Editor’s note: This story is a part of a series on how three Indian companies are overcoming a traditional reluctance to enter the U.S. market. Read the overview here: Indian Influx: Investors Overcome Cautious Approach to U.S. Market
H.K. Dhruv‘s family has been in business since before he was born. His father rented out land to tenant farmers in India during the British colonial period. In 1952, he headed to Aden, then a British port colony in Yemen, to work with his brother on a trading company.
After Yemen’s independence, the country made it tough for foreigners, forcing the Dhruv brothers back to Mumbai, where they started a small factory.
That tiny building, once set among other small-scale factories, has given way to a multi-story headquarters with shiny glass windows in Powai, a Mumbai suburb now known more for retail and office space than industry.
During an interview at the office, Mr. Dhruv told the long and winding story of a decades-long expansion that 15 years ago led his company, Prabhat Industries, to land in Atlanta.
Prabhat started in 1966, as the family began exporting auto parts to Africa. In places like Kenya, Tanzania, Sudan and Nigeria, overloaded cargo trucks saw their suspensions fail frequently as they bounced along on bad roads.The Dhruv family saw an opportunity, not only to fill a market need, but to transition into a more profitable niche: manufacturing.
They began making suspension springs and other components, often traveling deep into African countries to deliver the parts. As quality increased, they also broke into Southeast Asia.
After conflicts presented challenges for getting money out of Africa in the 1980s, they decided to try their hand in a market that was much less risky but ironically was harder to crack: the United States.
In 1994, Mr. Dhruv first went to Detroit, the epicenter of the auto industry, but he soon found himself traveling all over the country using open-ended plane tickets.
“I toured everywhere in America. Even 20 years (son Yogesh) is there, he has not seen the places I have seen,” the senior Mr. Dhruv laughed.
By the early 1990s, springs were no longer competitive, but Prabhat had been forward-looking enough to change gears before it was too late. It started a factory about an hour outside Mumbai to manufacture rubber gaskets for electrical assemblies and most sizes and varieties of water pipes.
As they had learned, American buyers expected precision without a premium.
“America wants quality goods with no defects and unrivaled service for a throwaway price,” said Umesh Dhruv, a director of the company and H.K.’s son. “The volume which the USA is giving that no other country is giving, so they are in a better position for bargaining.”
Customers also wanted quicker turnaround, which is why Prabhat needed to set up shop in the U.S.
In 1999, Yogesh Dhruv struck up a deal with Atlanta-based Transatlantic Sales LLC, which offers overseas companies, mostly from Europe but also from India and elsewhere, warehousing and office space for a fraction of what it would cost to set up on their own – with more flexible time constraints. Other services that are key to new business starts, from phone answering to legal and tax advice, are included.
The company has lost money in the U.S. since the downturn in the construction market, but the elder Mr. Dhruv believed things would turn around when spending picked back up. Besides, Prabhat had no choice but to make back in America what it lost there, he said.
“We have to go to the mountain,” he said, speaking metaphorically about the company’s ascent in the U.S. “If there is no way, you have to make the way. You cannot go back. If you go back, then you will be in the valley. To survive, you have to go ahead.”
He added that it’s a commitment to quality that sets the company apart.
“I never supply inferior quality goods. I will never default in my commitment. That’s why we are here since 1966,” he said.
Claus Boelter, CEO of Transatlantic Sales, uses “we” when he refers to Prabhat, which is utilizing his company’s warehousing space. While Prabhat was hit hard when construction “fell off the cliff” in 2009, its gasket sales climbed 50 percent in 2012 over the previous year.
He attributed the recovery to Prabhat’s patience and sophistication, born of its export experience, which has taught its leaders about the hard work of sales and the reality of economic cycles.
“A lot of companies that want to come to the U.S. think they go to a trade show, they make a contact and they’re waiting for the guy to order the first 40-foot container and pay up front. That doesn’t happen,” he said.
For more on Prabhat, visit www.prabhatind.com/about.html.
For more on Transatlantic Sales, visit www.transatlanticsales.com.