Texspin’s ambitious growth plan revealed

Over 100km from Ahmedabad in a place called Ranpur, Texspin, the over 50-year-old company run by a family that hails originally from the same area, is taking key steps to play an even larger role in the local and global automotive sector.

Set up in 1961, its product portfolio includes clutches for HCVs and off-road vehicles, cars and LCVs, hydraulic clutch systems, cylindrical bearings, kingpin bearings, steering and transmission bearings.
Established by the Makwana family, the company which is now under the stewardship of the third-generation family, has kept itself going by bringing in new products and working on new platforms even as it lays the ground for new business.
Texspin has major exposure to the CV sector which has been under considerable pressure due to the current slowdown. Yet the company has pursued new opportunities, steadfastly tapping its heritage of innovation and self-reliance.
In a freewheeling conversation, Dipen Makwana, the 37-year-old managing director, spells out the company’s vision.

We are at the start of 2014-15. What’s the challenge for Texspin?
The last financial year was tough but we managed reasonable growth with our turnover increasing by 10 percent. This is because we looked at other industries, exports and leveraged the growth in agricultural tractors as well. More so, new product development in the CV sector has supported us. We did not confine ourselves to the current portfolio. We have added new projects. In clutch bearings, for example, we participated in new projects/platforms, designed new products and began serial production. It has given us the numbers and helped us ride out the impact of the slowdown.

What were the new products you catered to?
In 2013-14, we have catered to the Leyland Dost and some Tata CV and LCV platforms. These are existing platforms with some internal technical changes. We have introduced products with technological advancements. We have introduced kingpin bearings; earlier we had bushes that were used on the left side of a vehicle so we have launched bearings. We leveraged growth in the tractor segment and have roped in M&M and TAFE to mention a few players. We also looked at Tier 2 players in the passenger car segment. One of our Tier 1 players is Sona Koyo, which has been our client for 20 years. It had several new projects and we participated in them.

How is the aftermarket business faring?
We have been in this space for a while and growth here helped as well. In fact, this sector grew faster than the OE segment. We grew 20 percent over the last year and clubbed together with other business gave us a 10 percent increase – about Rs 143 crore.

Are you looking at the two-wheeler segment?
It is the new area for us though we have been looking at the aftermarket with steering bearings. The areas we are targeting now are engine and transmission components and we are currently in the process of developing them. We are building a base for future growth in this space.

How is the year ahead looking for you?
As part of our annual business plan or ABP, we project a 17-20 percent growth despite the low numbers in the larger auto sector. This rides on new products and platforms. We have got Daimler as a new customer (suspension bearings) which adds to traditional players like Tata and Leyland.
We have also added smaller players in the machining industry
where bearings are needed, but it is non-auto. We are looking at Leyland-Nissan and there are Tier 2 players like American Axles and Hendrickson’s. We
supply to Daimler Fuso trucks as well and have some non-auto export clients.

What are the challenges of working with new players such as Daimler?
I would not differentiate domestic players and foreign ones. India’s home-grown players are on a par with international ones; they are hugely focused and so, in a sense, it is business as usual. We are attuned to fulfilling the unique requirements of all our customers. We have experience with our old and new partners as well, in fact, we have an emotional attachment with Tata Motors, our oldest player.

What are Texspin’s plans on the export front?
Our focus is basically in Europe where we have customers like FTE, ZF Group and Valeo. We are looking at China but as an extension of what we are doing for our European customers. It is all at a very initial stage. We see the EU business growing, thanks to our relationships with the customers there. We have made technical changes to meet their requirements in what I would say is a progressive relationship.

The CV sector needs an economy-wide impetus. Are you planning to diversify?
Diversification is key but at Texspin, it is not the mantra. We will remain focused on the auto sector and leverage all opportunities. The auto industry has a lot of scope that is yet untapped. Having said that, we can look at other segments and expanding our range of products and customers is in the plan. We have our faith solidly in automotive.

What are the trends in the bearings business?
The bearings business is considered to be a proprietary one. However, some product lines have become more commoditised. So some bearings sizes have become standardised and are no longer proprietary in nature. But we are not into such standardised bearings. We want to do niche products like steering bearings and we offer some specific bearings ranges. Our positioning is that of a specific bearings solutions provider. For instance, the hydraulic clutch release bearing is a forward integration for us and the next step in our evolution.

What challenges have you faced on the materials front, steel being one of them?
We source locally so there’s no impact of the rates but there has been impact on Indian materials such as bars and pipes which have gone up. Handling the input part of any business is a challenge.

What have you done on the cost optimsation front?
We have always worked on cost optimisation but the issue has become acute in the last few years. There is also a limit to cost optimisation. So we have focused on productivity, supplier consolidation and automation. We do not lay off staff but have added capacities. Our business and social values means that we will not impact the HR area.

What are the challenges of being in the Gujarat auto sector?
With the cluster being developed, we at Texspin have opportunities to grow. We see no impact on the HR area and can get staff at the right value. But down the line in five to seven years, we could face some issues on the labour front. Companies are setting up base here but there’s has not been any major impact.
Due to our location in Ranpur, we are blessed. It is a rather isolated area and local resources are readily available and we have to provide the training and development. We have people who come from outside the local area and local talent has got exposure outside and brought it in when they return to Ranpur. With what we provide as a work experience and people we cater to, we provide a good working environment.

Given your innovation and product development, what is your spend on R&D?
We do not have a budget. R&D is our foundation and to cap expenditure is not part of investment strategy. Having said that, it ranges between 5-7 percent of turnover. We are invested for now and are investing in a second plant for which we will spend Rs 50 crore in the next 18 months or so.
We will bring in new products, new machines. The capacity including that of the new plant will be double what we have at this existing plant in three years’ time.

As a young businessman, what’s our own outlook?
My core vision is to nurture the company’s growth. We wish to propel the growth of our business and service partners. I want sustainable growth for us and our partners, a collective growth story. How we go about this is the challenge and we have to strategise on future challenges. We have course-corrected at every level, be it with customers, our team and product selection and catering to it. A generation ago, people would say that ‘this happened in the 1960s or this happened in the ’90s' but nowadays, no one says that 'in the 2000s, this happened'. The world is changing every two to three years and now every year or 18 months. The 10-yearly change is no longer relevant.

What is your automotive wish-list from the new government at the Centre?
We need a centripetal stimulus as well as infrastructure stimulus that will re-start the CV sector and create more growth. I wish the new government will tackle the mining issue; coupled with infrastructure, it would bring the industry back onto its feet.