Automotive Valves shifts focus to OEMs

Automotive Valves plans to shift its business focus from merely servicing the aftermarket to include passenger cars and commercial vehicles also. The engine valves maker, which operates out of Ahmedabad, is in talks with Same Deutz Fahr (the Indian arm of the Italian tractor company) which has its facility in Ranipet, Tamil Nadu. It has also received orders from Premier Ltd (the erstwhile Premier Auto) which has got into manufacturing utility vehicles.

“We will be supplying a particular engine valve variety and volumes will increase as the company launches more models,” said Chetan Patel, managing director of Automotive Valves. Talks are also on with some tractor manufacturers for supply of engine valves. For the last seven years, Automotive Valves has been meeting the needs of three-wheeler engine maker, Greaves for both its plants in Ranipet and Aurangabad.

The company has also received a trial order from a major trading company in Germany to supply two varieties of engine valves for heavy duty vehicles, including Mercedes-Benz. This apart, it is negotiating with three aftermarket companies in the US for supply of valves. Patel expects the deal to be sealed next month. This is not all. Automotive Valves is talking to a leading Italian engine valve manufacturer to supply valves for heavy duty applications. Regular supplies are expected to begin in three months and annual volumes could be in the range of 600,000 pieces comprising four different valves.

Since it entered the arena in 1988, the company’s top focus has been the domestic aftermarket. Exports kicked off five years ago and markets include the US, Germany, Poland, Algeria, Iran, Middle East and Latin America. In fact, the global foray has been so encouraging that nearly 50 percent of the valves are exported. Capacity was recently doubled largely to cater to the new business of OEMs. Patel is keen to build the OEM business despite the fact that the aftermarket business is lucrative. For one thing, demand in the aftermarket is not keeping pace with vehicle population thanks to extended life of parts and greater awareness in quality.

In addition, there is a greater proliferation of authorised aftersales service points and this has hit the aftermarket business. The biggest plus in dealing with OEMs, Patel avers, is the prospect of building expertise in technology. By 2008-09, capacity is expected to be optimised and the long-term strategy is to make other powertrain components like valve guides, valve-seat inserts and tappets.

Automotive Valves has also been working on continuous improvement programmes to ensure better quality and delivery while attempting to reduce costs and contain rejections. It is also concentrating on reducing inventory. Three years ago, the company had about 40 days of work in progress which has since been reduced to less than a fortnight. This was a result of changing process layout and creating better flow of components in the manufacturing process.

Automotive Valves has now set itself a target to reduce this further to a week by the end of this fiscal. The company’s strengths lie in manufacturing low volume, high variety products but Patel says that the new focus will see this change to high volume products.