Fresh funding from First West Capital kick starts growth opportunities for Quebec-based automotive parts manufacturer

Balancing rapid growth and organizational stability requires finding the right financial partners with the right kind of capital.

Kanwal Inc., based in Magog, QC, is a niche Tier 2 auto parts supplier with a core competency in the production of automotive seals for convertibles and panoramic sunroofs. Manufacturing capabilities such as extrusion, injection molding, transfer molding, off-line flocking, testing, and packaging are among the products and services offered to its international customers.

When the recession hit in 2008, new car sales declined dramatically. Despite best in class products, this decrease in consumer spending negatively impacted Kanwal’s ability to grow. In order to best position the company for the future, the company’s President, Paul Kanwal, used LEAN techniques to increase efficiencies, expanded international manufacturing capabilities, invested significantly in R&D, and recruited additional executive talent to round out the management team.

With the infrastructure in place to scale the business, and fresh contracts in hand for new vehicle platforms, the next challenge was to align the company’s capital structure with its growth plans. Kanwal’s current financing, which had been put in place during the post-recession recovery period, had become expensive and was no longer a good fit.

If Kanwal’s CFO, Prithwi Chauhan, has learned anything over the past year, it’s the importance of balancing rapid growth with a stable organisational structure, including the right kind of capital.

“It was a challenge finding local financial partners to support our growth initiatives who really understood our business. This was made especially difficult due to our location in Quebec, which is a hub for the aerospace industry,” explains Prithwi.

It wasn’t until Kanwal’s trusted advisor suggested they contact First West Capital’s Regional Director for Ontario, David Hastie, that they were able to access the growth capital the company needed.

“We needed proper financing to stabilise and grow the company, but, more importantly, we wanted to deal with partners that could support us in the years to come,” says Prithwi. “David came to Magog to meet the team and get to know the market; he listened and saw the synergies and opportunities that exist for the business.”

“We needed proper financing to stabilise and grow the company, but, more importantly, we wanted to deal with partners that could support us in the years to come,” says Prithwi. “David came to Magog to meet the team and get to know the market; he listened and saw the synergies and opportunities that exist for the business.”

“First West Capital is very excited to be partnering with Kanwal to help them achieve their growth objectives,” says David, who was impressed with the team at Kanwal. “We like working with entrepreneurs who focus on continuous improvement in their products, customer relationships and internal systems. First West Capital is also a LEAN organization so there was strong cultural fit between our businesses which will form the basis for a long-term, mutually beneficial relationship. ”

The company is now expanding its manufacturing operations in Canada and Mexico, and enhancing its presence in Eastern Europe and Asia. With renewed funding in place, Kanwal expects to grow 40% this year.

Prithwi’s advice to other businesses? “Start sooner than later!” he laughs. “It’s easy to get caught up in the demands of your business, but if you don’t have the systems to support that business, you will struggle along. Good financial partners can help you get to the next level – the quicker you realise that, the more quickly you will achieve your goals.”

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