Gabriel India, part of the 19-company Anand Group, is humming with activity. This flagship listed company of the Group has several growth plans up its sleeve that include entering new overseas markets and being part of new vehicle programmes of OEMs.
Hence, the component supplier is strengthening its indigenous research and development (R&D) capabilities in preparation for the big leap, in addition to expanding its product basket in the aftermarket. With a strong portfolio in ride control products straddling shock absorbers, struts and front forks, the company has a large presence in the OEM segment, especially two-wheelers.
To further strengthen its technical expertise in this area, it is opening the doors of a full-fledged two-wheeler R&D centre at Hosur, Tamil Nadu, by the end of 2013. The company already has an R&D hub, staffed with 30 engineers, for four-wheelers and commercial vehicles in Pune.
Gabriel India’s older R&D setup at Hosur was housed within the plant. The new R&D centre is being set up near the manufacturing facility with an investment of Rs 8 crore and will function as an independent centre with 30 engineers working on product development and other design areas.
Manoj Kolhatkar, managing director of Gabriel India, told Autocar Professional on a visit to the Gurgaon Khandsa plant: “It will improve our design robustness. We were already doing product development for TVS and other customers. We are also upgrading our technology, benchmarking activities against competition.”
The company, which currently has six manufacturing plants in India, does not plan to increase the plant count further in the immediate future.
The immediate focus though is on shoring up its R&D expertise especially as OEMs in India are driven by the cost-cutting mantra that necessitates localisation of development and series production, not only from the production standpoint but from the design point as well. This is why Gabriel considers it necessary to be ready with localised end-to-end solutions for its customers.
Towards this end, the company is also investing in upgrading its equipment – software and hardware – in both the two- and four-wheeler segments. It is also looking at a capex of Rs 30 crore yearly to be spent on technology, processes or products.
Tech pacts galore
Gabriel draws on pacts with overseas leaders and has a collaboration with Yamaha Motor Hydraulic Systems Japan, a 100 percent subsidiary of Yamaha Motors Japan, that specialises in the manufacture and sale of shock absorbing components for two-wheeler applications. It is drawing on this project-based alliance with Yamaha to undertake product development for customers jointly as well as independently in two-wheelers. For passenger cars, Gabriel leverages the technological expertise from KYB Corporation of Japan and KYBSE, Spain which are global leaders in suspensions. KYB also holds a five percent stake in Gabriel from last year while its alliance is again project-based. Some parts are also imported from KYB to facilitate the development process.
Overall, Gabriel holds a 22 percent market share in the Indian OE two-wheeler market and is a strong supplier to TVS Motor while steadily growing its business with Honda Motorcycle & Scooter India, especially after the two-wheeler major recently set up the Narsapura plant in Karnataka. “We have been nominated as one of the suppliers for HMSI in Narsapura for shock absorbers and front forks. We have a plant in Hosur and a last-mile assembly plant at Malur in Karnataka, half an hour from Narsapura, that assembles shock absorbers for HMSI,” says Kolhatkar. Other customers are Yamaha, Suzuki and Bajaj. However, business from Hero MotoCorp still continues to elude the company.
“This market (two-wheelers) brings in a lot of numbers and we have been approaching Hero for the last two years and currently a dialogue is on. Besides, Royal Enfield is growing very steadily and we are with them. The numbers are small but we are becoming bigger month on month,” he adds. At present, Gabriel holds about 70 percent share of the CV market and 27 percent share in passenger cars.
In terms of the turnover spectrum, CVs contribute 10-15 percent of the Rs 1,200 crore topline, cars 25 percent and two-wheelers 50 percent. The long-term target is to achieve a revenue of Rs 2,000 crore in five years. A part of the revenue comes from railways and some from defence as well. Gabriel is also developing some new products in suspensions for the railways as they become more sophisticated, evolving from simple bogies to coaches and the metro network.
In passenger cars, Gabriel does not have a 100 percent technology partner and is also not the market leader in this segment. Kolhatkar attributes it to a change in car dynamics and presence of most of the global OEMs in India. Since sourcing decisions are made overseas and most involve global launches, the preference is for a global supplier.
However, of late, OEMs have become more open to localising, developing a local front and nominating a local supplier to cater to their overseas platforms. For instance, Gabriel is a 100 percent supplier to Volkswagen India for the Polo, Vento, Rapid and Fabia for shock absorbers and struts. The German carmaker has further opened up avenues in terms of increasing global volumes for Gabriel, which the supplier considers as a positive development.
In CVs, Gabriel leads with all major manufacturers on board such as Tata Motors, Ashok Leyland, VE Commercial Vehicles besides BharatBenz for which Gabriel is an exclusive supplier.
At present, the aftermarket chips in with 10-11 percent of the turnover and, going forward, the same share is expected to be maintained in the burgeoning girth of the topline. In the replacement market, Gabriel is a strong player and OE spares are pegged at close to 50 percent.
Bigger export play
Gabriel is now targeting increased growth with existing customers in India as well as through new vehicle programmes. Most of these OEMs are global names so the parts maker is trying to leverage this relationship to export back some quantity overseas. As a further push, it has recently appointed a full-time export manager dedicated to entering into new overseas markets. It is also liaising actively with OE purchasing offices in India.
At present, exports constitute a small portion of the total sales and are limited to OEMs in a single country – Iran – for cars. Elsewhere, it is for the aftermarket. Gabriel also exports OE volumes in the two-wheeler segment mainly to the South American market. Going forward, the South American, Russian and Asian markets pose an interesting outlook and the supplier plans to step up its visibility in these regions.
Kolhatkar concedes that while there are no immediate plans to locate assembly plants in these locations, if a big order comes their way it might not be feasible to service a big OE order all the way from India. This means a local last-mile assembly unit would have to be looked at. “We do that even today for domestic customers; so we may look at opening some small shop for assembly in those geographies. It will be more a logistics and distribution kind of a setup with a little bit of assembly. We are in talks with many players and we expect something to fructify by 2015.”
Some of the key markets Gabriel is hoping to tap are Eastern European countries for four-wheelers while it will be mainly two-wheelers in South America and Asia – Brazil, Argentina, Venezula and Columbia are touted to be big markets. In Asia, India and China together account for 80 percent of the global two-wheeler market. However, Gabriel prefers Indonesia and Vietnam for setting up assembly units since China is a difficult market with a large number of players.
Other growth drivers include the aftermarket where Gabriel is adding allied products. Also, with its enhanced R&D capabilities, it is mulling export of technology to Gabriel plants overseas. It foresees big potential in the aftermarket in South Africa as well as other parts of Africa where social, economic and political conditions are believed to be improving and throwing up new growth opportunities.
Taming the slowdown
While the ongoing industry slowdown has not left the supplier untouched, the impact is less thanks to Gabriel’s diversified product portfolio.
The company expects to close 2013-14 with a growth rate of 5-10 percent. It is also using the downturn to improve efficiencies. At present, its installed capacity is 28 million units while utilisation is 20 million units per annum. So marginal investments are being deployed to debottleneck operations.
A great place to work
Of the staff headcount of 2,700, Gabriel prides itself on a women manpower of 30 percent of the total. Last year it was among the top three companies in automotives voted as among the great places to work in in India.
People practices and manpower development through sponsorships, useful training programmes and varied support initiatives have kept attrition levels to a manageable 12-14 percent. In fact, an ‘I appreciate you’ event for employees was underway on the lawns the day Autocar Professional visited the Khandsa plant. It is all an integral part of the Anand Group’s work culture for bonding workers together, appreciating their work and improving their productivity still further.
Gabriel is one of the 19 companies under the Anand Group banner but the feverish pitch at which growth is being pursued here reflects the keenness
of the overall Group to achieve its topline targets namely Rs 10,000 crore by 2016. That a major portion of it will come from Gabriel is testimony to the company’s importance in the Anand Group's overall scheme of things.