Rane Group in expansion mode
Auto component major Rane group is on an aggressive expansion mode. The company wants to increase share of export revenues from less than eight percent of turnover to more than 25 percent in the near future. Four new plants - two each in Tiruchi (Tamil Nadu) and Uttaranchal - are being set up to realise this goal.
The export thrust will get a further fillip with the commissioning of a new plant – the fourth – by a group company, Rane (Madras). This plant, at Varanavasi about 50 km from Chennai, will function as a dedicated export oriented unit and cater to the outer ball joint requirements of TRW in North America and Mexico. Prior to finalising on Tiruchi and Uttaranchal for the new plants, Rane had been considering setting up a plant at Visakhapatnam in order to leverage the lesser turnaround time of this port. The company plans to invest Rs 50 crore in these plants over the next couple of years.
L Ganesh, vice chairman, Rane group told Autocar Professional that Rane Brake Linings and Rane Engine Valves would set up their new plants in Tiruchi, where the group’s joint venture Rane TRW already has a facility manufacturing producing power steering. Business plans for these two new projects will be finalised by January 2007, he said.
In Uttranchal, Rane (Madras) – which makes manual steering and suspension systems – and Rane NSK Steering Systems (that makes energy absorbing steering columns) will set up plants. These are expected to become operational by the middle of 2007. The two plants are expected to cost around Rs 10 crore. The two units will share a few common facilities to optimise cost. They will cater to Tata Motors and Mahindra & Mahindra (tractor division).
The Rane group has been growing steadily since inception in 1960. Over this period it has become market leader for a range of products, including steering gears and suspension linkages. Rising demand has led the company to set up plants in Mysore – to meet the requirements of tractor manufacturers - and Pondicherry – for passenger car manufacturers. The new Varanavasi unit will eventually manufacture ten million outer ball joints per year. However, the current capacity is for 5.65 million units a year only. Initially this plant will supply outer ball joints to about 15 new programmes of TRW’s customers in utility vehicle and passenger car segments.
When capacity is expanded to 10 million units, the company will look at manufacturing hydrostatic steering gear for tractors, rack and pinion steering gear for electric power steering system and inner ball joints for exports.
About Rs 10 crore worth of machinery, which can produce three million outer ball joints, has been moved from another Rane plant in Velachery (Chennai) and Rs 14 crore will be spent during the next four years in the new facility. The Velachery plant will now make new product lines.
The company has three suppliers for forgings in Chennai, Tiruchi and Faridabad. The Tiruchi vendor is also setting up a unit near Varanavasi to meet the forgings requirement of this plant. For quite sometime, Rane (Madras) has been focusing on OEMs in the commercial vehicle and tractor segments. It has naturally been affected by the cyclical nature of these businesses. The export market will lend a sense of stability to its business.
Rane’s export story began with the establishment of a collaborative venture with TRW about 20 years ago. At that time TRW was looking around for low-cost suppliers because of increasing cost pressure. The new company, Rane TRW Steering Systems makes power steering and seatbelt systems.
The company received the first purchase order for the LX programme in July 2002 and production commenced in January 2003. The company executed this order by creating a dedicated facility within the Velachery plant manned by a special cross-functional team. This unit meets exacting standards by using statistical process control for all critical dimensions.
Vendors were co-opted into product development as per the advanced product quality planning (APQP) procedure. This unit had a stringent selection and approval process for suppliers and used the DaimlerChrysler steel survey for evaluation of steel sources. So far, this unit has supplied about five million ball joints to TRW. With the new plant in place, supplies will now go up to 5.5 million ball joints per year.
The new plant has been created in a 10-acre site with 45,000 sq ft built up area. In order to minimise electricity usage the plant uses natural lighting to the maximum. The roof incorporates weather insulation to minimise the heating of the shop floor. This unit has open stores for inbound and outbound materials and the young workforce has been trained to meet global standards. It has adopted the single piece flow of operation, and every activity is supported with poke yokes to eliminate rejection.
S Parthasarathy, president, Rane (Madras) says that the company, in addition to enhancing process capabilities, is also looking at every avenue to reduce cost and delivery times. For instance it has reduced transportation time from 45 days to 35 days by optimising vessel availability. It has made agents the extended arm of the company and set up an exclusive warehouse for exports. It also introduced a unique concept called ‘hot mount’, where the company pays customs duties in advance to help reduce clearance time from five days to less than 48 hours.