With five plants that make products from car audios to castings, the UNO Minda Group can stake a claim to be a force to reckon in this Haryana town. Shobha Mathur reports.
A drive down to Bawal in Haryana, 104km from Delhi, reveals a town developing as an important industrial hub for the automotive sector on the lines of IMT Manesar. Land scarcity in Gurgaon and adjoining Manesar in the Delhi-NCR has pushed OEMs to distant Bawal and further on to Neemrana in Rajasthan. IMT Bawal, as this area is known, is verily a hub for the UNO Minda Group which has five plants located here. The Group has investments for the manufacture of air cleaners, die casting and blow moulded components, cylinders and audio systems.
“There has been a very encouraging response from OEMs with businesses coming for new products we have introduced,” says Sanjay Walia, vice-president, corporate marketing, who accompanies this correspondent on the visit to Bawal. Overall, the industrial belt of IMT Bawal has 150 companies and there’s more land for expansion too.
Our first stop on the plant tour is
Minda F-Ten India. This new facility begins mass production in September 2013, rolling out audio systems in alliance with its joint venture partner, Fujitsu Ten of Japan. The first set of customers includes Maruti Suzuki India and Toyota Kirloskar Motor. A surface mount technology line for mounting components on the PCB and two assembly lines are ready for Phase 1 – these will roll out three audio products, one of which will be an OE fitment for the refreshed Toyota Innova. For Maruti Suzuki, a universal audio will find fitment as a genuine accessory in any car model it makes but at the dealer’s end. Come September, this line will roll out about 4,000 units of the audio system per month for Maruti, to be followed in December by another 4,000 units of the audio with touch-screen and DVD player for the refreshed Innova. During Phase I, localisation levels of the audio systems for the Innova will be 13 percent but will increase up to 30 percent for models like the new Fortuner SUV expected within the next three years. In contrast, Maruti products start at a 35 percent localisation level. Minda F-Ten is also in discussions with Maruti for supply of audio systems for new platform-based models, as well as with Honda Cars India for upcoming models including a refreshed Brio hatchback around December 2014. An OE fitment of audio-cum-CD player is proposed for both car manufacturers. The company is also in talks with Tata Motors for a low-cost stereo minus a CD player. Overall orders worth Rs 120 crore are already bagged with another Rs 160 crore worth order to be finalised by September this year.
A Rs 180 crore capex plan has been approved by the management with phase 1 involving an investment of Rs 120 crore funded equally through equity and debt by the partners. Spread over 17,000 square metres, the plant has a built-up space of 6,000 square metres and will produce a variety of electronic products. The second phase will kick off by mid-2014-15 and will involve an additional investment of Rs 60 crore. Managing director Naveesh Garg tells Autocar Professional that he visualises the industry to be worth around Rs 2,000 crore wherein Minda F-Ten is targeting a 20 percent share or Rs 500 crore within 3-4 years of its operations. Key competitors include Sony, Panasonic and Harmann. While the OE fitment market constitutes 35 percent, dealers contribute another 35 percent with the aftermarket accounting for the rest. Sony holds a 20 percent share of the dealer and aftermarket space (which together constitutes 65 percent of the total market) with 8-10 key players in this segment. While Nippon Electronics holds a 20-25 percent share in both OE and aftermarket categories, Panasonic is the third major player.
Today, most components for the audio systems are imported but Garg is bullish about the localisation potential. “Except for semi-conductor devices, we can localise every part, for instance rubber parts, plastic components, wiring harnesses, base PCB board, die casting parts and sheet metal parts. At present, we have localised sheet metal components and some plastic parts,” he says. A challenge to the growth of the semi-conductor industry has been the high level of initial capital investment required for which large volumes are justified. Over the next 2-3 years, the semi-conductor industry is not expected to grow to a major extent, facilitating localisation of components. However, Minda F-Ten has an ambitious growth plan on the electronics front and plans to introduce navigation devices and speakers locally in the future. Garg says that its speakers, slated for launch next year, will leverage on light weight, weighing less than 100gm compared to existing 300gm units. Also, OEMs will be more than happy to buy lightweight antennas and antenna amplifiers as well as speakers as their thrust on lightweighting vehicles continues. Antennas will be introduced based on specific orders though local manufacturing will require sufficient volumes to benefit from economies of scale. The accruing cost benefits to OEMs, which currently source imported audio kits, is expected to range between 10-15 percent with the lowest audio system without a CD player costing Rs 2,000 and the highest Rs 25,000 inclusive of the stereo, CD and navigation package.
A walk around the Minda F-Ten plant shows the assembly area with a separate area for producing printed circuit boards, insertion of components in the PCB, for sub-assemblies as well as assembly of bigger electronic components and the final assembly area.
Banking on green
Another manufacturing facility that catches this correspondent’s attention and which is under development is for the manufacture of high-pressure gas cylinders, mainly CNG.
FJM Cylinders, a joint venture with Faber of Italy and the JBM Group, will focus primarily on automotive customers like Ashok Leyland, Maruti Suzuki, Bajaj Auto (for three-wheelers), Tata Motors and Mahindra & Mahindra. It will also cater to the aftermarket where CNG cylinders will be purchased by kit suppliers or retrofit workshops for retro-fitment in CNG vehicles. These cylinders will also find usage for filling medical and industrial gases.
Minda Emer Technology, a Group company that consolidates CNG kits, will also use some of the cylinders for assembly of CNG kits. The plant will kick off trial production from mid-July and mass production from November 2013, initially for a new model from Maruti Suzuki. FJM Cylinders’ upcoming plant will have a production capacity of 150,000 cylinders per annum. Phase 1 has involved an investment of Rs 100 crore with an additional Rs 50 crore earmarked for the second phase. R D Mathur, CEO, FJM Cylinders, says that an order from Maruti is already in the bag for supply of CNG cylinders besides orders from a few aftermarket distributors. The company is also exploring potential for supplying to existing Maruti CNG models like the Ertiga and the Eeco once the plant goes on stream. Maruti’s planned LCV (from its Gujarat plant in early 2016) will be part-CNG so the company stands a good chance of bagging this order as well. Mathur claims that FJM Cylinders will be an exclusive manufacturer with superior technology, courtesy its JV with Faber. The facility is 90 percent automated. The company’s major competitors include Rama Cylinders and Everest Kanto but most have home-grown technologies with a significantly lower level of automation of around 20-50 percent. Of the various players, Everest Kanto has a big plant and Nitin Cylinders has sold part of its equity to Worthington of the US but is yet to lay its hands on the technology it is believed. In a market ruled by around 10 players with small investments and no technology partnerships, the overall market is worth around Rs 450 -500 crore at present. FJM Cylinders is making a bid for expanding the market size with a turnover of Rs 300-400 crore after 3-4 years. Meanwhile, the FJM Cylinders plant has taken a number of measures to ensure safety including shaping of cylinders from hot extruded pipes. Though cylinders can also be made from billets and sheets, the UNO Minda facility is harnessing pipes as it is easier to make cylinders from them. However, the challenges in setting up a CNG cylinder plant are obtaining various approvals from government agencies including the Petroleum and Explosives Safety Organisation, Chief Controller of Explosives and the BIS for manufacturing different models of CNG cylinders.
Since the CNG cylinder, after the gas is filled, is like a veritable bomb in the car, as part of its safety exercise, FJM has a room where it explodes the cylinders to test their bursting strength.
Moulding growth
The next plant on the itinerary is,
Minda Kyoraku, whose blow-moulding facility has a production capacity of 400,000 spoilers and blow moulded components per annum. It has another plant in Bangalore that makes 800,000 blow moulded products per annum and caters to Toyota Kirloskar Motor, Nissan Motor India, Ford India and General Motors India while the Bawal facility mainly caters to Maruti and Honda Cars India. The Bangalore plant, manned by 170 workers, is the older plant and makes spoilers, washer tanks, energy absorbent pads, with technology patented from its partner Kyoraku. Nitesh Minda, MD, Minda Kyoraku, says that the plant is working on parts for many new models to come from Maruti besides some new variants of the Wagon R. He adds that plant capacity can be doubled to 800,000 units but will require new machines depending on the load factor; however, the paint shop and existing equipment are geared up for that number. The Bawal unit will complete 60 percent utilisation in 2013-14 with 100 workers on board. Among new technology products slated for introduction soon is the cargo board, which will be brought to India to meet NVH regulations coming to India in 2015-16. The next level of cargo boards including foam ducts in turn will reduce current weight by 30 percent but the company is yet to market the technology to OEMs and will offer them to OEMS by 2014. Minda Kyoraku’s initial target customers will be the Japanese OEMs. While Kyoraku has launched cargo boards in Japan and has secured business with Suzuki there, Minda Kyoraku hopes to start with Maruti and is bullish about garnering additional market share with this new technology in India. In India, the company has a 27 percent market share and competes with Motherson that has the majority 37-38 percent share. Minda Kyoraku is optimistic about growing its share to 35 percent by 2016 but a challenge is upskilling workers for which considerable training is imparted, especially in the paint shop. At present, the paint shop has a conveyorised line and two filtration systems but once volumes rise, there is the likelihood of using robots in future.
In terms of turnover, Minda Kyoraku is targeting Rs 57 crore in FY’14 with 20 percent to come from the Bawal plant that is on stream since 2011. By 2014-15, the company expects Rs 90 crore to accrue from the Bangalore and Bawal facilities together with 50 percent from each.
Thus far, the Bawal facility has seen an investment of Rs 20 crore with production of a few more blow moulded products like different types of ducts and spoilers yet to start. Production of blow moulded parts for Honda Cars India has already kicked off. For Maruti Suzuki, production started in June for OE fitment and supplies of unpainted spoilers as genuine accessories has also begun to dealers. These are sold by dealers as accessories and painted as per the specific car colour. Of the 240,000 units produced here this fiscal, HCIL will account for 25 percent and Maruti 75 percent. The Bangalore plant supplies almost 90 percent of Toyota’s needs and 60 percent of Nissan’s requirements. Minda Kyoraku has also started supplies of complete washer systems that spray water on the windscreen for the recently launched Ford EcoSport. This unit includes the washer bottle with pump that is imported. The washer tank is designed and made in Indonesia by Kyoraku. The company is a 100 percent supplier for the EcoSport with supplies to range between 5,000-6,000 units monthly. A walk around the plant shows moulded products coming off the assembly line. The plant usually works one shift and sometimes runs two shifts. Air ducts are produced for both the Honda Amaze and Brio here with Brio numbers running into 3,500 units monthly out of the 8,500 units produced every month. Going forward, this number is likely to be upped to 10,000 units monthly.
Casting future growth
The next stop is
MJ Casting, a joint venture of the NK Minda Group and the JBM Group, which also has a castings plant at Hosur in Tamil Nadu that supplies to Honda Motorcycle & Scooter India (HMSI). Production went on stream at the Hosur plant in end-May. During phase 1, it will produce 10,000 parts per day to meet the needs of the Dream Yuga commuter bike. Production of the Activa scooter begins this month. The plant will then ramp up capacity in phase 2 to 13,500 die casting parts per day. The Rs 70 crore unit, spread across four acres, has a built-up area of 7,000 square metres and has enough land left over for expansion. The Bawal facility, in turn, will manufacture 8,000 parts per day for supplies to both Honda bikes and scooters. HMSI being a key customer, MJ Castings is working closely with the manufacturer on new models producing various parts like the rear grip and left and right crankcase covers for the Dream Yuga and Dream Neo. About 3,000-3,200 parts per day are supplied for the Dream series besides those supplied for the Activa and CB Shine from here. Supplies for the CB Unicorn will be starting soon with the company being a 100 percent supplier for the Dream Yuga, 50 percent for the Activa and 50 percent for the CB Shine. The group has invested Rs 65 crore in the 18-month-old Bawal plant which has a utilisation level of about 80 percent. Enhancements are happening every month through reduced cycle time and small improvements on process time by leveraging better technology are also being practised.
Ram D Sharma, president and SB Head, says the crankcase being an important component on a bike and also having a high visual impact, special care has to be taken in its manufacturing. Casting defects show off easily on a two-wheeler. The Bawal plant works on designs as well as dies for covers and moulds for components provided by Honda. It is also in talks with India Yamaha Motor for new orders. MJ Castings now aims to make engine components for the four-wheeler industry but a bottleneck, admits Sharma, is that the company has 900 tonnes of machine capacity and hence only production of small parts can be undertaken. The asking rate of components for the four-wheeler industry is 1,600-tonne-plus machine capacity for which additional infrastructure in terms of machinery has to be installed. The company is looking to close 2013-14 with a turnover of Rs 70 crore, up from Rs 50 crore in 2012-13; the same revenues are expected from the Hosur plant. Its key competitors include Rico Auto, Sunbeam Auto, Kiran Udyog and the Endurance Group. Filtering the air
Roki Minda Company, the last stop on Autocar Professional's whirlwind tour, makes air filtration products and is a supplier to HMSI, India Yamaha Motor and Honda Cars India for air cleaner assemblies. It is a single source for supplies to the Amaze saloon, supplying 300-350 units per day and will also be a supplier for the new City Osamu Yoshida, vice-president, manufacturing, says the plant has a manufacturing capacity of 20 lakh per annum with work for air cleaner assemblies for Nissan and Triumph underway. The company will also be a second source for the Maruti Alto going forward.
Bawal as an auto hub
All the UNO Minda Group companies at Bawal maintain that a big challenge continues to be the market slowdown but are bullish that recovery will set in within 4-6 months. Bawal, meanwhile, is shaping up as an important automotive hub for components on the lines of Manesar as OEMs build up volumes. However, companies maintain that the state government has not provided any incentives for setting up a plant in this region. Most companies at Manesar have expanded to Bawal with key infrastructure established by the government.
Work at component makers in the Bawal region is on in full swing in anticipation of the turnaround that SIAM says may take place around Q3 of this fiscal. Whether all the investments that the UNO Minda Group is making to expand capacity and manufacture new technology products pay off, only time will tell. But the potential to grow is enormous and the Group is sparing no effort to stay geared for growth.
SHOBHA MATHUR