Expanding its presence in Europe, Dhoot Transmission had acquired Scotland-based TFC Cables in June earlier this year. It also entered into a joint venture with US-based Carling Technologies in October 2017.
20 Nov 2017 | 25368 Views | By Amit Panday
While the incoming BS VI emission norms will help Dhoot Transmission to more than double its business by 2020, it is aggressively expanding its portfolio and capabilities. Having acquired Scotland-based TFC Cables and inked a joint venture with Carling Technologies of the US, it has now lined up yet another ...
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While the incoming BS VI emission norms will help Dhoot Transmission to more than double its business by 2020, it is aggressively expanding its portfolio and capabilities. Having acquired Scotland-based TFC Cables and inked a joint venture with Carling Technologies of the US, it has now lined up yet another acquisition and two more JVs in the near future.
Dhoot Transmission, the Aurangabad based supplier of electrical parts such as wiring harness and other critical components, has charted out an aggressive future growth roadmap. This homegrown supplier, which at present is a Rs 500 crore company, plans to catapult its turnover up to Rs 1,400 crore by end-FY2019-20. The rapid growth is expected to come on the back of organic as well as inorganic growth that will include acquisitions and joint ventures.
Speaking to Autocar Professional, Rahul Dhoot, managing director, Dhoot Transmission, reveals that his company hopes to clock a turnover of Rs 650 crore in the ongoing fiscal (FY2017- 18). “Without disclosing too many details, I can say that we are working on making a Rs 100 crore acquisition, which is on the anvil. There are hopefully two more joint ventures lined up in the near future as we aim to do a turnover of Rs 850 crore in FY2018-19. This should jump to Rs 1,400 crore when BS VI norms come into effect in FY2019-20,” he says.
Expanding its presence in Europe, Dhoot Transmission had acquired Scotland-based TFC Cables in June earlier this year. It also entered into a joint venture with US-based Carling Technologies in October 2017.
While the JVs are expected to depend on joint participation and debt, Dhoot Transmission’s fast-paced expansion is understood to be funded by its internal accruals. “For some JVs, if we have to look at private equity then we will look at that,” says Dhoot. Mumbai BS VI norms to fuel aggressive growth for Dhoot Transmission While the incoming BS VI emission norms will help Dhoot Transmission to more than double its business by 2020, it is aggressively expanding its portfolio and capabilities. Having acquired Scotland-based TFC Cables and inked a joint venture with Carling Technologies of the US, it has now lined up yet another acquisition and two more JVs in the near future. Amit Panday reports. based Singhi Advisors are the internal financial consultants who have thus far helped the company with prospective JVs and acquisitions.
According to the senior company official, besides adding new customers on board, Dhoot Transmission continues to make further inroads into its existing clients. The company’s current clientele is spread across the two-wheeler, commercial vehicle and off-road segments. Of that, according to Dhoot, his company commands 30 percent market share in its product domain in the domestic two-wheeler segment. “That will move up to 39 percent in two years’ time,” he adds.
Commenting on the company’s organic growth in the recent past, Saurabh Sharma, country head – sales and marketing, Dhoot Transmission, remarks, “Our organic growth is in double digits from the past five years and Dhoot Transmission has established itself as the best-in-class source of wire harnesses and electronics for the automotive and white goods industry. Our latest acquisitions and JVs not only strengthen our strategic presence and add to our product portfolio but they also help OEs to find all solutions under one roof.”
BS VI: A GROWTH DRIVER
It is understood that BS VI emission norms, which will see implementation from April 1, 2020 across all vehicle segments, will drive the electronic content per vehicle by substantial margins. Even the entrylevel two-wheeler category will have to shift from carburettor-fed engines to electronic fuel injected (EFI) engines.
Giving his perspective in this context, Dhoot elaborates, “Carburettors have mechanical adjustment to them. EFI, on the other hand, means that the system needs an electronic signal to give a feedback, which creates the requirement of sensors. Although engineers have been working on sensors (in India) for a long time, the real revolution in sensor technology is expected to come in 2019-2020 when the BS VI norms kick in. We are talking about 20 million two-wheelers on the road every year. There will be eight sensors in every two-wheeler that is going to come. So the demand for two-wheeler sensors will be to the tune of about 16 crore sensors, which will be generated suddenly in a year’s time (over FY2018- 19).”
According to the young managing director of this company, his R&D team has been working on products for stringent emission norms (BS VI) for the past three-and-a-half years. “We see a big push in demand as far as our electronic revenues grow. When we talk of the wiring harness for BS VI norms, we have to understand that when we have delicate sensors, we need high-value connections and that’s how the price of wiring harness goes up. With BS VI, we will only grow as we are there in several new vehicle platforms for 2019-20,” he says confidently.
The company has eight patents in the automotive electronics domain. It currently operates with an R&D team of 96 engineers. Besides India, its engineering footprint is also present in the UK, Scotland and Slovakia.
“We are investing 10 percent of our profits into R&D every year. With switch technology coming in (under the joint venture with Carling Technologies), we will be hiring another 18-20 engineers. Other new JVs will enable hiring of more engineers. So R&D will consistently grow,” adds the top boss.
HUMBLE BEGINNINGS
Forty-four-year-old Rahul Dhoot started the company in 2000 with no background in manufacturing. He stands out as one of the few successful homegrown entrepreneurs who managed to merge their educational background with their interests. Dhoot, who is based in Aurangabad and is an electronics engineer, forayed into auto parts manufacturing after his company won an order from Bajaj Auto around 2002.
“We had participated in Bajaj Auto’s vendor rationalisation programme where we had put up a small set up with focus on quality products. I was very young at the time and I took it as my first and last opportunity. They became our first customers. Being based in Aurangabad helped us strategically,” Dhoot recalls.
From that year onwards, there was no looking back for this company. John Deere came on board as the second customer in 2005, followed by Piaggio Vehicles. According to the top official, the company had set up a small office in UK in 2007. “Fortunately, we got through some good customers there (in the UK). We wanted to upgrade ourselves and we hired intelligent people from the industry.
Later, Anand Biyani came on board with us as the head of engineering. His induction played a critical role as he was instrumental in restructuring the engineering vertical and a lot of engineering projects started. We eventually also moved into the CV segment and as a result customers such as MAN, Volvo, Force Motors, Mahindra & Mahindra, Volvo-Eicher came on board and supported us. Under Anand’s leadership, the engineering and technical capabilities at Dhoot Transmission grew rapidly,” highlights Rahul Dhoot, as he reminisces about a few major internal initiatives that delivered big results to his company.
Speaking in this context, Anand Biyani, COO, Dhoot Transmission, adds, “We are a team of experienced and energetic people driven by a passionate leadership who has a style of hiring the right people and empowering them to deliver results. Our focus on quality and customer satisfaction has enabled us to establish new benchmarks of excellence.”
FAST- EXPANDING CLIENTELE
The company currently supplies its products (wiring harness, electronic sensors and controllers) to Honda, Suzuki, Royal Enfield, Bajaj Auto, Volvo, MAN, John Deere and many other OEMs. “We are also supplying to Piaggio in Italy, Norton in the UK, KTM in Austria. Our global clients, however, majorly are from the off-road segment such as John Deere, Kubota, Volvo and others,” says Dhoot.
Given the growing demand for electronics content in the auto sector, and the big shift to BS VI barely three years later, it can be surmised that Dhoot Transmission is well placed to capitalise on demand.
(This article was first published in the November 1, 2017 print edition of Autocar Professional)