Ring Plus Aqua to enter forgings business

Raymond, more popular for its apparel business, is working on a new strategy to expand its automotive components business. Ring Plus Aqua, the flagship of the Raymond Group's engineering vertical, is planning to enter the forgings business this year. The company has lined up an investment plan of upto Rs 200 crore for its foray into the new business. The entry could be through an acquisition. “We are looking at offering a bouquet of components ranging from connecting rods to axles once we start the forgings business,” says Harshal Jayavant, president – Engineering Business, Raymond Ltd.

With the commissioning of the new business, Raymond’s engineering group has set a target of touching a cumulative turnover of Rs 1,200 crore in the next five years. A plan to get listed in the bourses is also on the cards. Meanwhile, Jayavant and his team are busy chalking out new business plans for Ring Plus Aqua, a key supplier of starter ring gears and flex plate assemblies to OEMs. The company, which clocked Rs 112 crore in turnover last fiscal, has set a target of touching the Rs 150 crore mark this year. The additional business is expected to come from some new premium clients. Autocar Professional learns that luxury carmakers Mercedes-Benz and BMW are currently auditing Ring Plus Aqua’s products and processes before taking it onboard their vendor lists. Supplies to the prestigious clients are expected to begin by December.

In the domestic market, Ring Plus Aqua is the sole supplier of starter rings for the Honda City. It also supplies to Hyundai’s i10 and i20 models and Ford’s Figo. In the CV industry, Ring Plus Aqua is a major supplier to Tata Motors. "Almost 90 percent of the demand for starter rings for Tata vehicles is met by Ring Plus Aqua," says Jayavant.

To meet the long term demand in the market, Ring Plus Aqua is also expanding its production capacity. Currently it has an annual production capacity of three million units, which will be hiked to 4.5 million units by the end of August. Around Rs 20 crore will be invested for the expansion. Between the company’s two key businesses of starter rings and flex plates, the latter is expected to show a stronger growth. Flex plates are used in automatic transmission vehicles, so there is a much stronger demand for this component from overseas customers. Ring Plus Aqua is currently in the process of pitching to some German commercial vehicle makers like MAN for business. Jayavant says, "With the current business development pipeline, we expect the growth in ring gears to be in the range of 20 to 30 percent year-on-year over the next four years, assuming of course that the world does not experience a recession similar to what we had in 2009/2010. Flex plates are expected to grow far more rapidly at 40 to 50 percent owing to their smaller base and the rapid growth of automatic transmissions across the world." The expansion activities are being carried out currently, but Jayavant is bracing for a temporary slowdown in the market. “In the next six months, there could be subdued growth as credit tightens and interest rates go up,” cautions Jayavant. However, with the long term healthy growth story in the domestic market and the resurgence of many overseas markets, the Raymond Group has good potential of finding space in an increasingly larger number of engines, as its tailored suits find a good amount of space in the wardrobes of executives!