Arvin Meritor looks at big business in India

The US-based Arvin Meritor, with a turnover of $9.2 billion, expects to do $1 billion worth of business annually in India over the next few years. This will involve making component purchases worth $500 million while the balance will be generated through sales made by its local joint ventures. President, Asia-Pacific, Rakesh Sachdev told Autocar Professional that his company was in talks with some Indian automobile companies to acquire part of their manufacturing setups.

Arvin Meritor has been working towards developing a closer relationship with Indian OEMs for sometime now through de-integrating; similar to the ones it has with Volvo in Sweden and Renault in France for their truck axles. Here, Arvin Meritor bought out their manufacturing operations in Sweden.

De-integrating, in his view, will provide opportunities for suppliers. “OEMs here and in Asia are vertically integrated. But as they go global, they need to work with a technologist or supplier who is also global. These companies make buses and cars and believe that theycannot do everything that goes in a car or truck. And we want to rely on a supplier who understands the functioning of a system,” Sachdev explains.

Arvin Meritor sees that opportunity in all of Asia. For instance, talks are on with OEMs in China. There are opportunities in India too. There is also a move to expand the company’s technical centre in Bangalore which employs around 180 people (proposed to be doubled soon). It supports product development that gets done largely in centres in the US and Europe.

The centre could now take the lead in developing a product both for local and other markets. This would mean designing the product for an application and testing it. This could be a complete brake and if this is the case, the centre will use that product development knowhow of taking that brake and developing it for Europe or China. The company's joint ventures here include Automotive Axles, Meritor HVS India, Arvin Exhaust India and Gabriel India.

EXHAUST SYSTEMS

Arvin Exhaust India is a joint venture with the Anand group which assembles and markets complete automotive exhaust systems, catalytic converters, manifolds and related parts. This will soon cease to be an Arvin Meritor company as the US parent will sell its global emissions division. “Our share in our Indian joint venture will be handed over to a private equity company, One Equity Parners, which is part of JB Morgan Chase. The deal will conclude next quarter,” says Sachdev.

The company also hopes to get into the Indian aftermarket business. “Once you become a successful supplier to OEMs, you earn the right to participate in the aftermarket. The timing is right and we can set up our own channel or team up with the right people,” he says.

Arvin Meritor has will also increase technical capabilities in Asia by building a new centre in China. Sachdev will be responsible for managing existing customer relationships and overseeing operations in China, India, Australia, Japan, Korea, Singapore, Thailand, Indonesia, Malaysia, the Philippines and Vietnam.

P THARYAN