It's after 7:30 in the evening. Anyone who has had five to six business meetings during the day is likely to feel tired by this time. Jayant Davar, 57, doesn't look or sound tired. Maybe it's the drive that entrepreneurs who work with passion and growing ambitions enjoy. Maybe, the cup of green tea also helped in getting refreshed.
The Sandhar Technologies (earlier known as Sandhar Locking Devices) story, which began in 1987, is interesting. The entrepreneurship bug bit Davar soon after he earned his engineering degree. What makes it more interesting is that Davar's journey began with loans of Rs 30,000 from his father and around Rs 400,000 from the State Bank of India. He has been venturing into new areas to grow the company both vertically and laterally. That seems to have yielded good results. From a turnover of Rs 12.5 lakh in its first year of operations, Sandhar Technologies ended the last financial year (FY2018) with a turnover of around Rs 1,900 crore.
This financial year (FY2019) Sandhar Technologies' revenue could climb up to around Rs 2,500 crore. A significant part of it will come from new product lines set to be launched in 2019, for which the company has tied up with foreign partners. Notably, six of the eight joint ventures (JV) that Sandhar Technologies currently has were signed in 2017 and 2018.
Erstwhile Hero Honda and Maruti Udyog were the first set of OE customers for Sandhar Technologies, then known as Sandhar Locking Devices.
The series of partnerships were led by the company's key strategy to increase the wallet share of business from customers. From helmets to fuel pumps, oil filters, starter motors to electric vehicle (EV) components, a host of new products will be launched in 2019. "It is going to be able to strengthen our sustainable growth management width. It will need a lot of training and education to the teams. It will need absorbing of new technologies that are coming in," says Davar. With so many new product lines getting launched almost simultaneously, the first challenge for Davar and his team will be their stabilisation. We learn that Sandhar Technologies is in talks with another company for yet another alliance, but Davar would not comment on that at this stage.
Sandhar Technologies is the world's largest vehicle lock manufacturer. . .
Sandhar Technologies' strategy is to tap the business opportunities that are growing due to new regulations and global megatrends of electric mobility, autonomous driving, shared mobility and connected vehicles. "We need to be in tandem with what the industry is looking for or what the sector is looking for," says Davar.
. . . and it wants to be the largest helmet manufacturer too
Over the past five years, the company has invested Rs 650 crore to also prepare itself for the future. The technocrat promoter identified sectors that are promising and technologies that will help his company be ahead of the curve. Financial borrowings grew and debt level was on the rise as returns on some of the investments were still some time away. At one point, Sandhar Technologies was investing Rs 100 crore in capital expenditure and spending another Rs 100 crore in loan servicing cost. The "double whammy" was taking a toll.
Sandhar is a leader in global seatbelt spools with a 28 percent share. Davar aims to replicate the leader status in other products.
That led to Davar decide to tap the bourses by becoming a publicly listed company and repay all debts. April 2 will remain a red-letter day for Sandhar Technologies as it debuted in the bourses with a share price of Rs 349 apiece. The Rs 512-crore IPO received bids for 6.73 crore equity shares. The issue size was 1.08 crore shares. It wasn't the best of time to get listed but Davar says, "Suffice it to say that we got an excellent response when we listed and the investors gave us a great response. Our scrip has done quite well. It has shown the premiums that many others on the launch did not. We were lucky to get through very well." Life hasn't changed for the entrepreneur except that he has to be much more prudent in taking business decisions, especially financial.
Target pole position
India is the world's largest two-wheeler market, India's Hero MotoCorp is the world's largest two-wheeler manufacturer, but not many would know that home-grown Sandhar Technologies is the world's largest manufacturer of two-wheeler locks. Currently, it produces over 100,000 lock sets daily! Not surprising also as this maiden business of the company started with Hero MotoCorp (then known as Hero Honda). The locking systems business contributes to nearly 20 percent of Sandhar Technologies' revenue.
New mandates/trends of parking assist.........
Seatbelt spool is another product where Sandhar Technologies rules the roost. With a 28 percent share of the world market, the company is the world's largest manufacturer of spools. This business was inherited through an acquisition in 2007 of Tecfisa, a Spanish company specialising in aluminium die casting and mould design. Along with the technology came customers like Autoliv and Bosch through this acquisition.
With the host of new businesses, Sandhar Technologies wants to be the lead player in each one. An ambition easier said than done one would say, but Davar is clear about his target. "If we are entering any business, it is with a clear mind of being the best in our business in terms of volume. If it's helmets, we want to be the best and the biggest helmet manufacturer in the world. That is the target. That is how these products are picked. That has been our history and that is how we want to carry it into the future," he says.
Technology is a key decision driver in spending money for Davar, who is an engineer and would rather depend on the company's CFO for financials. "We have invested in new plastic moulding facilities, zinc die-casting facilities, magnesium casting, which is new to India and all of these componentry will come out of Sandhar into the joint ventures as aggregates and will be used for assemblies. So there is a backward integration as well which keeps moving. We set up a new facility in Jaipur last year. We just bought land to set up another much bigger facility in Jaipur. So there is a lot of expansion that has gone into and now is the time when we start," says Davar.
surround view cameras,.......
Cabins is another business on which Davar is quite bullish. Sandhar Technologies entered this segment in 2012 by acquiring Bangalore-based Mag Engineering, a specialist in sheet metal fabrication for industrial requirements. It was followed by another acquisition of Pune-based Arkay Fabsteel systems. The cabins business is likely to earn Rs 350 crore for the company this year. Davar foresees "huge potential" to scale up this business as he plans to expand into the farm tractor segment after the construction equipment market. "There is a mandate that high-end tractors will carry cabins. We have already started supplies to tractors but it is still small. Gradually, it will become the order of the day," says Davar. With India the world's largest tractor market and also home to the world's largest tractor maker Mahindra, Sandhar could well become the largest cabin maker in the world.
As the highly unorganised Indian aftermarket begins to get organised, interest is on the rise for new players. One among them is Sandhar Technologies. Many of its new product lines like starter motors, filters and primarily helmets will be aimed at the aftermarket. A successful play here could lead to big gains. According to a study commissioned by the Confederation of Indian Industry (CII), the Indian aftermarket is projected to reach the Rs 75,000 crore market. In FY2018, it clocked sales of Rs 61,601 crore, up nine percent YoY.
Davar and his team are now mulling over activities like branding, marketing and celebrity endorsement which the company has never done earlier. "I think we will need to build the management bandwidths to be able to handle that. We have 9,000 employees. With the rate of growth that we are looking at, those numbers will become higher," says Davar.
Multiple routes to growth
Low-cost, high-scale manufacturing has been the forte of Indian companies. There have been a spate of efforts by home-grown players to enhance their technological capabilities and also bag new customers. For building technological competence, Sandhar Technologies has taken the routes of technical arrangement, technical collaboration, JVs and acquisitions with 15 companies. Through JVs with companies like Kwangsung of South Korea and Whetron of China, Sandhar Technologies is looking to tap the opportunities presented by growing megatrends of electric mobility and autonomous vehicles.
.......and cabin for tractors are some of the new business segments that Davar is bullish on.
When the Sandhar Technologies journey started as Sandhar Locking Devices on October 19, 1987, Jayant Davar had one big dream — to achieve a turnover of Rs 1 crore. Some may say it was a dream not big enough. But for a 24-year-old, first-generation entrepreneur from a middle-class background, it was indeed a big dream. It's a different story that the ambition was achieved in the company's third year of operations. Since then till now, when the company is driving towards the Rs 2,500 crore mark, Sandhar Technologies been a good case study of the Indian entrepreneurial spirit, a growing number of them seen in the component industry.
A CAGR of 32 percent over 30 years is impressive. At that rate a Rs 10,000 crore turnover shouldn't be too far away. "So, when do you expect to cross that milestone?" I ask Davar. "Unfortunately, I am not at liberty to answer that question, but suffice it to say we have grown faster than the industry," he says, now much more careful with his investments, and with his words as the MD of a listed company.
(This feature was first published in the December 15, 2018 Anniversary issue of Autocar Professional)