Abhishek Kulshrestha, Vice-President, Corporate Affairs and Aftermarket Business, Rico Auto, spoke to Nilesh Wadhwa recently on the sidelines of ACMA Automechanika New Delhi 2019.
Rico Auto, an established OE supplier, forayed into the aftermarket business in August 2017. How has the response been?
The response has been fantastic. We entered the aftermarket segment in August 2017, and this year we expect to report Rs 25-30 crore business. Next year onward our target is Rs 100 crore.
What are the steps taken by Rico to achieve this target?
We are building a very strong network of distributors. At present we have around 62 distributors in India and the target is to scale it up to 200 by April 2019. In terms of exports, we already have a good presence in Nepal and Sri Lanka. We are now also working on creating a systematic roadmap to grow in the export market, which includes SAARC countries and the ASEAN. We are confident that our team will leave no stone unturned to achieve growth.
What are your major offerings in the aftermarket?
In the two-wheeler segment, we are mainly in clutch assembly. We are leaders in the two-wheeler clutches aftermarket and that is one of our biggest USPs. The entire clutch business which includes clutch assembly and clutch plates contributes to around 40 percent of our aftermarket business.
Which are other key areas where you are looking to make gains?
We initially started this vertical with two-wheeler products, we have some presence in the four-wheeler segment (aftermarket) and now will enter in a very aggressive way for three-wheeler and commercial vehicles from April 2019. We will start with marketing activities. The three-wheeler and CV segments are the two new areas and for PVs it will be an increase in number of models, products and distributors.
What are your main products for passenger vehicles?
We have brake pads, brake shoes, brake discs and clutch assemblies. We will also enter into the filter business. We also have suspension springs and wiper blades.
What is the segment revenue breakdown and target?
At present, it is 80 percent two-wheelers and 20 percent from other areas. We are targeting a split of 60:40, wherein the major portion will be from two-wheelers but others will grow significantly.
You sound very bullish on export markets. What will be the drivers for growth there?
In all the SAARC countries, duty structure is playing a very big role. For instance, if we talk about Nepal, the country has imposed a 45 percent duty on components which are imported. That is a major challenge. We are confident that with the quality and competitive price that we are offering, our products will be the synergy giver for our distributors. We have distributors coming from Nepal and Sri Lanka at this ACMA Automechanika to discuss the four-wheeler parts.
Starting April 2020, all vehicles sold in India will come with BS VI engines. What kind of preparation has Rico Auto undertaken?
The company (overall) has made very big investment towards BS VI and all the customers whom we supply are already interacting with us in the OE market. But once BS VI vehicles are sold in the market, the aftermarket will also start demanding that. In the coming years we will also be entering with that in the aftermarket segment. The company has already invested around Rs 150 crore to Rs 200 crore in this financial year on R&D including BS VI.
Lastly, which are the key markets for you?
The good thing about India is that we have different weather conditions, which means when the monsoon starts, sales from Maharashtra and other coastal regions increase. So this business keeps on rolling in either one state or the other. So it is not a major issue.