Sensing new business opportunities in India, the Japanese manufacturer of high-precision components has set up a wholly-owned subsidiary. Shobha Mathur reports.
Japanese component maker Minebea Company Ltd is kick-starting its sales presence in India for which it has spun off a wholly-owned subsidiary NMB-Minebea India (P) Ltd recently. To be based at Gurgaon in Delhi-NCR, this company will play a key role in expanding the parts maker’s business operations in India, especially in the automotive sector, through sales and marketing activities.
Minebea initially began its India operations with a small office in Chennai some years ago but is now nursing ambitions of expanding in one of the fastest growing automotive markets in the world. “We will currently not look at a manufacturing possibility in India. We want to expand the business only for sales and marketing and grow in the automotive sector. So we have invested in a company and expect a huge market potential in the future from India,” says Shigeru None, managing executive officer of Minebea Company Ltd.
With a tentative capital investment of Rs 1 crore to be funded through parent companies at Thailand (99 percent) and its Singapore operations (1 percent), the Indian subsidiary will have seven staffers to begin with and will go on stream from early July.
“We will hire more manpower as we expand our operations,” clarifies Ashok Ashta, managing director and CEO of NMB-Minebea India. Similarly, sales activities will be tailored to meet the needs of local users and will enable greater visibility for Minebea products.
The component maker foresees large market potential for its product range that includes ball bearings, stepping motors and small DC motors, micro actuators, load cell and sensors with volumes based on customer demand. It plans to serve the local market mainly through imports from its manufacturing facilities in Singapore and Thailand. Some electronic components will also be sourced from its production unit in China. A Free Trade Agreement with Thailand and an AFTA with Singapore will facilitate spin-off benefits with the bearings being imported from those countries as it will cull out the duty component that ranges around 7.5 percent for products imported from Thailand and 5 percent on products from Singapore.
Eyeing a local alliance
The company’s long-term plan is, however, to grow in India which is slated to become a global automotive hub. In an approach similar to most foreign companies entering India, it will also look at a local alliance that will involve a factory set up for assembling products.
Shigeru None says that they have checked out a couple of companies and are scouting for a partner preferably in bearings. Competitors include SKF in the OE space and Chinese manufacturers which dominate the aftermarket.
While Minebea is not so well known in India, officials claim it is not a small company globally, holding a market share of over 65 percent in ball bearings of 20mm or less in diameter. In India, it holds a 60 percent share in ball bearings of the miniature size supplied mainly to OEs in the automotive sector.
Of the future product pipeline, motors and bearings will be supplied to the auto industry and measuring equipment will cater to industrial use. The path the company will follow in India in terms of sales or local manufacturing will be dictated by the growth potential of the local market in these product segments.
Increasingly, OEMs are looking at high precision and size specifications in ball bearings for a factory fitment. The replacement market, however, follows no specifications for products.
Minebea has five distributors in the country but can expand this figure going forward. The growth areas for the parts maker in this emerging market are automobiles, aerospace, medical and textiles where the focus is on high-end and advanced precision products and NMB-Minebea fancies that it has a broad product canvas to choose from. It is mulling supplies of advanced products like sensors, ball bearings and motors to OEMs like Mercedes-Benz India, Maruti Suzuki India and Toyota Kirloskar Motor through their Tier 1 and
Tier 2 suppliers.
As OEMs climb up the ladder in product sophistication and increase localisation content to draw upon economies of scale, their suppliers have to keep pace by contributing higher- quality components. The company maintains that it is here that its products will help enhance the quality of Indian parts so that they can also be exported. It will trigger off a chain effect improving the quality of components of Tier 1s and 2s as well as of vehicles on which they are fitted.
India gameplan
A late entrant into India, Minebea’s priority has till now been China. After successfully expanding its business there along with assembly operations, it has now turned its focus on India. The company’s high-precision bearings have also found fitment in the Tata Nano. In Europe and the US, it is a supplier for Mercedes-Benz cars through Tier 1 suppliers Bosch and Denso. At present, of its total global annual turnover of around $ 3 billion (Rs 17,616 crore), China accounts for 40 percent with India contributing a miniscule 1 percent. The target is to shore up this figure to 10 percent by 2020 as it ups the learning curve.