Neolite ZKW Lightings enters into strategic alliance with Hella

January 17, 2014: After a two-year lull that saw the exit of ZKW as its technical partner and further exacerbated by the slowdown, Neolite ZKW Lightings has entered into a strategic alliance with Hella KGaA Hueck & Co of Germany.

Though both the component suppliers had been working together for the last one year, the final modalities of the alliance took shape some months ago, and the association seems to have already clicked. To start with, the alliance has jointly bagged an auto lighting order last month worth Rs 100 crore spanning a four-year period. Involving the supply of headlamps and miscellaneous lamps for the new face-lifted premium hatchback and saloon of an European carmaker in India, it is set to trigger off a couple of other OE orders in the passenger vehicle segment going forward.

The twin new orders in the pipeline are expected to be in the kitty in the current calendar year with each pegged at Rs 100 crore, taking the total order size to Rs 300 crore plus. Production is expected to roll out starting 2015 for the new models and facelifts of predominantly European carmakers who are scouting for quality suppliers. It is understood that Japanese and Korean carmakers prefer to deal with their existing suppliers.

Rajesh Jain, managing director of Neolite ZKW Lighting, told Autocar Professional in an exclusive interview that under the recently struck strategic alliance, Neolite ZKW will provide the manufacturing infrastructure, facilities and expertise at its new Bahadurgarh plant in Haryana while technical inputs for developing the new lighting solutions will be contributed by Hella. The revenues from the order will be shared between the two companies.

Though the alliance does not promise any long-term commitment, Jain is hopeful that it would graduate into a joint venture or a technical agreement.

Meanwhile, headlamps are the primary target of the alliance besides miscellaneous lamps for the passenger vehicle market.

Earlier, Neolite ZKW supplied for various CV programmes besides providing fog lamps for Skoda and Vento cars of the Volkswagen Group and headlamps for the Chevrolet Sail. Tata Motors and Mahindra & Mahindra are also key clients for the company. With the CV industry on the downslide, Neolite ZKW is now focusing on the passenger vehicle segment and also trying to get a foothold with Maruti Suzuki and Honda in India.

Hella India Lighting in turn has a R&D centre at Chennai with 100 people working there. Till now the centre serviced the technical requirements of Hella globally in the absence of a full-fledged manufacturing facility. Now the company has stationed one full-time engineer from the Hella technical centre at Neolite ZKW’s facility at Bahadurgarh to spearhead the new light development with another 5-7 engineers from Hella Germany expected to join the technical team.

The order is also significant for Hella India Lighting as it is the first for passenger vehicles in India. The R&D division had been developing ambient lighting solutions for the global markets and planning to introduce them in the Indian aftermarket as well. With sales of Euro 5 billion, Hella is a global leader in electronics and lighting and hence the alliance is expected to be a big step up for the Rs 120 crore Neolite ZKW wherein ZKW continues to retain a 26 percent stake.

SHOBHA MATHUR

Photograph: Rajesh Jain, managing director of Neolite ZKW Lighting.