APEC Kolath is a medium-sized company based in a village 65km outside the City of Chennai, India (the main automotive manufacturing centre in India). They supply a range of specialised electronic assemblies (electronics components within moulded plastic housings) to automotive and industrial sectors. They were acquired by Lucky MT in 2018 and now operate as an overseas subsidiary of the Singaporean company.
APEC Kolath was established in 2009 as a plastic mouldings manufacturer, initially supplying Tata Motors Ltd. Their expertise in moulding metal components into plastic casings led to the company rapidly expanding production after gaining contracts from European automotive manufacturers including Erfde Automotive. Erfde Automotive took this opportunity to establish an overseas manufacturing plant in Chennai to take advantage of the low-cost economy in India.
During this period Erfde Automotive worked closely with APEC Kolath to develop a cost-efficient moulding process that allowed electronics components to be moulded into their housings rather that assembled post-production. This new technology was perceived to offer a significant market advantage and by 2013 Erfde Automotive had sourced over 70% of their underbonnet and facia electronics assemblies supplied to European automotive customers with APEC Kolath.
In January 2015 APEC Kolath received a $300,000 fine following a prosecution by the Tamil Nadu Water Supply and Drainage Board for causing substantial damage to the local water system; 1000 litres of oil escaped from a damaged oil tank and polluted 28 km of river system and 3 local lakes, affecting the water supply of 4 villages.
Although Erfde Automotive continued to source components and assemblies from APEC Kolath when these social and environmental concerns came to light, several large customers withdrew their business, and others reduced contracts so that in August 2016 the banks declared APEC Kolath bankrupt. To protect component supplies Erfde Automotive purchased APEC Kolath and continued to run the business as a subsidiary.
By early 2017 Erfde Automotive’s management team became aware of more extensive environmental and social issues in APEC Kolath, which were threatening to damage Erfde’s corporate reputation in Europe. They took a decision to remove the specialised moulding technology to a new location and sell what remained of APEC Kolath. However, selling APEC Kolath in a way which protected ownership of, and expertise in, the moulding / electronics technology and enabled the company to maintain component supplies to Erfde’s operations in both Chennai and Europe, proved impossible.
Instead Erfde Automotive identified an opportunity to link the continued operation of APEC Kolath with a supply contract for new under bonnet electronic sensors. Erfde considered it viable to transfer the ownership of APEC Kolath to an electronics manufacturer who would supply sensors to be moulded into housings in India and shipped to Erfde Automotive for onward sale to their longstanding automotive customers including Erfde Auto, Johnson Controls, Rosti McKechnie and Delphi. This reduced Erfde Automotive’s liability for sustainability performance, protected their reputation and guaranteed them access to the moulding technology which provided them market advantage. Lucky MT was selected as this partner. In March 2018, the ownership of APEC Kolath was transferred to Lucky MT.