Metalman Auto plans JV with Italian partner

Metalman Auto Pvt Ltd, the Pithampur-based $65 million manufacturer of sheet metal and tubular components for the automotive OEMs, is in expansion mode.

It has signed a letter of intent and will soon be inking a joint venture pact with Italy-based Cellino S.r.l. According to Arun Kumar, manager — business development and projects, “We are in the final stages of talks for the JV under which the Italian company will transfer technology for the same range of products we manufacture. It will be a 50:50 partnership involving the setting up of a new plant either at Pithampur or Pune. We are studying the feasibility of both sites in terms of customers and their suitability, manufacturing costs, investment costs, and transportation before we decide on one. We plan to supply the parts made there to all the major OEMs in Europe and also to the domestic market.”

Citing the reasons for the JV, Kumar says, “Firstly, manufacturing costs in Europe are high and the Italian partner’s customers have asked it to produce parts from India. India is continuously learning and becoming competitive. They scouted for possible JV partners and zeroed in on Metalman. The JV will be beneficial for both companies as they will get the same quality of parts at low cost as preferred by maximum OEMs around the globe, and we in turn receive business from European market and other export markets and the technological know-how. The investment will also be equal for this new venture”.

The company has two plants in Pithampur — Automan and Metalman Auto, which is the parent company. It also set up a plant at Waluj, Aurangabad to cater to Bajaj Auto’s captive requirements. This plant supplies full chassis assembled with other sub-assemblies like shockers, wire harness, and lamps for some two-wheeler models manufactured to Bajaj’s Aurangabad plant. Other supplied parts include handles, brackets and leg guards. Metalman has also begun exports from this plant to a French Tier 1 manufacturer which assembles bushes for fitment in Metalman parts supplied to Renault.

Kumar reveals that the company is being considered for OEM supply by Bajaj Auto for its proposed small car project among the cluster of major vendors in Pune. “This 10-acre facility will be a separate business for us. Once the small car project gets fructified, then we would start constructing the medium-sized plant which will have a press shop, welding shop, machine shop and inspection and testing facilities. Both machinery and manpower will be locally procured from Pune.”

Automan supplies sheet metal, tubular and fabricated parts to VE Commercial Vehicles Ltd (the Volvo Group and Eicher Motors JV) and Force Motors. Also parts to Caparo which in turn supplies to General Motors India in Halol, and seat frames to Pinnacle Industries which further supplies them in a furnished condition to Tata Motors. Meanwhile, Metalman makes cabins and other parts for the L&T Case Equipment Pvt Ltd in Pithampur.

Motorcycle business takes off

Set up in 1986 at Pithampur to manufacture sheet metal and tubular components, Metalman Auto made tubular components for Kinetic Honda. Automan, another unit, came up a decade later to cater to Kinetic’s new range of scooters. In the same year, the company set up a third plant at Waluj in Maharashtra with an investment of $2.5 million for the manufacture of motorcycle frames and other sheet metal and tubular components. Since 2005, Metalman Pithampur has diversified into manufacture of heavy sheet metal components for earthmoving equipment like driver cabin, tank and cover assembly, loader arm and similar components. It is the main supplier of heavy fabricated items to L&T Case and seat frames for Pinnacle Industries and has a production capacity of 300 metric tonnes per month.

Automan makes various parts for commercial vehicles and supplies to major customers like Eicher Motors, Force Motors and Caparo Group for their sheet metal and tubular automotive components. This unit has a production capacity of 400 metric tonnes per month.

The third plant at Waluj has progressed to become the flagship unit. It employs modern manufacturing methods and stringent quality control checks. The dedicated assembly shop for its major customer, Bajaj Auto is engaged in the sub-assembly of motorcycle frames. The Waluj plant has a production capacity of 1000 metric tonnes a month.

The firm’s strength lies in the fabrication of two-wheeler chassis by robotic welding system and has 12 robots installed in its welding line producing defect-free components. Low cost automation is implemented almost throughout the workshop. The company has bagged a number of quality awards and is certified to ISO/TS 1694:2002, ISO: 9001: 2000. Two of its units have successfully completed ACMA UNIDO training and another facility is currently undergoing training for TPM.

Main automotive clientele for the company, which recorded a turnover of $65 million for 2007-2008, include Bajaj Auto, Eicher Volvo Motors, Siemens, Caparo Industries, L&T Case, Anvis France and Renault France.

Expansion plans

While talking about the company’s expansion plans, Kumar says, “Bajaj Auto is in the process of expanding its manufacturing operations and our company is under consideration. We may put up a new unit to meet up their future demand in the same field of our activities.

L&T Case Equipments is engaged in the manufacture of earthmoving equipments like loader backhoe, vibratory compactors in Pithampur. The company has decided to outsource chassis loader arm, boomer, dipper handle sleeve and cabins from our Pithampur unit. Since our unit was involved in light engineering products only and we did not have the requisite infrastructure to meet up with their requirement, we have installed a 340-tonne capacity CNC press brake. Other new equipment is being procured. The investment in this expansion is around $1 million”.

As regards the downturn in the automotive industry, Kumar adds, “The Group registered a turnover of $65 million for 2007 -08. As our main business is with Bajaj Auto, if it has not performed well, obviously our growth rate will also come down."

He adds "there may be drop of 25 percent or more at the end of this financial year due to the drop in business for our customers. We are being affected in a big way, at least in the Aurangabad plant. We have cut down the shifts. But as we supply to Bajaj on a daily basis, the inventory level is balanced.”