Gujarat Special: UNO Minda to set up shop near Maruti

With an aim to cater to its clients in Gujarat and also to use the state as an export hub, the UNO Minda Group is finally making its footprint there. Shobha Mathur reports.

With Gujarat set to become the next big automotive cluster in India, all major component makers are in the race to acquire a land bank in the state to be in close proximity to their OE clients. In line with this trend, the UNO Minda Group has signed an MOU with the Gujarat Industrial Development Corp for 20 acres of land in Maruti Suzuki's Supplier Park at UghrojpuraMandal in Ahmedabad district. This will be a new production unit for the UNO Minda Group as it currently has only a warehouse in Gujarat where components are stored after being supplied from Pune.

What has driven the Group to Gujarat is the fact that Maruti Suzuki, Ford India, Tata Motors, Hero MotoCorp and General Motors India – all current UNO Minda clients – are either setting up new facilities or extending their existing plants in Gujarat. So for UNO Minda, it is imperative that it has a manufacturing footprint there for products that are voluminous and not easy to transport.

“As the volumes of these OEMs increase, we will step by step set up the factory there and increase its production capacity,” N K Minda, chairman, told Autocar Professional. While products to be supplied to Maruti Suzuki in Gujarat are still under discussion, a feasibility study is underway for alloy wheels. “It is always better to set up the plant near a customer for a voluminous product. We expect the status to be clearer by the end of this year,” said Minda. Maruti is expected to start work on its production unit in Gujarat later this year, thereby enabling component makers to take their investment decisions.

Though UNO Minda, along with the recent acquisition of Clarton Horns of Spain, has become the second largest horn maker in the world, it plans to continue its supplies from either its Manesar or Pantnagar plants as horns do not entail a high transportation cost. The long-term plan though is to first move supplies of some products that are currently being supplied from Manesar and Pune to Gujarat. These include switches, arms and lighting. UNO Minda is ready to acquire more land, if required, for further expansion. Investments, admits Minda, will depend on the kind of products to be produced. For instance, an alloy wheel plant with a production capacity of a million units per annum would typically cost Rs 100 crore. Plants for other products could be set up at different locations in Gujarat as well, depending on varied customer requirements.

Export hub
For UNO Minda,Gujarat will also act as a hub for exports with about 20-25 percent headed to the export markets of Brazil, Russia, Indonesia, China and South Africa where automobile growth is set to increase exponentially in the future and volumes don’t allow local assembly of components at present. The Group already exports to Volkswagen Russia from Pune and Minda clarifies that the potential of setting up an assembly plant in Russia would be explored if the OEM asks for it.

Overall, the main challenge in Gujarat remains one of cultural integration though the advantages far outweigh the negatives. The proximity of the Mundra Port will be the biggest driver for exports since most of the OEMs in Gujarat will be using it to drive their supplies to overseas markets. This will trigger outsourcing of components, tools and dies as well.