UNO Minda, the Gurgaon-based Tier 1 component supplier group, is working on a new vision and a host of new business strategies aimed at transforming itself to be better aligned for growth. Sumantra B Barooah gets the details.
Change is inevitable. Change is constant," is a famous quote by Benjamin Disraeli, writer and British prime minister of the 19th century. In the automotive industry, this change is not only inevitable but is getting dramatic and disruptive too. To cope successfully with such changes, top management officials at the Gurgaon-based UNO Minda Group are busy brainstorming to come up with strategies. While some of them are taking shape, others will be finalised soon. At a macro level, UNO Minda is looking to transform itself from a component manufacturing-focused Group to a technology-led player in the new-age auto industry.
As a key first step, UNO Minda will set up a technology and innovation centre which will be a central engineering and R&D hub for the Rs 5,600 crore Group. The first such hub will come up in Pune, with an investment of Rs 20-25 crore in the first year and 150-200 staffers. The target is to get it up and running by December. This centre could be followed by one in Manesar later. These centres would work on technologies for 2022 and beyond, carry out fundamental research and work with academia, among other things.
The key responsibility of setting up the central technology and innovation centre and driving the culture of technical innovation within the Group lies with Amit Jain, CEO and ED, UNO Minda, who relinquished his role as the India head of global major Visteon in May 2017. He has a three-pronged mandate – to make the Group more technology focused, to build self-reliance in technology, to be future-ready.
"What you are seeing today and what you are going to see in the next three years, possibly we haven't seen in the last 15 years. That's the kind of changes in some technologies and electronics. So, my mandate is to set up these tech centres which are focused on these key things," Jain tells Autocar Professional during his first-ever media interview in his new role. UNO Minda has 26 product lines. Jain foresees a "beautiful opportunity" of consolidation for technology Systems amongst others. To tap the connected car solutions trend, there's Minda iConnect. Honda Cars India's first connected solution is supplied by this firm.
GEARING UP FOR ELECTRIFICATION
As India gears up for mass scale electric mobility, UNO Minda is studying the developments "very closely" to get a fair idea of the timeframe when electric vehicles (EVs) would start contributing to a fair share of the automotive industry's sales. "We are already mapping all of our existing products with reference to EVs. Some product component will remain but they will require some change, and some components will not be required for EVs. There would be a third category of new components which will be required. Those will be new opportunities for us. All the three categories or buckets we are looking at," says Sudhir Jain, executive director – Group CFO, UNO Minda. The Group has a joint venture with Japan's Panasonic for automotive and industrial lead-acid batteries. The JV, signed in 2014, is an addition to the company's two-wheeler battery business. It is "closely studying" the opportunity to add lithium-ion batteries to its portfolio.
"We are working on multiple directions. Basically, battery and battery management systems, and also the motor and motor management system. These are the main areas that we are working on," reveals Naveesh Garg, chief strategy and technology officer, UNO Minda, while adding that nothing has been finalised yet. Jain expects to have clarity on the EV components front in the next 3-6 months. If the electric mobility industry scales up well, the Group may also venture into other businesses related to batteries.
Jain would be studying the electric mobility environment really well before making the investments because past experience shows that sometimes returns on investments take much longer than expected. UNO Minda's JV with Toyoda Gosei, which started operations in 2009, had also banked on benefitting from future safety regulations making airbags mandatory. The JV is a key player in the airbag market but it has seen lower than expected performance as airbags are not mandatory yet. Jain is keeping his fingers crossed for the introduction of the rear parking sensor regulation to kick in soon. That will benefit the some products from the JV with TTE. Jain expects Roki Minda's business to also get a boost with the onset of the BS VI emission norms.
Even as the relatively newer JVs mature, UNO Minda's switches business remains the flagship vertical. According to a company, it enjoys a leadership share of 65 percent in the two-wheeler switches market and over 50 percent in four-wheeler switches. Ravi Mehra, ED and CEO – Interiors, Controls & Safety Domain, UNO Minda, says the need is to offer more value now. Recently, an OEM customer asked him what he can do to help it to enhance the warranty period from two to three years. "One of the requirements is (OEM) customers want increased lifecycles. You have to go and have to shift from conventional technology to something different to be able to do that," says Mehra.
A quick tour of the Mindarika JV plant manufacturing four-wheeler switches plant in Manesar gave us an idea of the efforts being taken to ensure high productivity. The plant produces a cumulative 125,000 units of 260 different types of switches a day. The PPM level stands at three.
The switches businesses contribute to around 45 percent of the Group's total revenue. But as the other businesses mature and scale up in size, the switches vertical could settle at around 25 percent or so, says Mehra.
EXPANSION AND CONSOLIDATION
Even as UNO Minda prepares itself to align well with future market trends in the automobile industry, it is also investing to tap the growth in the existing environment. The target is to cross the Rs 10,000 crore mark by 2020. The cumulative capex plan for the next five years is over Rs 1,000 crore, with Rs 650 crore lined up for the next 18 months.
Gujarat will be the next production hub for the UNO Minda Group. It currently has only one plant, through the Roki Minda JV, manufacturing filters for Honda Motorcycle & Scooter India. Land has been acquired for four more plants by the Group's various JVs. An alloy wheel manufacturing plant under the Kosei Minda will come up next. Toyoda Gosei Minda, Minda Kyoraku and Mindarika will see plants coming up in Gujarat. All these plants will mainly supply to Suzuki's new car plant and HMSI's plant.
As the Group lines up fresh investments, it is also working on a consolidation exercise which will end by March 2018. It started 15 months ago. During this period, two-third of the Group's businesses have been integrated with the flagship company – Minda Industries – which earns 61 percent of its revenue from the two-wheeler segment and the rest from the four-wheeler industry. A few businesses are flagged and being given a year to strengthen their position, failing which they may be discontinued. Jain says a minimum turnover of Rs 250 crore with healthy profits is the parameter for every business to be continued.
With various strategies and steps to sustain and grow its existing businesses, the Group is hoping to touch the Rs 10,000 crore revenue mark by 2020. The results in the marketplace of the major move of setting up a central technology and innovation centre will mostly be seen from 2022 or later. Those will be budgeted in the Group's Vision 2025, which is taking shape now.
Also read: Interview with Amit Jain, CEO and executive director, UNO Minda Group