Sandhar Technologies, the Gurgaon-based Tier 1 components manufacturer working in the field of door locks, latches, relays, flashers and more recently auto electronics such as GPS antennae and parking sensors, has inked a new 50:50 joint venture agreement with Korean major KwangSung Corporation.
The two companies are to jointly supply sun visors to Hyundai and Kia in India, and also to cater to KwangSung's export markets in Europe and the US, where again it supplies to homegrown Hyundai and Kia in big numbers.
Essentially, with the JV, KwangSung is moving bases and relocating two of its six plants stationed in Korea and is looking at leveraging the low cost of manufacturing in India to make India its global manufacturing hub for sun visors and automotive lining tapes initially. The over US$ 300 million (Rs 2,091 crore) company sees two-thirds of its revenue coming from the US and Europe, with 50 percent of its total produce getting exported.
“We want to make our products here and also export out of the country, which is our first priority. When we went to the US and China, we solely targeted Hyundai and Kia in the local markets there, but that is not the case this time around. Exports will form around 80 percent of our total production and we also want to expand our customer base by supplying to more companies in India,” said Minsoo Sung, president and CEO, KwangSung Corporation.
Manufacturing hub in Chennai
“The JV will see KwangSung moving its production to India, in Chennai and from Day 1 itself, we will start supplying to Hyundai and Kia for their US, Europe as well as India operations. It is a ready business for us and is one part of the alliance which is the Phase I. It is valued at around Rs 300-400 crore and revenue will start coming in immediately,” said Jayant Davar, co-chairman and managing director, Sandhar Technologies.
“We are targeting Rs 240 crore in the first year starting Q1 of FY2019-20, and by stabilising production of 2 million car sets of these sun visors by end of the fiscal,” he added.
The next step (Phase II) for the JV will be to get into innovative tapes for application in wheels as KwangSung has a patented product in that space, which is 30 percent cheaper than what established players in the industry offer.
While the initial tooling for the manufacturing facility will be relocated from Korea, KwangSung-Sandhar will eventually see local equipment getting installed when it scales up volumes, and also see its localisation content increasing, which could also initially see the fabric for the sunvisors getting imported from Korea.
Venturing into lightweight components for EVs
KwangSung, apart from making regular interior trims, also specialises in patented blow-moulding materials for making lightweight glovebox and centre console assemblies which weigh one-third of what conventional parts would weigh.
“We also plan to list the JV as a separate company altogether and then gradually venture into lightweight parts which are suitable for application in EVs,” said Davar.
2019 a landmark year for Sandhar
With four of its recent JVs set to bear fruit in the coming fiscal, FY2019-20 holds immense value for the company, with it venturing into helmets with Sandhar Amkin in January 2019; fuel pumps with its JV with Korea's Daewha; rear parking sensors with Taiwan's Whetron and last but not the least, interior parts with KwangSung, all around the start of the next fiscal.
“I'm eagerly looking forward to 2019, and see the hard work of the team over the past few years finally materialising and taking shape,” concluded Davar.
The JV is pegged to generate overall revenue of Rs 1,000 crore over due course of time in the future and will position Sandhar as one of the most diversified component players in India and abroad.
Sandhar Technologies currently has 32 plants with eight under commission. By the end of CY2018, it will have a total of 40 operational plants.