technomeca and BHTC in Germany. Of the total production, 65 percent is exported and the remaining (35 percent) is shipped to Indian OEMs/vendors such as L and T and Procot.
'To meet the increasing demand for our products in Europe and the sub-continent, we are investing more (Rs.400 million) to expand the manufacturing capacity with a third facility near the existing two plants at Doddaballapur on the outskirts of Bangalore by March 2008,' Michavilla said.

Giving an industry perspective, Gupta and Garg said that though the global market for PCBs and membrane switches was attractive despite competition from China and Taiwan, the domestic demand was no less. They attributed this to the robust economy fuelling consumption of electronic products, consumer durables and high-tech products, including handsets and personal computers.

According to the Indian Printed Circuit Board Association (IPCA), of the $550-million worth of PCB/switches sold in the country in 2006, the share of Indian PCB firms was only $110 million, while products worth $440 million were imported from China, Taiwan and the South East Asian region.

The Taiwan Printed Circuit Board Association (TPCA) has estimated the PCB market size worldwide to be $45 billion in 2008 as against $33 billion in 2004. 'Our game plan is to join the volume-driven game and compete with our Chinese or Taiwanese counterparts on price points to capture a fair share of the global market and meet the growing requirements of Indian OEMs, who are still import-depended heavily,' Michavila affirmed.

For this fiscal (FY 2008), the Indo-Spanish JV has projected 100 percent growth in turnover to post about $20 million and grow by 50-70 percent year-on-year (YoY) over the next three years to cross $100 million revenue target by fiscal 2011-12.

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