Ingress Corporation Bhd took another giant step toward establishing itself firmly as an international player in the automotive components manufacturing industry when it officially flagged off its mass production lines for General Motors/ Isuzu at its 74 per cent owned Thailand subsidiary Ingress Autoventures Co, Ltd (IAV) recently.

IAV will be investing some RM20 million in this project alone. It has also invested another RM50 million to add a new building on its existing factory site in the Eastern Seaboard Industrial Estate in Rayong (southeast of Bangkok) as part of its expansion.

At full capacity, the new lines will see IAV producing 245,000 units of bellows and engine gas return pipes (EGR) per year that has been fully taken up by GM/Isuzu for its I 190 pick-up truck.

Honda line starts in Nov
Its strategy of being located close to its customers is paying off. Come November 2002, IAV will be flagging off another product line for the new Honda City model. Sharing the new building space, IAV will invest another RM18 million to meet Honda's order.

These two latest developments have strategically positioned Ingress to weather the storm of liberalisation come the year 2003 (2005 for Malaysia) when the Asean Free Trade Area (Afta) agreement comes into effect.

At the simple flag off ceremony on March 18 attended by a small entourage from Malaysia comprising Ingress directors, analysts and the press - Ingress Corp executive vice-chairman and IAV chairman Rameli Musa says the Honda order is its first major breakthrough in the passenger carmaker in Thailand.

The Detroit of Asia
It is a breakthrough not only into Honda but also possibly into other carmakers. Thailand, which has been touted "The Detroit of Asia," houses most of the world's leading automakers - Toyota, Nissan, Mitsubishi, Honda, GM/Isuzu, and Ford/Mazda - that have established high volume production plants there.

This puts IAV in good stead to garner more contracts as it proves itself with its existing customers, who have awarded it quality awards that are now a prerequisite for suppliers. IAV started with two major customers in early 1998, Auto Alliance Thailand and Mitsubishi Sittipol Corporation, which have remained with company.

Indonesia to be re-visited
When asked by theedgedaily.com on its expansion plans within Asean and globally, Rameli says the company will be focusing its efforts in Thailand for the time being to consolidate its operations there. However, he revealed that the company's next target is Indonesia, which has huge potential.

"We had actually gone into Indonesia in mid-1996 but we had to pull out when the (1997) crisis hit due to the political instability and other factors (including the closing down of the national car project in Indonesia)."

"But we are still keen to go there ... we've received invitations from some of our customers to set up a plant there. We are at the exploration stage ... maybe in two years time, if all goes well, we will be ready to go in again," says Rameli.

As for its global reach, Rameli says IAV is in fact already competing directly in the global market. "IAV had to compete with the other major parts suppliers worldwide in order to secure this (GM/Isuzu) project in Thailand. So in that sense, we are already competing directly in the global market."

World car concept
Another factor that is giving IAV the edge is the world car concept adopted by automakers where motor vehicles are built on a common platform at selected manufacturing bases. In this respect, Thailand has been selected by the automakers as such a base, especially for the one-tonne pick-up truck.

The Thailand automotive industry currently has a total capacity of 1 million; and vehicle production is expected to grow steadily to 680,000 units a year in 2004, from 327,233 recorded in 1999, according to the Thai Automotive Industry Association. Of the 680,000 units, 50 per cent will be exported.

"We may not set up plants outside Asean, but through our customers, we are exporting to all over the world," Rameli adds. Ingress Corp advisor Dr Abdul Wahab Ismail however says the group is open to any potential ventures especially with its long-term partners Katayama Kogyo Co, Ltd that has a 20.2 per cent stake in IAV and Mitsubishi Corporation (6.1 per cent stake in IAV).

When asked about the company's investment in the next five years, Rameli says it would be done step by step as the company wins more contracts.

As an indication of the future growth of IAV, Abdul Wahab says when the Honda production line for the production of door sashes starts, IAV would be using its current available capacity fully.

"So you can see that once we get another new order, we will be making further investments," says Abdul Wahab.

Malaysian plants
However, Rameli clarifies that the group's plants in Malaysia also produces the same products - except for bellows and EGRs - which if the situation allows, the companies could carry out capacity sharing to fill additional orders received by IAV.

At present, the products commonly produced by IAV and the plants in Malaysia are door sashes, mouldings (roof drip mouldings, belt line mouldings and others). It has three Malaysian plants operated by subsidiaries Ingress Engineering Sdn Bhd, Ingress Precision Sdn Bhd and Ingress Technologies Sdn Bhd.

On future expansion of the Malaysian plants, Rameli says the company would have to see what are the developments of Proton and Perodua over the next two to three years to determine the expansion needed to meet its two major customers' needs.

The company, which had forecast the group's earnings for the financial year ended Jan 31, 2002 at RM26.04 million, is expected to announce its financial results soon.

Automotive components division is expected to account for some 54 per cent of total revenue. Of this, IAV will contribute about 20 per cent, and its contribution is expected to rise about 10 per cent each year to about 50 per cent by the year 2005.

Power engineering
The other revenue will be from the power engineering division through Multi Discovery Sdn Bhd, Matrix Power Services Sdn Bhd and Ramusa Engineering Sdn Bhd.

The group has in hand works for the RM400 million Ipoh-Rawang Railway Electrification Project due for completion in 40 months.

Meanwhile, the group is also bidding for the northern and southern section of the railway electrification project, which is worth about RM1.3 billion in total - with the local portion being about 50 per cent.