NEWS FOCUS: HMSI’s South-side story draws vendors

A little-known fact of Honda Motorcycle & Scooter India’s new Karnataka plant is that 17 new suppliers have set up shop for smoother supplies. Karthik H has the details.

The Chennai-Bangalore-Mumbai industrial corridor might still be in the sketching stage but the proposed industrial parks along its route are well and truly taking shape. Located in the once-gold-laden Kolar district, Narsapura Industrial Area is one of the manufacturing zones that will benefit from the Chennai-Bangalore arm of the corridor. The 1,200-acre tract has, despite protests from farmers in the area regarding the price paid by the government for acquisition, been allocated to various industries of which Honda Motorcycle & Scooters India’s (HMSI) recently inaugurated Rs 1,350 crore manufacturing plant is one of the largest.

Improved logistics
As is the case with most OEMs, HMSI brought along with it a host of its suppliers from across the country when it established its newest facility which augments its total capacity to 4 million units per annum from three plants.

The Narsapuraplant is supported by some of the company’s long-time suppliers and new vendors who have gone so far as to set up all-new manufacturing plants there for convenient supplies. HMSI’s Narsapura plant will manufacture the ‘Dream’ series bikes – Dream Yuga and Dream Neo – and the Activa scooter, giving its suppliers enough reason to keep the assembly lines running.

HMSI’s procurement plant for the Dream Yuga and the Activa suggest that a lot of thought has gone into shifting production of two of its most successful products to its newest plant. Out of the 156 suppliers for the two products, local suppliers are 110 in number, with 33 Japanese suppliers and 13 suppliers from other countries making up the numbers. An average of 77 percent of components for the Dream Yuga and the Activa come from the southern part of the country, with 71 suppliers located here. According to an HMSI presentation made during the plant inauguration on May 28, ‘Big and medium parts’ are procured from suppliers in Tamil Nadu and Karnataka. Of the 71 suppliers in these two states, 36 were already supplying for HMSI’s operations in Manesar and Tapukara. Twenty-six suppliers have moved to the South, of which nine are entirely new suppliers.

The Western region of Maharastra and Gujarat is home to 24 suppliers of 'Medium parts', with two of the 24 being new suppliers. Despite the fact that the remaining 61 suppliers are located in the Northern region, only 13 percent of the parts necessary to manufacture these two products are procured from that region. Suppliers located in the Northern states of Rajasthan, Haryana and Punjab provide what HMSI terms ‘Small parts’. Understandably, no new vendors have been added in this region. Yadvinder Singh Guleria, HMSI’s vice-president and operating head for sales and marketing, says: “We have 17 new vendors who have set up base here, investing Rs 1,710 crore (till date) and providing jobs to 4,150 people. Including the plant, we are generating employment for around 8,500 people because of this plant.”

Smoother supply chain
Located a stone’s throw away from HMSI’s plant is Bando India’s drive belt manufacturing facility. Set up with an investment of Rs 200 crore, the plant at Narsapura is Bando India’s second manufacturing plant after Manesar, and makes drive belts for two- and four-wheelers.

“We employ close to 80 people here and manufacture 250,000 two-wheeler drive belts per month here,” said an official. Production at this facility went on stream this March and the plant now runs two shifts to cater to TVS Motor Co and Maruti Suzuki, apart from HMSI.

Pretty much sharing a boundary wall with HMSI’s factory is T S Interseats India, part of the Thailand-based seat manufacturer. The company has invested Rs 177 crore in its new plant which has a capacity of 1.4 million two-wheeler seats per year. It is understood that the Karnataka Industrial Area Development Board had allocated 20 acres of land near the Narsapura Industrial Area to the company and the plant is expected to employ 500-odd people. T S Interseats India’s facility in New Delhi supplies two-wheeler seats to HMSI, TVS Motor, Hero Motocorp and India Yamaha Motor apart from other OEMs.



In an email interview AdityaBhartia, managing director of the Pune-based Advik Hi-Tech, says the company will be investing close to Rs 40 crore in its plant in Bangalore. Advik supplies its entire range of products including oil pump, tensioner, fuel cock, combi brake system, and drum gear shifter to HMSI.

Commenting on why it set up a plant there, Bhartia says: “We are a customer- centric company. With HMSI setting up a plant in Bangalore, as it is one of our most esteemed customers, we decided to set up a new facility there. Furthermore, our existing capacity at our Chakan plant is full and we have no scope of increasing production there.” As regards targeting new OEMs from the Bangalore plant, he adds: “Fulfilling HMSI’s requirement is our first priority. The plant has just started commercial operations. All our energies are focused on a smooth start up and stabilising quality there first.”

Taking a step back from the developments and the effort that has gone into it from HMSI’s side, the company’s president and CEO, Keita Muramatsu, says, “We need more vendors to move in when production increases.” With the plant all set to welcome another line later by the end of 2013-14 – taking its capacity up by 600,000 to 1.8 million two-wheelers a year – HMSI’s task of convincing more vendors to establish facilities in the South sounds never-ending. However, for a company that has seen an industry-defying 31 percent growth in 2012-13, this should be easier than shooting fish in a barrel.

(With inputs from Amit Panday)