'We plan to finalise one acquisition in Europe, worth Rs 200-300 crore, over the next 2-3 months.'

What is the future roadmap of the UNO Minda Group, given that the green shoots of recovery are visible?
I think now there is a positive mood and the industry is growing in all directions. It is a good sign of growth that in turn depends on GDP. The GDP per capita income and infrastructure have started climbing northwards, so there is optimism in the automotive industry.

We are far behind China in GDP per capita per car and now there is a concern of production capacity. Therefore, we will all need to invest huge amounts for expansion in different states like Gujarat, to shore up capacities.

In the UNO Minda Group also, we are facing capacity constraints so going forward we plan to expand production capability.

Can you elaborate on plans of stepping up capacity in India and overseas?
Overseas, after the acquisition of Clarton Horns in Spain we have a request from customers to build a factory for catering to the US market from Mexico, so a feasibility study is currently underway.

We also have a request to set up a plant in China from global customers like Ford, General Motors, Volkswagen as also BMW and Mercedes. These are the opportunities that we have at present.

The study will be over in 4-5 months after which will invest between Rs 100-150 crore in both the plants. In terms of volumes, we are targeting five million horns per annum from each plant, mainly dual-tone horns which are more popular in those countries for passenger cars.

We have a handicap today that based out of Spain we don’t have global factories while we have global orders from North America, Europe, Asia and Japan where cars are produced.

How have you been able to leverage the acquisition of Clarton Horns and make it viable for the UNO Minda Group?
I would say that we are experiencing about 5-7 percent growth which is not a very attractive growth rate. Once we set up two new plants to service customers globally, then we will notch a growth of 20 percent globally. However, we are able to sustain ourselves and are not losing money on the acquisition today.

Any further acquisitions on the radar?
Yes, we plan to finalise one acquisition in Europe over the next 2-3 months. It will be worth Rs 200-300 crore and will be funded through internal accruals and equity. Overall, over the next 3-4 years, we will invest Rs 700-800 crore out of which Rs 600 crore will be in overseas projects and Rs 200 crore in the domestic area.

What will be the strategy for growing your South East Asian bases, especially Indonesia, going forward?
They are doing very well. We have orders from the Indonesian plant to supply to Suzuki there as well as Nissan and Daihatsu in lighting. We have made a big breakthrough with Nissan and Daihatsu is also a major customer which is one of the largest manufacturers in Indonesia.

We will grow manifold in lighting with all the manufacturers in Indonesia. Currently the Indonesian operations account for Rs 35-40 crore and in 3-4 years we will touch Rs 150 crore in lighting there.

We are first focusing on Indonesia and later we will look at Thailand if the models are common. For example, all car companies have common vehicle models and are growing them to reduce tool costs as well as investment and manufacturing costs. If we can manage logistics costs, they prefer to have the same suppliers in all their locations.

How will you tap the opportunities in terms of growing the manufacturing footprint in emerging markets?
Our focus is India and as I said we are facing capacity constraints. Today, about three million cars are produced annually in the country and in a 5-10-year timeframe there will be about 20 million cars that China is today producing.

Why can’t we produce 20 million cars when everyone is talking of growth in infrastructure and good governance, good policies and being environment friendly? Our industry is dependent on infrastructure growth so we have to invest in further capacity and I am bullish about  growth in the Indian market.

How much will you invest further in the Indonesian plant?
Our total investment in the Indonesian plant for lighting will be in the range of Rs 70-100 crore over a medium-range of 3-4 years. All our plans are in the same mid-range. It will be funded through a mix of private equity funds, internal accruals and debts. The Motilal Oswal Fund has invested in our company’s stock and is on our board and we keep discussing with them plans for further investments and funding.

Customer-wise Nissan is a big customer for us – we have received orders for supplies for both the same car produced in Chennai as well as in Indonesia. For instance, we supply to the Datsun Go here and there. Similarly we supply to the Wagon R here and in Indonesia as well. So when an RFQ comes, carmakers know we have a base in Indonesia and request us to quote from both the places for supplying to the same model.

How about the India expansion plan to counter capacity constraints?
Depends on product lines which are growing – for example, in alloy wheels we have a plant in Chennai and are also planning to set up another facility either in the North in Bawal or in Gujarat because per car use of alloy wheels is increasing so there is a growing opportunity in this product segment. And Gujarat is an upcoming auto hub while Chennai is growing further. In Bangalore, we already have a factory to cater to Toyota. North is, of course, our largest base with Maruti Suzuki, our largest customer in the vicinity.

Would you look at setting up another facility for Maruti Suzuki or enter a new joint venture for entering a  new product line to strengthen your product portfolio?
We will not enter into any new collaboration as we already have 11 collaborations but we don’t have all their products. For example we have a joint venture with Tokai Rika only for switches when they manufacture a wide range of products. But we want to increase the market share of those products. And if they have not introduced some of their product range like automated manual transmissions in India, then we would like to enter into an alliance for doing that. 

Your biggest customer Maruti is headed to Gujarat. Will UNO MInda follow them?
We have already started setting up a factory in Gujarat for producing filters for Maruti Suzuki and Honda Motorcycle & Scooter India. We have to be present wherever our customer is to supply just-in-time parts. The factory will start production by mid-next year and it is located in the JETRO Park in Mehsana, near Maruti’s manufacturing base.

What will be UNO Minda’s export strategy going forward?
We are currently doing almost 17 percent, so it will become 20 percent of the turnover. For supplies to common models in Asia, we would like to grow our Indonesian and Vietnam plants.

How ambitious are your topline targets over the next 4-5 years?
Topline in the industry is according to per investment ratio for instance, 1:2 or 1:2.5, so another Rs 2,000 crore will be added. We expect to cross Rs 4,000 crore in 2014-15 from the current Rs 3,150 crore level and maybe will be Rs 6,500-7,000 crore in another 4-5 years.

How do you plan to leverage the PM’s ‘Make in India’ call?
There is a challenge of producing electronic components. Right now, we import a large chunk of it from China, Taiwan and Japan but for local production we need volume of scale. There is a lot of gap in good quality tooling which is still imported, so skill development will be a challenge for localising it. There is a lot of opportunity for manufacturing electronic components locally as it will generate employment and we will look at opportunities in manufacturing electronic parts.

How do you think the industry will fare in this fiscal?
If all goes well, the industry should grow in double digits. Our growth will come from all segments. Commercial vehicles are a matter of concern but even they should grow.